Lords Sitting of 16 May 1984

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

Monetary Aggregates: Growth
Lord Bruce-Gardyne: My Lords, I beg leave to ask the first Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what was the annualised rate of growth of £M3, PSL2 and M1, respectively, over the latest period of three months for which figures are available.
The Chancellor of the Duchy of Lancaster (Lord Cockfield): My Lords, over the three banking months February, March and April 1984 sterling M3—The measure of broad money used for target purposes—grew by about 7½ per cent. at an annualised rate on its new definition, excluding public sector deposits. PSL2—which is not a target aggregate for the 1984–85 target period, although its behaviour is taken into account when assessing monetary conditions—grew at 15¾ per cent. annualised. M1 grew by about 24¼ per cent. annualised. As explained in the Medium Term Financial Strategy the behaviour of Ml has been increasingly difficult to interpret, and there is no target for Ml for 1984–85.
Lord Bruce-Gardyne: My Lords, I am most grateful to my noble friend for that information. Bearing in mind the advice of my right honourable friend the Chancellor that, over the medium term, domestic inflation is determined by the performance of the monetary aggregates, would my noble friend go so far as a Treasury spokesman was quoted after the publication of these figures last week of saying that there was no evidence from the domestic monetary aggregates to suggest a need for action on interest rates?
Lord Cockfield: My Lords, so far as the point made by my noble friend is concerned, the Government's policy on monetary matters is set out in detail in pages 4, 5, 6 and 7 of the Financial Statement. To turn to the future of interest rates, it is not the policy of the Government to forecast movements in interest rates.
Lord Kinnaird: My Lords, can the noble Lord the Minister please explain—because I do not understand and I think a great many do not—what we are talking about?
Lord Cockfield: My Lords, I have no responsibility for the Questions that are tabled on the Order Paper; I merely do my best to answer them. If, however, my noble friend wishes to pursue these exotic matters, he will find a genealogical table setting out the relationship between the various components of the
1402
monetary aggregates on page 79 of the latest issue of the Bank of England Quarterly Review, a copy of which he may obtain from the Printed Paper Office.
Lord Diamond: My Lords, it is all very well for the Minister—a Cabinet Minister—to call these figures, and the study of these figures, exotic, but would it not be correct to say that he supports the Government's policy of placing great reliance on some of these figures in assisting the Government with their unemployment policies?
Lord Cockfield: My Lords, it is essential to follow a responsible financial and monetary policy. This is particularly important in relation to the health of the economy and of unemployment. This in fact is what we are doing.
Lord Beswick: My Lords, is it by design or coincidence that when targets fail to be reached each of these pieces of terminology in turn has been discarded for a new one, and that in fact we now talk mostly about MO and not about any of these three aggregates? How long will it be before MO is superseded by something else?
Lord Cockfield: My Lords, the noble Lord takes an excessively simplified view of the situation. If he reads the Financial Statement, he will find that two of the aggregates are targeted; MO for narrow money, and sterling M3 for broad money.
Lord Beswick: My Lords, I know what the targets are. I am suggesting, however, that in no case have they been reached.
Lord Cockfield: My Lords, in no case have the targets been breached?
Lord Beswick: Reached.
Lord Cockfield: Reached. This is not the position because last year most of the aggregates were in fact within the target range.
Lord Bruce-Gardyne: My Lords, may I press my noble friend on perhaps a rather less exotic indicator; namely, the remarkably exuberant progress of bank lending to the personal sector. Does that not in turn suggest that there may be something rather excessively expansive over current credit conditions in the economy?
Lord Cockfield: My Lords, at the moment the monetary aggregates are moving in a perfectly satisfactory fashion. If one takes MO, for example, the change in banking, April on a 12-month annualised basis was 4¾ per cent.; on a six-month annualised basis it was 4 per cent. and on a three-month annualised basis it was 2¾ per cent. There is a similar decline over this period if one looks at sterling M3.
Lord Nugent of Guildford: My Lords, am I right in thinking that my noble friend and his right honourable colleagues are trying to set a course which will set our domestic interest rates as low as possible without the pressure on our financial economy being such, due to the movement of international funds, that we shall

1403
depreciate the relationship of sterling to the dollar currency and thus increase the cost of our exports? Is he aware that this is a very nice balance to keep which, considering the interest rates here are some 3 or 4 per cent. below those in the United States, has been successfully maintained up to date?
Lord Cockfield: My Lords, I entirely appreciate the points that my noble friend makes. The forecast of the growth of the various monetary aggregates over the period covered by the medium term financial strategy shows a steady decline and the control of the monetary aggregates is one of the major factors in keeping the economy on a healthy growth path.

Jet Express: Loan
2.46 p.m.
Lord Bruce-Gardyne: My Lords, I beg leave to ask the second Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what consultations with the Department of Industry preceded the decision by Rolls-Royce 1971 to make 42·5 million dollars available in loans and equity to Jet Express of Chicago for the purchase of Pratt and Whitney engines.
Lord Cockfield: None, my Lords.
Lord Bruce-Gardyne: My Lords, I am grateful to my noble friend for that reply. But should we not conceivably reckon that the Department of Industry should have had consultation with Rolls-Royce 1971 before this remarkable deal was struck, bearing in mind that in the past two years this business has lost £300 million or more of the taxpayers' money? Is it not a matter of some concern that they should provide 42 million dollars in loan and equity, for a business that has not even started, to lease from some Maharishi gentleman an aircraft carrying the engines of their competitors? Does that not sound like a pretty loony deal for a company in this degree of trouble to undertake?
Lord Cockfield: My Lords, the relationships between Rolls-Royce and the Government are governed by a Memorandum of Understanding dated 15th December 1980. This was published on 22nd June 1982 in the Sixth Report of the House of Commons Industry and Trade Committee 1981–82. My noble friend was a Minister at the Treasury at that time and this matter will therefore be well within his knowledge.

Agricultural Research: Recruitment
2.48 p.m.
Lord Prys-Davies: 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 steps are being taken to recruit new staff at the Scottish Crop
1404
Research Institute and other agricultural research institutes in England and Scotland.
The Earl of Swinton: My Lords, all vacancies for scientific staff graded scientific officer or above which arise within the agriculture and food research service are trawled throughout the service in the first instance. The AFRS includes Agricultural and Food Research Council institutes, state-aided institutes in England and Wales supported by the council, and state-aided institutes in Scotland supported by the Department of Agriculture and Fisheries for Scotland. If no suitable candidate for a vacancy can be found within the AFRS, institutes may seek to fill that vacancy through public advertisement after seeking permission from the headquarters of the Agricultural and Food Research Council.
Lord Prys-Davies: My Lords, I am grateful to the Minister for that information and for the assurance. However, on 29th March the Scottish Research Institute advertised externally for a scientific officer to work on chemical evaluation of the brassicae (belonging to the cabbage family) and the brassica breeding material programme, although that post had not been advertised within the service since the budget-led cuts were announced in December last. Secondly, the programme—
Noble Lords: Question!
Lord Prys-Davies: My Lords, is the Minister aware that this post was advertised externally to the service, although it had not been advertised within the service?
The Earl of Swinton: Yes, my Lords, I understand that the Scottish Crop Research Institute recently advertised in order to fill a scientific post. However, the procedure that I have described would have been gone through first, and the names of any people with appropriate qualifications and experience who were likely to become redundant elsewhere would have been considered.
Lord Cledwyn of Penhros: My Lord, is the noble Lord aware that posts have been created in this institute in Scotland and in Cambridge in respect of specialties whereas posts are being closed in Aberystwith at the Welsh Plant Breeding Station? These posts are being closed, which have been held by people for over half a century. Is this not the height of absurdity and does it not show a clear prejudice against the Welsh Plant Breeding Station?
The Earl of Swinton: My Lords, I am intrigued not only by the knowledge of the noble Lord but by the ingenuity with which he has somehow turned a question which refers purely to Scotland and England into one concerned with the Principality. I suggest to the noble Lord that there is nothing whatsoever illogical about vacancies for scientists with given skills and experience arising in one institute, while similarly qualified scientists at another institute elsewhere are no longer needed. The Corporate Plan strategy is very much concerned with concentrating major programmes of work at certain institutes while

1405
allowing institute directors to decide where to concentrate their resources in the context of the future structure.
Lord Prys-Davies: My Lords, does the Minister not agree that it is very difficult to justify a policy which de-commissions a programme at one research institute, with consequential redundancy, while another research institute considers that very programme warrants a sufficient degree of priority to cause them to advertise and recruit externally?
The Earl of Swinton: No, my Lords. As I said in the answer to the noble Lord, Lord Cledwyn, the Corporate Plan strategy is very much concerned with concentrating major programmes of work at certain institutes; and that is what is happening.

Research and Development: DTI expenditure
2.51 p.m.
Lord Rodney: 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 proportion of the Department of Trade and Industry's budget goes towards expenditure on research and development and how this compares with 1978–79.
Lord Lucas of Chilworth: My Lords, it is estimated that in the financial year 1983–84 19 per cent. of expenditure by the Department of Trade and Industry was on research and development, compared with 8 per cent. in the financial year 1978–79.
Lord Rodney: My Lords, I should like to thank my noble friend for that Answer, which is certainly very encouraging. May I ask him whether he is aware that the support for innovation schemes is much appreciated by the medium and larger companies in this country, but that in many cases the smaller companies—that is to say, those employing less than 30 people—find it virtually impossible to avail themselves of this facility because in the first instance they have to find the minimum sum of £25,000, and also to involve themselves in considerable administrative costs which strictly apply to the audit? May I ask my noble friend whether he would investigate what percentage of small firms have successfully subscribed to this scheme, and whether there is any way in which he could simplify it so that the smaller companies can avail themselves of it?
Lord Lucas of Chilworth: My Lords, I am grateful to my noble friend for his acceptance of my original Answer. It is not true, however, that a minimum figure of £25,000 has to be found by an applicant. The support-for-industry scheme is now currently under review, and I would expect a statement on the whole programme to be made quite shortly.
Lord Ironside: My Lords, in view of the importance of placing research and development work in industry
1406
now, could my noble friend say what proportion of the 19 per cent. is spent extramurally in industry, research associations and universities?
Lord Lucas of Chilworth: My Lords, not without notice. I think that my noble friend will find the information that he seeks in the recently-published Statistical Trends, which breaks down under a variety of headings all the governmental contributions for research and development.
Lord Diamond: My Lords, could the noble Lord help the House by giving, in addition to the percentage figures, the sums involved on a constant basis?
Lord Lucas of Chilworth: My Lords, not on a constant basis but on a current basis. In 1979–80, the DTI share of 11 per cent. equalled £167.6 million; in 1980–81, 9 per cent. equated to £240.1 million; in 1981–82, again 9 per cent, but this time equating to £251.8 million; in 1982–83, 12 per cent. and £284.8 million; and, in 1983–84, 19 per cent. equating to £341.3 million.
Lord Dean of Beswick: My Lords, before the noble Lord the Minister accepts too readily the congratulations of the noble Lord, Lord Rodney, at the increase from 8 per cent. in 1978–79 to 19 per cent. in 1983–84, could he possibly tell the House how this compares with our industrial competitors in Europe?
Lord Lucas of Chilworth: My Lords, I am not able to do that because the various bases used by government departments in overseas countries are rather different from our own. The noble Lord will probably recall that the adoption of the Frascati definition (which we are now using in our Government's returns) has only just started. It will be two years before a direct comparison can be made.
The Earl of Kimberley: My Lords, could my noble friend go back to two questions ago, when he said that he would be announcing something shortly? Could he give the House some idea of whether it will be one month, six months or this year?
Lord Lucas of Chilworth: My Lords, I would expect a statement to be made in a matter of weeks. Therefore, it will be less than six months and possibly more than one.
Lord Sandys: My Lords, while congratulating the Government on giving close attention to the all-important matter of research and development, may I ask whether they are aware that there is a grave shortage of designers in this all-important field, as opposed to draughtsmen? Will they consider ways in which this shortfall may be made good?
Lord Lucas of Chilworth: My Lords, we are aware of that. A scheme was introduced a few months ago to encourage more designers, particularly, to go through the university system.
Lord Glenamara: My Lords, is the noble Lord aware that in the debate in your Lordships' House recently on higher education I raised the question of the lack of

1407
funding of research in polytechnics as compared with universities? Indeed, subsequently, I have had a very helpful letter from the noble Earl, Lord Swinton. Will the noble Lord look at the possibilities of placing more of this 19 per cent. in the polytechnics?
Lord Lucas of Chilworth: My Lords, I take note of what the noble Lord has to say, and will draw his remarks to the attention of my right honourable friend.
Lord Rodney: My Lords, may I ask my noble friend whether it is true that the Government subvention was reduced on 1st May from 33⅓ per cent. to 25 per cent.?
Lord Lucas of Chilworth: My Lords, that is not true. The SFI rate of grant was raised to 33⅓ per cent. in May 1982 for one year. Subsequently, in the 1983 Budget, it was extended for a further year mainly to attract—and this it has done most successfully—more applications from companies which were engaged in the key technologies of the future, including such things as biotechnology, information technology, fibre optics and so on.

Business
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Belstead, with the leave of the House, will repeat a Statement to be made in another place on British Aerospace.
Again with the leave of the House, I should like to say a brief word about the timing of the two short debates this afternoon. It is normal to suggest a maximum length of time for speeches, and the principle which is adopted is that the mover should be entitled to approximately 15 minutes and the Minister should rise to reply no later than 20 minutes before the scheduled end of the debate. On that basis, I would suggest that subsequent speakers in the debate on the Motion of the noble Lord, Lord Ezra, should limit their speeches to a maximum of 11 minutes, whereas subsequent speakers in the debate on the Motion of the noble Lord. Lord Kennet, could speak for as long as 14 minutes. Perhaps I might add that if any noble Lord were to speak at even greater length he would do so at the expense of later speakers in that particular debate.

Associated British Ports (No. 2) Bill
Read a second time, and committed to a Select Committee.
Selby Bridge Bill
Read a second time, and committed to an Unopposed Bill Committee.

Energy: Long-term Strategy
3 p.m.
Lord Ezra Lord Ezra rose to call attention to the need to consider a long-term energy strategy for the United Kingdom; and to move for Papers.
The noble Lord said: My Lords, it is many years since an attempt has been made to define an energy strategy for the United Kingdom and we on these Benches believe that the time has now come to do so, despite all the difficulties and the problems of making such an attempt. In support of that contention I should like to deploy a number of general arguments and a number of specific ones.
First, as to the general arguments, there is not the slightest doubt about the importance of energy in the economy, in the home and the factory. There is equally no doubt that, if we wish satisfactorily to develop our energy resources, decisions have to be taken which require years to mature whether it be in the field of research and development or of investment. So inevitably, in order to take those decisions, some view has to be formed of the future and of interrelationship of one form of energy with another.
Secondly, there is equally no doubt, particularly in recent years, about the wider economic and financial implications of the energy scene; the way in which the oil from the North Sea in particular has contributed so massively to our financial wellbeing. How long is that going to continue? How effectively are those additional financial resources being used? These are also issues of energy policy. Then there are social issues, sadly brought home by the present dispute in the mining industry, and in relation to those social issues also it seems to me that a broad energy strategy is necessary.
Finally, there is the international dimension. We are members of the European Community. We are members of the OECD. We have participated in many international discussions and operations in the energy field. Coincidentally, and very happily so, the Select Committee on the European Communities have only recently issued their very important report on the European Community's energy strategy and objectives, which ties in very well with the subject of this Motion.
When we consider the question of an energy strategy for the United Kingdom we start from a position of strength. We in the United Kingdom have a particularly favourable energy position with our reserves of coal, oil and gas. the nuclear expertise and the general technological advances that we have achieved in the usage of energy; but, in my opinion, far from diminishing the need for an effective energy strategy, that strengthens it, so that we can make the very best use of what nature and what effective achievement have favoured us with.
But apart from these general grounds, there are a number of specific grounds. I believe that the time is coming when a number of very important issues in regard to particular energy sources have to be decided. I would crave your Lordships' indulgence to be able to mention some of these in regard to the particular sectors.
Coal is the area with which we must obviously start. It happens to provide the largest indigenous reserve of fossil fuel in the country and, unfortunately, is very much in the news at present because of the dispute going on in that industry. I should like to ask whether, among the various factors that have led to this dispute, there could not have been a feeling of uncertainty

1409
about the future of the coal industry. This to my mind calls not only for a clear declaration of what that future might be, but of that future in relation to the total energy scene. Perhaps the noble Earl, Lord Avon, when he comes to reply, will make some reference to this.
Obviously we all wish this present dispute to be settled as quickly as possible, and this is of particular importance if the coal industry is to benefit from the great potential advantages that lie ahead of it. The fact is that we have, on the supply side of coal, massive reserves—45 billion tonnes of readily mineable coal which could last us for more than 300 years at present rates of extraction. We have very highly skilled mining engineers and mineworkers, and we have great technology both in the extraction of solid fuel and in its usage. The combination of these things makes for a strong potential supply situation.
On the demand side, despite the decline in the use for energy in recent years, coal is in a strong position to compete with oil and the progressive replacement of oil firing with coal firing is something which holds out great prospects for the coal mining industry. In the longer term, as the Select Committee's report to which I have just referred makes mention, there is the prospect of growth in coal demand in the whole of Western Europe, which of course is going to be partly satisfied from more far-distant sources but is an open invitation to the British mining industry also to compete. Then, looking even further ahead, we have the situation in which coal represents the largest reserve of fossil fuel not only in this country but in the world, and fossil fuels are going to be needed for particular uses as far ahead as we can see, whatever other fuels may be developed. So it follows from all this that the sooner the present dispute can be settled the better, the sooner will the coal industry in Britain be able to realise its great potential for the future.
The oil industry also raises questions. Recently the Government published the latest indications of the reserves in the North Sea and these were very promising. They showed an increase over last year's estimates. Policy issues are raised here; are we making the best use of this resource; are we making the best use of the financial benefits that this resource confers on us? In the case of oil we have got to see that we really do provide the right sort of fiscal framework within which the reserves available in the North Sea are exploited, and we have to ensure that it is used to best advantage both at home and abroad and in effective relationship with other sources of energy.
With gas we have a different sort of problem because we are presently using 25 per cent. more natural gas than we actually produce, so we are importing it, mainly from Norway. The problem of being dependent on a single external supplier is that there are from time to time arguments, as there are at the moment, about the price of additional supplies, and the question of the Sleipner field is still under debate. But there is, as the Select Committee's report mentions, the question of a linkage with the Continent, which would provide access for the British gas industry to the whole European market, and would provide an outlet for any surpluses which we might
1410
have from time to time. So these are big policy issues which call for comment and decision.
When we come to the nuclear area, there too we have the problem of deciding exactly where we need to go in relation to other forms of energy. We could ask straight away, particularly in the light of the extra oil that we have discovered, whether we really need to go ahead at this stage with a further development of nuclear energy. We need further to ask the question, to which the Select Committee addressed themselves, of whether we are right to put so much emphasis on the PWR system. They have drawn attention to the fact, rightly in my opinion, that we were the pioneers of the AGR system. We have finally brought it after many years of difficulty to a successful conclusion. It is a British system and it seems a bit odd that, at the moment of success with one system, we then turn to another one for what may be a relatively short period because, at the same time, we are making progress with the fast breeder. So I think all this needs to be looked at not only in relation to the future prospects of the nuclear industry as such but in relation to other sources of energy available to us.
When we come to the electricity industry we have first of all the question of its capacity. There is more capacity now available for the generation of electricity than we need. That is a very fortunate thing. I am not one of those who have ever criticised the electricity industry for having surplus capacity, because that gives you a strong fall-back position in case of need when there are difficulties such as arise all too frequently in these uncertain times. But the question arises as to whether at the moment we should be extending that capacity, particularly in regard to large new installations such as the Sizewell B station. The Government have said that they are strongly in favour of combined heat and power, and, indeed, legislation was introduced last year to facilitate this.
However, the point is that the progress towards the realisation of combined heat and power has been relatively slow, and it needs more than the recent statement from the Government that they would support a number of feasibility projects. It needs much more support for the first major scheme; and I believe that the first such scheme should be associated with one of the smaller power stations which the CEGB have decided to cease to use for normal electricity generation, converting that to a CHP scheme.
With electricity, of course, there is the question of pricing, and unfortunately that whole question seems to be in confusion. We are all awaiting with interest what the Government have to say about the report from another place: the Energy Committee Report of 27th February on electricity pricing. I do not believe that I have ever read a more critical view on an aspect of energy policy than I read in that document, which said that the proposed price increases for electricity were "not justified either on the grounds of the industry's financial target or of the Government's economic pricing policy". That suggests that we need to sort out this question of pricing. On what basis are we seeking to price the energy which we have at our disposal and which we need?
Let me turn next to the question of renewables. I asked a Question of the noble Earl, Lord Avon, on the 26th April: what was the Government's expenditure

1411
on renewables? I was told that it was £11 million in 1983–84 and £14 million in 1984–85. To my mind, that is clearly inadequate; and I was again interested to see that the Select Committee said in relation to the European Community that due to the change in the supply and demand position of energy there had been an unfortunate falling back of interest in this field.
In spite of the small expenditure in this country on renewables, a number of quite significant research achievements have been attained. Dr. Challis, the former chief scientist of the Department of Energy, indicated to the all-party group for energy studies in October 1983 that if we were to take advantage of what we have already achieved in this field, even on this restricted budget, the successor programmes beyond 1985 would need to be funded at between £100 million and £200 million a year. So here is a matter of major policy on which I believe we would be interested to hear what the Government have to say.
When we come to the question of conservation—which is effectively an additional source of energy—everybody agrees that although many energy savings have been made so far there are many still to be achieved. Twenty per cent. of the energy consumed is wasted, according to the right honourable gentleman Mr. Peter Walker. That would amount to something like a £7 billion a year saving. These are the Ministry's own estimates. An energy efficiency office has been set up, and it is working hard. I, personally, have been in contact with it. However, the question is: is this effort enough, bearing in mind the enormous potential savings that can be achieved; and how are these savings going to be monitored year by year? How long is it going to take us to achieve even half the massive figure that is mentioned? These are all things that we should like to know more about.
Finally, there is the question of the environmental issues: acid rain, the "greenhouse effect", and nuclear radiation. The Select Committee's report made it clear that they thought a much more concerted effort needed to be made within the European Community, including ourselves, to try to resolve these questions once and for all and on a sensible basis.
I conclude by saying that both on general grounds and on specific grounds I believe that the time has come for a broad review of energy strategy. I do not think it is too much to ask that such a review should take place at approximately five-yearly intervals. It was in 1978 that the last Green Paper on this subject was published. We are now in 1984, and I believe that the time has come when all these issues need to be seen in relation to a broad strategy, which itself would have to be flexible, of course, but which would nevertheless be there as a yardstick to enable the right specific decisions to be taken. My Lords, I beg to move for Papers.
3.17 p.m.
Lord Campbell of Croy: My Lords, I am sure the whole House would wish to thank the noble Lord, Lord Ezra, for having raised this subject and for introducing it in the way he has. I believe he has attempted the almost impossible, and has, I suggest, succeeded: that is to say, he has spoken on the subject of long-term strategy in a short-term debate. We are
1412
fortunate that, besides his immense knowledge and experience of the coal industry, he has had wider interests in industry as a whole over many years, and we are grateful to him for the very able way in which he has opened the debate.
In the time allotted, I propose to present two or three propositions only; but first I must again declare an interest. For nine years, since going out of government, my main businesss activity has been working with a major oil company which is the operator of one of the largest fields in the North Sea. To illustrate the scale of that operation, the company produced from that field during 1983 about one-fifth of the total petroleum requirement of this country. I hope therefore that the strength of my convictions regarding the course which this country should take will be recognised when most of what I am to say now will be advocating the enhancement of the coal and nuclear industries.
The reason for this is that oil will diminish and eventually come to an end. On this I should like to make some comments about our own reserves in the continental shelf and perhaps onshore. There have been serious misunderstandings in the media. There has been confusion between the time when the annual rate of production of our oil reaches its peak and the time when oil from our continental shelf will run out. I have heard remarks, for example, on television and radio—there have also been press reports—to the effect of, "when our oil runs out in 10 years' time." Of course, that is nonsense. There is a very high annual rate of production at the moment: considerably more than self-sufficiency. Within the next five years the annual rate of production may start to fall and then there is likely to be a gradual decline, but that does not mean there will be no oil from our continental shelf in 10 or 20 years' time. The report which came out last month from the Department of Energy brings that out again. I confidently expect, as I have told your Lordships before, that, provided the incentives are there, oil will still be produced from our continental shelf in 40 years' time though in smaller quantities.
The people who are most concerned, of course, are the Treasury. Declining revenue means that they are getting a maximum now but will be getting less and less per year.
Before I leave the subject of indigenous oil and gas, may I say a word about those incentives? There is a great difference between exploration on the one hand and development on the other. There is a great difference in cost. The drilling of dry holes for the discovery of oil costs a few millions each time, but the decision to develop a field when it has been discovered, which means committing huge quantities of money and an investment for a period of usually 20 to 25 years, is a quite different matter. The banks and other financial institutions have to be convinced as well as the companies.
Once a field is on stream, expenditure continues. More wells have to be drilled from the platforms, usually in the less likely places. Perhaps the expression "on stream" is misleading. Oil does not continue to flow automatically once it has been initially tapped. Therefore, the whole future of an oilfield has to be visualised when these very expensive decisions are

1413
being taken about whether or not an oilfield should be developed. There are very long lead times and each field has its own characteristics and problems. Of course, I agree with the noble Lord, Lord Ezra, that the fiscal regime of this country must take all this into account.
The noble Lord spoke of a long-term strategy and he also pointed out that it had to be a broad strategy. I would emphasise that it has to have great flexibility. It cannot be a hard and fast plan. Few, if any, predictions of 10 years or more in the field of world energy have proved to be anywhere near correct. Unforeseen events can completely change the national and the international situation. For example, the conflict in the Middle East in 1973 caused so rapid a rise in oil prices that within a short time they were four to five times higher than they had been. In contrast to that, who could have foreseen that the war between Iran and Iraq, carrying on for about three years, should also have been accompanied for most of that time by a situation in which there was more oil in the world than was needed? Of course, the recession played a part in that, too. In the United Kingdom, we are fortunate in having options and we should aim for diversity.
I turn to coal. Like the noble Lord, Lord Ezra, I, too, have been on the sub-committee which prepared the report on the coal industry in the context of the EEC, and also the report on energy strategy which came out a few days ago. That report will no doubt be discussed on another day. We must keep our coal competitive and saleable. We are the largest producers of coal in the EEC, and there is no doubt that we have valuable and economic seams which can be used when oil is becoming scarce and which will continue to be used when all the oil that can reasonably be obtained has been extracted. Furthermore, oil should be husbanded in the next century, because it has special applications for transport and will still be needed particularly for aircraft. Coal must, I suggest, be made competitive. I understand that the electricity industry's costs at the moment are about 50 per cent. from the cost of coal, and about 80 per cent. of its fuel costs are due to the cost of coal.
Then another vital option for this country is the nuclear one. We have great expertise collected over many years. Here, again, there are very long lead times and we cannot postpone decisions for too long. There are opponents of generation by nuclear energy. Some of them contend that it is much more expensive than other forms of energy, but that I utterly refute. If you take the initial costs and the running costs together, you will find that energy from nuclear sources is as cheap as we can get it. I am reminded of the Hunterston A station. I attended its commissioning almost exactly 20 years ago in my capacity as a junior Minister, and over those 20 years it has been efficiently producing electricity at a very good price.
Then there are those who oppose nuclear energy because of safety anxieties. Of course, nuclear energy must gain public acceptability if we are to embark on a major programme, but the safety record of this industry has been outstanding. I should like to make a comparison with France, a country which does not have indigenous oil and gas and which decided some years ago to embark upon a major nuclear programme
1414
using, in the main, adapted PWRs. As a result, electricity is now being produced in France at a rate considerably lower than we can produce it here, and that is very attractive for incoming industry, particularly American industry.
I should like to ask my noble friend the Minister whether, with the cross-Channel link in electricity, the time has come, or is expected to come soon, when we shall be offered by France electricity, largely from nuclear generation, at a price considerably less than the price obtaining in this country. I would ask him further what our response will be when that happens. That is an example, in France, of a programme being embarked upon with very much less in the way of objection from Greens, environmentalists and others than elsewhere. Consequently, France has this great advantage of a considerable amount of nuclear generation.
Those who oppose nuclear energy, for reasons of emotion or quite irrationally, are doing a great disservice to this country. But, of course, safety and all the conditions must be looked into most carefully, as is happening now at the inquiry at Sizewell. I close, therefore, by urging the Government to give very high priority to further progress with our nuclear programme. We must be ready for enough generation in the next century for it to play an important part—which I am sure it will have to do—in the production of energy.
3.27 p.m.
The Earl of Halsbury: My Lords, like the noble Lord, Lord Campbell of Croy, who preceded me, I should like to thank the noble Lord, Lord Ezra, for giving us an opportunity to debate this subject this afternoon. There are few better qualified than he to take a lead in this subject, and it is a great pleasure to me personally to see so well-known an industrialist, if I may so refer to him, sitting on the Front Bench of his own party so soon after taking his seat in your Lordships' House—a decoration to which I feel his party is also entitled.
I should like to make a passing reference to the report of the Select Committee on which the noble Lords, Lord Campbell of Croy and Lord Ezra, myself and others have sat. I wish to pick up only four points from it before embarking on the burden of what I want to say. First, in the Summary of Conclusions, conclusion (b) states that we,
"should step up … monitoring of … pricing practices."
I do not believe that you can have a viable energy policy without transparent prices. There was a letter in The Times two days ago recommending that Her Majesty's Government should subsidise electrical power in order to enable the CEGB to buy coal at uneconomic prices. That is exactly the expedient which the French have adopted, and for which they have been criticised in quite adverse terms by the commission, with whose views your own Select Committee entirely agrees. There should be no question of doing anything like that.
Secondly, conclusion (d) states:
"Profitable home coal production must … be encouraged."
Among the illusions from which Mr. Scargill suffers is the illusion that Her Majesty's Government are trying

1415
to extinguish the coal industry. I do not know how he dreams up these illusions, but they have no support whatsoever from the proceedings of your Lordships' Select Committee or in my own mind. I am quite convinced that the base load power of this country for a long, long time to come must and should be based upon coal. All we need is economic coal at economic prices.
Thirdly, conclusion (h) reads:
"The Community should debate the case for a variety of reactor designs, not confined to water-cooled technology".
Associated with conclusion (h) is paragraph 26:
"A closely related issue is the future of the European nuclear construction industry. Without a continuing design and building programme, it faces serious contraction. Its future must be safeguarded. Otherwise the Community could find itself deprived of European contractors when a full nuclear programme is wanted".
It is on that point that I wish to concentrate what I have to say. I cannot offer your Lordships a formula which can be assented to, yes or no. I can only offer difficult decisions connected with policy making, the resolution of which must be an act of judgment.
First, nuclear technology is growing, It would therefore be a mistake to make an over-investment in any one nuclear design, for in due course we should be landed with too high a proportion of obsolete designs. That is one extreme to be avoided by an act of judgment. Secondly, there must be sufficient investment in any one design to obtain the cost advantages of serial ordering, because the prototype is always many times more expensive than its copies. After the trouble shooting on the prototype has taken place, there is an enormous advantage to be gained from the serial ordering of trouble-free copies. Thirdly, there must be no under-investment in new designs, or the engineering industry responsible for them will be extinguished.
This is exactly what happened—I believe I have said this before—in the sphere of blast furnace design. We so over-invested in new blast furnaces after the Second World War that a full 10 years elapsed before any new blast furnace was built. When the time came to commission a new blast furnace there was not a single engineering team in the country which had built one before. The "oldsters" had all retired and the youngsters had no experience. We had to go to Japan for a licence to build up-to-date blast furnaces. We do not want that to happen in the sphere of nuclear technology.
I am the last person in the world who would want to "knock" my own country. We have many good qualities, but with those qualities go certain defects. I do not believe that it is "knocking" Britain to draw attention to our national shortcomings and try to face up to them and correct them, where we can. In my view, in almost every context we have too many cooks stirring every brew, too many fingers in every pie, too many irons in every fire, and too much bread always spread with too little butter overall. That is one shortcoming that we must face up to in this context.
The second is too great an avoidance of clear-cut decisions and a preference for compromises which are not decisions on their own but means of avoiding decisions. If I take those two factors and apply them to the history of the pressurised water reactor, what is its
1416
history? Some 10 years ago there was a gross overestimate of the number of nuclear power stations which would be required by the end of the century. It was postulated that 36 nuclear power stations would need to be bought by the end of the century, and there was no possibility of doing so unless we bought an off-the-shelf design from somebody else. The Magnox reactors were out of date and the AGRs were not coming forward at the speed which had been hoped. The target of 36 nuclear reactors, to be bought off-the-shelf to somebody else's design, was a will-o'-the-wisp which hypnotised the fortune hunters of big industry and which hypnotised the CEGB as the only means of meeting its targets. It proceeded to act as a will-o'-the-wisp which from that time on lured everybody into wrong decisions.
At the moment that that target was mentioned I uttered a warning on the Floor of your Lordships' House. I said that there were too many of these PWRs in too many unskilled hands and that sooner or later there would be an incident which would cast a shadow of doubt on the basic safety of the PWR reactor. Within 15 months my prophesy had come true. The Three Mile Island incident had occurred, and all over the world people cancelled orders for PWRs or stopped building them.
At that point we decided to ask Sir Walter Marshall at Harwell to re-engineer the PWR to English safety requirements. He did so, and I expect that he made a very good job of it. But that does not mean that we ought to go ahead now with a reactor that has no future because, as the noble Lord. Lord Ezra, said, the future is with the fast commercial reactor, either the breeder reactor or the incinerator reactor. If we build the PWR now we shall be deserting the AGR, which is now trouble-free, in order to invest in a new design. Too many irons in the fire; too many cooks having a finger in the pie; never finalising anything; no sooner getting something trouble-free than, instead of obtaining the benefit of serial ordering, which I postulated as one of my conditions, we go on flirting with new design. It simply does not make sense.
We have had our initial teething troubles with the AGRs. Dungeness B was a disaster, due to entrusting the construction to an inexperienced sydicate. There were troubles at Hartlepool and Heysham I, but Hinkley B, which was started in 1967 and commissioned in 1976, together with Hunterston B, have put up splendid performances in their latter years. And Torness and Heysham II, which are the next two of the quartet, are now under construction. They are within target estimates for construction and have every prospect of being a credit to the industry. That is what we ought to be building at Sizewell B, if there is to be a station there at all. Naturally, I do not want to pre-empt the findings of the inquiry as to whether we ought to have a station at Sizewell B, but, if so, it ought, in my view, to be an AGR.
Before I resume my seat, may I quote a few figures comparing a modern, up-to-date AGR with a slightly older coal-fired power station. Let me compare Hunterston B with Longannet close by, where the coal is mined by modern methods and comes straight up out of the mine and into the power station. Electricity is generated at Longannet at 2.4 pence per kilowatt hour, whereas Hunterston B is generating it at 1.74

1417
pence per kilowatt hour. The comparison is 2.4 versus 1.74 and that is what we can hope for. The most we could get out of the PWR on serial ordering, when all the "bugs" have been ironed out of it, might be a few per cent. less. But, my Lords, if you have the option of something which becomes dangerous after a minute, an hour, or a day, which would you choose? You would choose something which gave you the option of an hour in which to do something rather than a minute. You cannot have a day, because that is the fast reactor, but you will have it later.

British Aerospace
3.39 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, with the leave of the House, I shall repeat a Statement which is being made in another place by my right honourable friend the Minister of State for Industry about British Aerospace. The Statement is as follows:
"The boards of Thorn-EMI and British Aerospace have announced that they are having talks to explore the possibility of a merger between their two companies.
"Such a merger would fall to be considered by my right honourable friend the Secretary of State under the provisions of the Fair Trading Act, so that he can decide whether investigation by the Monopolies and Mergers Commission is required. No decision on this point can be reached until details of the proposal have been studied and a recommendation received from the Director General of Fair Trading.
"When British Aerospace was privatised, the Government gave an undertaking that the company would not pass outside United Kingdom control. If the proposed merger is to go ahead the Government will require the new company to agree arrangements which would continue to give effect to that undertaking. The precise nature of these arrangements would need to be determined in the light of circumstances.
"The Government will also require an undertaking that British Aerospace's participation in the Airbus programmes will continue.
"Subject to these considerations and to studying the details of any proposal which may emerge from the present exploratory discussions, the Government do not see any reason which would justify using their shareholding in British Aerospace to impede such a merger if it proved acceptable to a majority of the remaining shareholders".
My Lords, that concludes the Statement.
Lord Bruce of Donington: My Lords, the House will be grateful to the Minister for having repeated the Statement made in another place. The concluding paragraph of the Statement says that,
"the Government do not see any reason which would justify using their shareholding in British Aerospace to impede such a merger if it proved acceptable to a majority of the remaining shareholders".
The first question I have to ask is this: by what means is it intended to ascertain whether or not the proposal
1418
is acceptable to a majority of the remaining shareholders? Is it proposed that there shall be a special secret ballot on this point in order to establish exactly what the shareholders have in mind?
With regard to the Statement itself, we are grateful that the Government have stipulated that, in the event, they would not tolerate the company passing outside United Kingdom control. We also note that, in the event of the merger going through, the Government will require an undertaking that the participation of British Aerospace in the Airbus programme will continue. That is important because it will be within the recollection of the House that the Government have already advanced, or are in the process of advancing, some £250 million of taxpayers' money towards this particular project and that British Aerospace itself is contributing a further £400 million.
With regard to the merger (and whether the Government regard this as a takeover or a merger is an interesting point), there are some observations which the Government should bear in mind. It should be borne in mind that some 60 per cent. to 70 per cent. of Thorn-EMI's turnover is connected with supplying goods to the ordinary customer. Its interests in defence and matters associated with defence are some 3·46 per cent. of its total turnover. Therefore, it is difficult to see what justification there is for this company either merging with or taking over (whichever it may prove to be) another company so heavily committed in the defence sphere and in the strategic arms sphere as is British Aerospace.
It is a little curious that the Government should take such a neutral attitude towards this development. It rather seems to us on this side of the House that the Government will have to decide either that they will retain what amounts to control of a vitally strategic industry or that they are prepared to see a powerful United Kingdom group completely independent of any kind of governmental intervention. One would have thought it in the interests of the nation as a whole that the Government should retain their essential control, which resides in their 48 per cent. shareholding in British Aerospace. The House would like to have the noble Lord's observations on that point.
The Government are a trustee for the taxpayers; they are a trustee for the nation in regard to its shareholding in British Aerospace. We do not consider that there is any case at this time for a merger or takeover. Does the Minister really think that the whole ethos of British Aerospace in pursuing the very important tasks which it faces will be in any way enhanced by its association with a company that is probably more concerned ultimately with pop stars?
Lord Diamond: My Lords, I, too, am grateful to the Minister for repeating the Statement. I am particularly grateful to the Government for letting us know their thinking at this very early stage in their considerations. So far as the content of the Statement is concerned, we on these Benches welcome the Statement and welcome the Government's action in giving us a chance to share in their early thinking. As to that, there are two major points on which the Statement is silent and which I should like the Minister to consider.

1419
The first point has already been touched on in a way. In the course of the consideration to which the Government have referred in the Statement, will they give the most careful consideration to, and make the most careful examination of, the question of ascertaining whether this is truly a merger or in fact is the establishment of a huge conglomerate? The second of these is perfectly permissible in the City but hardly seems to serve any useful purpose in regard to the Government's interests in defence. As I understand the matter, there are areas of interest which do overlap, but there are wide areas which do not. Very careful consideration will need to be given to this point and I ask the Minister to indicate whether he would favour the proposal more if it were shown to be a true merger rather than just the establishment of a conglomerate.
The Statement is totally silent with regard to the question of employment. Will the Government consider very carefully the likely results of this coming together upon the combined number of the employees of the two companies? There will be a very large number involved and it could well be a matter of great anxiety among those concerned. Will the Government give special consideration to this aspect? If additional unemployment is likely to be caused by this development, will the Government take special steps in an endeavour to see that those who are displaced find new and suitable employment not too far from their places of employment at the various factories concerned?
3.47 p.m.
Lord Belstead: My Lords, I am grateful to both noble Lords for their replies to my right honourable friend's Statement. There was perhaps a warmer welcome from the noble Lord, Lord Diamond, than from the noble Lord, Lord Bruce. Nonetheless, I thank them both. The noble Lord, Lord Bruce, asked me about that part of the Statement which referred to the question of the move being acceptable to shareholders. I ought to make it clear to the House that at the moment we are in a situation where there is no definite proposal. There is certainly no offer to any shareholders. As the press notice put out by Thorn-EMI and the Statement both make clear, we are in a situation where there have been discussions initiated and, so we understand, detailed studies and negotiations will be proceeding between the two companies. When we reach the stage when there is a proposal, if there is one, then the Government will study it very carefully.
It is in that spirit that I would answer the question put to me by the noble Lord, Lord Diamond, as to whether the Government see this as being a merger; this was a question asked also by the noble Lord, Lord Bruce. The noble Lord, Lord Diamond, asked whether in the event that it is a merger the Government will then examine it in a more friendly light than if it were some other form of move. Again, I have to say that we do not know. We shall wait to see what the proposal ultimately is.
As to the question of its being essential that the Government retain their shareholding in British Aerospace—and this was put to me by the noble Lord,
1420
Lord Bruce—the Government's point of view is that, provided that the safeguards on United Kingdom control of British Aerospace are maintained, and also the extremely important undertakings which are mentioned in the Statement of continued participation in the Airbus project, the nature of British Aerospace's business does not of itself require there to be a Government shareholding in the undertaking. I remind your Lordships that there are several other companies engaged on important defence contracts in which there is no Government shareholding. Nor was there a Government shareholding before 1977 in the undertaking now known as British Aerospace. Therefore, it is the safeguard given as an absolute undertaking by the Government in 1981 about preventing foreign control and also participation in the Airbus project which is at issue. That safeguard about foreign control, I underline to your Lordships today, remains an absolute commitment of the Government.
Finally, the noble Lord, Lord Diamond, asked whether the Government would be looking for guarantees about employment in this matter. I must go back to my original answer. We have not yet had a proposal and we certainly have not got a definite offer to shareholders. Let us wait to see what now occurs.
Lord Orr-Ewing: My Lords, while thanking my noble friend for the Statement and welcoming the fact that it is put before both Houses before there is a firm action and fact, may I say that I have some reservations. Both these companies are deeply involved in defence. The defence White Paper makes the clear point that it is Government policy to try to encourage competition and thereby lower the price of equipment which they are buying and which plays such a large part in the defence budget. On the face of it. this would seem to reduce competition in the avionics field. Can my noble friend make sure that the five or six very large electronic companies are going to compete on a fair basis if EMI is absorbed by British Aerospace? That is a very big absorption, with probably over £2 billion in market value altogether. On such a big issue and with the reduction of competition probable, would it not be wise to consider referring this matter to the Monopolies and Mergers Commission?
Lord Belstead: My Lords, of course I follow the logic of my noble friend's question; but, as the Statement makes quite clear, if a merger is proposed it would fall to be considered by my right honourable friend the Secretary of State for Trade and Industry under the provisions of the Fair Trading Act. I think it is proper for me to repeat that in answer to my noble friend.
Lord Beswick: My Lords, may I also welcome the fact that the Government appear to be encouraging consultation and discussion. Will the noble Lord do everything possible to ensure that there is thorough discussion on the aircraft side of British Aerospace? In that general discussion, may I suggest that the following points are relevant. First, there is no recent industrial experience which suggests that a bigger industrial complex is necessarily better. Certainly from the point of view of the MoD that would not be borne out. Secondly, is the noble Lord aware that while there may be very great satisfaction to those who sit at the top of a great industrial complex, that

1421
satisfaction and, more significantly, the motivation is not necessarily shared by those down the line? I also ask the noble Lord to take into account that in the aircraft industry, before the period of public ownership when it was part of a wider industrial complex, there was a history of contraction. There are many who will think that that history of contraction may set in again. Although there is apparently this undertaking which will be required about Airbus Industrie, there is no certainty that a big industrial complex would not squeeze out aircraft projects in the less profitable sectors.
Lord Belstead: My Lords, of course I recognise the interest of the noble Lord, Lord Beswick, and his record in this field, but for the moment I suggest to your Lordships that this is a matter for the companies concerned. It is right to remind your Lordships that the 48 per cent. shareholding was taken by the Government in 1981 because the Government said that it provided a basis for partnership between the public and the private sectors within British Aerospace. However, in the intervening three years British Aerospace, in its present form, has established itself as an internationally competitive, profitable and successful company. This does not necessarily require the Government to own nearly half the shares. It certainly does not require the Government to meddle in the affairs of two very great companies.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that, although he has been congratulated on many sides for making the Statement, there could be a line of thought which would suggest that the Statement is premature? My noble friend obviously had nothing to say. He had to admit that he does not know what it is all about and that many other things have to be produced before any real judgment can be formed. Is there not just a possibility that to encourage parliamentary comment on something that has not yet reached the stage where anyone knows what it is about is likely to be discouraging to possible participants whose aim is to bring about a more efficient organisation for a very important part of our defence production?
Lord Belstead: My Lords, with respect to my noble friend, with whom I practically always entirely agree, there are important issues in this very brief Statement. One is the national interest, on which noble Lords have put their fingers, in the work of these great companies; namely, the question of British control of British Aerospace, which is, of course, written into the articles of association and is preserved by the Government's shareholding. That undertaking remains exactly the same; although if proposals are put forward we shall have to see how best the Government will continue to fulfil that undertaking, which remains absolute. That was one reason for making the Statement.
Another reason is to make it absolutely clear that our participation in the Airbus project continues. Thirdly, and finally—and perhaps this brings me nearer to my noble friend's point—the Secretary of
1422
State for Trade and Industry has a locus in this matter under the Fair Trading Act. I think it was important to lay before both Houses that this is so.
Lord Mulley: My Lords, we are all very much indebted to the noble Lord for making the Statement today because, as he stressed, it is a matter of national importance. That is why I found the contents of the Statement disappointing because it appears as though the Government are viewing it only as a matter of whether or not it is right in terms of the Director-General of Fair Trading. This is a vital industry for the defence of this nation and for our future if we are to stay in the aircraft business. It is that aspect with which we need to concern ourselves. As my noble friends have already explained, this rather odd merger of two concerns which, on the face of it, do not appear to be well aligned, is a source of anxiety. It is not only a question of safeguarding our interest, which in my view is all too small an interest, in the Airbus project, but it is also a vital defence interest. I hope that this is not a follow-up of what we understand is the intention of the Secretary of State for Defence; that is, to put every defence contract out to private tender regardless of security and other matters. It is on that aspect that we need some assurances.
Lord Belstead: My Lords, I do not think that I should follow the noble Lord, Lord Mulley, down all those paths. This is a preliminary Statement by two highly successful and very important firms that they are embarking on exploratory discussions. My right honourable friend the Secretary of State felt that it was right to keep Parliament informed from the point of view of the Government, and that is what we have done today.
Lord Bruce-Gardyne: My Lords, may I seek to reinforce what I detect to be my noble friend's instinct for well-doing in the matter of the Government's shareholding in British Aerospace? In view of the very substantial speculative element in the order book of this company on the civil aviation side, and not least the Airbus project, is there not something to be said for the Government seizing the opportunity, if an offer is made for this company, to unload some of their current shareholding and diminish their risk in the areas of high risk in which British Aerospace is engaged?
Lord Belstead: My Lords, I think I detect a former Treasury Minister behind that question.
Lord Molloy: My Lords, many of us are becoming somewhat perturbed—and this is no reflection whatsoever on the Minister's responsibility—that Statements such as the one he has just read so excellently to this House contain matters of vital importance to our nation and yet we have only 20 minutes of debate. That is a travesty of the principle of parliamentary democracy. In this instance, for example, there should have been a full-scale debate, as the British people themselves are involved. Had this been two private organisations which were being compulsorily amalgamated, rightly there would have been a full-scale debate. Under the same principle, where publicly owned or publicly related organisations

1423
are being hived off or joined to some form of private enterprise, should not the voice of the people, whatever that may be, be given the opportunity of being heard, certainly in this Chamber? Although I understand that the noble Lord has no responsibility for this, will he nevertheless be prepared (as I believe his feelings indicate) to take the feeling of this House back to those in authority, which is that in such instances we should have a much fuller and better form of debate than merely the opportunity to ask questions revolving around a Statement?
Lord Belstead: My Lords, before answering that question, may I make it clear that in my reply to my noble friend Lord Bruce-Gardyne I was not seeking to be unfriendly. Indeed, I think there may very well be something of merit in what he said.
With the greatest respect to the noble Lord, Lord Molloy, I do not think that there is very much in what he suggests. I have had the impression over the past few weeks that your Lordships' House becomes irritated with lengthy Statements, and this is a Statement which, under our procedures, requires questions and answers. When we are talking about a Statement on which there is in fact nothing to debate because there are no proposals and no offer to shareholders put forward, I would have thought, if I may say so, that the length of the proceedings we have had would be just about enough.
Lord Bruce of Donington: My Lords, I want to press the noble Lord on one point further. In view of the remarks he made concerning his attitude towards the Government's holding in British Aerospace, will he give the House an undertaking that he will not proceed to unload any further shares in British Aerospace on the market without first making a Statement to this House and a Statement being made in another place?
Lord Belstead: My Lords, this is hypothesis, and with all friendliness to the noble Lord, Lord Bruce, I think I must rest on what the Statement has already said, which is, in essence, that we must see how we go. If we are talking about a merger, that would first of all fall to be considered by my right honourable friend the Secretary of State under the provisions of the Fair Trading Act. We still have quite a long way down the road to go before anything certain is settled.
Earl De La Warr: My Lords, will my noble friend please take on board how grateful most of us are that he has come so quickly to this House to make this Statement, in spite of the obvious fact that he cannot be expected to have any information yet? We are delighted that he has come here so fast.
Lord Belstead: My Lords, I am most grateful to my noble friend.

Energy: Long-term Strategy
4.3 p.m.
Debate resumed.
Lord Diamond: My Lords, I, too, am most grateful to the noble Lord, Lord Ezra, for having introduced this matter in such a comprehensive way. I am indeed
1424
especially grateful to him because then it justifies, perhaps, my seeking your Lordships' leave to discuss only one narrow point, he having fully and fairly discussed the major issues.
What I want to draw to your Lordships' attention is a proposal which has already been discussed in two oral parliamentary Questions, but the discussion showed that there was no possibility of minds meeting. Perhaps that was the fault of the fact that they were attempts to bring into a discussion under a parliamentary Question an issue which was too large to be accommodated there. It is perhaps more suitable that one should attempt to raise it during a short speech in this debate. The proposal is, against the accepted background of closure of fully uneconomic pits, to repeat what has been a highly successful experiment in the steel industry in similar circumstances.
As I understand it, BSC (Industry) Limited was formed in the 1970s to help create new jobs in areas most affected by the steel closures. Since 1978 it has achieved the following remarkable results. Some 1,250 companies have been helped to start up in these areas; some 19,000 new jobs have been created; and a further 14,000 are forecast by the end of next year. I understand that those are reliable figures; and your Lordships will have added them up and seen that we are talking about a total of 33,000 new jobs in areas affected by steel closures at that time. A comparison immediately comes to mind of areas affected by pit closures. Thirty-three thousand is a substantial number, and in the context of the mining industry is such as to give some hope in an area where very little hope is felt at the moment by those affected. This proposal has been put forward in very short form, and the Government have reacted very unfavourably against it. They say that coal is not the same as steel. Of course it is not, but it is sufficiently similar to merit very careful consideration of whether a true comparison exists.
Then the Government say, "We can rely on the existing services. You do not need to have a separate creation in order to try to achieve the maximum new employment in these affected areas". You could have said just the same with regard to steel. It was not said, and this steel company was formed for that special purpose. It has achieved this remarkable result, and for the very good reason that the existing services were not truly geared to cope with special circumstances of this kind. A new organisation would be likely to bring new enthusiasm to co-ordinate all the existing services and to direct efforts in the correct direction. It would act as catalyst to help, as it did with steel.
A further objection of the Government is that there is no real problem, because any problem resulting from compulsory redundancy in the mining industry is to be met by redundancy payments. I must repeat that we are not talking about an individual's grocery purchases: we are talking about the continuing existence of communities. That is the background in the mining industry. We are talking about people who are concerned about going out to work every day, instead of staring at a blank future of unwanted idleness.
Finally, by implication the Government say that this is an ordinary industrial dispute and they should

1425
leave it to be settled between employer and employee in the ordinary way. Nobody would want the Government to get involved in the detailed negotiations of a dispute of this kind, but it is quite wrong to regard this as an ordinary industrial dispute. First of all, it concerns miners, and there is no need for me to remind a Conservative Government that that takes it out of the definition of "ordinary".
Secondly, the dispute is a great one, and escalates day by day. We are now in a situation where there is a possibility of miners being sent to prison as a result of charges being made against them under the Riot Act. We all know, since the 1939 to 1945 war, how difficult a situation a Government are placed in once they allow striking workers to get involved with imprisonment, and what extraordinary steps the Government have to take to get them out of prison before negotiations can proceed. We do not want that to happen. I understand that a particularly sensitive turn has been given by the arrest of a rather well-known lady only today.
So it is certainly the Government's responsibility to concern themselves with the social consequences of market forces. They believe in market forces and want to leave matters to the market forces but the social consequences are the responsibility of the Government. Also the social consequences of the Government's industrial policies are the Government's responsibility and they cannot turn their backs on those.
Above all, we should recognise that this is a political fight. This is not for the first time. The miners' leadership has rejected the private ballot in favour of the political battle and the Government cannot avoid a political response. Their present stance of withdrawal and seeming to be indifferent to what is happening, is providing Mr. Scargill not only with his platform but with a pedestal as well. The mining communities see no one else taking any care for their long-term future. I must ask the Government what help they are giving to the miners and their wives in Nottinghamshire. They are being spat on by their fellow miners and the Government are merely turning their backs.
The Earl of Avon: My Lords, may I intervene for one moment? Is not the noble Lord aware that these miners in Nottinghamshire want to work? Would the noble Lord not wish them to work?
Lord Diamond: My Lords, I am grateful to the noble Lord for his intervention because it shows that he was listening. Alas, it does not show that he understood. I was making exactly the opposite point. I am saying that the Nottingham miners deserve to be encouraged and the Government are doing nothing but turning their backs on all mining problems and on all miners, whether they come from Nottingham, Derbyshire, Yorkshire or wherever. The Government say that they have nothing to do with it and I am saying that they ought to reconsider. I am grateful to the noble Earl for having advanced that step in his intervention.
I wanted to keep this speech as short as I possibly could. In brief, what I am suggesting is a method whereby the Government can be seen to be showing
1426
proper concern in an area of Government responsibility. It would cost them virtually nothing to try. The noble Earl will correct me if I am wrong, but I understand that the present cost of the police bill in connection with the mining dispute has accumulated to £25 million. It may well be that in relation to the huge figures for proposed redundancy payments, savings could be made there, too, if the matter were handled with care. I can see no reason why an attempt should not be made, why this experiment that has been so successful in steel could not be repeated so far as coal is concerned, and why, at the end of the day, we might not enable the mining villager to say once more, "How green is my valley".
4.12 p.m.
Lord McAlpine of Moffat: My Lords, it is a great privilege to be able to thank the noble Lord, Lord Ezra, for raising this very topical and interesting debate at a time when this subject is so much on our minds, and to be able to listen to such a well-informed summation from a man who has been so closely involved with the problems which are worrying us all today. That is the first joy.
The second joy was to hear a certain amount of praise for my old friend, the AGR reactor. It was nice to hear the noble Earl, Lord Halsbury, so well-informed and so up to date on this subject. There is no doubt at all that it is very, very important that somehow or other we make the right choice of reactor. It saddens me to find that the Department of Energy take the view, "We will leave this decision to the commercial judgment of the CEGB". To my mind, that is unfortunate. That is unwise. It is unfair. If the choice be a wrong one, it could be unforgivable and unforgettable.
I do not like having to make all these "uns" because it sounds rather rude and I should like to explain why I say those things. When I say it is unfortunate, I think it is unfortunate because in this nuclear world you go along a road and it is very difficult to retract. Some years ago the PWR appeared to be the right reactor. We have had more experience of the AGR, which now means that the PWR could well be the wrong one and there is an opportunity of putting it right.
Secondly, I think it is unwise because I think it is a terrible kick in the stomach to one of our greatest professions. Nothing hurts me more than to see two American companies, that is Bechtel and Westinghouse, being employed to design reactors for Britain when we have the finest engineering consultants in the world. The point is that they have done so much for us. When a British consultant is appointed for a foreign country what do they do? They specify everything British. What do you expect an American to do? Will he not specify everything American? To my mind therefore that is a terrible danger with the PWR.
The next point concerns a matter of safety. We have all been rather hypnotised with the French effort. But I think the Edwardians discovered that if they went to France they found a moral laxity that enabled them to enjoy themselves in a way that would have been frowned upon in London. It is exactly the same with nuclear power. When our safety gentlemen have

1427
finished, you will probably find a completely different set of figures, and it is right that it should be that way. So that is why I am rude enough to say that it is an unwise decision.
Then I will go on and tell you why I think it is an unfair decision. I think in the light of so much new and recent knowledge, it is very unfair that the CEGB should be put in the position of being responsible for having to make a U-turn. They have been responsible for spending £200 million of our money—and goodness knows what the commitments are! There are very good reasons now why they must make a U-turn and it is unfortunate that the department should abdicate their responsibilities in favour of a nationalised industry. That is nearly all I have to say but I will mention the other two points. If by chance the wrong decision is made, it will be unforgivable and it will also never be forgotten.
There is just one slight technical point which is very important and is not known to the lay mind. If something goes wrong with the PWR there is very little warning given and, for safety purposes very little time to correct the fault. If something goes wrong with an AGR, I am told that having received the initial warning they have then something like 48 hours in which to put things right. To my mind that is very, very important. So I would beg of your Lordships to do all you can to persuade the department to take a new look at this because things have changed. As things change, we must change our views and our policies.
4.18 p.m.
Lord Harris of High Cross: My Lords, I particularly congratulate the noble Lord, Lord McAlpine of Moffat, for making his points with such commendable brevity. It allows me to say, at the outset of my contribution, that I think this is just the kind of debate to which my noble friend Lord Robbins would have made his usual wise and weighty contribution from these Cross-Benches. I have to tell your Lordships that I have just heard of his death this morning after a severe stroke two years ago. I am sure that all who knew him will agree that we will miss him grievously, both as a warm friend and a wise counsellor. He has served this House and many other institutions with rare, I would say incomparable, distinction. I know we would all wish to join in sending our heartfelt sympathy to his widow and family.
Noble Lords: Hear, hear.
Lord Harris of High Cross: We must all have been impressed by the wide-ranging opening speech by the noble Lord, Lord Ezra. Like some other orations from the Liberal Benches, I found myself wondering what link it had with the fundamental principles of the Liberal philosophy. I shall try to remedy this deficiency by warning against pinning too high hopes on a long-term energy strategy. The noble Lord displayed a wide knowledge gained from a lifetime of some 35 years in the coal industry. I hope, however, that he will bear in mind that a lot of knowledge can be a dangerous thing, unless informed by constant humility about the changing variables that can never be known in advance.
1428
The complaint might be made that we have suffered by not having a long-term energy strategy over recent decades. Yet the question that I want to pose is: who could have foreseen the dramatic transformation of supply and demand in the United Kingdom and indeed in the world energy market? In 1960 coal represented almost 100 per cent. of British fuel production and we relied for some 30 per cent. of our consumption on imported oil. By 1973, despite the eruption of natural gas, we relied on imports for half of our then substantially increased consumption. When we come to 1982 we find that, with North Sea oil in full spate, we produced a surplus of fuel to export while coal accounted for no more than a third of our total production. Could any long-term fuel strategy have predicted such far-reaching changes?
If we have survived without too much difficulty, it is thanks chiefly to the adaptation of production and consumption to price adjustments in the market—a market, I may say, made more imperfect by Government obstructions and intervention. Allowing for the long time lags for producers and consumers to adjust their supply and demand from one fuel to another, is it not astonishing that we have avoided disaster without the noble Lord's strategy? Indeed, at intervals since 1973, the only disruption has been caused or threatened by the coal industry which, as I shall try to argue, has suffered from the handicap of a long-term plan.
The folly of the Plan for Coal, as with all similar political aspirations, is that it was an example of physical planning without too much regard for changing prices. I recall the noble Lord, Lord Molloy, in our debate last week on unemployment urging Government planning on the analogy of private enterprise companies which, as all of us know, may plan for five or 10 years ahead. But competitive planning by separate companies is quite a different matter from centralised government planning. No company pretends to plan for the whole industry, and it certainly does not inscribe its targets on tablets of stone.
All business planning is tentative and conditional upon changes in the market place. Each firm estimates the future market and its likely share, but then stands ready to adapt to unexpected changes. Competition provides a perpetual feedback on movements in relative prices reflecting substitution of new sources of supply. If things turn out worse than expected, enterprising businessmen are ready to lower their price to sell their present production, and to cut back their plans for the future.
National or corporatist planning stands in the sharpest contrast. For a start, it will always include a large dash of political expediency. Its targets will often smack more of hopes than of practical realities. Secondly, government plans are cast in terms of physical quantities that extrapolate forward from past experience in a way which has been compared with trying to steer a boat by looking backwards at the wake. Thirdly, once Government have set their seal on a plan, it takes on a life of its own and becomes highly rigid. It is then likely to be persisted in long after the assumptions on which it was based have been falsified by changing circumstances. Above all, official plans or

1429
strategies give hostages to fortune. They raise expectations among favoured interests and so provide a breeding ground for bitterness when the expectations are not fulfilled.
So we come to the Plan for Coal. By far the best obituary was written by Professor Colin Robinson and his colleague, Eileen Marshall, in their evidence to the recent Select Committee on European Coal Policy. They pointed out that the past decade,
"should have provided a favourable environment for the British coal industry".
In 1973 the Arab oil cartel handed coal a massive competitive advantage. So the plan in 1974 projected an optimistic target, centred on production of 135 million tonnes for 1985 and based on a Government commitment to a large-scale investment programme. Success of this plan depended upon a 4 per cent. annual increase in average output per man to be achieved in part by closing down high-cost pits and opening up new, lower-cost capacity. Despite Mr. Scargill's Marxist-Leninist mathematics, the investment of £7,000 million is the only part of the plan to have been fulfilled. Output per man, assisted by the bonus scheme and the 1979 tax cuts, has increased by an annual average of nearer one per cent. than the promised 4 per cent., largely because the closure of high-cost pits lagged behind the programme until Sir Norman Siddall's surgery last year.
Behind Mr. Scargill's inflammatory and ideological rhetoric lies the damning truth that British deep-mined coal, at £46 a tonne after subsidies, costs twice or three times as much as the best achieved in the United States or Australia. But the paradox is that by protecting British coal against imports and by raising subsidies, governments have weakened the very competitive pressures that would have made for greater efficiency. They have thereby enabled the National Union of Mineworkers to keep pushing average costs up much faster than the cost of living index. In short, the Plan for Coal inflated the monopoly power of Mr. Scargill and of his predecessor to obstruct adaptation to market changes, to milk the taxpayer and to impose higher prices on consumers, including housewives, industry and the captive Central Electricity Generating Board.
I believe that our best strategy is to get markets to operate more freely and more flexibly. As the National Coal Board's outstanding marketing director, Malcolm Edwards, never tires of repeating, the best way to check imports, to stop more nuclear power stations, and to speed conversion from oil in industry and electricity generating, is to produce a dependable supply of British coal at £30 to £35 a tonne. That simply means a lot less coal produced at £50 to £80 a tonne, which now requires the public to pour in capital and current subsidies which are equivalent to approaching £150 a week for every miner in the industry.
I share the view expressed by other noble Lords that there is great hope for the future of British coal. But it is a great hope that can be fulfilled only if the price of coal is made competitive and customers can rely on an uninterrupted supply, without the costly insurance policy of massive stocks or keeping alternative
1430
capacity in reserve. There is no future for British coal under Mr. Scargill's political programme of high costs and unreliable delivery.
For the good of coal miners and their customers, our strategy should be to break up the present politicised monopoly, phase out the subsidies and find ways of giving workers a personal equity in the success of their own efforts. As a first step towards such a competitive strategy, I want to offer to the Minister a simple proposal. It is that the Government should repeal Section 1(1)(a) of the 1946 nationalisation Act which gave the National Coal Board the exclusive power to work all new discoveries of coal found in Great Britain. I believe we would soon find that there is nothing like competition, even the threat of competition, to galvanise a monopoly into greater efficiency.
4.29 p.m.
The Duke of Portland: My Lords, in the United Kingdom and the United States nuclear power has suffered in recent months from a spell of bad publicity. In the United Kingdom we have had misfortunes at Sellafield, and in the United States it has been lack of funds for the completion of nuclear plants and the discovery of faults in the construction of some reactors. However, elsewhere nuclear plants are in general operating satisfactorily.
In the United Kingdom nuclear power currently produces 18 per cent. of our electricity. When Dungeness B, Heysham and Hartlepool are fully commissioned, which should take place within a year, the nuclear contribution will exceed 20 per cent. Unfortunately, the satisfactory operation of nuclear power stations is not news and consequently is of little interest to the media, while any nuclear incident, however small, can form the basis for horror tales as to what might have happened which will sell the paper and assist the ratings of the television stations.
In the United Kingdom nuclear power has shown itself to be cheaper than coal, and this experience has been matched throughout Europe. Therefore, it is hard to understand why we have to obtain 80 per cent. of our electric power from power stations fired with coal for which the Central Electricity Board have to pay a higher price than if they were free to purchase coal from overseas. This increases the cost of electricity and thus handicaps our industry when competing in foreign markets. Moreover, so long as we obtain such a preponderant proportion of our energy from one source we remain at the mercy of that source.
Surely it is high time, quietly but steadily, to begin to make a change. Let us commence this operation with the long-term energy strategy for the United Kingdom so ably advocated by the noble Lord, Lord Ezra. Let us decide that for the present we will construct no more coal-fired power stations until these are competitive with nuclear power. Instead, let us follow the example of France, Germany and other countries and let us be masters in our own house so that we are no longer hearing the effrontery of a minority who threaten to overthrow our Government and compel us to change our mode of life. Let us begin by offering public opinion a really authoritative assessment of the safety and environmental risks of

1431
nuclear power compared with the corresponding risks from other forms of energy. The French, Germans, Belgians and Swiss and other European nations are not foolish people and have not taken the nuclear road without the most careful consideration of all aspects—safety, health, environmental and, above all, financial.
It will be said that this change will inflict unbearable hardship on the mining communities, but this hardship can be alleviated by financial subsidies until these communities can find suitable employment, as has happened in France and Belgium and to some extent in Germany. Surely it will be preferable to make such payments, which will be required for only a limited number of years, than to continue to pour money down mines which are unable to produce coal on a competitive basis. It may also be said that this would not be necessary if the import of foreign coal into the European Community were prohibited. I submit to your Lordships that anyone who can believe that the French, Germans, Belgians and other members of the Community will allow themselves to be forced to purchase coal from the United Kingdom at £40 a tonne when they can obtain coal from outside the Community at less than £35 a tonne is living in cloud-cuckoo-land.
4.35 p.m.
Viscount Hanworth: My Lords, today I propose to speak in the main about combined heat and power (abbreviated as CHP) as it concerns district heating, using our national power stations as a source of energy. I think it may be helpful to give a brief explanation of what this means. Because of fundamental physical laws, at present our best steam power stations, whether coal, oil or nuclear, are approaching only 38 per cent. efficiency in generating electricity. About 50 per cent. of the energy put into the steam boilers appears as waste heat in the cooling water used to condense the steam after it has passed through the turbines.
For maximum efficiency of electrical generation the temperature of the cooling water containing this 50 per cent. of wasted energy should be as low as possible. Therefore the cooling water is directly useful only for heating greenhouses, fish farming and similar applications. However, at the expense of somewhat reducing the amount of electricity generated, the temperature of the cooling water can be taken or raised to a useful temperature for district heating. For those interested in figures, the loss in electrical output is between one-fifth and one-tenth of the hot water provided. In this comparison I am speaking in energy terms.
Looking at the overall energy balance sheet, efficiencies of up to 80 per cent. can thus be obtained. With gas turbines and diesels the waste heat appears in the exhaust gases, which are at a useful temperature. But the efficiency, cost of generating electricity and other factors tend to balance the advantage, except for some industrial applications. A CHP scheme using waste heat from one of our power stations should be able, on a marginal costing, to provide energy at one-quarter or less of the cheapest alternative available to consumers. But marginal costing does not take into account the interest on the capital expended in
1432
bringing a scheme into operation. Nevertheless, the potential of CHP is exciting.
Such schemes were fully considered in the Atkins Report. They gave an estimated possible saving of 40 million tonnes of coal equivalent a year. The difficulties are the high capital cost of implementing any scheme, the delay in bringing it into full operation and the numbers of people or other users willing to change over to a new method of heating. These problems were much less serious on the continent and in Scandinavian countries because they already had district heating networks to which a power station could be connected, and of course they do not apply to green field sites.
At the Government's request, Atkins Partners have carried out a detailed survey of nine cities as possible sites for a lead-type CHP scheme. They have concluded that all the cities could provide a return on capital of between 5 per cent. and 12 per cent. The lower figure is the Government's minimum requirement for new investment by nationalised industries.
Very recently the Government issued a statement supporting the concept of using CEGB power stations to provide heat for district heating of cities. They are willing to provide three-quarters of a million pounds for studies into the financial viability of schemes in up to three cities, but the financing of any scheme would have to be by private investment. The major problem in making any new scheme financially viable is the necessarily slow build-up before it can begin to pay acceptable interest on capital invested. There is also a considerable risk that an insufficient number of potential users will decide to change over to district heating to make the connection to a power station economic. However, even if they did not do so the system could still be operated as a normal district heating scheme.
Although no detailed planning is available as regards how a CHP city scheme would be built up, it is likely to be in two main phases. First, some heat mains would be laid in parts of the city and connections made to houses and other buildings. A survey has indicated that a reduction of 10 per cent. in heating costs would probably be sufficient to persuade the majority of users to make the change. During this stage the heat would be supplied by conventional boilers. Inevitably, the build-up will last several years before the point is reached at which the heat load justifies connection to the power station.
The second stage would consist of laying several miles of heat mains from the power station; adapting the steam turbines; and probably providing some hot water storage and possibly back-up boilers, if those in use for the stage 1 system are unsuitable. The costs of all this are very substantial, and certainly not less than £100 million.
With the need to restrict capital expenditure, I do not at this moment criticise the Government's decision to try to finance projects from the private sector. However, this may not prove possible, and, in fairness to the needs of future generations, the Government must, if necessary, finance CHP or one of the other major energy options such as the Severn barrage scheme or a demonstration fast reactor.
We should, of course, continue funding other

1433
smaller alternative energy options—wind, solar power, geothermal, biomass and so on. But none of those requires major capital expenditure at present, and if any of them are brought into general use the expenditure could be in small instalments. With the uncertainties of nuclear fusion, I am afraid that it cannot be considered as a factor in future planning.
In favour of CHP—even if investment has to be made by the Government—are the following advantages. First, it can give real and substantial energy savings, and could avoid buying, for example, gas as our own supplies diminish. Secondly, it uses known technology. The continent has all the necessary experience. Thirdly, it would provide employment in urban areas. Fourthly, it is in the consumer interest, as it should reduce fuel bills. Finally, for those concerned with environmental issues, it could greatly help because we could get heat without increasing pollution.
4.44 p.m.
Lord Energlyn: My Lords, we have been talking about conventional methods of producing electrical energy by means of converting water into steam. No matter whether we use solid fuel, liquid fuel or nuclear fuel, we are still converting water into steam. Even though the noble Earl. Lord Halsbury, has proved quite conclusively the merits of using nuclear fuel in terms of units of electricity costs, the output of electricity from all these generators is determined by the steam turbine. The steam turbine is only about half as efficient as a water turbine. Therefore, in looking to the future I am so pleased that the noble Lord, Lord McAlpine, is present, because his firm has, indeed, been responsible for very large developments in the creation of hydro-electricity, and I venture to add that it will be equally great in the provision of electrical energy from the noble Lord's rather lovely windmills.
However, I return to the issue raised by the noble Lord, Lord Ezra, to whom we are all so grateful. I should like to suggest that perhaps we might address ourselves for a few moments, not so much to the production of energy, because that is reasonably easy, but rather to the utilisation of energy. What are we going to use it for? Let us, for example, take the lesson that we learnt in the war. Suddenly we were unable to import any iron ore. We were driven to use home ore, which contained, on average, only about 28 per cent. to 30 per cent. available iron. Yet we won the war on that iron ore. There is still 100 years of supply of these bedded iron stones running through the Midland belt of England, and they can be mined at very low rates. Incidentally, we have one of the largest draglines in the world operating on them. It is a magnifient piece of British engineering, about which very few people know. But if we could return to the smelting of low grade iron ore, it would cut the imports of iron ore into this country, and that would lead to a very substantial reduction in the overhead price of iron and steel.
The reason why we do not use low grade iron ore is that it consumes too much coal. But if we convert our iron and steel furnaces into electric arc smelters, we would no longer need coal to smelt iron ore and, indeed, we would not be in the impasse that we are at the moment, where these furnaces are in danger because they cannot be kept hot. We can turn on an
1434
electric arc smelter willy-nilly and create the iron and steel that we require. Moreover, we can create iron and steel with a higher degree of purity than we can from a converter furnace.
The interesting aspect is that the technology now exists for adding to these low grade iron ores; and, indeed, low grade iron ores are preferable, for my concept, to high grade iron ores because low grade iron ores contain a large number of other metals, not least aluminium. Having taken the iron out by means of suitable organic fluxes and electric arc smelting, the liquid then flows through electrodes which take out the aluminium. So we have a source of aluminium. Then the larva goes on further into another set of electrodes which take out the magnesium. It still goes on, and then it takes out the prize metal of the future: silicon. That is the only way in which we can produce silicon in any large quantities. After that, the residue of larva is poured into a pond and we have the perfect fertilizer. So nothing is wasted; we have a metals factory. I venture to suggest that by following that course, we will see the re-birth of Llanwern, Corby and Scunthorpe as centres, not of iron and steel but of metal production.
Having said all that, you must, of course, knock me flat by saying, "Have we got enough cheap electricity?" I should like to return for a moment to the production of electricity from coal. As I said earlier, we can get only a certain amount of electricity out of a steam turbine. But if we convert coal into hot coal gas we can pass that into a magnetic field and place two electrodes in it and abstract direct current. It is known as magneto-hydrodynamics. This has always been a dream and a nice laboratory experiment to show students, but now it is a reality. I have seen a pilot plant in Sydney, where Professor Messerle has demonstrated its potentialities. He tells me that there is a 500-megawatt station about to be commissioned outside Moscow, and in America there are a number of similar developments.
Therefore, instead of using our coal for smelting iron and steel we use our coal to produce coal gas, from which we produce direct current. It is direct current that you need to drive an arc smelter, not alternating current, so you cut out the cost of conversion. I would suggest and recommend that here is a use for coal which is in the pipeline, as it were. Talking about pipelines, there are also the dramatic experiments with which I am in contact in Australia, where some of my ex-students have shown that if you pour coal powder on to a hot bed you distil oil by flush distillation direct into heavy petroleum. Therefore, you have a new arena of uses for coal directed towards its viability.
We then come to a factor which is never talked about much, and that is transport. Transport is one of the biggest on-costs which the National Coal Board has had to face in its distribution of coal. If coal is reduced in particle size until it becomes a coal slurry, then it can be transported as easily as any oil anywhere, or pumped into ships, and so on.
Having got the coal down to that particle size it is now in the size and range which von Diesel could never attain when he invented the diesel engine. His first fuel was powdered coal, but it did not work because the powder was too coarse and it wore out the

1435
pistons. Therefore, he turned to oil, and that is how diesel oil was born. We have the techniques now for reducing particles of coal down to microbes where they become explosive in their thermal potentialities, and so you have a fuel which you could put into what one might call a diesel engine and create electricity, not by boiling water but by driving coal diesel engines which you can turn on and turn off at will.
Having said that, I should like to return to something that is nearest my heart, and that is renewable sources of energy—Lord McAlpine's windmills and water storage turbines. I have been carrying out a desk exercise for many years in Norway. There we can prove that by tapping the melt waters of the permanent ice-cap in Norway—I see the noble Earl looking at me; I know how receptive he is to new ideas, and this one is for the formation of an Anglo-Norwegian hydro-electric company—and with 200 power lines across the North Sea, we could fill the grid, as it is at the moment, for ever.
4.53 p.m.
Lord Winstanley: My Lords, I am sure that noble Lords will agree with me when I say that my noble friend Lord Ezra dealt with this important subject not only extremely comprehensively but also succinctly in what I am sure noble Lords will agree was an admirable speech. Other noble Lords have added important points, and some have developed themes parallel to those pursued by my noble friend. There is thus little left to say.
I have no wish to join the noble Lord, Lord Campbell of Croy—much though I enjoyed his speech, with which I agreed—in the guessing game about how long our different sources of energy will last. All I would say on that score is that our resources are clearly finite. Sooner or later they will run out. That means that we have a duty to husband and cherish what we have, and to use our energy without waste so as to provide the maximum time in which to pioneer and develop alternative sources of energy. This was referred to by the noble Lord, Lord Energlyn, with other ways of saving energy, and also by my noble friend Lord Hanworth.
I take the view that, given something like 50 years—and we have much more than 50 years if we accept that our coal supplies will certainly last us for 300 years, if not more—of adequate investment and effort, that could produce results with wind, wave, and solar power, and even with schemes like the Severn barrage, or the development of pump storage schemes like that at Dinorwic, which could perhaps solve our problems. But there might still then be a gap which might, and indeed probably will, have to be filled by nuclear power. I shall return to that briefly in a moment.
First, I should like to refer to one or two matters in which I have some direct personal experience, and these are matters which have not yet been raised in this debate. I practised medicine as a general practitioner for many years, largely in a mining area. Many of my patients were miners, or they were the dependants or families of miners. I also worked as a surgeon in a hospital in the middle of a mining area.
1436
From my medical experience there I was able to see the health hazards of coal mining at first hand. I had to deal with them at first hand, with all the conditions about which we know so much: osteo-arthritis; beat knee; miner's nystagmus; pneumoconiosis; and all the other various conditions from which miners suffer. My observations and professional experiences have convinced me beyond any doubt at all that these health hazards arise in the main, if not almost exclusively, in the old, worked-out and inefficient pits. In other words, the dangers to the health of the miners arise in the very pits which Arthur Scargill is now fighting to keep open.
That seems to be something of a melancholy contradiction, but there really is clear evidence that the health hazards are minimal in the new and highly productive pits, in which, incidentally, the miners' earnings are also maximal. That comes not only from my own evidence, which is direct evidence from personal professional experience, but the figures produced by the Department of Health and Social Security regarding sick absence and morbidity among different sections of the community. They show clearly that the morbidity incidence in mining communities close to old, worked-out pits is immeasurably higher than in those communities in which people are involved substantially in the more efficient and more productive pits. In addition, there have been studies carried out under the auspices of the Royal College of General Practitioners which have confirmed those facts.
All that should surely mean that at least from the point of view of the health and safety of the miners, and probably also for economic reasons, we should now be closing down the uneconomic pits and opening up new pits in productive and profitable areas. The Government may say that that is exactly what the National Coal Board is trying to do. If so, why this present dispute? Not a lot has yet been said about the dispute, though it was mentioned by my noble friend Lord Diamond, but I think there is no doubt that the dispute has arisen largely as a result of the lack of clarity of the message which has gone out from Government sources with regard to their future intentions.
Here I perhaps could resume the brief argument which took place between my noble friend Lord Diamond and the noble Earl, Lord Avon. If the Government had expressed their intentions with regard to nuclear power, for example, with the clarity with which the noble Earl, Lord Halsbury, expressed what ought to be the Government's intentions with regard to nuclear power—had we had that kind of message with that kind of clarity—or if, in addition, we had had the other message suggested by my noble friend Lord Diamond about the development of new industries in old mining areas in a way comparable to that in which new industries have been developed in the old steel towns, if those two messages had been going out in a clear form from Government, I think it would have been impossible for people like Mr. Scargill to exploit the understandable fears of miners in the way in which those fears are now being exploited. Surely the ultimate answer is that we want the old inefficient pits closed down, certainly for the health of the miners.

1437
I say that not just as a doctor but as a person who comes from a family connected with mining. My eldest uncle was in charge of the Prince of Wales Miners' Relief Fund in about 1930. He saw much of the health or ill health of the miners in those days. My great grand-father was one of the leading, if not the first, consulting mining engineers in Britain and since that time my family have either become doctors or involved in mining. The two professions are not without some kind of connection. We should think about the health hazards. From that point of view we should be closing down the uneconomic pits, but at the same time expanding mining in the more productive areas where the earnings are higher and the health hazards are much fewer.
There has been a tendency for the Government to appear to be relying, perhaps to an excessive extent at the moment, on nuclear power. I am not saying we should not have nuclear power, because I very much take the view that was expressed by the noble Earl, Lord Halsbury, but had the message been clearer—in other words, had there been a clear energy strategy such as is now being called for by my noble friend Lord Ezra—then I do not think we would have had the recent dispute and I do not think it would have been possible for those who have sought to exploit the fears of miners to have done so.
I will say no more, but I hope that at the end of this debate we shall hear something about a clear strategy. I will say no more about the dispute, save that I hope that it is soon over. Like other noble Lords, I should like to extend my sympathy to the police for the difficult work they are doing; work which they sometimes find almost as distasteful as having to molest some of the good ladies of Greenham Common—but that is a separate matter entirely. I also join with the Chief Constable of Nottingham in expressing my personal sympathy to the miners of Nottingham who at the moment are having to put up with intolerable provocations merely because of their demand for the democratic procedure of a ballot, which I hope in the fullness of time they will have.
5.2 p.m.
Lord Stoddart of Swindon: My Lords, I, too, should like to congratulate the noble Lord, Lord Ezra, on introducing this short debate today. I must confess that when I heard that he was to introduce this Motion in a two and a half hour debate I wondered whether the House would have sufficient time to deal with this great subject, but I have been very pleasantly surprised that we have had excellent contributions and the debate we have had has been very well balanced indeed. It has been intriguing in many senses. We almost reached a consensus about the need for a long-term strategy on energy. That consensus, I think, was a little dented when the noble Lord, Lord Harris of High Cross, came in followed by the noble Duke, the Duke of Portland. Nevertheless, we have reached a measure of consensus which is good and which bodes well, I hope, for the future of our energy industries.
The noble Lord, Lord Ezra, who is an expert in energy matters—not only in coal; his experience ranges wider than that—set the scene and in some respects left very little for the rest of us to say because he covered the subject so well. Nevertheless, there are
1438
some things to be tied up. Indeed, it is necessary for me to put my own party's point of view on the need for a long-term energy strategy. Indeed, there is a crying need for a long-term energy strategy. We have for too long dealt with the subject piecemeal. We have suffered too many crises of very great note which have done damage not only to the energy industries themselves but to the economy of the country as well. For example, our failure to recognise and realise exactly what the advent of North Sea oil would do has caused great damage to much of our manufacturing industry. This was touched upon by the noble Lord, Lord Ezra, when he opened the debate.
By not using those oil revenues to the full we have lost, or at least nearly lost, the opportunity for rebuilding our manufacturing base, which in the long run will ensure a good and prosperous future for this country. Instead we have allowed the benefits of North Sea oil to be used to finance large-scale mass unemployment and also to invest about £18,000 million abroad (according to the Chancellor of the Exchequer) since 1979, creating jobs in other countries when we needed the jobs in this country. Therefore we have, to a very large extent, lost the opportunity that North Sea oil gave us from 1980 onwards.
There is still some time left to repair the position because we are still likely to remain self-sufficient in oil until 1995. It is true, as the noble Lord, Lord Campbell of Croy, said, that North Sea oil will not suddenly run out. It will peak next year or the year after. On present estimates we shall lose self-sufficiency by 1995, and from then on it will be downhill all the way.
We still have a breathing space to ensure that North Sea oil revenues are used for the benefit of creating new jobs, new industries, and repairing old industries in the United Kingdom. Indeed, warnings have been given many times in this place, in another place and in the country that as the benefits of North Sea oil run out so we shall run into dreadful balance-of-payments problems.
The noble Lord, Lord Ezra, produced figures during a previous debate to show that we were now running in awful deficit in manufacturing goods throughout the world. In the EEC last year alone our deficit in manufactured goods was £8,000 million. Unless we replace the amount of overseas earnings that we gain from exporting North Sea oil and the amounts we save by being a net producer of oil, within the next few years we face a catastrophe. We ought to understand that and the Government ought to be planning for the time when we meet and have to face these balance-of-payments difficulties.
Britain has the advantage, as the noble Lord, Lord Ezra, and many other noble Lords have said, of considerable energy resources. We have coal for hundreds of years. We have oil self-sufficiency until 1995–10 years hence. We have gas which will last into the next century, particularly if reserves are extended by imports from places such as Sleipner. But it is essential that we plan the use of these reserves together so that we get the best from them for the longest period of time possible, and to slot into these reserves a nuclear power programme which is suitable to this country.

1439
Furthermore, it will be necessary—and we need to do a good deal more work on this—to engage in energy conservation. Any money invested in energy conservation is a bonus to the nation's reserves. It is a bonus to people's heating needs and, what is more, it pays for itself. It pays for itself in money terms and in better heating-standard terms and it could enable a regeneration of work in this country and assist in getting some of those 3 million people who are now on the dole back to useful work. It is not only necessary to spend more on research and development on renewables but also essential to start using renewable resources—and, to date, we have done hardly anything at all (except to start building one windmill) in actually getting renewable sources at work. So we need not only to spend more money on research into renewables but we need to install renewable energy in place.
The noble Viscount, Lord Hanworth, mentioned CHP, and I support him. I have been a supporter of CHP over a very long period of time because it will enable this country, in many instances anyway, to get twice as much power from the fuel put in as it does at the present time. When we have a power station at the present time to produce only electrical energy, we find that we are getting an overall efficiency of only 35 per cent.; whereas, if we used CHP, as the noble Viscount has told us, we could get overall efficiencies of up to 80 per cent. It is worth getting on with projects of this sort because of the energy savings and, again, because in places like Belfast, Liverpool and Glasgow, where unemployment rates are high, we could get people doing useful work building a new infrastructure service.
We cannot (as was suggested, I think, by the noble Lord, Lord Harris of High Cross) simply leave energy planning to the caprice of the free market. It simply cannot be done. The finite nature and long lead-time of development make fossil fuels unsuitable to leave to the free play of market forces. In the case of oil, the flow can be cut off almost overnight by the oil-rich nations. If they should have political difficulties, then, as we saw in 197 3, the price could suddenly go through the roof—and not only our own economy but the economy of the world as well. Have we not yet learned the lessons of the 1960s?—when, through lack of foresight and planning, we closed down coal mines which still had good, recoverable reserves and instead built oil-powered stations which now stand as a monument to crass stupidity, lack of foresight and lack of proper energy planning.
Therefore, it is necessary to have a long-range plan. It is no use thinking that the free market can deal with our energy problems over the long term—and they must be dealt with over the long term. In any energy plan, coal must and will remain the base fuel. There is simply no other possibility available, since energy demands cannot be met now or in the future without a large coal component; and the higher that component can be, the more effective and efficient will be our management of total energy reserves. That is something that we must all understand, and I hope that the Government will understand it. We have coal reserves adequate for our own needs and, indeed, a healthy surplus for exports at least until the 24th century. Over the next few years, it is likely to be an
1440
increasingly cheap energy and fuel source in relation to other fossil fuels—even, in my view, with nuclear energy; that is, where all the costs of nuclear energy are taken into account.
Coal needs an expansionary future. The short-term difficulties which are now being experienced must not be allowed to detract from the main aim; that is, a large coal industry to meet our own needs and an exportable surplus to make up the loss of oil exports which will occur in the not too distant future. Of course, the coal industry has to be efficient and competitive. We all agree with that. The problems which we have at the present time and the problems of getting the coal industry efficient must be dealt with and handled sensitively. The future of the coal industry can be assured only if all concerned recognise that their own interests and those of the coal industry, as well as the total national energy interest, are all bound up together.
All these interests will be best served through co-operation, understanding and good relationships rather than through confrontation, recriminations and and mistrust. It is possible to get that understanding and co-operation and I sincerely hope that the Government will bend their minds to that as soon as they possibly can. I believe that this House wants them to do so, that Parliament as a whole wants them do do so, and, indeed, that the nation as a whole wants them to do so. And the sooner we can solve the present problems in the coal industry and get down to real planning, the better it will be.
Although, my Lords, I have run over my time, we do have a little in hand and before I sit down I should like to say a word about nuclear energy. I think it was the noble Earl, Lord Halsbury, who said that proper thought had not been given to nuclear energy problems. I welcomed what he said. There was so much sound sense in it. I hope that the Government, if they will not listen to the Select Committee on Nationalised Industries, if they will not listen to other people and if they will not listen to people like me, will listen to what the noble Earl has said—because he was absolutely right.
The PWR has got itself bogged down into a never-ending, expensive inquiry. Indeed, had we not decided to change, had we decided just when the AGR was coming into its own to go ahead with an AGR programme, we should not have had any inquiry. We should have been building an AGR at Sizewell instead of having this inquiry. I hope that the Government will take note of what has been said. I believe that the PWR is not a suitable reactor for introduction into this country, for the reasons stated by the Select Committee in their most recent report, and because I, certainly, believe that there are dangers inherent in that type of reactor.
I think that the Government ought now to rethink their nuclear strategy in its entirety, not only to decide whether they will go ahead with the PWR, but to decide whether they need a new nuclear power station before the fast breeder reactor comes on stream—and that is possible by the end of the century. In the meantime, they really ought to be considering meeting their additional energy needs by refurbishing coal-powered stations.

1441
Let me say this, finally. I wonder whether the Government themselves, bearing in mind the quarrels that take place between the Treasury, the Department of Energy and other energy-using departments, can plan energy alone. I wonder whether it is possible for the Government to do it alone. Do they need some assistance from outside? Would it be right to set up an Energy Commission which would bring in all the energy interests and all the expertise that is available to assist them? I believe that that may be very helpful indeed towards obtaining a long-term energy strategy and I sincerely hope that the noble Earl, Lord Avon, when he comes to reply, will be able to say that he will take that possibility on board.
5.20 p.m.
The Parliamentary Under-Secretary of State, Department of Energy (The Earl of Avon): My Lords, I join the whole House in expressing gratitude to the noble Lord, Lord Ezra, for initiating this debate. I have it down in the margin here to say how succinct was his speech, but the trouble is that, as I am speaking last, the noble Lord, Lord Winstanley, has already taken that remark from my lips. It certainly took us to the broad issues in a very brief space of time. I find the problem in these debates is that we have talks on energy renewables, talks on oil, and talks on nuclear power, talks on CHP and talks on the diesel engine, all of which I should very much like to take up as a whole debate, and really to deal with each effectively in a short debate is a great difficulty.
Before I open my remarks I should just like to pay my tribute to the noble Lord, Lord Robbins. I was sorry to hear of his death and I should like to join in the tributes that have been made.
I should like to begin my remarks by referring to coal, first because of its special combination of long-term opportunity with short-term difficulty and, secondly, because the noble Lord, Lord Ezra, has given a substantial part of his speech to this subject and, of course, an even larger part of his career to the coal industry.
Every government is necessarily concerned to create the conditions in which the industry can be fully and economically developed. These conditions require continuing modernisation of the coal industry, investment in new economic capacity as well as withdrawal of capacity which has become uneconomic. This is the essential meaning of the Plan for Coal which the noble Lord, Lord Ezra, and his board prepared with the noble Lord, Lord Gormley—I was pleased to see the noble Lord here earlier today—under a Conservative administration. It was their response to the oil price shock in 1974.
I believe that this Government more than any government in history have been willing to back their belief in the future of the coal industry with money and investment in modernisation. The figures are enormous. Between 1979 and 1984 we invested £3·9 billion in coal; over the next four years about a further £3 billion is likely to be invested—and yet the Government and the NCB are accused of intending to destroy the coal industry. The noble Lord, Lord Ezra, will be aware of the sums during his tenure and
1442
acknowledge the increase now. Investment was the Government's commitment to the Plan for Coal. It was and is being more than met, as the noble Lord, Lord Harris of High Cross, touched on. Two other key factors—productivity and closures—have not been met. It is not the Government who have failed the industry.
Modernisation means change, but the National Coal Board and the Government are united in seeking to protect individual miners from hardship. The House should consider, I believe, what has been done. First, there is a high pay offer on the cards. The offer made last November would give face workers about £185 a week, and keep average earnings in the coal industry above average earnings in manufacturing industry. Since the offer was made last November, gas and power workers have settled, without industrial action, for similar or smaller amounts. Secondly, there are most generous terms for transfer, and also for voluntary redundancy. Thirdly, not one single miner has been made compulsorily redundant. As many noble Lords have said, high cost uneconomic capacity, with no future, is a burden on the whole industry; it is to the advantage of everyone in that industry that it should be eliminated.
There is no future for the industry if coal cannot be sold. The impact of the strike on markets has been nothing less than tragic. Confidence of existing suppliers has been undermined. The crucial task of securing new long-term customers for coal has been brought almost to a stop. For example, there were 78 applications last December for aid to converting boilers to coal under the Coal Firing Scheme; in March there were only two. The noble Lord, Lord Ezra, will, I am sure, agree with me that marketing—in which he is much experienced and to which he continues to lend his expertise—is a key to the future of coal. There is a real potential for its future and at the moment it is being damaged and harmed.
The noble Lord, Lord Ezra, and the noble Lord, Lord Winstanley, asked specifically: what is the Government's plan for coal? Our aim is a future secured by a massive investment programme designed to produce coal at a price at which customers at home and abroad will increasingly buy. An industry productive and profitable, winning new markets in the years ahead, with miners working in safe pits, using the best machinery modern technology can buy and enjoying good wages and good conditions. This again was the point made by the noble Lord, Lord Winstanley. That is the Government's design—with our desire to improve energy efficiency and our encouragement of coal conversion. With the fact in Europe that France is cutting its coal industry in half and Germany reducing hers, Britain has the opportunity—if it produces its coal efficiently—to become the great coal producer of Western Europe. That is why we are investing in the future of the coal industry. As noble Lords have said, coal is only part of the United Kingdom's rich endowment of energy resources. The noble Lord, Lord Stoddart of Swindon, talked on this, and I would broadly agree with everything he has said provided it was not political.
My noble friend Lord Campbell of Croy touched on oil. Revised estimates of our UKCS reserves were

1443
announced earlier this month. The remaining recoverable reserves are now estimated to lie in the range of 1,410 million tonnes to 5,280 million tonnes. In gas, new estimates put remaining reserves in the range of 900 billion cubic metres to 2,260 billion cubic metres. These new estimates hold out the prospect of a longer period of self-sufficiency and continuing shelter from the vagaries of the world market. We believe that the Government have been successful in stimulating exploration. The level of drilling activity in 1983 was the highest since exploration began in 1964, with 128 exploration and appraisal wells commenced compared with 116 in 1975, the previous record year. Ten new developments were approved during the year.
Much was said on nuclear power and I shall come back to it again later. I believe that nuclear power has firmly established—
Lord Stoddart of Swindon: My Lords, I am most obliged to the noble Earl, Lord Avon, for giving way. Did I understand him correctly to say that the new figures produced in the Brown Book will give us a longer period of self-sufficiency? That was not my understanding of it. I read "possible reserves" to mean exactly what that is: that they were possible reserves. Is the noble Earl now saying that there is evidence that we shall have self-sufficiency beyond 1995?
The Earl of Avon: My Lords, I think that I avoided the term "self-sufficiency". What I said was that the reserves were there. Did I say, "self-sufficiency"?
Noble Lords: Yes.
The Earl of Avon: I did; in which case I will stand by what I said. What I find exciting in this field—I am sure that my noble friend Lord Campbell of Croy will be with me on this—is the new methods of extraction which are being found. These alone, I believe—certainly a recent talk by one of the oil companies to which I listened led me to believe this—suggest that the ideas we have for the future are pessimistic rather than optimistic. But as the noble Lord is well aware, we are in the world of hypothesis and, as the noble Lord, Lord Harris of High Cross, mentioned, we are in the world of crystal gazing and it is very hard to come to any firm conclusions.
Lord Campbell of Croy: My Lords, will my noble friend give way, as he very kindly referred to me? I would agree that it is exceedingly difficult to make forecasts about reaching self-sufficiency. After all, we hope that we shall be out of recession and there will be a great deal more demand for energy in years to come, so that is a very difficult estimate to make. Will my noble friend also take the point—because he has given the figures and referred to the recent increase in exploration—that the next stage is the stage of decisions on investment, which are the really important ones where our Continental Shelf is concerned?
The Earl of Avon: My Lords, I take my noble friend's point. To return to nuclear power, it has firmly established itself as a supply option for this country and for over a quarter of a century has been providing
1444
us with a safe and reliable supply of electricity. Last year it contributed around 17 per cent. of our electricity supply. By the end of the decade we expect 16 nuclear stations to provide 10 per cent. more than that. The Government expect nuclear power to play a significant role in meeting our energy needs in the future. We have a proven nuclear industry ready and looking for exports. I believe that the world needs our expertise, and not only in the nuclear field. There is a market for coal technology, which the noble Lord, Lord Ezra, touched on, and also for our know-how on oil and gas extraction offshore as well as for gas and electricity distribution.
Our energy endowment is unmatched in the European Community. We are the only major exporter of oil. and overall our net position is such that, after satisfying our needs, one-eighth of our total energy production can be exported; whereas, apart from the Dutch who are broadly self-sufficient in energy, our other European partners all need to import around two-thirds of their energy requirements.
Managing this energy endowment is my department's central task, and the key issue of this debate is the best way of discharging it. Terms like "long-term energy strategy" or "energy policy" inevitably suggest an attempt to draw up comprehensive long-term projections of primary fuel supplies and, on that basis, to determine an aim for some ideal fuel mix for the whole country for the future.
This is a bold intellectual concept, but it breaks down in two crucial ways. First, there are limits to human foresight, which the noble Lord, Lord Harris of High Cross, described as "constant humility". Whatever the abilities of those who attempt it, the uncertainties are so great that it is unrealistic sometimes to base decisions simply on a single preferred assessment of the future. Past attempts failed to anticipate the oil price shocks of the 1970s, the check to energy demand and the changing patterns of the fuel mix. That is why major companies like Shell, as well as the Government, have moved away from the central planning approach.
Of course, assessments of possible futures have their place but, like my department's current energy projections, if they are to be of practical use, they should offer a range of backgrounds against which possible decisions can be tested. They canot be used as premises to deduce decisions. These will be up-dated from time to time.
Secondly, the central planning approach diverts attention from managerial responsibility to forecasting. It gives too little weight to flexibility and responsiveness, which my noble friend Lord Campbell of Croy stressed. It also gives too little weight to all the competitive pressures which make for efficiency in meeting the needs of the customer.
All this put central planning in second place. Instead, the Government's approach is to encourage the maximum economic exploitation of our energy resources not by central direction but by clearing the way for producers and consumers to reach the best possible understanding in the market. This is not a simple task. We seek to strengthen the operation of market forces throughout the field of energy investment, production and sales. We seek to

1445
eliminate or reduce the effects of monopoly in inhibiting that operation. We also seek to promote economic efficiency in the use of energy; we seek to assist and encourage the contribution of British industry to energy development and to energy-related export. We seek to establish a firm financial framework for the nationalised energy industries and to increase the participation of the private sector in energy investment, production and sales. And, my Lords, we seek to manage effectively and economically the use of public expenditure in energy research and development as a contribution to balanced research and development effort in the energy sector as a whole.
The noble Lord, Lord Ezra, spoke about electricity prices. He may be aware that we have actually given our response to the Select Committee, and I gather that this is now in the Library of your Lordships' House. Some noble Lords spoke about over-capacity and others spoke of a long lead-time. This shows the difficulty in judging the balance of future supplies of electricity. The noble Lord, Lord Energlyn, gave us a stimulating talk on iron ore, and something that I shall be discussing with my advisers is whether there may be a future opportunity of discussing this matter.
My noble friend the Duke of Portland mentioned the price of coal as against that of imports. Perhaps I may just say that the extra costs incurred by the CEGB in limiting the amount of imported coal have been reimbursed so that electricity consumers do not pay any more than they would have done without that limit. The noble Earl, Lord Halsbury, made some very good remarks about the report of his Select Committee. I should like to welcome those remarks and say how much I would hope to have a debate on that report in due course.
We had a long and interesting discussion, as we usually do in your Lordships' House, on the subject of nuclear power. My noble friend Lord McAlpine of Moffat told us that his AGRs were doing a superb job. I am sure that that is so; and we had other alternatives put in front of us. Perhaps I may say that the precise level of future ordering of nuclear stations will depend on a number of factors, some of which noble Lords have introduced into the argument tonight. Not least of these is the level of future electricity demand. I believe that at the moment, with the inquiry over Sizewell going on, your Lordships would agree that it would not be right for the Government to comment further on this particular subject.
I think it was the noble Lord, Lord Ezra, who spoke of the links with Europe, particularly with gas in mind. I would say, first, about the Sleipner gas field, that the purchase there by the British Gas Corporation is of course a major economic decision and therefore is being given close and careful examination by the Government. We hope that a decision will be taken as soon as possible.
So far as linkage with Europe is concerned, we have no strong feelings about this for the gas industry. We note that the electricity supply industry is having interconnectors with France built at the moment and these will be ready in 1985–86. It is intended that there should be a two-way flow of electricity.
The noble Viscount, Lord Hanworth, spoke about combined heat and power. As part of a long-term
1446
approach, the Government have given extensive study to the potential for the economically viable use of CHP and district heating. As the noble Viscount pointed out, consultants have been appointed to undertake a programme of work to test the economic and practical feasibility of CHP in nine inner-city areas. The noble Viscount stressed his own views in what I felt was a well-balanced speech, and I thought put his case very fairly.
As part of the programme, my right honourable friend the Secretary of State announced that the Government were ready to encourage the formation of local consortia to undertake further studies, provided that the major participation in the development of such schemes comes from the private sector. While all this work on the lead city study has been going on, we have continued to demonstrate our support for viable schemes. Action was taken in relation to CHP in the Energy Act 1983. This was designed to encourage the private generation of electricity and to set a framework for ensuring that, among other things, private power-producers get a fair price for the electricity which they sell.
We discussed the renewables: I think that perhaps the noble Lord, Lord Ezra, might say a word on this subject in his winding-up remarks. The noble Lord, Lord Stoddart, also mentioned it. You all want us to spend more. I wonder what form of renewable energy your Lordships would like the money spent on. It may be that some of the ideas put forward by the noble Lord, Lord Energlyn, ought to be taken up. The Government are conscious of the renewable field, and we would welcome ideas in that connection. We have, as your Lordships know, put aside for the moment wave energy research; we are, however, investigating geothermal; we are looking at wind; and we are very ready to consider any new ideas which may be put before us which we can research and develop and which may possibly prove demonstrably profitable in the long run.
I seem to have slightly overdone my time limit, too. May I end by saying how much I appreciated what the noble Lord, Lord Ezra, said? I thought it was an excellent resume of the energy scene. The Government do not see the energy sector as protected from the uncertainties of the real world. It would be foolish to do so. Our task is to make sure that the country is well placed to tackle problems and to seize opportunities. I am grateful for the constructive remarks which have been made by many noble Lords this evening, which I assure your Lordships I shall take careful note of.
5.40 p.m.
Lord Ezra: My Lords, may I, in my turn, thank all noble Lords who have contributed to this very important debate. It is a pity that it had to be constrained within such a short time, but it is remarkable how much wisdom has been distilled during that period. I am particularly grateful to the Minister for having given us such a wide-ranging reply—and I know that he had to speak fairly rapidly—covering most of the points raised.
I believe I would be right in saying, in conclusion, that with one or two notable exceptions there is agreement that there should be a strategic concept for

1447
energy. Everybody, however, emphasised that this would have to be flexible. Of course, we cannot forecast the future. On the other hand, nor can we take major decisions, requiring 10 or 15 years for their maturity and involving hundreds of millions of pounds, without having a broad strategic concept on which to base them. I believe that that was probably the conclusion of the views expressed by most of those who have spoken. My Lords, I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

Diplomatic Immunity and Terrorist Attacks
5.41 p.m.
Lord Kennet Lord Kennet rose to call attention to the need for a review of the Vienna Convention on Diplomatic Immunity of 1961 and for an independent inquiry into the intelligence appreciation of the threat posed by Libyan terrorist attacks before the recent events in St. James's Square; and to move for Papers.
The noble Lord said: On the morning of 17th April there was a demonstration outside the building which had been the Libyan Embassy in St. James's Square by Libyan opponents of the present Libyan regime, and during that demonstration one or two machine-gun bursts were fired from a window of the building. As a result of this. Woman Police Constable Fletcher was shot dead. I think the House would agree that, first, we should renew the messages of condolence that we have already sent to the family of Constable Fletcher. Eleven Libyans were also shot. I have inquired about their condition, and I understand that they are all out of hospital, for which I think the House will be glad. They, too, were casualties of the outrage. All are agreed that what happened was unprecedented.
Our Motion this afternoon falls into two parts. The first part speaks about a review of the Vienna Convention on Diplomatic Relations—not Diplomatic Immunity. I apologise for the mistake on the Order Paper. The second part addresses itself to the independent inquiry into whether the intelligence available to us might have helped to avoid the outrage, which inquiry we have already demanded elsewhere; and my noble friend Lord Harris of Greenwich will speak to that part of our Motion later in the debate.
The Vienna Convention embodies what is, in fact, the oldest part of international law. It has hitherto been automatically thought of and perceived in the world as a means to protect diplomats against the wrath of the people to whom they were posted, and against unjust laws which might exist in the receiving country. We have now to begin to think of it as an instrument for protecting the people of receiving countries against outrages committed by diplomats, and we have to think about this in a world of increasing state terrorism.
Let me say at once that I am not going to urge that the Government should necessarily seek a revision of the Vienna Convention. The St. James's Square outrage was, of course, the tip of an iceberg which everybody has known for a long time existed. There are immense numbers of people enjoying diplomatic immunity in most of the major capitals of the world,
1448
and London has a very high number indeed. There has been a good deal of anxious questioning in both Houses of Parliament for years now about this number. When I asked in this House in 1973 how many there were, I was told that it was 4,600 and that about three times that number should be added for their families. In 1982 Mr. Greville Janner inquired in the House of Commons, and by then the number was 5,200, with three times that number to be added for families. This of course constitutes a steady advance.
As your Lordships would expect, minor crime—given that number of persons totally immune to prosecution—is astronomical. During a period of nine months last year, as the noble Lord, Lord Elton, recently informed this House, 74,674 fixed penalty notices for traffic offences were cancelled without further inquiry when it was established that the car in question belonged to a protected diplomat.
More serious crime is of course in proportion. Over a period of 10 months in 1982, as Mr. Mayhew informed the House of Commons in that year, more serious crimes were as follows: violence against the person, 4; offences against the Theft Act (including shoplifting), 16; drink offences (drunk and disorderly), 2; road traffic offences involving drink, 19; other road traffic offences—that is, those where proceedings were actually contemplated before they were withdrawn—115; firearms offences, 1; sexual offences, 1, and others 8. No action was taken in any of those cases. A minority of the diplomats concerned—22 of them; because they were all known—left the country, and the remainder did not. I do not know whether, when the Minister of State comes to answer, she will be able to give us more up-to-date figures, because they would be interesting.
I come now to the St. James's Square outrage and the lessons it can teach us for a review of the Vienna Convention. The arms used there were either, first, bought or stolen in this country, or, second, brought in in the private baggage of a diplomat, which is immune; or, thirdly, brought in through the diplomatic bag itself. I think that the first possibility is the least likely. The second possibility does not matter, because a diplomat's private baggage has less protection than a diplomatic bag, and if a country were to administer the convention more strictly in regard to arms the criminal diplomatic mission could simply move its means of import up one to the diplomatic bag itself, which enjoys a higher degree of protection. The diplomatic bag is indeed the essence of the problem.
Twice in the past 12 months Mr. Ray Whitney has answered written parliamentary Questions with the same words:
"We are precluded by the provisions of Article 27 of the Vienna Convention on Diplomatic Relations from opening or detaining diplomatic bags".
This is so. But we are not precluded by that wording from doing certain other things to them, particularly x-raying them or scanning them by other sorts of energy, and, if we see that they are full of machine-guns, from taking the appropriate action.
Now what is that? Probably no better source of advice is available than Satow's Guide to Diplomatic Practice, which says:
"The receiving state or the airline authorities may subject a bag to detector devices designed to show the presence of explosives, metals

1449
or drugs, since this does not involve opening or detaining it, and if this test disclosed grounds for suspicion the airlines could decline to carry it".
I ask your Lordships to mark two points there. First, the receiving state—in this case us—may, and presumably does, know whether a given diplomatic bag contains guns; and, secondly, airlines have a duty to do the obvious thing—namely, to send the bag back. States do not even have a right to do this. So what is the obvious course for a receiving State? I suggest that it is to declare the offending ambassador, or one of his staff, persona non grata until his country stops sending arms through the bag.
At this point I shall make one observation about the intelligence ramifications of the present case. During the past few years it has seemed to me that, in the difficult decisions whether to protect the continued efficacy of their sources or to use the intelligence procured to prevent danger or harm to our people, officials have sometimes leaned too much towards preserving the sources.
The other great question which has been publicly discussed is the inviolability of embassy buildings. I would add to the discussion only by reminding the House of a case which may or may not be relevant. In 1973 the Government of Pakistan suspected that arms were being brought in under diplomatic cover and stored in the embassy of Iraq. They asked for the Iraqi ambassador's permission to search it. They were refused. They searched it all the same. They found that it was so. They protested strongly to Iraq. They expelled the Iraqi ambassador and withdrew their own. So at the end of the day they were just where we are today with Libya.
The Libyan Embassy was not a real embassy. There was no ambassador; there was no head of mission, as the Vienna Convention requires there to be. There was simply a committee which the Government decided to treat as if they were proper diplomats. I know that this was discussed among the Ten—the Prime Minister has emphasised it—and I know that the Ten agreed to accept these committees. But that does not make it any better. Article 11.2 of the convention says:
"The receiving State may … refuse to accept officials of a particular category".
I may be wrong, but I should have thought that members of a four-man student revolutionary committee were officials of a quite particular category, and that the record of this category around the world was already well enough known. I hope that the Government will say something about their oddly-relaxed approach to the various Libyan innovations in diplomatic practice.
Terrorism is bad enough. Here we are talking about state terrorism. But Libya is not alone. Let us listen for a moment to the voices of state terrorism around the world, first from Tripoli itself. Here the voice says that the incident was Britain's fault because we did not prevent "stray dogs" from demonstrating. The British police, the voice goes on, influenced by Zionism and imperialism, organised an attempt to storm the embassy. Therefore Libya will form an alliance with the IRA, with branches in all Libyan towns. That, no doubt, will be of great interest to Libyan workers, soldiers and nomads.
More seriously, the voice from Tripoli specified that when the British embassy in Tripoli was searched after the rupture of diplomatic relations, 20 tins of what might be nerve gas were found in the presence of the Italian consul. It is worth pausing for a moment. Perhaps the Minister of State will be able to tell us what it was that the Italian consul did find when he searched our premises there.
Moscow of course backs Libya to the hilt. Here the voice says that the police-led assault on the office in St. James's Square was part of a scenario worked out in advance by the United States and other Western powers for a large-scale provocation against Libya. Moscow has also informed the world that when the Metropolitan Police went into the offices afterwards they found no arms and no evidence of shooting.
It is a world of state lies and secret state violence. What a comfort it would be if we could say to ourselves that at least the other super-power had clean hands! The Government have very properly condemned the United States for mining the harbours of a country with which it is not at war, and the world court has very properly endorsed this condemnation and ordered the United States to stop it. But the voice of Washington—it is that of the President's national security adviser—continues to claim a general right for the United States to do these things.
I come now to the review of the convention which the Government are undertaking. It takes place against the backgound of rising state terrorism. We do not urge the Government to seek a revision of the convention. Like all treaty revisions, it would be a Pandora's Box and would take many years. But plenty of other things can be done. Today's leader in The Times is helpful.
The convention is quite complex. It is by no means one-sided. It lays clear duties on diplomats—above all, the duty to keep the law of the receiving country. It also sets out the proper functions of an embassy. That is useful, because it can sustain the presumption that anything else is illicit and not protected. These are clear provisions. There is also quite a lot of long grass. Perhaps the Government should begin both to use the clear provisions more boldly and also to exploit the long grass from time to time against criminal governments.
The Government should also do whatever they can to get international support for a general stringency in the application of the Vienna Convention by receiving countries. My right honourable friend Dr. David Owen has suggested that there might be a United Nations resolution reaffirming the Vienna Convention. This could have the advantage of spot-lighting any country which abstained. It might not only be Libya. The Government should also take an initiative, with the Ten, which may lead to a declaration. Such a declaration may tend towards the idea that diplomats should be expelled in proportion to the gravity of the offence, starting with one junior person. An important point would be that we should give the reasons for these expulsions, and give them publicly. A tit-for-tat expulsion of a diplomat by the other side, without reason given, would not then seem to be so sensible.
There are many devices that one could think of, but the essence is this: that the St. James's Square outrage could be used as a rallying point to begin to collect as many countries as possible into a new and public move to apply the Vienna Convention as strictly towards the safety of the people of the receiving country as it is now, perfectly properly, applied to the immunities of the sending country's representatives. As formal war fades into history and as unofficial and official terrorism increases, such a move seems the least we can do. My Lords, I beg to move for Papers.
5.59 p.m.
Lord Broxbourne: My Lords, may I begin with an apology to the House in general and to the noble Lord, Lord Kennet, in particular for having missed the opening of his speech. If it was of the same high quality as the rest of his speech. I have certainly been punished for my lateness.
I listened, as, I am sure, has the House, with great interest to the noble Lord submitting his Motion to the House. I nearly said "two Motions", because, though technically and in form, it is one Motion, in substance it is two. It is a dichomotic Motion which is appropriate to this Session of this Parliament in which we are dealing with dichomotic Bills. The Housing and Building Control Bill and the Rates Bill are dichomotic, and now we have a dichomotic Motion. The general part of the Motion deals with the Vienna Convention on Diplomatic Relations. The second part of it deals with the activities of the Libyan terrorists. I dare say the House will be relieved to know that I propose to confine myself to one part only: to the question of the convention and possible action in regard thereto.
Two matters arise on this question. First, the content, effect and adequacy of the convention; secondly, the desirability and practicability of action to change and improve it, in so far as that is needed. As your Lordships will know, the convention, after a long gestatory period, came into force on 24th April 1964 and was proclaimed by Article 48 to be open for signature by all members of United Nations. It was ratified by the United Kingdom in 1964 and necessary provision was made in our British municipal law in that year.
Whatever view is taken of the content of the convention and the possibility of abuse, it must be said that it is clear, it is concise, it is comprehensive, and it is categorical. Thus, Article 22 requires that the premises of the missions shall be inviolable and immune from search, requisition, attachment or execution. There is a similar provision in regard to the private residences of the diplomatic agents in Article 31. Article 24 ensures the inviolability of the archives and documents of the mission.
Article 27 requires, in similarly unqualified terms, that the diplomatic bag shall not be opened or detained; and Article 29, that the person of a diplomatic agent shall be inviolable and not liable to any form of arrest or detention—with a further immunity from criminal proceedings in the receiving state under Article 31. There are many more provisions in the 53 articles of the convention, but
1452
those are the key provisions, and they are all crystal clear in their effect and in their drafting.
Two points strike me about those provisions. The first is their clarity and categorical nature—all absolute and virtually unqualified. The second is their one-sidedness. There is a formidable array of rights, privileges, immunities and safeguards without any corresponding reciprocal obligations. The reason for this is perhaps twofold. First, there is a reciprocity deriving not from the content of the convention but from the dual nature of the parties' signatories thereto. Each party—each signatory, each state—is both, in the language of the convention, a receiving state (in which capacity it must assume the obligations imposed upon it) and a sending state (in which capacity it has the benefit of those same provisions).
The second reason, I would think, is that there is an assumption underlying the convention that signatories will observe the lex gentium; that they accept an implied obligation to use the rights and immunities conferred with propriety and not abuse them. This obligation exists by necessary implication and is not spelt out in the convention. Presumably this is because—as is the case with so many implied terms—it is thought to be so obvious not to require expression. The noble and learned Lord. Lord Denning—from whom we shall be hearing, I am pleased to say—will recognise the test of what in the courts is called the "official bystander", as will the noble and learned Lord, Lord Wilberforce. I only wish that we were to have the privilege of hearing from him, too.
Unfortunately, in a convention so precise in its specification of rights and immunities, there is, apart from an oblique reference in Article 45 to breaking off diplomatic relations, no express provision for remedying and correcting breaches of the fundamental implied condition not to abuse those rights and privileges. That is the heart of the present problem which the noble Lord has presented to the House.
This brings us to the second main matter—the practicability of action to change and improve the convention in order to cure this weakness. This brings me to the other Vienna convention (because there are two of relevance in this context); the Vienna Convention on the Law of Treaties, ratified by the United Kingdom in June 1971. There is a very large number of signatories but it does not, I think, include Libya nor. as far as I know, in effect any of the Soviet bloc or the Soviet itself. Nevertheless it is, one would suppose, basically a codification and statement of principle applying to the conclusion, validity and interpretation of international law. It is to its provisions that we must look for the arrangements governing amendment and the possibility of giving effect to them.
The basic provisions are to be found in Articles 40 and 41 of the Vienna Convention on the Law of Treaties. It is the provisions of Article 40(2) which present the difficulty in regard to any amendment of the Vienna Convention of Diplomatic Relations. With great respect to the noble Lord, to review a convention is likely to be a somewhat academic and sterile exercise if it will not lead to any amendment and improvement.

1453
Article 40(2) states:
"Any propsal to amend the multilateral treaty as between all the parties must be notified to all the contracting states, each one of which shall have the right to take part in the decision as to the action to be taken in such a proposal".
So one sees that there is in effect a requirement of total notification and also of unanimity before one can hope for any amendment of the treaty. That is so because, as your Lordships will see from reading Article 40(1),
"Unless the treaty otherwise provides, the amendment of multilateral treaties shall be governed by the following paragraphs".
In other words, that it mandatory; there must be notification and there must be unanimity.
The problem is clear. The countries most likely to abuse the provision of the Vienna Convention on Diplomatic Relations are those most likely to withhold consent to its amendment. It is true that Article 41 provides the possibility of separate, ad hoc amendment which would apply only to the two or more countries concluding the specific agreement to modify. Indeed, that would be possible, in theory, in the case with which we are seeking here to deal.
The possibility of an ad hoc agreement between two countries to modify, so far as they are concerned, would be a specific course open to us in regard to any other country or group of countries—but again it is likely to remain a theoretrical possibility because the countries most likely to abuse the provisions of the convention would be those least likely to enter into an agreement of that kind.
The noble Lord, Lord Kennet, mentioned Article 11 in subsection (2) of the Vienna Convention on Diplomatic Relations. That would provide some possibility of improvement, but only to a limited extent. Only one other possibility occurs to me, and it arises from the annexe to the Convention on the Law of Treaties. This annexe provides for a panel of conciliators of "qualified jurists"—a term much beloved by continental lawyers—and for the setting up of a "Conciliation Commission" in particular cases. Such a commission would be drawn from the panel and set in motion by the Secretary-General of the United Nations. It then decides upon its procedure, including the opportunity for oral or written submissions, and comes to a decision. But, again, that decision is not binding on the parties and constitutes, according to the convention, only a recommendation.
Clearly, therefore, that also is not very hopeful as a solution but is possibly, in the time-honoured jargon, an avenue to be explored. There is the same basic difficulty as with an ad hoc agreement to modify or amend under the other Vienna Convention—the states or parties in regard to which one would wish to apply the procedure are those least likely to agree or, having agreed, least likely to accept any decision not to their liking.
Therefore, I fear that one comes to the conclusion that the position in respect of the improvement and amendment of the Vienna Convention on Diplomatic Relations is neither easy nor promising. The difficulties are clear. You can only bind sovereign states if they are willing so to be bound. You cannot impose goodwill but only invite it and hope for it in return for your own. Our forbears realised the truth of this. They realised that good international relations could only be based on an unquestioning and
1454
unconscripted adherence to what they called the Law of Nations.
It was, perhaps, easier in a way then; in a smaller world with fewer nations. Today there are many nations varying vastly in both experience and good will. Improvement by way of textual amendment of the Vienna Convention is likely, therefore, to be difficult if not impossible. Therefore, we must promote as best we may, and strengthen by all means open to us, respect for the lex gentium and regard for international law by our own actions and representations in the United Nations, the Commonwealth, the European Community and in our bilateral dealings with individual nations. That is perhaps the best, and indeed it may well be the only, way.
6.12 p.m.
Lord Denning: My Lords, a few weeks ago a most wicked crime was committed in one of our public places—in St. James's Square. It was in England that it was committed. A woman police constable was murdered but the criminal went free. He was not arrested. The premises from which the shot was fired were not searched. It is said that the miscreants had diplomatic privilege under the Vienna Convention. I do not believe it. Those who interpret the Vienna Convention in that way are entirely wrong. The Vienna Convention was made, by the Diplomatic Privileges Act 1964, part of our English law. It is to be interpreted and can be interpreted again by our English lawyers just the same. It starts off with a word known in international law but very little known in our English law. It states that the premises of the embassy, or whatever it may be, are to be "inviolable". It adds that the person or the diplomatic agent is to be "inviolable". Does that mean without exception? Under the preamble to the convention it is said that it is only the expressed terms that apply, but still the old customary rules of international law go with it. Article 41 of this convention states:
"The premises of the mission must not be used in any manner incompatible with the functions of the mission as laid down in the present Convention or by other rules of general international law".
The mission was being used in contravention of every elementary principle of international law.
Let me take the first instance—the personal privilege of the ambassador or the diplomatic agent. Article 29 states:
"The person of a diplomatic agent shall be inviolable. He shall not be liable to any form of arrest or detention. The receiving State shall treat him with due respect and shall take all appropriate steps to prevent any attack on his person, freedom or dignity".
Is there not a correlative to that? If we are to protect him from any attack, surely he is not allowed to attack us; to attack our personal freedom or dignity by firing weapons and guns from the embassy. Let me take illustrations from our international law and quote Hugo Grotius—almost a founder of it. He gave the illustration that if an ambassador attacked a man, that man in self-defence could kill that ambassador. Grotius himself said that. It is the principle of self-defence. So did Oppenheim in his later edition of International Law, or the more modern ones. There is the exception of self-defence in the case I have given. There is the exception of emergency. The drunken diplomat with a loaded gun in a public square: is he not to be arrested? Is he not to be detained? Cannot

1455
our police deal with such a position? Clearly they could.
There is the principle of self-defence; the principle of emergency and, indeed, there is the principle which Dr. F. A. Mann pointed out in a letter to The Times. Supposing an ambassador goes out with a machine gun and starts shooting down people in a public street? Is he entitled to privilege from arrest or detention? It cannot be. There are exceptions written by international law for this convention which were not put in but ought to have been put in.
I have dealt with the personal position of the ambassador or the diplomatic agent himself. But what about the premises, the mission where he resides? Are those premises inviolable? Article 22 states:
"The premises of the mission shall be inviolable."
It goes on to say:
"The premises of the mission … shall be immune from search, requisition, attachment or execution".
That is what the convention expressly says; but impliedly international law writes in the exceptions. If an embassy is on fire and likely to spread to adjoining premises are not our firemen and police entitled to go into that residence or that mission to put out the fire and save the houses next door? If there is a gunman inside shooting and firing at our ordinary peaceful people outside, are we not allowed to go in? If you plead the principle of self-defence, or whatever exception one calls it, we are entitled to search the premises and arrest the miscreants and prevent these crimes from being committed.
As my noble friend. Lord Kennet, said, when in 1973 Pakistan discovered that the Government of Iraq had hoards of arms in its embassy the Pakistan authorities were quite right and entitled to go in—despite what Iraq said. They did go in and found hoards of arms there. This so-called principle of inviolability is subject to many exceptions in international law which are written inpliedly into the convention when the position is abused by those of the sending authority. I have dealt with that.
Neither does the diplomatic bag have all that much exemption. That is also covered by Article 27. It is true that it says:
"The diplomatic bag shall not be opened or detained".
It goes on to say:
"The packages constituting the diplomatic bag must bear visible external marks of their character and may contain only diplomatic documents or articles intended for official use".
Supposing that provision is breached, and the diplomatic bag contains narcotics, bombs or whatever else it may be. It seems to me that that provision does not prevent proper steps being taken to discover it, whether by scanning or whatever else. Such action is perfectly lawful for our authorities. They need not actually open the bag these days. By scanning and other scientific means they can well see things. We have these things at the airports. They can well see whether there is any metallic substance or the like there.
I have gone through the terms of the convention, because, as I said, they are part of our English law, but what is to be done? I know the difficulty of the position. If we had taken steps here, what would have
1456
been done by those others in Libya to our own residents there? Would they play just tit for tat. I do not know whether they would or not. But on the other hand, I can see the difficulty, which is why the decision was not taken, as I suggest it could have been, to enter the premises, seize, search and arrest.
But if I am wrong about that, what is to be done? As my noble friend Lord Broxbourne says, it is not much good trying to review this convention and get all the states of the world to agree to a modification. Let us do all that we can. One thing that has occurred to me is that we could take the advisory opinion from the International Court of Justice. It could say whether the exceptions which I have indicated are existent in international law. It could say whether those exceptions which I have indicated are correct or not. If the International Court of Justice affirmed that, you would have guidance for all the countries for the future so as to know what could be done.
Otherwise, there are other means. As my noble friend Lord Kennet said, we can do everything we can by co-operation with others to stop this evil of our day—this international terrorism. All I would say is that, as I view this Vienna Convention, and as I view the Diplomatic Privileges Act, they did not give privilege to those criminals who were shooting from the embassy in St. James's Square.
6.22 p.m.
Lord Paget of Northampton: My Lords, may I first apologise to the noble Lord, Lord Kennet, for missing his opening passage. This debate came on rather suddenly, but I am extremely sorry that I missed that. May I also express my pleasure at speaking after the noble and learned Lord, Lord Denning. In the old days I often spoke before him, but this is my first experience of speaking after him. May I also add how much I enjoyed his version of the law and how, as on many other occasions, I wished that his version of the law was the law, but on this occasion I am afraid that I cannot go quite as far as agreeing with him as to what the law on this matter is.
As the noble Lord, Lord Broxbourne, said, there are two branches to this. The first is the security question. I feel that so often the needs of protecting security are simply an excuse for bad behaviour. But there is one form of security which it is essential to protect, and that is sources—where the statement of a fact is likely, or even certain, to disclose the source you got it from. One of the papers—I think it was the Daily Telegraph—said that we had been informed by the Americans that the Colonel had sent a message (a telephone message or a signal) to the embassy, instructing it to fire on demonstrators if any appeared before—they do not call it an embassy—the People's Bureau. Was that true? If it was true, I would certainly regard that as the most shocking breach of security. It would inevitably tell the Libyans that the Americans had their code, and it would also tell the Americans that we were quite insecure to give information to. If it is not true, I feel that the newspaper in question should be rather severely dealt with.
The other point is the broad one which I think all the other speeches have dealt with, and that is the amendment of the Vienna Convention. On this I find myself in entire agreement with Lord Broxbourne. You cannot conceivably get universal agreement to

1457
any kind of amendment which would be the slightest good, because you have to get agreement from the lawless states to a new restraint on lawlessness. You really cannot get agreement to the stiffening of criminal law from a convention of burglars, which is what we are being asked to do here.
If you cannot amend the situation there, what is one to do about it? The assassin states have been rather my King Charles's head. The use of assassination as an instrument of government policy is something which has only really come in in the past 10 years. It began in the most ancient history. There was the king and his assassins whom the crusaders knew as "the old man in the mountain". He was a fellow student of the great Persian poet Omar Khayyam. He said, "If I can get 10 men to obey me absolutely, I can rule the world", and he sought for his 10 men. He sent messages to the various potentates, "Do this, or I will send my assassin". As the assassins had been totally convinced that they went straight to heaven afterwards, they were extremely effective, and this regime lasted for 300 years, until the Mongols rooted it out. I believe that that is frankly the only treatment for it.
But here we have a situation in which there are a number of assassin states, and Libya is only the most noisy example. Assassin states proclaim themselves. It is part of the game. There is not much point in being an assassin state if you cannot threaten assassination and be believed. So we know who these assassin states are, and what form of representation we give them is within our discretion.
It would probably be very desirable to get together with what used to be called the "great powers", the leading states, and say that in the case of certain powers and certain states representation should be confined; they should not have the width of a Vienna Convention. It should be a matter of limited convenience without the security of a diplomatic bag, in which both arms and dope can be smuggled. Certainly when I say that I would include Russia among the great powers with whom we should consult, and who I think certainly finds the behaviour of assassin states as awkward and embarrassing as we do. I do not see why we would not have a common interest with Russia here.
I do not think that we have ever had trouble with the Russians bringing in arms in their diplomatic bags or bringing assassins into this country to do their job. Of course, there has been talk of spying. Well, the job of a diplomat is to get information for his government. What is obtaining information and what is spying is very marginal. All states and embassies stray a bit on the borderline here.
That is not what we are thinking about. This is a question of infiltrating assassins, infiltrating arms, treating the whole relationship of diplomacy in a manner totally contrary to its spirit. I believe that here is the point where we ought to work to get an association of the great powers, all of whom have a common interest in this, and say that we are going to have two levels of representation. As to the second level of representation, we would work out a common agreement as to what we would grant and what we would not grant to our visitors. If we got together and did that, countries such as Libya could decide whether or not they want to send a representative on those
1458
terms. The convenience to their trade would be such that I think representation, even on second-grade terms, would for these smaller states be of considerably more value than none at all, provided that they knew it was the best they could get.
However, I do not believe that we can have a general amendment to Vienna. You cannot get through rules to which the burglars would not agree. We have got to have a great power get-together on a very dangerous change in world society which it is in all our interests to stop.
6.33 p.m.
Lord Molson: My Lords, I am sure that all your Lordships will agree that the noble Lord has done a good service in raising this important matter for discussion in this House. It is not only a matter of the utmost importance but one upon which public opinion in this country is deeply moved. It is right that your Lordships should debate it. If the debate were not distinguished for any other reason, it certainly would be distinguished and remembered because of the speech to which we have just listened from the noble and learned Lord, Lord Denning—by common acclaim one of the great judges of his time. He has always stood, as indeed he made clear in one of his books which I read with interest and admiration, for the principle of justice, rather than for any pedantic adherence to the letter of the law.
I believe that that principle inspired his speech today. Not all his judgments have met with the agreement of all his learned brothers, especially noble and learned Lords who sit in this House. I did notice that when he expressed views which were not those which I think were adopted by the right honourable gentleman the Home Secretary—who is himself a very distinguished barrister—the noble and learned Lord did remark, when he was construing the words of the Vienna Convention, that there were words dealing with self-defence and so on which they did not put in but should have.
So it may well be that, as regards the view, which I think is the more conventional view amongst lawyers, that we were prevented by the Vienna Convention from doing what I am quite sure all of us would have liked to do, this is one of the cases where the noble and learned Lord would like to see justice done rather than the letter of the law observed. I thought that a most valuable constructive suggestion of his was that this whole matter should be referred to the International Court of Justice.
Anger, however justified, is a bad counsellor. I feel that the Home Secretary, who had the handling of this matter, conducted the affair impeccably. It is a fortunate thing that the only police force in England which comes directly under the Home Secretary is the Metropolitan Police Force. Therefore the responsibility rested clearly upon the Home Secretary, who I believe behaved and conducted the affair extremely well.
I should never dream of being so presumptuous as to argue with the noble and learned law Lord about law or international law, but it happens that a number of yeas ago I had a conversation with the late Lord Strang, who, as your Lordships will know, was a very distinguished Head of the Foreign Office. I was

1459
discussing with him the matter of diplomatic immunity. The view that he took, which was not that of a lawyer but that of a practical diplomat, was that it was of the utmost importance for us to obey the strict letter of international law and especially of the Vienna Convention. He pointed out, without mentioning any names, that there were a number of countries, which would be only too glad to violate the principles of the Vienna Convention if they could find any excuse for so doing. If we departed from the letter of the Vienna Convention we should not only invite reciprocal treatment but it would open the way for things far worse than anything we had contemplated.
So far, I have been dealing with the first part of the noble Lord's Motion. As my noble friend Lord Broxbourne pointed out in his erudite speech, there are in fact two separate Motions. The second calls for an independent inquiry. I hope, and I am confident, that the Government will resist any such demand. We have had an assurance that the Government will go into the whole matter and consider carefully whether there was any failure in our security arrangements or in the transmission of any information that came to us, to the police and to other people concerned. I am quite confident that the Government will learn all the lessons that can be learnt from that internal inquiry.
I do not take that line merely because it is a Conservative Government. I should take exactly the same line if it was a Labour Government or an Alliance Government. I think that we can rely completely on any British Government, after such sad events, to go into the whole matter and see whether any useful steps may be taken to prevent a recurrence of anything of the sort.
It is deplorable that, owing to a number of events in the last few years, so much has been disclosed of the operations of security organisations in this and in other countries. If there were any independent inquiry, I feel that there would be the greatest danger of information being conveyed that ought to be kept secret. I feel confident that the Government will continue to handle this matter as they have done so far, in a wise and prudent manner.
If I have ventured to express views that differ from those of the noble and learned Lord, it is not because I would be so presumptuous as to question his legal interpretation. But this is a matter that politicians and statesmen have to consider. The danger of departing from the safeguards of the Vienna Convention would be far greater than any satisfaction that we might have obtained by taking more drastic action. As my noble friend Lord Broxbourne has pointed out, the terms of the Vienna Convention are incorporated in our statute law. Even if an attempt had been made to bring the murderer to justice, he would not have been convicted, I am sure, by any British court. The Government followed, I think, the only line they could.
6.43 p.m.
Lord Gladwyn: My Lords, I am not altogether certain that I speak on this particular point with the agreement of all my noble friends in the Alliance. But, personally speaking, at any rate, there seems little or no purpose in endeavouring to get agreement on some revision of the Vienna Convention. In this respect, I
1460
agree with the noble Lord, Lord Broxbourne, and other noble Lords. It would be a field day for the 141 celebrated, international lawyers who would take part in such a conference. But what prospect of success could there possibly be? Clearly, the countries of the Communist bloc would not want to change the rules governing diplomatic immunity from which they profit so much, notably in financing and encouraging Communist parties all over the world. No more would those countries which see advantage in using the bag to import illicit articles—-even, conceivably, arms and ammunition. Quite a number of small or very small states would equally object—the bag, and immunity generally, no doubt representing in practice a useful adjunct to the standard of living of their representatives and their staffs. If any action is to be taken to reform the existing system, it must presumably be taken either by us alone in defiance of the convention, accepting, of course, any retaliation that might arise, or, preferably by a group of states acting together—for instance, the European Community of which we are a member.
I suppose that our greatest objection to the present system is that it can be used or misused by terrorist organisations for terrorist purposes. Nor can we ignore the fact that this danger is likely to increase with the passage of time. It is not only the problem posed by crazy rulers like Colonel Gaddafi, who seems resolved to exterminate enemies wherever they may be found and by whatever means available. It is also the problem posed by terrorist groups which may, by one means or another, in the next decade or so, get control of some diplomatic bags. We are told, for instance—and I have checked this with someone in the International Institute for Strategic Studies—that nuclear bombs or devices exist that are not much larger than a six-inch shell but which could nevertheless flatten the whole of Whitehall together with much of Westminster. What would happen if we were told that one had been planted here and would go off unless certain demands were met?
Such a device might be introduced already assembled in the boot of a car. But the terrorists concerned would no doubt prefer the comparative safety of the diplomatic bag provided that the bag was always exempt from what is called "scanning". Whatever the limitations of scanning, it could presumably always be relied upon to detect radiation emanating from any nuclear device. But it is obvious that there would be no point in scanning at all unless it was the intention, if anything suspect was noticed, to open the bag in order to see what it was. Even if this was done in the presence of a representative of the embassy concerned, it presumably would be a breach of the Vienna Convention. As noble Lords have said, the convention is absolutely specific. Article 27 lays down flatly that the diplomatic bag shall not be opened or detained apparently in any circumstances whatever. So this rather awkward fact must be recognised from the start if this method of scanning to check for the possible importation of arms by diplomats is to be the answer. Myself I hope that it will be eventually adopted.
I should also have thought that there was a case to be made out for limiting the weight of diplomatic bags to some agreed amount. I have not read the

1461
convention perhaps with sufficient care, but I would have thought that a weight limitation was permissible under the convention. After all, what is essential for any diplomatic representative is the ability to communicate with his government by both written and telegraphic means. All that is stricly required for this particular purpose is the use of a sealed bag for the transmission of correspondence as well as, one must presume, in modern conditions, the occasional conveyance of machines in order to encipher telegrams and that is all, really.
Beyond freedom from arrest, there is no further reason in equity why diplomats should be exempt, for instance, from customs duties or, for that matter, exempt, save perhaps for the head of the mission, from the payment of fines for parking offences. But if in defiance of the Vienna Convention we were to institute such reforms as these, or anything like them, we should have to face retaliation by governments all over the world, and presumably they would apply the same rules to our diplomatic mission in their countries. Would this really matter very much? I only ask the question. Would it not mean only that we should have to pay our diplomats rather more than at present? I cannot see that otherwise our national interest would be unduly damaged. Still, I suppose that in practice that sort of action would be out of the question as things are. Are we then debarred from taking any unilateral action, and no doubt illegal action, at all? I suppose so, in principle, but certainly I should make an exception of scanning, for the reasons I have given. That is the main thing we want to do on our own or in collaboration with our friends. Even here, if the operation resulted in the presumption that a bag contained arms or, still worse, nuclear material, as I say, the bag would have to be opened in the presence of a representative of the mission concerned.
An alternative or additional course would naturally be for us to decide to have no diplomatic relations with any state which on the face of it was in any way encouraging terrorism or was known to be in touch with terrorist groups. At least this would have the advantage of being something that we could do without any violation of the Vienna Convention. It might well be, as possibly may be the case with Libya, that mutually advantageous trade could still be carried on without any diplomatic or consular assistance. Surely we can also quite legitimately reduce the size of diplomatic missions; I am sure that would be in accordance with the Vienna Convention. Presumably we should also not hesitate to declare persona non grata any member of any mission who we consider has violated the law or committed any offence. I should hope that we do so increasingly. That would also be in accordance with the convention.
I believe that the Government intend to discuss the general subject of how to defeat efforts to use diplomatic facilities for the propagation of terrorism with our associates in the Community and presumably also with our colleagues in NATO. I am sure this is right and I can only wish them well in their efforts. All I would repeat is that I trust that they will not encourage any idea of a general conference, no doubt to be held under the auspices of the United Nations, for the revision of the Vienna Convention; and not discourage any proposals for at least some minor
1462
revisions such as scanning—if we can call that a minor revision—which might be adopted, at least by ourselves and our friends, even if it is to constitute a technical infringement of the convention, which already has been overtaken by events and which in legal language might even be said to be subject to a Statute of Limitations! For the reasons I have given I think this is about all we can do at the present time.
6.54 p.m.
Lord Harris of Greenwich: My Lords, it has been commonly accepted that the matter we are discussing today has deeply shocked public opinion in this country and in many other countries as well. That is the circumstances in which a young policewoman was shot down in St. James's Square and shortly thereafter we were compelled to escort the murderers to London airport and see them safely on to a plane to take them back to Libya
It is commonly accepted by all who have spoken that a review of the Vienna Convention raises formidable problems. Quite apart from anything else, as has been said by almost everyone who has spoken, some of the states who are keenest on assassinating their opponents as a means of conducting their day to day business would be represented at such a conference, and so would the Soviet Union and its allies. By no means could we be sure that we should necessarily secure agreement at such a conference.
Nevertheless, the fact is that clearly we have to take some form of international action to deal with the situation that has developed. I think that what the Foreign Secretary has been doing in recent days with our colleagues in the European Community is a valuable first step. I hope that will be followed—I should be grateful if the noble Baroness could confirm this—by an early meeting in the series of meetings which take place between the Home Secretary and Ministers of the Interior of the European Community, where, presumably, these matters can be taken a stage further.
But there are one or two matters which have already been identified in the course of this debate and which require our urgent attention. One is the issue touched on by my noble friend Lord Gladwyn—the question of scanning diplomatic bags. The noble Baroness will recall that a few days ago we had an exchange in the House on this matter. I wonder whether or not she is able to report any developments on this question since that exchange. I think the noble Baroness conceded on that occasion that we were not precluded by the terms of the Vienna Convention from scanning diplomatic bags. If that is so, it seems to me, for the reasons stated by my noble friend Lord Gladwyn, that the sooner we do it the better. Presumably that is one of the matters we would wish to discuss with our colleagues in the European Community.
Secondly there is the question of the International Court of Justice, which was touched on by the noble and learned Lord, Lord Denning. It seems to me that that is exactly what we should be considering at the moment. I find it extremely difficult to understand what is the argument against going to the International Court of Justice. As it happens, Libya itself has recently been a party in an action before the International Court of Justice, though obviously on a

1463
wholly different question. I realise that this matter must have been considered by Ministers and I am sure we should be glad to know whether the Government are proposing to take any action along these lines.
Having said that, I want to move on to deal with the questions of the intelligence appreciation of the Libyan threat before the events in St. James's Square and why in our view this necessitates an independent inquiry, either by Privy Counsellors on the lines of the inquiry which took place after the Falklands War or by the Security Commission presided over by the noble and learned Lord, Lord Bridge of Harwich. Again, it must be common ground that the Government must have realised what were Colonel Gaddafi's objectives. He could hardly have made them clearer. In February 1980 he declared that he proposed to liquidate his opponents living abroad. On 7th October 1982 he called on Libyans travelling abroad to become responsible for the elimination of Libya's enemies wherever they might be. Following his first statement in 1980, terrorist attacks commenced against Libyan exiles living throughout Western Europe—in Germany, in Italy and in Greece. As we know, in this country a well-known Libyan journalist was assassinated outside the Mosque in Regent's Park and two months later a Libyan lawyer was murdered in his London home. Two Libyan children were poisoned in North London and a student opponent of Colonel Gaddafi was stabbed to death in Manchester. And so it went on.
As the noble Baroness may recall, on 5th April this year I asked the Government what action they were proposing to take against the Libyan Government following the bomb attacks in London and Manchester which occurred in March and in which 29 people were injured. The noble Lord, Lord Elton, in his reply assured us at col. 794 of the Official Report for 5th April this year that:
"the Home Secretary and the Foreign and Commonwealth Secretary are determined to reply to them in the appropriate manner, should they continue to develop".
That was the Government's position on 5th April this year. Ten days later Woman Police Constable Fletcher was murdered and 11 opponents of Colonel Gaddafi were shot down in the street in St. James's Square by automatic weapons fired from the people's bureau.
The Home Secretary has complained about people being wise after the event. I think that there is some truth in that criticism, because it is all too easy to minimise the serious problems that arise when one is handling a terrorist episode of this kind. Having been involved as a Minister in handling three of them, I am well aware of the great difficulties which face both the security forces and Ministers when confronted with these violent situations. And I know how infuriating it can be to reply to criticisms from those who do not always recognise the limited amount of information which is available at the outset of one of these incidents; the risks to innocent lives if there is a single error of judgment committed by anyone—policeman or Minister; and the great problems that arise (and I can remember this in relation to one of these incidents) if foreign nationals or a foreign government are involved. Speaking for myself, I accept all of that without any degree of hesitation. But I fear that it does
1464
not begin to deal with the criticisms that have been made about the failures of our intelligence appreciation of the threat posed by Colonel Gaddafi's agents in Britain, and about the use made by them of the Libyan People's Bureau over the last four years.
Why did the Government not recognise the threat posed by the Libyan People's Bureau in London? We all now know that it was packed with firearms and ammunition and almost certainly with explosives, which were, of course, sent back by diplomatic bag before the diplomats left our shores. How could it be that there was such a failure to recognise the central role of the bureau in the terrorist operations which were conducted against Libyan exiles living in the United Kingdom? The present Government had already been compelled to expel a Libyan diplomat—and that they certainly did—because of his enthusiastic public endorsement of Colonel Gaddafi's campaign to liquidate his enemies in this country. I wonder whether it really could have been assumed that Colonel Gaddafi was such a keen student of the Vienna Convention that he would have prohibited absolutely the use of those premises to store weapons, ammunition and explosives? What did the Foreign Office really believe was going to happen when Libyan students took over the People's Bureau in February of this year?
And what about those so-called students? A few were, it is true, and it is right to recognise this, ordered to leave the country by the present Government. But I do not believe—and 1 suspect that the Government would now share this view—that this in any way dealt with the scale of the Libyan threat in this country. There was ample evidence that the hard core of terrorists, in the four years of Colonel Gaddafi's campaign in this country, described themselves as students. Some of those people had presided over the hangings of students opposed to Colonel Gaddafi in Libya. Some of them were pretty middle-aged students—gentlemen in their late 30s—but they were still allowed to enter the United Kingdom on student visas and to remain here, despite the growing evidence that a number of them were involved in the campaign of violence in this country.
Let me take the example of just two of these gentlemen: Mr. Baghdadi and Mr. Mabruk. Both were described as students and were admitted to this country in 1982. Both were given extensions of stay, and both were deported by the Home Secretary immediately after the events in St. James's Square. According to the noble Lord, Lord Elton, in a Written Answer which he gave to me on 9th May at col 1003, they were granted extensions of stay:
"on the production of evidence of enrolment in full-time academic courses and of adequate funding".
I am sure that they had adequate funding. There has never been any shortage of adequate funding as far as Colonel Gaddafi is concerned when he is contemplating terrorist operations outside Libya.
But what steps were taken to verify that these gentlemen were students and that they were not involved in this campaign of terror? I realise that this raises a question outside the departmental responsibilities of the noble Baroness and I apologise to her for raising this issue. Nevertheless, it is central to the question of our intelligence appreciation of the

1465
Libyan threat. I am well aware, having been a Home Office Minister for a number of years—although not having dealt with immigration policy in that time—of the great problems which face our immigration service and the genuine attempts which are made both by officials and by Ministers to have a fair policy in all respects. Sometimes they succeed and obviously very often they fail.
However, having said that, I still find it hard to understand the order of priorities. An immense amount of official time was consumed—and I am just putting forward two illustrations—in running to earth Mrs. Begum, a woman who was granted entry clearance in 1982 to join her husband in this country. He died, and after a prolonged investigation and search for this lady she has now been thrown out of the United Kingdom. There is also the case of Mr. Pereira, who has been threatened with deportation having been made redundant, despite the fact that he had lived in the United Kingdom for six years and has a child born here. Again, I repeat: I recognise the genuine problems facing Ministers in dealing with immigration cases and I do not want in any way to minimise them. But what I do question is why such substantial resources were devoted to cases of this character when so many so-called students from Libya with close connections with the Gaddafi regime had so little difficulty in entering the United Kingdom. Certainly a few were expelled; that is true. But again, the numbers in no way correspond with the seriousness of the terrorist threat.
I return to the point which I made earlier. I find it rather difficult to understand why so many misjudgments were made and why we took such a remarkably passive attitude before the events in St. James's Square. Colonel Gaddafi's threats against Libyan exiles in this country were clear and specific; and his gunmen implemented those threats with enthusiasm. Our intelligence services were, of course, well aware of this, and of the scale of Libyan operations in other parts of the Western world. In one country after another, Libyan terrorists have been responsible for committing terrorist outrages. Colonel Gaddafi backed the international terrorist known as Carlos, who was responsible for the attack on the OPEC ministerial meeting in Vienna and for many other terrorist attacks throughout Western Europe. Colonel Gaddafi has trained and financed IRA gunmen responsible for the slaughter of so many innocent civilians and servicemen in Northern Ireland.
Quite apart from the evidence available to our intelligence services, a great deal of this information is available to newspaper readers, because Colonel Gaddafi has never made any effort to disguise his objectives. In addition, I must tell the noble Baroness, Libyan exiles in this country claim—and I repeat "claim"—that they sent direct warnings about the scale of the Gaddafi threat to both Ministers and Foreign Office officials.
I realise, of course, that one has to analyse information of this kind extremely critically. But is it right—and the noble Baroness may be able to help us, or, inevitably, she may not—that the National Front for the Salvation of Libya (which is an organisation which, as she knows, is regularly in correspondence with Ministers) specifically warned the Government in
1466
July of last year about a meeting of revolutionary committees addressed by Mr. Sodani, one of Colonel Gaddafi's principal agents in the United Kingdom, and attended by 60 so-called students at various centres of education throughout the United Kingdom?
This meeting had one central objective: to draw up detailed lists of Colonel Gaddafi's opponents in the United Kingdom. Subsequently, I understand, the organisers met again at the Libyan official residence, where they were joined by four of the so-called student leaders who took over command of the embassy in February of this year. Later still, a number of accredited Libyan diplomats, including the consul, the cultural attaché and the head of security at the embassy became involved. The question remains: were we aware of this? The Libyan exiles claim that they told the Government at the time. I have no idea whether that is accurate or not. That is their claim. If they told the Government, what action was taken?
I recognise in discussing matters of this degree of sensitivity that no one outside a small group of Ministers is in a position to know how much intelligence we possessed about Libyan operations in this country, and whether it had been made available to them. But after so many serious failures in our intelligence services during the lifetime of several Governments—by no means exclusively the present one—I just do not believe that it is right, as the noble Lord, Lord Molson, suggested in his speech, that we should simply leave this to Ministers. That is far too easy a way out.
What I believe is necessary, as I said at the outset, is that we should either have a Committee of Privy Counsellors on the lines of the inquiry which took place after the Falklands war, or that the matter should be referred to the Security Commission presided over by our colleague the noble and learned Lord, Lord Bridge of Harwich. That is necessary. What we are not interested in is simply a relentless search for scapegoats. What we want to ensure is that some group of responsible people establish where the weaknesses existed so as to ensure that early remedial action is taken, and thus we can begin to restore a confidence in the intelligence services of this country which has I am afraid, been fairly seriously damaged in recent years.
7.14 p.m.
Lord Cledwyn of Penrhos: My Lords, we are all grateful to the noble Lord, Lord Kennet, for initiating this debate today and for the thoughtful speech with which he opened it. Other noble Lords have made constructive contributions. I think we are all agreed that the events of 17th April and the following days have had repercussions that will continue for a long time to come. The tragic and unnecessary death of Yvonne Fletcher showed that the world is an unpredictable and still largely uncivilised place, and that violence is just around the corner even in this relatively well-ordered society.
Our experience in April is only one example of the way in which international terrorism has spread over the last 20 years. Other countries like France and West Germany have suffered similar and even worse atrocities than we have, and if a long-term solution is to be found, then it must be by international

1467
agreement. In his Statement on 1st May the right honourable gentleman the Secretary of State for Foreign and Commonwealth Affairs said, at col. 211, that he was instituting,
"a full review of the Vienna Convention, its operation and enforce-ability".
And we also note that the Select Committee on Foreign Affairs in another place are to investigate this and related matters.
I am glad that on Monday the Foreign Secretary raised the matter at the European Economic Community Summit of Foreign Ministers, and that a common code—I think that is the term used—for the Community is now to be considered and drafted. All this is very necessary because things have changed a great deal since the Vienna Convention came into force almost exactly 20 years ago on 24th April 1964. Those parts of the Convention requiring parliamentary approval were embodied in the Diplomatic Privileges Act 1964. During the Second Reading debate in this House on 11th May 1964 the late Lord Silkin made a significant remark. He said, at col. 44:
"Whenever there was a question … of extending diplomatic privileges, or of giving them to a bigger section of people coming into this country, this House has generally been critical".
In the light of subsequent events, Lord Silkin was unusually prescient.
I think everyone agrees that to amend the convention would take a great deal of time, and we have noted that the Soviet Union would oppose any attempt to do so. In any event, it took centuries to obtain a convention, or to achieve a consolidation of a body of international custom which had grown over the years, and it might not be in our own interests to change it, at least without careful consideration of the consequences to us.
The noble Lord, Lord Broxbourne, in a characteristically able speech, defended the provisions which he summarised very well. It is not the convention which is at fault, but the way the convention is abused. What the Libyan authorities did on 17th April was to abuse the convention in a monstrous fashion. We must face the facts, which are that formal change would take a long time and would present great difficulties, as the noble Lord, Lord Broxbourne, has said.
We are, of course, aware that any weakening of the immunities under the convention would curtail the rights of diplomats in this country, but they would impose the same restrictions on our diplomats abroad. It is, however, essential to examine the way in which the convention is working and how its provisions should be tightened where necessary and if possible.
I understand that a number of unilateral measures are under consideration by the Government. Perhaps the noble Baroness would be good enough to comment on these when she replies. The first is that the power to declare diplomats persona non grata should be used more readily. That seems to me to be sensible, for the tendency has developed for some countries to fill their embassies with numbers out of all proportion to the size of their country or the functions they have to perform.
They thus enjoy important immunities of which
1468
some take undue advantage. The most simple example is diplomats' cars which are exempt from parking fines. I believe that there are 5,718 diplomatic cars in London, and the noble Lord. Lord Kennet. has mentioned the huge number of fixed penalty notices which were cancelled on immunity grounds. This is. I believe, being looked at now. but the question of examining the bona fides of diplomats has been under review for a long time. Mr. Douglas Hurd, when he was Minister of State in the noble Baroness's department, was talking about this—in June 1980. I hope that we can now define a new and more limiting policy on the number of diplomats.
I read the interesting article by Sir Anthony Parsons in The Times the other day. and I shall read what is a telling paragraph from that article. He said:
"My view is that the best remedy lies in a more vigilant scrutiny of the individuals seeking to enter Britain from states which, for domestic or ideological reasons, do not consider themselves bound by accepted international norms: whether those individuals are nominated as diplomats or as consular officials".
That seems to me to be a sensible way to put it. We have the power to do this, to apply this limitation, and we should consider using it more frequently in the appropriate circumstances.
The second measure is a greater willingness to break off diplomatic relations. This is a much more serious step, and in his Statement the Foreign Secretary described it as "an exceptional event". We must, of course, agree with him. The consequences are always serious, the more so when there are British citizens in the country concerned, as is the case in Libya, where there are about 10,000 British residents. There are also the trading and commercial considerations and the likelihood that others are ready to step into our commercial and trading shoes. This factor has a distasteful aspect, especially where friends and allies are involved, and it makes the desirability of concerted action necessary, for example, within the European Community, where there should be clear rules of conduct between us. I hope that that will be the objective of the common code which is now being drafted. The Government were right to break off diplomatic relations with Libya, and I hope the Minister can assure the House that we have the full support of all our partners in the Community in this action.
The third measure is to scrutinise more carefully the usage of diplomatic buildings, and perhaps the Minister will comment on this as well.
The problems connected with the diplomatic bag have been discussed at length over the last few weeks, and noble Lords have referred to the problems. This is very natural. I am sure we were all curious about the contents of the voluminous bags which went back to Libya. We remember the case of the Moroccan Embassy employee who tried to smuggle one-third of a ton of cannabis into this country in a diplomatic bag. The "bag" in this case was a large crate. There have also been allegations that firearms have been smuggled into this country in the so-called "bag". The whole thing would be a farce if it were not fraught with so much danger for our own citizens.
This is an area which needs looking at carefully. Is the bag as sacrosanct as some make out? Article 27 of the convention states:

1469
"The diplomatic bag shall not be opened or detained".
It does not, however, specify any definition of the bag other than that:
"The packages constituting the diplomatic bag must bear visible external marks of their character and may contain only diplomatic documents or articles intended for official use".
This is far too wide. It means that a railway wagon or a cargo plane can be construed as a diplomatic bag if it carries the official seal.
Unfortunately, there are many loopholes to smuggling and, as has been said by a number of noble Lords, one suggestion has been the use of X-rays to inspect the so-called "bags". The Vienna Convention preceded widespread terrorism and the installation of X-rays in airports also preceded the convention. One has to have regard to the use of the term "inviolate" in the convention, and the question is whether the inviolability of the diplomatic bag under Article 27 precludes the X-ray.
It seems to me that what is needed is a more precise interpretation of the word "bag", because at the moment the fact is that the inviolability extends to the diplomatic crate and the diplomatic jumbo-jet provided that they carry the official seal. The Oxford English Dictionary defines "bag" as:
"a receptacle of flexible material with opening at the top"—
of a kind which is normally used to carry official documents: not a jumbo-jet and not a railway train, even if it has the Libyan official seal. I am sure that the Government and the Select Committee will examine this area very carefully.
Noble Lords may be aware that this matter was debated in another place in the early hours of this morning, so the Official Report has not yet appeared. But I was able to obtain from the Library the reaction of the Home Secretary to a number of these matters. Perhaps I may quote him. This is what Mr. Leon Brittan said:
"There is no doubt that we have a problem and that there has been abuse of the diplomatic bag. There is no doubt also in my mind that the present position requires consideration".
It certainly does. He went on to say in reply to another honourable gentleman:
"but for the record I should make it clear that I cannot accept his interpretation of the law, which is that it would be permissible under the law as it exists, or under the Vienna Convention, to open diplomatic bags. That is not so."
He went on a little later:
"It is therefore clear, as a matter of construction and as a matter of law. that it is not permissible to inspect the diplomatic bag";
and, further:
"Similarly, the proposal that scanning should be attempted and that if anything suspicious is shown the diplomat concerned should be required to open the bag or to return it cannot be carried out because of the provisions of Article 27".
That was the view expressed by the right honourable gentleman the Home Secretary last night.
Lord Gladwyn: My Lords, would the noble Lord agree that, as I said in my speech, scanning is absolutely useless unless, having detected something in it, one has the right to open the bag?
Lord Cledwyn of Penrhos: My Lords, I am much obliged. I tend to agree with what the noble Lord, Lord Gladwyn, said in his speech.
1470
What we must now do is to study carefully what the Home Secretary said last night. I do not want to come to a snap decision on what the Home Secretary, with the advice of his lawyers, said, but I believe that the conclusions he came to were sweeping conclusions and must be looked at again.
Another point to bear in mind is that the Vienna Convention did not authorise foreign representatives to carry guns, and any of them found doing so should be sent packing forthwith.
Other suggestions which have been made and which deserve consideration are that positive vetting procedures should be introduced. These, again, are permitted by the Vienna Convention. The noble and learned Lord, Lord Denning, in a telling speech, made an important point. As I understood him he proposed that the absolute immunity given under Articles 22 and 2 7 should be brought under the higher and neutral jurisdiction of the International Court at The Hague. The convention will remain little more than a voluntary code until the International Law Commission at the United Nations begins to think along the lines of the noble and learned Lord. No doubt this is a proposal that the Government will wish to consider as well, and we shall be glad to have the reactions of the noble Baroness later on.
The second part of the noble Lord's Motion calls for an independent inquiry. I think the history of our relations with Libya in the period prior to 17th April justifies this request. When I asked the noble Baroness about an inquiry on 1st May, she referred to the internal Whitehall inquiry which the Government set up. Perhaps she can tell us how this internal inquiry is getting on and when we may expect it to report. As I said then, in a dangerous and delicate situation like the one at St. James's Square Ministers must make the best judgments they can on the advice they receive and on the events as they develop. After an initial slip by the Home Secretary, I think the Government conducted the operation satisfactorily. We did what the Libyans certainly did not do: we acted in accordance with the Vienna Convention.
The question at issue, however, is whether the Ministers concerned should have taken greater precautions prior to the shooting incident on 17th April, given the warnings that they received. The criticisms of the noble Lord, Lord Harris of Greenwich, are valid in the circumstances. It must now be doubted whether it was right to afford any recognition to the students who took over the bureau in February. Positive vetting would clearly have given them very short shrift indeed.
The Times, in a leader on 4th May, said this:
"The Police, the Foreign Office, the Home Office and MI5 have been aware for a substantial period of time that the People's Bureau … was a nest of terrorists".
I agree with that conclusion, as all noble Lords do.
The midnight protests against the demonstration both in Tripoli and in London on 16th April were not taken seriously by the Government on the grounds that such warnings at such times have occurred before. We should like to know how many times the Libyan authorities have called in the Foreign Office at midnight and how many times our ambassador in Tripoli has been summoned at midnight. Further-more, we should be told whether there was a radio

1471
message from Tripoli which was decoded and showed that Colonel Gaddafi gave special instructions to use force against the demonstrators.
Finally, the inquest into the death of Yvonne Fletcher has revealed a great deal of evidence which needs to be sifted very carefully and considered objectively with the other matters raised in the debate by noble Lords, not least the powerful speech of the noble and learned Lord, Lord Denning. For all these reasons, and in the interests of national security, a full independent inquiry may prove to be essential. We hope that the Government's own investigation and that of the Select Committee in another place, taken together, will cover the ground. If they do not, we shall have to return to this subject again.
7.30 p.m.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, we have had a most important and timely debate this evening. The whole country was deeply shocked by the outrage that took place at the Libyan People's Bureau in St. James's Square on 17th April. It was as a consequence of this that the Government broke off diplomatic relations with Libya. No British Government has ever done this in response to abuse of immunity—indeed we have only broken diplomatic relations on three previous occasions since the war. And, as was said in the Statement on 1st May by my right honourable and learned friend the Secretary of State for Commonwealth Affairs, we have taken so far the firmest action of any country faced with abuse of diplomatic immunity.
The noble Lord, Lord Kennet, has phrased his Motion in the form of two questions to which I shall give answers. But before turning to those more specific points, I should like to reply to two quite separate questions which he raised in his opening remarks. The first one was about the Libyan Committee. I should like to confirm to the whole House that we did not regard the committee as a Head of Mission in 1979. We refused to do business with them for many months. Until June 1980, they nominated a single individual as the Head of the Mission. Then we acted with our Community partners and our example was followed by all other countries in the world with whom Libya sought to maintain diplomatic relations.
The second specific point that he asked me about was about the weapons in the Tripoli Embassy. The facts are as follows: the Libyans claimed to have discovered some weapons, including five pistols, some ammunition and tear gas. This, of course, is totally bogus. No such equipment was issued to the Embassy or to the staff and Her Majesty's Ambassador has confirmed that none was held. The building was empty for a considerable period after the departure of the staff on 27th April and the Libyans had ample opportunity to plant the items referred to.
In the course of this debate, many noble Lords have made a number of constructive and positive suggestions as to courses that might be followed in order to help in this particular situation. I should like to say at the outset that I shall read again the whole debate and that we shall look carefully at the suggestions that have been made. Noble Lords will
1472
know from the Statement of my right honourable and learned friend the Foreign and Commonwealth Secretary on 1st May, that a full review of the Vienna Convention on diplomatic relations has been instituted and the review will cover its operation and its enforceability.
It may be helpful if, first, I draw to your attention the existing provisions under the Vienna Convention. We have the right under Article 9 to notify the sending state at any time, and without having to explain the decision, that the head of a mission or any member of the diplomatic staff is persona non grata or that any other member of the staff of a mission is not acceptable. We also have the right under Article 11 to require that the size of a mission be kept within limits considered by us to be reasonable and normal. The two articles taken together are potentially a powerful weapon against the missions of governments who advocate or support terrorism.
The Foreign and Commonwealth Secretary referred in his Statement on 1st May to certain immediate actions which are being taken to strengthen control over the operations of foreign missions in this country. He referred to the ultimate sanction of complete severance of diplomatic relations. This is not an action which we would undertake lightly. Her Majesty's Government are responsible for the protection of many thousands of British subjects who live overseas, often in the furtherance of Britain's worldwide trading interests. In many places, the conditions which they have to face are anything but safe. It is precisely in such places that the protection of the Government is most necessary. In considering the lesser sanctions open to us under the existing terms of the Vienna Convention, we have to bear in mind that diplomatic relations between governments rest ultimately upon the principle of reciprocity, a point made by my noble friend Lord Broxbourne.
This is the real sanction of diplomatic law, since every state is both a sending and a receiving state. The effectiveness of the Vienna Convention—and it has, in general, proved to be very effective—rests largely on this principle. A case in point is the question of whether we should subject the diplomatic bags of foreign governments to electronic scanning, a point raised by almost every noble Lord who has spoken in this debate. This practice is not expressly ruled out by the Vienna Convention. The practice of all states is, in fact, not to scan bags. Our own practice hitherto has been never to allow our own bags to be scanned nor to scan the bags of others. The noble Lord, Lord Gladwyn, asked a specific question about the weight of bags. I can confirm that bags may include "Articles for official use" and we have ourselves sent to East European countries building blocks to construct Embassy premises. Weight limits would be very inconvenient to everyone without doing much to help the problem of abuse. Drugs and many weapons do not weigh very much.
The topic of the diplomatic bag is currently on the agenda of the United Nations International Law Commission. We have more than once considered whether any change in our practice is desirable. Any such change would inevitably take place on a reciprocal basis. We have to decide in these cases how best to protect British interests and, in particular, the

1473
security of our essential communications. However, all these matters are under consideration in the context of the review. I have already referred to our power to declare persona non grata, or unacceptable, any member of a diplomatic mission who is unwelcome to us. The noble Lord, Lord Cledwyn, referred to this point. Normally we take such action where there is evidence of personal conduct incompatible with diplomatic status.
My right honourable friend the Foreign and Commonwealth Secretary has stated that from now on we shall go further than this, if circumstances justify it. We shall be ready to use the power of expulsion as an exemplary measure against any mission that the Government have good reason to believe is responsible for unacceptable activities in this country. We shall also scrutinise carefully applications for visas for diplomats of countries whose missions are suspected of unacceptable activities.
My noble friend Lord Broxbourne raised a very interesting point about the privileges enjoyed by those having diplomatic immunity and corresponding obligations. Article 41 of the Vienna Convention requires the persons enjoying these privileges and immunities to respect the laws and regulations of the receiving state. It also requires the premises of the mission not to be used for any matter incompatible with the functions of the mission. We have said repeatedly that Libya was in clear breach of Article 41 of the convention. I have said that we have the power to set limits to the size of diplomatic missions, a point raised also by the noble Lord, Lord Gladwyn. We can also refuse to accept as having diplomatic status any premises of a mission which are not in our view being used for diplomatic purposes. We now face a wider threat from international terrorism and we shall not hesitate to use our powers to prevent the abuse by missions of their diplomatic status in connection with terrorist activities.
I now turn to the more general points of principle which should be borne in mind in any discussion of the possibility of amending the Vienna Convention. The Vienna Convention did not create new law. The inviolability of the envoy, both in peacetime and between peoples at war, is a rule which goes back 3,000 years. It is fundamental to the growth of any relations between states which regard each other as enemies. The Vienna Convention thus represents a codification of customary international law on immunity and on other aspects of diplomatic relations. But the very long stability of the rules of law being codified was one of the factors on which the success of the Vienna Convention depended.
It follows from this that even if it were open to us simply to denounce the Vienna Convention unilaterally this would not entitle us to disregard the basic principles of inviolability of diplomats and missions which are reflected in the convention. Any amendments to the Vienna Convention—to which 141 states are now parties—would be a matter for international negotiation. Even those countries most friendly and sympathetic to our point of view have stressed that the whole system on which diplomatic relations are based should not be put at risk because of abuse by a tiny minority of states. The effort by the international community should concentrate on
1474
isolating any country which abuses the basic rules of the system. I have to say, therefore, that it is not likely that most countries would welcome any changes in the Convention.
I must also re-emphasise the point about reciprocity; any qualifying of the present immunity enjoyed by diplomatic agents in respect of both their persons and their premises could be exploited by unfriendly states overseas and could, for example, potentially lead to the arrest of British diplomats on trumped-up charges. I would remind your Lordships that Iran sought to justify the many months of detention of the United States hostages in Teheran on the basis that the diplomats had committed crimes against the Iranian people.
Several noble Lords have asked whether there has been any collective discussion on this whole matter. I should like to confirm that my right honourable and learned friend the Secretary of State raised the proposed review of the Vienna Convention at the Foreign Affairs Committee early this week on 14th and 15th May. I should also like to confirm that as a Government we place great value on collective international action against terrorism. We firmly believe that such action is likely to provide the most effective means of countering international terrorism, including state terrorism. We are, therefore, seeking to achieve a common approach to the problem on a number of different fronts.
As 1 said, most recently my right honourable and learned friend the Foreign and Commonwealth Secretary raised the issue with his European colleagues at the meeting of the Foreign Affairs Council on 14th May. They accepted that the issue had to be taken seriously and they instructed senior officials to consult closely. My right honourable friend the Prime Minister intends to raise it at the London Summit in June. The problem is a serious one which affects us all. We shall take every opportunity to make it clear that support for terrorism does not pay. We are not prepared to accept terrorism in any form, including that organised or directed by governments and abusing diplomatic privilege.
The noble and learned Lord, Lord Denning, raised a number of very interesting and important points. I would like to confirm that we are reluctant without the most careful and balanced consideration of the implications to advocate exceptions to the basic rules of inviolability or to enter into the dangerous game of claiming rights of retaliation in response to a breach of the convention. But this certainly does not mean that the fundamental right of self-defence, either in international law or in domestic law, is irrelevant in this context. Your Lordships may indeed recall that we relied on it when we made clear that those emerging from the Libyan People's Bureau, diplomats and non-diplomats alike, were personally searched for weapons and explosives before their identities were established. This limitation on the inviolability of the diplomats concerned was clearly essential for the protection of the police handling this stage of the expulsion, and its justification on grounds of self-defence has not been seriously challenged.
The noble Lord, Lord Cledwyn, raised two points about the present position on immigration and the present position on students. I should like to confirm

1475
that my right honourable and learned friend the Home Secretary has powers under the Immigration Act 1971 to exclude and to deport foreign nationals on the grounds that their presence here is not conducive to the public good, and he has made it clear that he will not hesitate to use these powers in the public interest. My right honourable and learned friend the Home Secretary announced on 1st May restrictions that he was imposing on the admission of Libyan nationals and the stay of those already here, which involved all applications being considered very carefully and granted only after stringent checks. This particularly applies to students and to trainees.
I turn now to the second part of the Question raised by the noble Lord, Lord Kennet, and to the suggestion that there might be an independent inquiry. We do not believe that an independent inquiry would be justified. We do not believe that the situation is comparable to the Falklands war, although we acknowledge that the incident in St. James's Square is unprecedented. The noble Lord, Lord Harris, who supported this case, quoted my right honourable and learned friend the Home Secretary who said that it was easy to be wise after the event, a point with which we would all agree, but the facts of the situation are that there was a comparative lull between 1980 and the bombings of March 1984. There was no accumulation of violence in 1982 and 1983. Furthermore, we could not ignore the very real risk to British embassy staff and the British community as a whole in Libya—after all, four embassies in Tripoli have been burnt in the past five years.
When the Libyan People's Bureau was taken over by a committee of revolutionary students in February 1984, we refused to deal with the revolutionary students and, as I indicated earlier in my remarks, we insisted that the Libyans name a new head or secretary of the Libyan People's Bureau. From that time no additions were accepted to the Libyan diplomatic list. We knew who were the accredited members of the Libyan People's Bureau but not in fact who were inside on 17th April.
After the bombings which happened on 10th and 11th March official Libyan involvement was suspected and six Libyans were deported and five are awaiting trial, but the link between those responsible for the bombing and the Libyan People's Bureau was not clearly established. We issued a strong statement directed to Libyans that a repetition of the 1980 incidents would have serious effects on our relations and that we expected the Libyan authorities to do everything in their power to prevent criminal acts by the Libyan residents.
This matter of an independent inquiry has been raised on several occasions and, as I have indicated, we do not believe that this is a case comparable to the Falklands. We therefore do not believe that there should be an independent inquiry into this case.
Lord Harris of Greenwich: My Lords, without becoming involved in an argument about the Falklands Inquiry, what is the argument against this matter going to the Security Commission?
Baroness Young: My Lords, I was about to turn to that point. As my right honourable friend the Prime
1476
Minister has said in another place, an internal inquiry has been set up under the Cabinet Office. When my right honourable friend said this, she indicated that any external inquiry into intelligence matters would risk compromising sources and damaging the effectiveness of the intelligence services, the very cause that most of us seek to protect. As my noble friend Lord Elton said on the same day in this House:
"Such risks should be run only when there are overriding reasons of public policy for doing so and in the present case we are clear that it would not be justifiable to incur these risks".—[Official Report, 1/5/84; col. 487.]
I should like to conclude by pointing out that, contrary to the impression sometimes given by the Press, most of the 5,000 or so diplomats serving in this country and their families are law-abiding and do not use their immunity to flout United Kingdom laws and regulations in any way. The same applies, needless to say, to British diplomats serving overseas. The abuses which any revision of the Vienna Convention would be intended to correct are committed by only a very small minority of diplomats.
May I repeat what I said at the beginning of my remarks: that I shall, of course, look carefully at the record tomorrow in Hansard and consider all the suggestions that have been made in your Lordships' House. I will certainly draw them to the attention of my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs.
Lord Kennet: My Lords, this has been an interesting debate and one which, in many respects, I hope may prove helpful to the Government in the review they are making of the convention. I should like to make one or two points, if I may detain the House for about 40 seconds. The noble Lord, Lord Cledwyn, mentioned the "diplomatic jumbo" and the noble Baroness, Lady Young, mentioned "diplomatic building blocks". I forgot to mention, when I spoke earlier, the diplomatic railway. There was a time when this country built a railway in the Soviet Union out of materials which had been brought in with the diplomatic bags. Things have changed since then.
Several noble Lords asked what was the point of scanning if you were not allowed to open the bags. There is something that could be done if bags were scanned: you could send them back unopened. This is a point that I think we may want to come back to later—indeed, everybody should come back to it later—the fact that the airlines are under a duty regularly to scan all baggage that they are carrying, including of course diplomatic bags; and, if they see something in them, they refuse them. This country does not scan diplomatic bags and so they do not see whether there are machine guns in them. There is a lot of interesting matter hidden behind this.
I have to say that the Government's answer on the inquiry was not satisfying: nor has the Prime Minister's defence of her refusal to hold an independent inquiry been satisfying. She bases her objection on security grounds. The Franks Inquiry into the Falklands War was an independent inquiry and went very fully into intelligence matters. There is no reason why there should not be another such inquiry this time.
Everybody who has spoken has agreed that the

1477
Government should not seek a revision of the Vienna Convention. This is one of those rare debates in your Lordships' House when it is possible to identify an issue on which everyone is agreed, and on which the Government agree also. For that reason perhaps it was a little surprising to hear the Minister of State read out the defensive brief against having a revision of the convention when nobody had asked for it and almost everybody had specifically said that we should not ask for it.
My Lords, I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

The Probation Service: Objectives and Priorities
7.53 p.m.
Lord Wells-Pestell Lord Wells-Pestell rose to ask Her Majesty's Government whether they will reconsider the objectives and priorities set out in the Home Secretary's recent statement on the probation service in England and Wales.
The noble Lord said: My Lords, I beg to ask the Question standing in my name on the Order Paper. On the 14th May 1934, 50 years ago last Monday, I was appointed a probation officer in the London probation service, serving the East End of London, which I did for a good number of years. Although I left the service soon after the war I continued a very close association with it and was for a period a vice-president of the National Association of Probation Officers. I have always considered their problems as my problems, as many of your Lordships know. During the last half century there have been many changes in the probation service and I feel it is a much better service now than ever it has been before. Today we have a very competent, able and well informed group of men and women throughout England and Wales.
On 1st May, the Home Office issued a statement on national objectives and priorities for the probation service. It is not possible for me to go into that statement in great detail: it would not be fair to your Lordships or to those who have agreed to speak tonight. The statement was the outcome of some 18 months of discussion with the Home Office, including some consultation with the probation organisations, including the National Association of Probation Officers and the Association of Chief Probation Officers. Most of the discussion, if in fact it could be called that, was undertaken by the exchange of memoranda, the first draft coming from the Home Office, with the interested parties submitting memoranda by way of reply. There was some face-to-face discussion but not a great deal and, as your Lordships know, there has been very little press coverage for this statement.
I am concerned—and 1 want to say this as nicely as I can: I do not want to be considered offensive in any way—about the competence of those at the Home Office who are responsible for the statement of objectives and priorities, who probably have had no practical experience at all of being a probation officer.
1478
I know that the noble Lord the Minister is going to tell me that they had the experience of probation inspectors. They had that experience, but it is a very different thing, when you come to prepare and write a memorandum, to do it after discussion with some people who have worked in the field if you yourself have had no practical experience.
I want at this stage to ask the noble Lord two questions. Did this group of civil servants consult the Magistrates' Association as to what they felt ought to be the objectives and priorities in the probation service? Did they consult the president of the Family Division?—for so much of the work of a probation officer is concerned with the family. I should like an answer to those two questions.
While I and my friends in the probation service find ourselves in agreement with some of the comments in that statement, we feel that the Home Office has failed to provide a positive programme for the future development of the probation service. There is in the statement a narrow preoccupation with cost cutting which is unrealistic having regard to the importance of the service to the community. It is because of the importance of the service to the community that I really am surprised that they did not seek advice, guidance or expert help from other bodies, two of which—the Magistrates' Association and the Family Division—I have mentioned.
Let me be quite frank and say that we applaud the statement that the probation service's first priority,
"should be to ensure that wherever possible offenders can be dealt with by non-custodial measures and that probation orders and community service orders should be made available, especially in cases where custodial sentences would otherwise be imposed."
It should not be necessary, but I want to stress that probation orders should be used more often as an alternative to custody and less often as a response to a first or minor offence. I believe that this is also the view of the Home Office; and it should become operative as soon as possible.
Many people who are now in our prisons could be dealt with by community service orders, and we look to the Home Secretary to draw this to the attention of magistrates and judges. Unless he does that, his feelings will not be known to them. I think we all appreciate that, if there is one thing that the present Home Secretary wants to do, it is to see that the right kind of treatment is meted out to offenders.
The statement makes the point that social inquiry reports should be concentrated on cases,
"where the court may be prepared to divert an offender from what would otherwise be a custodial sentence. There must be more selective use of reports by the courts, in order to make better use of probation officers' time".
I want to ask the Minister whether the Home Office has made it clear—if it has, I have not been able to find it—on the matter of social inquiry reports, whether they ought to be considered in precisely the same way, at the same rate for the same cases, or whether any instruction is about to be given as to how they should be used? We all know that probation officers undertake an enormous number of social inquiries, some of which are quite useless if the offender is dealt with in some other way. I have known cases where social reports have been asked for but the case has not been dealt with for six or eight months, and then the

1479
court has asked for another one to bring the matter up to date. That is very time-consuming and time-wasting.
My friends and I are concerned at the failure of the Home Office to plan for the continued growth of the probation service. It is stated:
"Provision made by the Government is intended to allow the probation service to grow by rather more than 3 per cent. in 1984–85".
The Home Office knows, and no doubt the Minister knows, that local authorities provide 20 per cent. of probation funds and that the financial position of most local authorities is such that 3 per cent. is unrealistic and unwise. It is a responsibility which the Home Office itself must undertake.
The statement gives a low priority to after-care for offenders released from custody. I came prepared to say something about this, but my noble friend Lord Harris of Greenwich is far better able and more experienced than I am, so I propose to make no further comment about that.
The statement also gives a low priority to the civil work of the probation service, which occupies about 10 per cent. of its resources. By "civil work", the Home Office means the issues of custody and access to children affected by the separation or divorce of their parents. In 1982 the service compiled over 28,000 reports for magistrates, county courts and High Courts and was responsible for over 15,000 supervision orders in civil cases. This does not take into account the guardian ad litem work which it undertakes. This is a time-consuming occupation, but the Home Office says that the work must be contained.
I think I can say without giving offence that very few people understand the value of these reports in custody cases. Husbands and wives rush off and consult a solicitor who, quite properly, takes the matter before a court. It ends up with the child being used as a battledore and shuttlecock between the father and the mother, and it begins to develop an intense dislike for one or other of the parents. I can say from my own personal experience, and from the experience of those in the service, that when these matters are left to probation officers agreement is more often than not arrived at between the husband and wife and even the child and they remain with a fairly good relationship. But the Home Office says that this is to be given a low priority, whatever that may mean.
The statement goes on to say that this kind of work should now be contained, and perhaps the Minister will interpret those words so that we know what they mean. A low priority for civil work and after-care will mean that a great deal of valuable work which is being done not so much in the interests of the community, but in the interests of the children concerned, will be lost. What is more, if this happens we shall have a very poor pattern of probation work in the various districts.
I should have liked to say something about formulating a plan for the future of the probation service, but I do not have time; I do not intend to speak any longer. But I hope that one of the subsequent speakers will say something about it. We must have a future plan for the probation service, which is much more understandable and realistic than the one suggested in the statement.
8.7 p.m.
Lord Harris of Greenwich: My Lords, I begin with something of an apology, because this is the second time that I have spoken in the past hour on rather different matters. But I should like to say how grateful we are to the noble Lord, Lord Wells-Pestell, for having raised this matter. As he has indicated, he has had a lifetime's interest in, and concern for, the probation service and it is of great help to the probation service that he has raised this matter tonight. Although I say that, I do not agree in all respects with the criticisms he has made, but in one or two respects we probably share a common outlook.
First, I welcome the statement. It is the first clearly defined national statement of what the objectives of the probation service should be and, as the Home Office—sometimes rightly, sometimes wrongly—gets hit over the head most of the time, when it does something well it is rather nice to say so. I know that the small group of ex-Home Office Ministers who are here—apart from the noble Lord, Lord Elton—will share that view. The job has been well done by Ministers and I do not wholly agree with the noble Lord, Lord Wells-Pestell, on this point. It is also a first-class piece of work by the officials who have been responsible for drafting this document. However, it is right to say that it is one thing to have national objectives, but it is a very different thing to try to apply them.
In a Written Answer in another place, which he gave at the time of the publication of this statement, the Home Secretary indicated that it is for chief probation officers and probation and after-care committees themselves to decide what their own order of priorities should be. That, in my view, is correct and proper, but they should certainly take account of this national statement of objectives which has been published in the past few weeks.
First—this is one of the points upon which I do not wholly share the view of the noble Lord, Lord Wells-Pestell—there are. I believe, genuine resource problems for not only the probation service but also the social work agencies. This would be true, whatever form of government we had. The fact is that there were limitations during the lifetime of the Labour Government. There had to be. It is right to recognise that under both the Labour Government and the present Government there has been some improve-ment in the resources made available for the probation service. As the statement points out, in 20 years the service has multiplied in number by over 500 per cent. I should be surprised if there were many other areas of activity where there has been quite such a degree of growth. I welcome that. I would say to the noble Lord, Lord Wells-Pestell, that if we impose new responsibilities upon the probation service—and we are anxious to impose them in order to reduce the size of the prison population—it is essential to recognise at the outset what the implications are for probation manpower.
It is also right to recognise the value of this statement. No other service receives such a high degree of support from central government. As we all know, 80 per cent. of the costs of the probation service are met from central government funds. This is a far higher degree of support than is given to the police

1481
service or to any other area of Home Office responsibility. That being so, it was absolutely right for the Government to publish this statement.
I speak today only for myself, and I do so on the basis of having been a Minister responsible for the probation service for five years and for having, for rather over three years, been chairman of the Parole Board. Essentially, the message of the statement is right: that the probation service is primarily a criminal justice service. Most of us have recognised for a long time that if we are to make a real drive towards getting down the number of people in prison it is essential that the probation service should define its responsibilities far more pecisely. The statement is right in saying, in relation to the work of the service in the courts, that, given the limitation of resources, social inquiry reports should be concentrated on cases where such reports are statutorily required, or where a probation order is likely to be considered and the court may be prepared to divert an offender from a custodial sentence. There is much else in the statement with which I agree.
May I now state some of my anxieties about the statement. There are three. First, I am concerned about the reference to non-statutory after-care and the suggestion that a lower form of priority should be accorded to it. Again, given the limitations of resources which I believe will exist, whatever form of government we have in this country, I do not favour encouraging probation officers to maintain regular contact with a wide range of ex-offenders, some of whom may not be in urgent need of their services. I do not believe that we shall ever have sufficient resources to make that kind of approach possible. We have to recognise that tough decisions have to be made about resources. That is necessary when you are a Minister, and it is only right to recognise the truth of that statement when you are not a Minister.
But if we are going to try to reduce the size of the prison population, what about those people, to take one example, who do not at the moment get parole? We know that those who do get parole are recommended for parole by the Parole Board, or the recommendation comes to the Home Office direct from the local review committee. There has to be a carefully detailed release plan. That is important, The release plan deals with housing arrangements for the offender and with any other arrangements which can be made to deal with his employment problems. But what about the person who has got immense personal difficulties and who, because of those difficulties, or because he has committed a grave offence, or because he has breached parole on a previous occasion and has been recalled to prison, does not get parole at all? There is a danger that if the general approach of this statement is taken too literally, probation officers will not feel that it is incumbent upon them to deal with that offender, on the ground that he is not one of their most urgent responsibilities. It would be a very great pity, were that to be true.
I repeat: if we are going to try to reduce the number of people who are sucked back into prison after a relatively short period in the community, I believe that it is absolutely essential that people at risk, emerging from prison in the circumstances which I have described, should get all the help that the probation service can give them.
1482
That is my first anxiety. My second relates to civil work, which is downgraded in the statement. This is hardly surprising. The Home Office has no direct responsibility for the divorce courts in this country. The noble Lord, Lord Elton, may recall that in a debate just over a year ago I asked him whether any effort would be made to encourage the Lord Chancellor's department to pay for the work which the Home Office was doing on the Lord Chancellor's behalf. Bluntly, if the probation service is not going to do this work—let us recognise that the statement means that they will be encouraged to give it a lower priority—who will do it? It will have to be done by somebody. If the probation service, which I know has an enthusiasm for doing work of this kind, is going to be asked, as it certainly will be, by divorce court judges to take on work of this kind, it seems to me to be right to return to this question: why should the Lord Chancellor's department not pay for the work carried out by the probation service in the divorce courts?
The problem is caused because of the delineation of responsibilities between the Home Office and the Lord Chancellor's department, with the Home Office responsible for the criminal courts and the Lord Chancellor's department responsible for the civil courts. It has been recognised in this statement for the first time. I welcome that fact. Since the problem has arisen, I believe that far more serious attention will have to be paid with regard to how this matter is handled by these two departments of state.
I turn now to paragraph 6 of the Government's statement which contains a reference to the work of the probation service in relation to outside agencies. The paragraph reads:
"There must be a continual process of interaction with other agencies and other interests—locally between probation committees, the management and staff of area services, the courts, the police, the prison service, local authorities, local government services",
et cetera. I agree with that. It is absolutely splendid. But I wonder what it actually means. I wonder also whether anything, in fact, will be done about it. It is one thing to say that this should be our objective; it is quite another thing to ensure that it actually takes place. I should like to quote a comment on this point made by the National Association of Senior Probation Officers, of which I have the honour to be president. They state:
"However, we are unaware, at our level, of any sense in which the service 'shares with others … the task of developing a planned and co-ordinated response' etc. Indeed, it frequently seems to us that other agencies in the criminal justice system are working at cross purposes with us and with each other. If it is the intention of the Home Office that an inter-agency planned and co-ordinated approach should be developed (and this is a development which we would strongly support) then it is necessary both to say so clearly and to indicate some of the means whereby such co-operation might be fostered. The possibility of inter-agency policy review committees at county level is one idea that occurs to us".
I shall be very interested to hear what the noble Lord. Lord Elton, has to say on that particular point. It is an important question.
In the lifetime of the Labour Government, as the result of a conference that took place at Ditchley of a number of chief constables and directors of education and social services, it was decided to try to fashion in some way a co-ordinated response of the kind set out in this document, at local level. After many agonising

1483
drafting sessions, a joint circular was eventually sent out by the Home Office with the DHSS and, I believe from memory, the DES as well.
This suggested that chief constables should take the responsibility for convening conferences in their own areas; bringing together the various other people responsible for social work agencies, including chief probation officers. That seemed to me at the time to be rather a good idea—obviously it did, as otherwise the circular would not have gone out. Nevertheless, I am interested in knowing whether this process is continuing. Is the Home Office still encouraging that particular development of regular meetings between chief constables, chief probation officers, directors of education and directors of social services so that they can discuss together local problems—discussions which would otherwise not take place? One point that became absolutely clear at the time we were discussing this development originally was how irregularly such contact had been made in local communities.
Finally, I should like to turn to a point that has not been touched on in any direct way. It relates to training. The statement is largely silent on this question, although the publication of this statement of objectives does in my view carry with it very substan-tial training implications. Again, I should like to quote the view of the National Association of Senior Probation Officers. I apologise to the House for the fact that it is a rather lengthy quotation, but nevertheless it sums up some of the problems rather well:
"We see the statement as confirming the trend away from ideals of the police court missionary as epitomised by the phrase 'advise, assist and befriend' towards a more central role in the criminal justice system with its emphasis on the management of crime within the community. For this trend to be managerially sustainable will require not only an input of training in management skills, particularly at senior probation officer level, but also a substantial revision of basic probation officer training. At present this relies too heavily on training for social work without recognising the very different task that probation officers are required to undertake as opposed to social workers. There is an urgent need for the training base to be broadened to take account of the enlarged range of activities performed, methods undertaken and skills required by the present-day probation service. In view of the rather self-congratulatory approach of the accademics responsible for social work training, we see little impetus for change coming from present training sources and the road ahead lies in the probation service taking back to itself the task of basic training, possibly within a central probation college".
I recognise that the Minister is not going to commit himself to a central probation college this evening—it would be rather remarkable were he to do so. Nevertheless, this is an important matter. The probation service has no training resources of its own. There are quite sophisticated training facilities available to the police service—and a very good thing, too. There are substantial training resources for the prison service—but there is an enormous gap so far as the probation service is concerned. I hope that this will receive attention in the future.
Having said that, I have indicated that—subject to the qualifications that I have mentioned in the debate this evening—I broadly welcome the approach of the document and I wish it well.
8.25 p.m.
Lord Rhodes: My Lords, I join in thanking the noble Lord, Lord Wells-Pestell, for having introduced this
1484
subject tonight. I congratulate the Home Office on the clarity of its well thought-out statement, and also on the document on justice that was issued last week. My speech will be a little recital of practical events with a bearing on those documents.
Successive Home Secretaries have sincerely tried to stem the tide of increasing crime, with only limited success. We welcome the working paper Criminal Justice and the statement on national objectives and priorities for the probation service which have been issued during the past fortnight. The remarks I have to make are directed to the statement on the probation service. The statement clearly identifies the need to maintain a whole range of facilities for use by the courts and the probation service. It highlights the need to assist all those returning to everyday life from custody. To this end, we in the community are urged to rally around and to make a prime contribution by involving ourselves in the rehabilitation of the offender. Quite rightly, for without that involvement of the community in the rehabilitation of an offender, rehabilitation is a non-starter.
We have been doing that in Manchester for the past 13 years; that is, carrying out the tenets which are mentioned in the two documents. Our trust is called the Selcare Trust. It comprises Crown Court judges, probation officers, magistrates and a fine lot of people from the general public. Last week, we held our annual general meeting in Manchester Town Hall. It was one of the most vibrant meetings I have attended in recent years; it was one of the finest meetings I have ever had the privilege to attend. The hall was full. It is now recognised that we are making the kind of progress that is paying off in this particular field.
I ask your Lordships to give me your indulgence when I read out the progress that we have made in Manchester during the past 13 years. If my name crops up occasionally, please forgive me. We started first with an organisation, involving the head probation officer for Manchester. In 1971 the Chadderton Guest House was opened as a rehabilitation centre for older men, to help many of the men living there avoid further crime and breakdown. In 1972 it was the Bury Family Centre for women needing help—wives of prisoners who did not know how to add up. In 1973 it was the Failsworth Guest House for homeless women and their babies, especially when leaving hospital or prison.
In 1974 it was the Oldham Anchor Club—an evening centre for the isolated and lonely, a day centre for community groups with special aims, and so on. In 1974, we had the Bolton Guest House for homeless men in single rooms; and rooms for battered wives, unmarried mothers or the homeless from care or prison. In 1975 we had the East Manchester, Beswick Guest House, for homeless young men in the 17 to 21 age group discharged from detention.
In 1976 we were registered as a housing association. In 1976 we had "the Lady Rhodes", a narrowboat. This is a marvellous project where probation officers give of their own time to take out young lads who have just started offending against the law. Then we had Flagg Barn, another place in Derbyshire that we have for young offenders to learn sensible adventures. Again, the probation service comes up trumps, because much is done in their own time. I shall soon

1485
be through this list. In 1979 there was Stretford, a group support scheme providing facilities for a number of probation officers in the area. In 1980 there was Leigh, a bed-sit rehabilitation unit for six homeless men discharged from prison. Then, in 1981 there was the Manchester Forward Drive Scheme, the Manchester Coach Scheme and the Manchester Day Centre for all after-care contacts, where people can put down their names so that they can keep in touch with really good influences day by day.
In 1981 there was an extension to Chadderton House to accommodate men discharged from prison. In 1982, in Manchester, we obtained paramount control of two existing and successful hostels. This is absolutely fantastic. One is for men and the other is a stopover home for young women who, shall I say, are seen and looked after, having arrived at Piccadilly Station with nowhere to go and no home. In 1982 Failsworth House was reopened for homeless males discharged from prison. Also in 1982 Leigh Hostel was opened. In 1983 seven developments were commenced. I shall come to a conclusion in a few moments. This year, Princess Margaret opened the Rhodes Centre in Oldham—a resource centre able to cater for many groups and which contains the original Anchor Club. The building had been completely gutted and rebuilt, mainly using Manpower Services labour skills. It is to be used from mid-December, and was officially opened in February.
I shall come to what we want to do in a moment. Your Lordships will have noticed that the accent is on accommodation. We know it to be true that there is a correlation between homelessness and offending. The dosshouse is no place for a young person. This work has been the most rewarding thing that I have ever been associated with in the probation service. I would not have believed it when first I started, but it grows and the public are ready to help. Even old offenders stay out of trouble longer. Accommodation other than dosshouses is a must if we are to have any success with young offenders. I say this deliberately, because I know it to be true. They must have something of a place that they can call their own. I do not know how many of your Lordships were brought up in a large family in crowded conditions, as I was. The only bit of space of one's own was half a small drawer. The defence you put up against any encroachment on that half-drawer was sometimes nearly lethal. In my opinion, having a place to call their own, however tiny, is a most powerful influence on an offender who is trying to adjust to ordinary life again.
Where my Trust thinks the Government strategy comes unstuck is in linking the priorities to their actual budgeting. In other words, they are not putting their money where their mouth is. The Cinderella section of the Home Office—C6 Department—which deals with the voluntary sector of the community, has had last year's budget of £5,106,000 increased by 11 per cent. It was increased to this figure by the addition of some £250,000-plus only after we had made strong representations from the voluntary sector, complaining that it had committed this amount in its building programmes in line with principles previously agreed with the Home Office. It was increased only with a clear warning that this amount will not be included after 1984–5 and that no request for
1486
increased support for supported accommodation projects will be accepted in the near future.
Surely the Government must be aware that the community accommodation project takes two or three years to materialise, and a break at this point not only puts it back 12 months but cancels the whole programme, which cannot be restarted for at least two or three years? Without that £250,000-plus, the increase to that sector is approximately only 5 per cent.—just an inflation increase. The 3 per cent. does not apply on this basis. That is not an increase calculated to give confidence to the community.
Will the Minister tell us whether, after getting the good will and the offer of practical help to carry on this work in our further developments, we should now say, "We are sorry, but we do not want you"? History in this country spells out how the voluntary effort has very often been kicked in the teeth. As I have said, the Government have given a clear warning that no request for increased support for supported accommodation projects will be accepted in the future. I cannot believe that the Government could be so callous or so stupid. In sheer practical terms the financial saving to the community and to the country is considerable. Do your Lordships realise that it costs £200 a week to keep a person in prison? We can keep them out for a fraction of that amount. Look at what we have done already. It fits like a hand in a glove all the criteria that the Home Office is urging us to adopt.
What I am saying is that this work must go on. This is one of the few examples of success. Ten regions have imitated what we have been trying to do in Manchester. We have a whole set of first-class people working with other first-class people in the probation service, ready and willing to do this rehabilitation job. All we need is the capital for the original buildings. The ordinary committees in the localities will look after the revenue. Please think again when you are thinking in terms of starving an organisation like this which is doing such a magnificent job.
8.40 p.m.
The Earl of Longford: My Lords, it is a great pleasure to take part in the debate on this subject which is initiated by my noble friend Lord Wells-Pestell, who is certainly more qualified by long experience of the probation service to discuss these matters than anyone else. Lord Harris, who I believe will be returning in a moment, has had very significant Home Office experience. The noble Lord, Lord Rhodes, has, I am sure, moved us all with his account of the work he is involved in at first hand. May I say that my remarks, less eloquent and slightly less concrete, will move along the same lines as his.
I am not one of those who will become very enthusiastic about this paper. If one was the tutor of whoever wrote it, one would tell the person to go away and put it more briefly. I think that the whole thing is unduly prolonged and ambiguous. I do not see why one should pay the officials any special tributes. Lord Harris was of course in charge of these officials, or people almost identical, so it is reasonable to think that loyalty would cause him to find merit here which might not be so apparent to the rest of us. But at any rate, here is the document, and I am glad that we have

1487
it and that the noble Lord has raised the matter this evening.
As those on whom I have inflicted myself in this House before now will know, I should like to see a great expansion of the probation service. I shall not dwell on that matter now, though it has been touched on by other speakers. The rate of increase indicated here is, in my eyes, quite insufficient. I would take the view that in any enlightened plan for the future of our penal arrangements we should have far more probation officers to undertake the supervision of people who either are not sent to prison at all or who are released from prison, and there would be much less money spent on new buildings which we would then merely proceed to fill up with prisoners who might as well in many cases not be there. In general terms, I would like to see a much more rapid expansion of the probation service, but I recognise that this was not the remit of the officials who drew up this document, and it would not be fair to criticise them on that account. Let us take the paper as we find it. I will leave over all the issues except that of after-care. I hope Lord Harris might be here by the time I reach his points on this, but, if not, I shall not say anything, I think, that he will find offensive, because in these latter days he and I seem to agree much more than we used to.
I have had a long connection with the after-care of prisoners, but my memory of the probation service does not go back as far as that of the noble Lord, Lord Wells-Pestell. But, now nearly 30 years ago, I and others founded the New Bridge to help those who had been in prison, and a few years after that I was chairman of a committee—what was then called the Pakenham-Thompson Committee—which produced a report recommending a national system of after-care. The Home Office soon after that promoted an inquiry through its advisory committee. Moving on from that point, I think at the beginning of 1964 or thereabouts it was renamed the probation service. It became from the beginning of 1964 the Probation and After-Care Service. Those who were concerned then with after-care were very much encouraged by that development and by the indication that at last we had a national system of after-care.
Those interested in after-care at that time certainly understood that to mean that in future when a man came out of prison he would be able to find some identifiable person to whom he could turn for help. That was 20 years ago. I shall come back to the question of whether that will continue to be the position or whether in future there will not be such a person. But, at any rate, that was considered the most encouraging development 20 years ago—that when a person came out of prison there would be someone to turn to.
In some ways prisoners were even a little better off than someone who had not been to prison. If you found people who had been (shall we say?) dismissed from their job for petty stealing, if they had not been to prison they would not be able to go to a probation officer. There was no one for them to turn to, so in a way it was a privilege for people who had been to prison, but it was about the only privilege then or now that they possessed—that they had somebody to whom they could turn on coming out of prison.
1488
Let us see what we have today. We are told that it is no longer to be called the Probation and After-Care Service. When I say that we are told today that it is no longer to be called that, I am aware that the name was changed in the Criminal Justice Act. If noble Lords point out to me that I might have caused a little trouble at the time and failed to do so, I can only say that, like many greater people, I nodded. It escaped my attention. However, the noble Lord may or may not be aware of the views of the National Association of Probation Officers. There may be other views that have reached him which flow from the probation service or those concerned with it, but as far as NAPO is concerned, I have been in touch with it in the last few days and it points out that it resented the removal of the word "After-Care" from the title.
I do not know whether the noble Lord the Minister will be able to say anything to encourage us on that point. I understand from NAPO that it received assurances at that time that this did not mean that those who came out of prison in future would not be able to turn to someone, as they had in the past. But I must ask the noble Lord, whether the change of name which is now before us this evening, and this paper which confirms this point of view, represent any discontinuance of a service which previously existed. Will prisoners coming out of prison be worse off in future? I must put that to him clearly.
The paper itself, as I ventured to say earlier, is not a model of clarity, but on this point, the language used is rather frightening. The Government paper says:
"the Service has the following principal tasks",
and the third one is:
"providing through-care for offenders sentenced to custody, and exercising supervision after release in cases where required by law".
I repeat that:
"exercising supervision … where required by law".
That would be, as I understand it, where there is a statutory duty. But there is no mention here of after-care for those who are not under any compulsory supervision.
Later, when we turn on to what is now called "through-care"—I do not object to that word, because it includes contact with prisoners while they are still in prison—under heading C, "Through-care", we find this:
"assisting prisoners while in custody"—
well and good—
"and in preparation for and following release".
There it is: "assisting prisoners … following release". So it would appear from the task which they have undertaken for the last 20 years, with limited resources but to the best of their ability, that they would still have that duty cast on them of helping all prisoners after release, whether or not they are under supervision. I must press the noble Lord to give us some sort of reassurance on that point. That would of course be one way of answering the noble Lord, Lord Rhodes, who was very much concerned with the dangers.
This question of supervision is full of complications. I do not know that the task of a probation officer who is supervising an ex-prisoner is totally different from the task of a probation officer who is befriending or

1489
helping an ex-prisoner who is not under supervision. It is different but it is not totally different. We know that a good schoolmaster is the tutor and also the friend of his pupils. I do not know that one can draw too sharp a line between supervision and friendship in the case of prisoners. Nevertheless, the point I am making is the one that I made just now, that prisoners not under supervision—I have no time to discuss those who are under supervision—are all important in the eyes of many of us for the reasons which have been dwelt on by the noble Lord, Lord Rhodes.
Before I close, may I say just one word from the point of view of the New Bridge Society for ex-prisoners, which I helped to found and of which I am now president. There was a feeling in that society, and I have no doubt in other voluntary societies—maybe in the one with which Lord Rhodes is connected—that the implication of this paper is a lessening of the importance attached to voluntary participation in penal policy. I hope the noble Lord might be able to say something encouraging about that. Will the noble Lord be able to tell us that there is no lessening of the emphasis on the importance of voluntary work?
After all, we know that volunteers bring something which others cannot bring. It is difficult to define it but for many prisoners it is rather more acceptable than those who appear, however well-intentioned, to be agents of the state. They have some advantage in other ways. too. On the other hand, they have the disadvantage that they are part-time and their services may be rather more intermittent. So I am not trying to say that volunteers are better than the probation officers. What we have had up until now is a very happy combination in most parts of the country, so far as I am aware, between the volunteers and the probation service. I want to be sure that the noble Lord, Lord Elton, will be able to say something to encourage that continued participation.
I will not take long. I promised the noble Lord the Government Chief Whip that I would speak for 12 minutes. I have spoken for 12 minutes precisely, so I will close. But I do want to press the noble Lord, Lord Elton, on the question of whether in future those who are not under supervision, who have emerged from prison, will still have a probation officer to look to as they have at the present time.
8.52 p.m.
Lord Mishcon: My Lords, this House is often fortunate in having Motions introduced and participated in, by way of debate, by those who have special experience. Tonight is no exception. My noble friend Lord Wells-Pestell, quite apart from performing a great public service by bringing this matter before the House, has done so with the experience of which he spoke and of which his noble freinds and other members of this House are well aware. I think we were all touched by the contribution of my noble friend Lord Rhodes. In the course of his distinguished and long career, he has most likely heard the phrase "What Manchester did yesterday, the rest of the country will do tomorrow". I imagine that that really was the burden of his speech and of his hope.
My noble friend Lord Longford—whose contributions on matters of this kind are always so
1490
welcome—very pertinently said at the close of his speech that he had made a promise to the Opposition Chief Whip that his speech would last only 12 minutes. I believe it was a hint.
The Earl of Longford: My Lords, it was the Government Chief Whip.
Lord Mishcon: The Government Chief Whip, my Lords? Oh, I do not regard any promises of that nature as binding on me! I thought he had made it to the Opposition Chief Whip and I therefore looked round for the limit on my own speech. But what I aim to do, whatever really may be the duty of a winding-up speaker, is to try to talk very briefly about matters that have not been very substantially dealt with by other speakers but merely touched upon. Possibly I might even be able to bring a fresh point to your Lordships' attention.
I should like to start by saying that it is very sensible of the Government to have a document of this kind. As has been pointed out—and it says so in the document itself—it is the first such document that has been produced. Therefore they deserve congratulation for that. After a little bit of optimism at the beginning of the document that no doubt it would have the warm approval—I do not think those were the actual words used—of the probation service, there is later in the introduction to the document a very polite reference to the fact that no doubt the very relevant organisations will submit their views and comments on the document itself. But at least we have a document to discuss. For that, the Government deserve praise.
I would say this, though I do not think it is a terribly original thought. If ever there was any branch or any agency that one might hope would, first of all, succeed in reducing the prison population of this country, which is such an urgent problem, it is the probation officers, the very service about which we are talking. I would go on to say that there is a terrific problem of recidivism that we have encountered in all the figures we have discussed when we have considered penal matters. For reducing this, the probation officers are indeed our main hope.
You can go on saying as often as you like that, as a judge, the law provides that you should not make a probation order and you should not make a community service order unless you feel that the only alternative to that is prison. I tried to say this when we were dealing with the Juries (Disqualification) Bill. I regret to say this in his absence, but the noble and learned Lord, with that magnificent flow of language that he employs and with a smile that very soon turns into laughter and persuades everybody else to laugh with him, described the whole attitude of people as thinking that probation orders and community service orders were made without this thought very well in the judge's mind, If I may most respectfully say so, he was saying something, which just is not correct in practice.
Most of our courts, thinking that the supervision at home did not seem to be good enough for the young person before them and that the parents seemed not to have succeeded in keeping the young man from being present in court that day, would not think of sending him to prison at all but would just think that a dose of probation order and/or supervision would do him a

1491
power of good. The judge may very often also feel that a little bit of public service, a little bit of work doing good for the community would really be a healthy way of dealing with the offender before him. Again, it may not be in respect of an offence, whatever the Act may say, which would normally carry with it, but for the community service order provision, a prison sentence. So the probation service is always going to be a very busy service indeed. It is our hope for keeping many out of court again.
Having regard to that, and having regard to what the document itself talks of as the qualities that are necessary for the probation service, perhaps I may quote what the document does say. It states:
"The task of running the Service has therefore become more demanding both managerially in terms of the size, variety and complexity of resources involved"—
and these are the important words—
"and professionally in terms of the demands which are made on the objectivity, judgement and commitment of individual probation officers and those responsible for their professional development and supervision".
I think that it was the noble Lord, Lord Harris of Greenwich, who spoke about the absence from this document of any reference to training for the probation service and any detailed plans for that training. I shall not repeat the point that the noble Lord made so well and so eloquently. I underline it. I must, however, bring again to the attention of the House that, if this is the quality of the personnel that we are looking for in this vital service, how extraordinary it is that the Government recently decided to reduce the pay for trainees in this service so as to make it so difficult for the right type of person—those with the particular, valuable and rare qualities that the document itself sets out as being the qualities and characteristics necessary for a successful probation officer—to come forward and be trained to fulfil this terribly difficult role.
On the question of numbers, reference has been made to what is stated in the document about the 3 per cent. increase for the coming year. I do not quite know what the 3 per cent. figure relates to. If I remember correctly, there are two figures given in the comparison to which the noble Lord, Lord Harris, drew attention so properly, of the rise in the 20 years. The noble Lord mentioned that it was 500 per cent. I believe that the last figures given in the document, relating to only a year or so ago, are 6,000 in the case of probation officers and, I believe 5,000 for their ancillary assistants. What I do not know and what I hope the noble Lord the Minister will tell me is whether it is 3 per cent. on the 6,000 only, or is it 3 per cent. on the total of the 6,000 and the 5,000 ancillary workers? I believe that some amount of interest will be taken in that reply.
Other speakers have talked about after-care. I am going to keep to my promise not to repeat in inferior language what others have said so much better than I should. There is, however, a quotation which I do not believe has been made and which I should like to read from the document, although, peculiarly enough, I believe that my noble friend Lord Longford did quote from the preceding sentence.
Previous speakers have dealt with the social work
1492
that is being done by probation officers after prisoners leave prison. One obviously relates that to the hope—the noble Lord, Lord Rhodes, referred to this so movingly—of giving them homes and some sort of possibility of rehabilitation with their families which will make it possible for them not to return to prison. It is in that context that I quote from paragraph VI(c) on page 5 of the document that we are discussing:
"Beyond that, social work for offenders released from custody, though important in itself, can only command the priority which is consistent with the main objective of implementing non-custodial measures for offenders who might otherwise receive custodial sentences".
That is officialese—I do not say that in any slighting sense—for saying, "It is quite meritorious but, from our point of view, we put it at the bottom of the list". It should be nowhere near the bottom of the list. My noble friend Lord Rhodes emphasised that point as indeed did my noble friend Lord Longford and others.
You will be relieved to know, my Lords, that I am on my last point. It is a matter to which other speakers have referred, but the point I make is different. It relates to the very low priority that is given to the proportion of resources allocated for civil work. Again, the rather dampening words are used that this,
"should be contained at a level consistent with local circumstances and the foregoing priorities".
I am not going to repeat the question, "Who is going to do it?" It is the point that the noble Lord, Lord Harris, raised. I am not even going to say, "Oh dear, 80 per cent. and 20 per cent. Why doesn't the Lord Chancellor's department bear the burden here for this charge in respect of work done by the probation service?" I say that it should not be done by probation officers at all unless they happen to be dealing with families with some sort of prison background that is part of the problem. From these Benches and other Benches, there has been the plea over recent years that family problems should be dealt with by family courts and not by magistrates' courts and not by the Divorce Court as happens at the moment.
When one is dealing with the pathetic problems, and they are indeed pathetic, of the children, and the quarrels over children's custody, these are things that should be dealt with by social workers attached to the family courts, not by probation officers who are associated, as the document says, part and parcel with the programme of dealing with criminal law. There may be probation officers who are well able to help, but this is not the province of the probation officer in the normal case. It is for the social workers that so many of us want attached to the family courts. I have exceeded my noble friend Lord Longford by two minutes in winding up. I hope that I shall be forgiven.
9.7 p.m.
The Parliamentary Under-Secretary of State, Home Office (Lord Elton): My Lords, the House is clearly and rightly grateful to the noble Lord, Lord Wells-Pestell, whom I also am tempted to refer to as my noble friend, for this opportunity to discuss the work of the probation service so soon after the issue by my right honourable and learned friend the Home Secretary of the statement of national objectives and priorities for the probation service.
When the noble Lord addresses the House about the probation service he does so with knowledge and

1493
authority. Indeed, in the light of the credentials which he recited at the beginning of this evening, how could it be otherwise? Looking around the Chamber and looking at the credentials of other noble contributors, how could I do other than listen with the greatest of respect and deference to the whole of this debate? Although we are small in number, apart from myself your Lordships concentrate a very considerable volume of experience and authority on this vital service.
The noble Lord, Lord Wells-Pestell, is concerned about the statement, but let us consider first the service itself. In recent years, as the noble Lord, Lord Harris of Greenwich, has generously acknowledged, it has undergone tremendous growth and change. In 1963, 94 area services employed about 2,000 probation officers and some other staff at a cost of about £4·5 million. At that time it did little more than supervise offenders on probation, prepare social inquiry reports and engage in civil work arising from matrimonial disputes and the custody of children.
Since then the probation service has become responsible for social work in prison department establishments and for both the voluntary and statutory after-care of offenders released from custody; for running day centres and hostels; for organising community service and for providing some intermediate treatment facilities. It is involved in adoption work and conciliation work and engages itself with statutory and voluntary agencies in a wide range of activities. In the financial year 1983–84, 56 area services employed almost 6,000 probation officers and about 5,000 ancillary and support staff at a cost of some £150 million.
I can bear out the arithmetic of the noble Lord, Lord Harris of Greenwich, that therefore the number of full-time workers was roughly treble what it was in 1963. The total number of people working in the service was about five times what it was in 1963 and the annual expenditure had increased to more than 30 times what it had been over a period of 10 years, to cover a much wider area of concern.
That is a measure of the extent of the change in the service over that period. Through that time, public attitudes also have been changing. There has been concern about the steady increase in crime and about the apparent inability of the criminal justice system to contain it; and there has been increasing interest in victims and in crime prevention. The probation service has to take account not only of its clients' needs but of the interests and concerns of the wider community in which it operates and which it serves.
But resources are not infinite and they cannot be used indiscriminately. Therefore, it is necessary to have a link between objectives and budgets. The service cannot expect to go on growing as it has in the past. The Government have indeed made provision for a 3 per cent. growth in 1983–84. The noble Lord, Lord Mishcon, asked, "Three per cent. of what?" The provision is for growth of 3 per cent. in probation officers and support services. But it is for individual probation committees to decide how to allocate their budgets. Last year's growth achieved more than 3 per cent. in probation officers—close on 200 extra—plus
1494
more than 100 ancillary officers. I hope that is a sufficiently mathematically exact reply to the noble Lord's interest.
In future we shall be expecting the probation service to concentrate on making the most effective use of the resources which it has already. It must expect to meet increased demand for its services by more efficient and economical use of its existing manpower and facilities. In addition, a basis was needed for the application to the probation service of the Government's financial management initiative. The intention is to ensure that the 80 per cent. grant we pay on the probation service is related to clear objectives and is securing value for money. There can be no objection to getting more for the same amount of cash.
All this pointed to the need to provide probation committees and probation service management with a clear indication of what my right honourable and learned friend saw as the service's present objectives and priorities. But the statement which he has issued is not carved on tablets of stone and it is not immutable for all time. Circumstances and need have altered in the past. Doubtless they will alter in the future. Nor do the Government intend that their view should be applied uniformly throughout England and Wales. Circumstances and needs also vary from place to place.
But we are confident that in setting objectives and priorities for their own area service, probation committees and chief probation officers will have regard both to the national objectives and priorities which have been set for the probation service and to the local circumstances, needs and resources within which they are operating. This is primarily, of course, a task for probation committees on the advice of chief officers; but the probation inspectorate will be ready to assist in any way that it can.
Copies of the statement have been placed in the Library. Let me briefly say that it sets the probation service in the wider context of the criminal justice system. I am grateful to the noble Lord, Lord Rhodes, for referring to the working document on the criminal justice system which gives all the parameters and which I commend to your Lordships. There is already a copy in the Library.
The statement emphasises the importance of a planned and co-ordinated response to crime and the importance of public confidence, both in the probation service and in the criminal justice system generally. The statement goes on to look at the probation service itself and indicates my right honourable friend's firm belief that its central objective is the supervision of offenders in the community. This was the original task of the probation service; it continues to be its principal task. Its influence and credibility would be seriously undermined if preoccupation with other work led to its falling down on this responsibility. The statement then sets out the service's related objectives of providing advice to the courts; of supervision of non-custodial orders; of providing through-care for people in custody; and of meeting the separate statutory duties arising from civil work.
The statement suggests a broad order of priorities. I may be going over familiar ground, but I think that it

1495
is worth putting them on the record from this Box. The first priority is to ensure that wherever possible offenders can be dealt with by non-custodial measures and that standards of supervision are set and maintained at the level required for this purpose. I think that we are all agreed that it has been a prime concern of this House for a number of years to try and prevent anybody who need not go into custody, from going into custody. Secondly, resources should be allocated to the preparation of social inquiry reports on the basis that standards will be similarly set and maintained, but that reports will be prepared on a more selective basis consistent with the first objective. A draft circular on social inquiry reports is to be issued, following a review and drawing together of existing guidance and policy on the use of these reports. We shall be consulting the service on this exercise and it will, therefore, take a little time.
The third objective is that sufficient resources should be allocated to the through-care of those in custody to enable statutory duties to be met; but beyond that, social work for offenders released from custody, though important, should command only the priority which is consistent with the main objective of diverting offenders so that they do not get into custody at all in the first place. Fourthly, the service should devote sufficient management effort and other resources to make an appropriate and effective contribution to the wider work of the community, including the civil work tasks required by statute.
The statement ends by recognising that its implementation may involve a redistribution of resources or a change in priorities for individual area probation services and suggests that in general the first priority—that of providing for non-custodial disposals for offenders—will continue to require an increasing proportion of the service's total resources, that civil and community work will require an increased contribution from management but not necessarily of total manpower, and that the remaining objectives will be achieved by using existing or slightly reduced levels of resources more efficiently.
The statement is a Home Office document; it has been produced in consultation with the probation service and we have taken account of the views which organisations representing the service have expressed. The noble Lord, Lord Wells-Pestell, who questioned the nature and extent of that consultation—and I should like to deal with the matter on two perspectives—referred, first, to exchanges of minutes of correspendence. There was a meeting with the Central Council of Probation Committees, a meeting with the National Association of Probation Officers, and two meetings with the Association of Chief Officers of Probation, plus informal contacts, I understand, with the officials of the organisation. But copies of the statement were not sent to the Magistrates' Association or the President of the Family Division (which is what the noble Lord asked about) and they were not consulted—I am not sure that I have said what I meant to say. I should have said that copies of the statement in fact were sent to those bodies, but they were not consulted. If that is not what I first said, then it is what I meant to say.
Lord Wells-Pestell: My Lords, I am sorry to interrupt the noble Lord, but am I to understand that copies of these documents went to the Magistrates' Association and to the Family Division of the High Court?
Lord Elton: Yes, my Lords, the noble Lord and I can understand that. They were not consulted, and that was the noble Lord's concern; but they had been asked to comment on the statement. It seemed preferable to get something out as a basis for discussion and consultation and into the field rather than consulting, as it were, in a vacuum. Time seemed to be of the essence. It would not have been sufficient to consult just these two organisations but other bodies and other members of the higher judiciary, and this could have taken a long time in view of the need for the statement as a basis for the financial management initiative.
The statement is therefore a working document; it is both a document on which we expect probation committees and chief probation officers to act now, and one on which we hope that the service and other agencies in the criminal justice system will comment. In our letter to the service and other agencies we specifically said that we looked forward to receiving comments on the objectives and priorities set out in the statement. We were not specific as to the timing. We expect some comments to come in fairly soon, and noble Lords' own comments have come in rapidly. But others will come in in the longer term as people get experience of the consequences of the priorities. It is expected therefore that we shall issue further statements in the future which will reflect the experience and views of the service and others.
Your Lordships will see, therefore, that the consultation process, far from being truncated, is continuing, and I hope that this debate will give a boost to the interest and reaction of other bodies outside this House. The statement recognises that the service can no longer expect to grow at the rate it has done in the past, and that if greater use is to be made of non-custodial disposals for offenders it will have to manage its resources even more effectively than it does at present. This involves examining all its practices and procedures critically in order to eliminate unnecessary, inappropriate or ineffective tasks.
Here may I answer the concern of the noble Earl, Lord Longford (whose valuable pioneering work in this field I gladly acknowledge) that the probation service is no longer called the probation and after-care service? As the noble Earl knows, the reference to after-care was introduced in 1966 and it demonstrated the service's commitment to the then new function of after-care. Since then, the service has assumed a wider range of additional functions of which after-care is but one. Important though after-care is, it seemed inappropriate to continue the reference to that one function, and so with the agreement of a wide spectrum of opinion within the service—and indeed your Lordships' House—the service reverted to its original title; but the change was purely semantic. It did not indicate any change in emphasis. I can assure the noble Earl that with the increasing use of parole the probation service's statutory responsibilities in the field of after-care are indeed most remotely likely to diminish.
The Earl of Longford: My Lords, I was particularly raising the question of people who come out of prison, men and women, who are not under any supervisory obligation but who, up until now, have been able to look to a probation officer for help.
Lord Elton: My Lords, I am coming to that. If I have not come to it by the end of the speech, will the noble Earl interrupt me again because it is there somewhere? This brings me to the place in the order of priorities given to voluntary after-care. The fact that it is not high on the list should not be interpreted to mean that my right honourable friend does not attach importance to the contribution which proper and relevant after-care should make to reducing the likelihood of a person re-offending.
As an earnest of this, I should like to remind the House of the important role which has been, and continues to be, played by the after-care hostel scheme. Through the grants that it makes, the Home Office contributes to the provision of some 3,800 places in a range of accommodation projects which are available to offenders released from prison, including those on parole. Area probation services are closely involved in the development and management of such projects which provide a useful means of helping offenders re-settle in the community, and are seen very much as a response to local need. The number of places funded through the scheme has increased by more than half since 1979, and will continue to increase in 1984 to 1985, though we shall have to assess whether there is an adequate case for any further expansion thereafter.
Here I find my note to myself. The noble Earl, Lord Longford, asked to whom can the prisoner coming out of prison turn? Ex-prisoners have a statutory entitlement to voluntary after-care for 12 months after release. But voluntary after-care is a demand-related service. The ex-prisoners can seek the help of probation officers if they feel they want it and the probation service will always respond. Although non-mandatory work has a lower priority than that arising from mandatory supervision, it will continue to be undertaken to the extent that ex-prisoners ask for it. I think that is an answer to the noble Earl.
On the subject of voluntary after-care I am particularly glad to acknowledge the admirable work referred to by the noble Lord, Lord Rhodes, done by Selcare. I am glad to be able to say that it receives £50,000 a year from the Home Office for the revenue support of its after-care hostels and has received several capital grants for day care projects, including £29,000 towards the cost of the recently opened Rhodes Centre—properly so named—in Oldham, and £25,000 towards the acquisition of St. Georges School in Wigan. This support which we have given, and are continuing to give, to Selcare towards the costs of these valuable projects is in earnest of the determination of my right honourable friend to give a proper measure of support to the work of the voluntary after-care organisations.
Indeed, I share the regret of the noble Lord that his assistance cannot be more. But as I have had to say many times before, resources are finite. If one project is to be given additional resources, it can only be at the expense of some other project or other effort from
1498
which those additional resources must be taken. I hope that does not make the noble Lord think that I am one with the less appreciative of the work which he enumerated and which we admire.
The noble Lord, Lord Wells-Pestell, felt that the statement had failed to produce a positive programme for the development of the probation service. If that means more staff doing more work, I am not sure that I can accept that charge. Since the Government took office in 1979 the size of the probation service has increased from 5,200 probation officers to almost 6,000, and from 3,600 to 5,000 ancillary and other staff. The statement, he will notice, is neutral on further growth but suggests objectives and priorities for the work the probation service is already doing. Those objectives and priorities, indeed the work, may well change as society continues to change and I repeat that the statement is not fixed in time. It is a handbook for the present and the immediate future.
Noble Lords have been concerned about the low apparent priority given to the after-care of prisoners and to civil work. Inevitably if one establishes an order of priorities everybody wants one thing at the top and nobody wants his own thing at the bottom. I have tried to make it quite clear that all the priorities are priorities, but there has to be an order and I have tried to explain how that is arrived at.
The primary purpose of the probation service must be the supervision of offenders subject to probation orders and other orders. All we are doing is giving an indication of the order of priorities. The Government recognise that in many areas of its work the probation service reacts to the demands made upon it by the courts and other agencies. This is particularly so in the preparation of social inquiry reports and in matrimonial work, in which a number of your Lordships are interested. The courts will be aware of the statement and the Government's view of the order of priorities which should be given to the service's various tasks. Copies of the statement were sent out to the Magistrates' Association and the Justices Clerks' Society and we also expect the chief probation officers and probation committees to consult the magistrates in their area.
Local action is usually the most effective way of tailoring national objectives to local actions. In the first place it is for the probation committees, which are largely made up of representatives from the local bench and the crown court and from probation service management, to take the initiative in explaining the need for a measure of selectivity in asking for reports and drawing the service into matrimonial work. We shall expect the new probation liaison committees introduced by the Criminal Justice Act 1982 to play a key role in this. The Home Office, usually in the shape of the probation inspectorate, will be ready to give support where it properly can. This is a sensitive issue. There can be no question of the Executive seeking to interfere with the judiciary. Nevertheless, it is right that the judiciary at all levels should be fully aware of the constraints which face the probation service and the consequences of imposing a burden on the service that is too great or inappropriate.
I apologise for taking your Lordships' time, but I believe that at the end of a long day noble Lords like

1499
answers to their questions, and I try to give them. I take note, with a fond smile, of the familiar suggestion the noble Lord, Lord Harris, made about the Lord Chancellor's Department. I promise that I will parade it, as I did before. I see its attractions. He, no doubt, sees the difficulties with which it bristles. I can say, on inter-agency co-operation, that the Home Office has given periodic encouragement to this by circulars and ministerial statements. There is a research project just starting in Avon to explore various ways in which co-operation between the different agencies of the criminal justice system can be improved.
The noble Lord, Lord Harris, also asked about co-operation between the chief officers of police, the chief probation officers and the directors of social work. In some areas, all three regularly consult. In most, the chief probation officer meets the chief officer of police or his deputy, and, separately, with the director of social works.
I am constrained by the clock. I have something I rather wanted to say to the noble Lord, Lord Mishcon, on the question of probation students' pay. He brought it in at the end. The noble Lord, Lord Wells-Pestell, who has been a crusader in this, restrained himself from discussing it. I will merely say that I think that the decision to continue retrospectively to try to change a salary rate which is already ahead of that of the nurses—and considerably so in the older age brackets, with whom we are most concerned—is ill-advised; but even more so is pursuing this by means of interfering with the probation statistics.
Noble Lords may not agree with the exact terms of the statement of priorities, but all welcome the fact that there is a statement and that we can see where we are going. How did we know where we were; how could we see where we were going? Look in the statistics! It is a sad irony that the National Association of Probation Officers seems to be bent on drawing around itself, and around the service, the fog of ignorance which will prevent us going further along this enlightened road of evolving the role of the service in the light of experience. I hope that good sense will prevail and that they will bring that chapter to an end.
Briefly on training, since Lord Harris of Greenwich, Lord Mishcon and others, by inference, were concerned, I merely say that the probation inspectorate, in conjunction with the Association of Chief Officers of Probation, each year arrange a number of courses in management skills for chief officer grades. The department has made financial provision to increase that effort, including testing out external management courses. Secondly, the Standing Conference of Probation Tutors, in collaboration with the Association of Chief Probation Officers, is examining the contents of existing courses for probation students to see to what extent modification is needed so that the training meets the current and projected work of the service. The quality of the intake has been monitored over the past two years and I will send copies of the findings of that monitoring to the noble Lords, Lord Wells-Pestell, and Lord Mishcon.
May I conclude—I see the noble Lord, Lord Wells-Pestell, adopting an eager position which I think may mean that he is not going to say, "Before the noble
1500
Lord sits down," I am so used to it that I am quite surprised. The Government have made this clear. While they expect the probation service management to start to review and adjust its practices in the light of the statement, in consultation with and by agreement of other agencies of the criminal justice system, there is nothing final either in the statement or in any changes made at local level. The intention is that the probation service should play its part in the most effective manner possible in the criminal justice system as a whole.
The Government look forward in the coming months to receiving comments on the statement and suggestions for its further refinement from the probation service itself and from other agencies in the criminal justice system. We shall then be in a position to review the statement and possibly to modify it. But it was issued only a couple of weeks ago and, to answer the Question that the noble Lord has actually asked on the Order Paper, it really would not be proper for the Government to undertake this review at this very early stage.
House adjourned at twenty-five minutes before ten o'clock.