Lords Sitting of 28 November 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 Hereford.

Higher Education: Future Development
Baroness Lockwood: 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 when they expect to respond to the advice of the University Grants Committee and the National Advisory Body for Local Authority Higher Education on A Strategy for Higher Education into the 1990;and whether they accept the principles contained in the joint statement from these two bodies.
The Earl of Swinton: My Lords, my right honourable friend the Secretary of State for Education and Science intends to bring forward the Government's proposals for the future development of higher education in the form of a Green Paper in the early part of next year. The paper will take account of the published advice of the University Grants Committee and the National Advisory Body for Local Authority Higher Education, including that contained in their joint statement. Noble Lords will understand that I cannot anticipate the Government's proposals.
Baroness Lockwood: My Lords, in thanking the noble Earl the Minister for that reply, may I ask whether we can be assured that a broader and more flexible access to higher education, as envisaged in the joint statement, will become the basis for the Government's projections relating to numbers and also for providing future resources?
The Earl of Swinton: My Lords, both the University Grants Committee and the national advisory body have published reports of their working parties on continuing education and have incorporated some aspects of their conclusions into their strategy advice to the Government. The response to this advice is currently under consideration.
Baroness David: My Lords, will the Minister convey to his right honourable and honourable friends the Ministers that it is very urgent to have this response, particularly in the light of the news we had this last week that 4,000 fewer applications have gone into UCCA for university entrance this coming year? Moreover, when the request is only for access, is it not very alarming?
The Earl of Swinton: My Lords, as I have said, we are going to publish a Green Paper on this matter. But I should point out to the noble Baroness that since 1979–80, when the previous Conservative Government took office, the number of home full-time and sandwich students in higher education in Great Britain has increased from 455,000 to 519,000 in 1983–84.
Lord Kilmarnock: My Lords, if we are going to have to wait a bit for the Green Paper, can the noble Earl tell us what age participation rate in higher education the Government are aiming for in the second half of this decade? Will the noble Earl say whether the Government support the higher DES student number projection or the lower one?
The Earl of Swinton: My Lords, I do not think that your Lordships will have to wait very long because we are nearly in December and the White Paper is expected to come out in the very early part of next year. So, as I said previously, I cannot anticipate any of the Government's proposals.
Lord Hankey: My Lords, in drawing up their Green Paper will the Government bear in mind the great need for the system of higher education to produce the talents, technologies and knowledge which are needed for young people to provide what industry requires?
The Earl of Swinton: Yes, my Lords. I think that that is very much in the forefront of my right honourable friend's mind.
Baroness David: My Lords, may I ask the noble Earl whether it is to be a Green Paper or a White Paper? He said at first that it would be a Green Paper and then later he said that it would be a White Paper.
The Earl of Swinton: My Lords, I am sorry; I must make it absolutely clear that it will be a Green Paper.

RAF New Basic Trainer
2.39 p.m.
Lord Mulley: My Lords. I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have now decided to approve the purchase of a British aircraft as the new basic training aircraft for the Royal Air Force.
The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne): My Lords, we are proceeding with the full evaluation of the four tenders that we have received in respect of the new basic trainer aircraft. As I informed your Lordships on 17th October, we hope to take a decision around the turn of the year.
Lord Mulley: My Lords, I thank the noble Lord the Minister for that Answer. I hope that in that evaluation it will be borne in mind that the British interest is not only that the RAF should have an aircraft meeting its specifications—which presumably all the contenders do, because otherwise they would not be shortlisted—but that we should have the exports that will undoubtedly follow from the adoption of a particular aircraft by the Royal Air Force. Would the noble Lord also consider, in the longer term, what international competitors will make of it if in fact it is known that we in this country have been incapable of designing and making a basic trainer for our own airforce?
Lord Trefgarne: My Lords, I can assure the noble Lord that all considerations of that type will be taken into account. It is worth remembering, of course, that all the contenders that we are presently considering anticipate a major part of the manufacture in this country.
Lord Gisborough: My Lords, will my noble friend bear in mind that one of the first questions which foreign purchasers ask as regards arms is, "Is this aircraft used by the British Air Force?" If the answer is, "No", it will be almost impossible to think about sales.
Lord Trefgarne: My Lords, I am certainly aware of that consideration.
Lord Fitt: My Lords, while recognising that there will be fierce competition for this order, will the Minister agree that the tender by Shorts is as British as any other tender that has been considered, and that in fact the aeroplane that has been tendered by Shorts is in operation? Will he also agree that 80 of these 'planes are in operation in various countries throughout the world, and that 70 per cent. of the airframe will be built on British terrritory—namely, in Northern Ireland—with the exception of the Canadian engine, which I believe all the other tenders will use as well? Given the state of the economy in Northern Ireland, were such an order given to Shorts, will he not agree that it would immediately create 1,000 jobs in Shorts and 3,000 jobs throughout the United Kingdom? Given the experience which Shorts has and that it has only 2 per cent. of aircraft orders from the Ministry of Defence, will the Minister not agree that on this occasion Shorts has a legitimate claim, provided that it can fulfil the specifications for this order?
Lord Trefgarne: My Lords, I suspect that all the tenderers will say that they have a legitimate claim to bring to the attention of the Ministry of Defence in this matter. We certainly are considering and will consider all the tenders very carefully and will be taking into account considerations of the sort which the noble Lord has mentioned.
Lord Beswick: My Lords, will the noble Lord the Minister agree that in this particular requirement parliamentary pressure has probably gone as far down the road as it can usefully go? If there is an important issue of British content here, will he confirm that the PC9 now has a British design leadership? Will the noble Lord also confirm that the PC9 has as high or higher a British content of equipment as any of the competitors? In these circumstances will it not be better now to leave it to the professionals to make their choice?
Lord Trefgarne: My Lords, the even-handedness of your Lordships is reflected by three at least of the four contenders who have produced supporters in your Lordships' House this afternoon. But the sort of considerations which the noble Lord mentioned are relevant in this case and will be taken into account.
Baroness Airey of Abingdon: My Lords, in view of the Secretary of State's statement on economy in
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defence and assuming that all the contestants are agreeable to the RAF, should we not take into account the question of price when considering choice?
Lord Trefgarne: My Lords, that will of course be a very important consideration.
Lord Graham of Edmonton: My Lords, may I remind the Minister that when he spoke on this matter on 17th October he told the House that the prime consideration had three elements to it: first, the aircraft had to obtain cost effectiveness; secondly, that the aircraft had to have a good performance; and thirdly, that it had to have a long fatigue life. Given that all of the applicants or more than one of the applicants comply with those criteria, will the Minister not agree that it would be in the best national interest that the ultimate criterion ought to be that which provides most British jobs?
Lord Trefgarne: My Lords, I am not sure that the assessment of the first three criteria to which the noble Lord referred is quite as simple as he imagines. We are now engaged upon ensuring that the contenders meet the criteria to which the noble Lord referred, and then we can reach our decision on this matter.
Lord Shinwell: My Lords, is the noble Lord aware that we are all in favour of providing adequate defence? Not a word has been said in connection with this Question about additional cost. Is he aware that we spend £17 million on defence, apart from research into the use of satellite missiles which is bound to increase our defence if we make a contribution at all, as indeed we must? In view of our economic position, when will we stop spending on defence?
Lord Trefgarne: My Lords. I can assure the noble Lord that I am very well aware of the size of our defence expenditure at this time. That is why, with regard to this particular project, the question of cost-effectiveness will be so important.
Lord Morris: My Lords, does my noble Lord recall that during the course of the debate on 17th October he relied very heavily on the fact that the four tenderers were British companies? Will he not agree that, even though a company be thoroughly British from a proprietorial and managerial point of view, it is nothing other than naive to consider that the company is de fact British, because de fact control need not necessarily rest with the company? Will my noble friend be kind enough to comment on that point?
Lord Trefgarne: My Lords, I am not sure that there is any doubt about the Britishness of British Aerospace, Shorts, Westlands or Hunting Aircraft, which are the companies concerned.
Lord Shackleton: My Lords, I should declare that I am a Firecracker man and I am not competent to make a judgment on this. Notwithstanding the demands in the interests of employment, will the noble Lord not agree that it is important that the RAF should have the best aircraft for the purpose and that in the past they have had aircraft from some areas which have been mentioned which were not

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satisfactory? In view of the interest which has been expressed, may I ask that when the decision is taken—and it is not an easy one to take—the noble Lord will consider reporting the results of the assessments?
Lord Trefgarne: My Lords, I have no doubt that when we come to make and announce a decision on this matter there will be intense parliamentary interest in what we have to say and I am also certain that we shall be called upon to justify our decision in the most detailed terms. I certainly believe that that would be right.
Lord Paget of Northampton: My Lords, if, sadly, we still have to go in for spending more on defence, should not we spend it in Northern Ireland, where we shall have to spend anyway?
Lord Trefgarne: My Lords, I am not sure that it is part of the purpose of the budget of the Ministry of Defence that it should be used for social purposes in any part of the United Kingdom, no matter how desirable those social purposes might be. Having said that, we shall of course take into account the considerations that the noble Lord has put to us; but I do not think that they could be paramount considerations.

Mental Health Act 1983: Hospital Admission
2.49 p.m.
Lord Broxbourne: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are satisfied that the courts are in a position to give effect to their power to order hospital admission or guardianship in appropriate cases in accordance with Section 37 of the Mental Health Act 1983.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Glenarthur): Yes. my Lords, we are generally satisfied.
Lord Broxbourne: My Lords, in thanking my noble friend for that Answer, may I ask whether he is aware that perhaps he is a little too easily satisfied? Has his attention been drawn to the recent observation of Judge Verney, in sentencing a mentally disordered woman, that:
"It is a scandal that people like this woman have to be sent to prison because there is nowhere else to send them"?
My noble friend is too enviably youthful to recall the high hopes that animated us at the time of the introduction and passage of the Mental Health Act 1959. But does he not think it regrettable that provision of facilities for implementation lag so far behind legislative intention?
Lord Glenarthur: Yes, my Lords, I am aware of the remarks to which my noble friend has referred. But I am sure that, with his experience, he will realise that cases which hit the headlines in the way that this one
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has done are often more complex than they in fact appear from the reports in the media. The courts can have difficulties where, for instance, there is a conflict of medical opinion, but the aim of legislation is to ensure that only those unfortunate people who really need, and will benefit from, treatment are compulsorily detained in hospital. I share some of the misgivings which my noble friend expresses, but there are problems such as I have described, of which I am sure he, too, will be aware.
Lord Kilmarnock: My Lords, how many orders of the type referred to in the Question have been made since the coming into force of the Act, and have the hospitals been able to respond? How many people have had to be detained in custody, and for how long, pending a suitable hospital place? Is it not a scandal that a mentally disturbed female arsonist should recently have had to be sentenced to life imprisonment?
Lord Glenarthur: My Lords, I cannot give those figures without notice. The answers to the. second part of the noble Lord's supplementary question were given in reply to my noble friend.
Lord Ennals: My Lords, if the Minister cannot answer that specific question—which was, how many who ought to have gone to hospital for treatment have gone to prison, where they cannot receive treatment—is that not a very unsatisfactory situation? Is the noble Lord not too easily satisfied by a situation in which, surely he would agree, a number of regional health authorities do not have suitable accommodation, whether it be special hospitals, regional secure units, or hospitals with secure wards? As he looks at his notes, is he not able to find out and to say how many such people have been sent to prison? Is it not clear that since the Mental Health Act was passed, there have been a number of cases where people are now in prison—people who are dangerous to the community and dangerous to themselves, and who desperately need treatment? Is the Minister not being much too complacent in the Answer he gave to the noble Lord, Lord Broxbourne?
Lord Glenarthur: My Lords, I did not intend to be complacent at all. There are real difficulties associated with some of the more marginal cases. The noble Lord will be aware of that. I have not the figures he asked for, but I shall let him know what they are. So far as regional secure units are concerned, I hope he will be pleased to hear that there has been continuing progress in the programme of regional secure units, and the present position is that seven permanent regional secure units are now open, which will eventually provide a total of 264 places, of which about 120 are now staffed and available. Nearly 500 places are expected to be completed by the end of 1984, or early 1985, and 650 by the end of 1987. There are additional places in interim secure facilities and I shall be delighted to let the noble Lord have those figures, too.
Lord Avebury: My Lords, does the Minister recall that in the proceedings on the Mental Health (Amendment) Act, I pointed out that, as a result of the

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more stringent requirements for the transfer of a person from prison to a special psychiatric hospital—in particular, the requirement that they had to be susceptible to treatment before such transfer could be approved—there would be in our prisons an increasing number of persons who were severely mentally disordered and for whom the prisons had no adequate provision? Is it not a scandal that in recent weeks there has been a succession of stories about self-mutilation by women in Holloway Prison? Is it not apparent that some kind of provision ought to be made outside the prison system for patients of this kind, even if they cannot be treated in special hospitals?
Lord Glenarthur: My Lords, we certainly hope that the implementation of Sections 35 and 36 of the 1983 Act, which has recently been introduced, will help to provide an alternative to remands in prison in cases where there is reason to believe that the person concerned may benefit from hospital treatment. But, meanwhile, both remand prisoners and sentenced prisoners may be transferred to hospital by the direction of my right honourable friend the Home Secretary under Sections 47 and 48 respectively of the Act. The success rate for recommendations from the prisons for the use of these powers is now very high, and we hope that this improvement will be continued.
Lord Winstanley: My Lords, apart from the question of the interests of these unfortunate people themselves, does the noble Lord agree that the presence in prisons of mentally disturbed offenders who ought really to be in secure units, or other institutions, places an intolerable burden on the shoulders of the prison officers, who are not trained or equipped to deal with people in those conditions?
Lord Glenarthur: My Lords, I would certainly agree that it places a burden. I have described the situation and the way in which the other sections of the Act are now coming into force, and, as I said to the noble Lord. Lord Avebury, those matters will assist the position.
Lord Ennals: My Lords, can the noble Lord say whether the Mental Health Act Commission is now looking at this disturbing situation? The noble Lord mentioned a number of sections of the Act. Can he say how many times use has been made of Section 39, which enables the court to find out what facilities exist in the 14 different regional health authorities?
Lord Glenarthur: My Lords, I cannot off the top of my head give the answer to the noble Lord's question about Section 39. Again, I shall find out and let him know the number of instances. So far as the Mental Health Act Commission is concerned, they have a wide remit and it is proper that they should look at this sort of thing; and that is what my noble friend Lord Colville and his commission will no doubt be considering.
Lord Broxbourne: My Lords, would my noble friend draw the attention of Ministers in another place to the concern expressed in this House on this sad and
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sombre subject and urge them to take appropriate remedial action?
Lord Glenarthur: My Lords, my department's officials already have had discussions with senior officers of the National Health Service authorities, consultants, senior nursing staff from individual hospitals, directors of social services, and prison medical officers about the problem of what are known as "difficult to place" patients, who, in a sense, fall between two stools. This has been taking place generally, and ways of making required facilities available are being discussed. In this context they have been discussing, among other things, the position of the courts in making hospital orders.
Lord Kilmarnock: My Lords, I know that the noble Lord is always punctilious in writing to me. Will he confirm that he will write to me with the figures I have asked for and that he will place a copy in the Library, in accordance with the new procedure?
Lord Glenarthur: My Lords, I can confirm both of those points to the noble Lord.

British Airways: Designers
2.57 p.m.
Lord Reilly: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have any views on the commissioning of American designers to redesign the appearance of British Airways' aeroplanes.
Lord Trefgarne: My Lords, the choice of designers was a matter for the commercial judgment of British Airways' management.
Lord Reilly: My Lords, may I thank the noble Lord for that Answer, which does not surprise me? May I ask whether he is aware that the decision of British Airways not only runs counter to the Prime Minister's many admirable initiatives in the field of design, but has greatly discouraged the whole of the British design profession and not least our very excellent graphic designers? Is it not sad that the organisation which has been exhorting us all to "fly the flag" should set such a bad example?
Lord Trefgarne: My Lords, I understand that the initial choice of the American firm as design consultants was carried out by a competitive process, and for that reason I do not think I would wish to criticise British Airways in the way that the noble Lord suggests.
Lord Bruce of Donington: My Lords, is the noble Lord aware that the ability of Her Majesty's Government to lean on nationalised industries whenever they think fit is very well known indeed, and is there any reason why the Government should not have leant on British Airways in these circumstances? Is the noble Lord aware that if the implications of his

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answer are accepted, then the strictures of Sir Michael Edwardes on the quality of British management become abundantly justified, and is he also aware that design is an integral part of all competition? Will the noble Lord bear that in mind when he seeks either directly or by implication to lay the whole burden of international competitiveness on the wage earners of this country, as distinct from management, designers, research and development, and all the rest?
Lord Trefgarne: My Lords, as the noble Lord will be aware, we are approaching the moment when British Airways will, we hope, be passed into private hands. For that reason, my right honourable friend the Secretary of State for Transport has made it clear to British Airways that they should be operating on a proper commercial basis. That is what they are doing and I decline to criticise them for that.
Lord Somers: My Lords, do we really want our planes to look like American planes? Will the Government possibly commission some American architects to make London look like New York?
Lord Trefgarne: My Lords, I imagine that any such proposals would fail the competitive process.
Lady Saltoun: My Lords, does the noble Lord not agree that the passenger does not care what the aircraft looks like, but that all he cares about is that it is safe and comfortable?
Lord Trefgarne: My Lords, I am afraid that history tends to prove the noble Lady wrong. The fact is that British Airways, like all major international airlines, operates in an international environment and has to compete in the international market place and must, therefore, make its arrangements accordingly.

Business
3.2 p.m.
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lady Young will, with the leave of the House, repeat a Statement on Gibraltar that is to be made in another place.
This will be followed by my noble friend Lord Lucas of Chilworth, who, again with the leave of the House, will repeat a Statement on regional industrial policy.
It may be for the convenience of your Lordships if I say a word at this point about this afternoon's short debates standing in the names of my noble friend Lord Balfour of Inchrye and the noble Lord, Lord Annan. It is customary in short debates that the mover is allowed approximately 15 minutes and that the Minister should rise to reply not more than 20 minutes before the scheduled end of the debate. In the case of the short debate in the name of my noble friend Lord Balfour of Inchrye it is not necessary to suggest a limit on the length of subsequent speeches because the small number of speakers would put such a limit in excess of 15 minutes. I know that the House will appreciate it if the normal conventions of brevity in such debates are observed.
In the case of the debate in the name of the noble Lord, Lord Annan, subsequent speeches should be
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limited to a maximum of nine minutes. If any noble Lord were to speak at greater length he would do so at the expense of subsequent speakers in that debate.

Personal Bills: Select Committee
The Chairman of Committees (Lord Aberdare): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That a Select Committee on Personal Bills be appointed, to which all Petitions for Personal Bills shall stand referred; and that, as proposed by the Committee of Selection, the Lords following, with the Chairman of Committees, be named of the committee:—

Banks, L.

Dilhorne, V.

Nugent of Guildford, L.

Templeman, L.

Wilberforce, L.

Willis, L.

—(Lord Aberdar.)
On Question, Motion agreed to.

The Unemployed: Factors of Special Disadvantage
3.4 p.m.
Lord Balfour of Inchrye Lord Balfour of Inchrye rose to call attention to the needs of those unemployed whose prospects of further employment are slender due to age and changes of economic conditions of trade; and to move for Papers.
The noble Lord said: My Lords, I rise to move the Motion in my name. The first duty I have to the House is to record the answer to a question of mine from the late Lord Swinton, just before he left the House: he died shortly afterwards. We were sitting where the noble Earl, Lord Swinton, is sitting here today at the corner and the debate had to do with colonial affairs, on which he was a great expert. I asked him, "Philip, are you going to speak?" He said, almost severely, "No, no one wants to hear the speeches of old men".
That warning I take to heart and I shall not detain your Lordships for very long. However, that rule has its exceptions. We have recently heard the wonderful maiden speech of my noble friend the Earl of Stockton; forceful and, I thought, gentle—that would be my description. Our second exception to the rule which I term the Swinton rule is my noble friend opposite, Lord Shinwell. His contributions we all enjoy. They are pungent and very much to the point. If I may for a moment use the language of the turf, I would say that Lord Shinwell is leading in the veteran stakes but there are several other good horses running up the course and in due course we shall know who in the field will be first past the winning post.
For two reasons, I took particular care in drafting my Motion to keep it limited to one aspect of unemployment. First, I know your Lordships are very shortly to debate in full the question of unemployment and, secondly, I do not wish to detain the House for too long. The size of the problem of unemployment for men of middle age and beyond is serious and great.
I wonder whether your Lordships realise that 25 per cent. of men and women unemployed at the present time have been unemployed for five years or more and, of these, 40 per cent. are over 50 and have given up hope of being in regular employment.
Last November, just a year ago, we touched upon this subject in a debate following a Motion by the late Lord Byers. I was taken to task by the noble Baroness, Lady Seear, and by the noble Lord, Lord Scanlon, for pessimism and for thinking that nothing could be done. I am no pessimist but I do not agree with Lord Scanlon's words. I told the noble Lord that I intended to quote him. He said:
"I want to turn to the contribution by the noble Lord, Lord Balfour, and say how much I agree with the noble Baroness, Lady Seear, in her rebuttal of. . . the unemployed and, if I may say so, of the right reverend Bishop. If ever we develop this policy of despair, this philosophy that there will be a section of our community doomed to perpetual unemployment, we shall destroy all that is being argued about now."—[Official Repor, 2/11/83; col. 603.]
I am no pessimist. I think I am a realist. I feel that people in a section of the industrial community have written themselves off and I am afraid that we must write them off as well as regards regular jobs.
It is pie in the sky for the noble Lord. Lord Scanlon, to say that everyone over 45 or 50 years of age has a chance of permanent employment again. We have heard so many times about how unemployment can be cured. We on this side of the House have often heard Ministers say—and no doubt the Minister will repeat it today—that the real cure for unemployment is for British industry to sell to the markets of the world goods at the right price and with the right delivery dates. Then we have heard from the other side of the House many interesting suggestions about shorter hours, work sharing, longer holidays, and various other reliefs. All right, we need not argue about any of those, but we must admit that none of them would work quickly. All would take an indefinite period of time ahead. For as long as most of us are here in this House, high unemployment will be with the community. Can anyone say (does the Minister dare to say?) how long it will take the Government to bring about a reduction from 3 million to, say, 2 million? Can anybody on the other side say the palliatives that they would advocate to bring 3 million down to 2 million? I believe that it is an impossible thing to prophesy. Trade revival hopes and talks will not touch them.
To me, the tragedy is that of the 50 or 55 year-old ex-executive and ex-manual worker who suddenly become redundant. What is their life to be? They see lying ahead a long road of unemployment with their just sitting around or, if I may use the expression, sitting on their hunkers, gazing into space. What a future for them to consider! What we have got to do is to see that we can put something of the joys of life and of interest before them so that they may still use the talents and energies which remain to them in creating new ideas, new hobbies, a new form of social life. Leisure means effort. They must make the effort; and we, too, as leaders of political parties, must make the effort.
Today, the Government provide protection from hunger and immediate want. Thank goodness! When I went into another place 55 years ago, unemployment
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was a savage, cold, harsh knife which cut into families. I am always ashamed that, sitting as I did for a comfortable South of England seat, my greatest worry then was a few seasonal workers. I did not—and some of my friends did not—take the train to South Wales to see what was going on there at that time. That is why I speak today. It is because ever since then I have felt that we must not let things remain static; we must improve the whole time.
To bring some happiness to these men, Government leadership and action is required. There is no use in thinking that local authorities and local authority representatives can do the job: it must be done from the centre by the Government agencies. These men are not seeking charity, they are seeking opportunity. It is true that voluntary work can do much to relieve. We have 40,000 (I think it is) volunteers. They are splendid people, but they are really engaged mainly in looking after the sick and in helping those who cannot be mobile, doing shopping and doing various other things. No, we have got to do something more than that for them.
What I want to see is the Government at the centre carrying out an experiment. The experiment that I would advocate is based upon the work of many voluntary bodies that we can quote with great benefit to all concerned. The body that I choose to quote to your Lordships as an example is Toynbee Hall. Toynbee Hall is celebrating its centenary this year. They have gone for the aged in a big way. They have a senior care and leisure centre where, they say, the keyword is opportunity. They introduce new amusements for the unemployed—many games, indoors and outdoors, and sport—and they introduce new works of art and woodworking efforts. I could go on in this way, but I shall not weary your Lordships.
In many directions the Toynbee Hall leisure centre could set an example of what the Government could do if they were able to start three or four centres as an experiment; if they were to take the centres of high unemployment and start building one of these leisure care centres.
Let them see what the result is. They would need very little cash, but they would need a lot of good leadership, which is not easy to obtain. I think that if we could do that we could inspire minds which have become more and more affected by prolonged unemployment. We could stimulate their minds and stimulate their bodies.
We have now got a new "supremo" of unemployment who has been appointed. I have not had the pleasure of meeting him, and I do not know whether some of your Lordhips have done so. I hope that he will not concentrate entirely on youth and on youth and training, but will take this section of older men in hand and see whether we can stop the rotting minds and the rotting bodies brought about by constant unemployment, and can stimulate them in the ways I have described, by having three or four of these centres built. Try it out for a year or two and see whether there is not a good result! I sometimes think what wonderful material Toynbee Hall and others like it have to work on. How patient and good are these unemployed at the present time! I hate to see the downward fall of good minds and good bodies.
I would say to the Government, "Be bold; be determined to stop this rotting away!" Mr. Churchill used to send periodically to departments a folder labelled, "Action this day." I cannot but say to the noble Lord who is to answer that I would wish that he was able to send a folder to his Prime Minister saying to her, "Action this day"—because that is what we need. I beg to move for Papers.
3.20 p.m.
Lord Rochester: My Lords, I am sure that the whole House will be grateful to the noble Lord, Lord Balfour of Inchrye, for giving us this opportunity to examine the needs of the older unemployed people among us, for their plight, as he indicated, is both demoralising for them and wasteful of talent and of experience for our country. I shall not be taking the same line as the noble Lord, but 1 am sure that all your Lordships will be glad that the noble Lord, Lord Balfour, did not, on account of age, feel precluded from giving us the benefit of his views on this vital subject.
I was privileged to be a member of your Lordships' Select Committee on Unemployment under the chairmanship of my noble friend Lady Seear. We paid considerable attention in that committee to early retirement as a means of reducing the supply of labour, and in our recommendations we made it plain that if there had to be unemployment among older people we preferred measures to reduce the numbers in employment by voluntary means. In thus supporting the option of voluntary early retirement, we concluded that this could best be achieved in three ways.
The first was to extend the Job Release Scheme, under which employed people nearing statutory pensionable age can give up their jobs to make way for younger unemployed people and in return receive a weekly allowance. Our view was that the qualifying age for job release could reasonably be reduced from 62 to 60, to bring about 50,000 more people within the scheme under protections which were current at the time. Incidentally, I believe that the qualifying age for subsidised retirement in Western Germany is now 58. I welcome the decision announced by the Secretary of State in another place on the 12th November to continue the Job Release Scheme for a further year, but I regret that his proposals do not include provision for reducing the age at which people are eligible to take part in it.
A second recommendation of the Select Committee was that as a varient of the Job Release Scheme, and in order to combine the benefit of gradual retirement with a reduction in labour supply, pairing or job-splitting schemes should be introduced, under which two people aged over 60 would be employed half-time in place of one person full-time, each of them to receive half-time earnings. An essential element in our proposal was that, as inducements to participate in such arrangements, no national insurance contributions would be payable by either employers or employees. I am sorry that employers contemplating the introduction of job-splitting schemes appear to have been deterred from taking action by a number of factors: the effect on occupational pension schemes (which we foresaw in our report), opposition from trade unions, and the benefits accruing to employers and employees being regarded as insufficiently
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attractive. In his Statement in another place a few weeks ago the Secretary of State said he proposed that an allowance should be made to the employer to cover the extra cost involved in job splitting. That, it seems to me, is to be welcomed, and I would be grateful if the noble Lord, Lord Belstead, when he replies to the debate, would tell us the amount of this allowance, if he can.
I congratulate the Government on having at last abolished altogether the national insurance surcharge on employers. But is there not now a strong case for restructuring national insurance contributions so that they no longer apply either to new jobs—particularly for the long-term unemployed—or to the splitting of existing jobs?
A further recommendation of the Select Committee concerned the so-called "over 60s option", under which all those aged over 60 who have been unemployed for more than 12 months can opt for the higher rate of supplementary benefit in return for their withdrawal from the unemployment register. We considered that at the relatively low cost (at the time) of £20 million per annum, that option could reasonably be made available to long-term unemployed people aged 55 and over. Now that the problem of long-term unemployment has become so much more acute, I wonder whether the noble Lord, Lord Belstead, would bring this point especially to the attention of his right honourable friend.
I know it is all too easy to talk of ways in which money can be spent in simply limiting the problem that we are now considering. A key criterion in my view is that expenditure in this field should be concentrated as much as possible on finding work for older unemployed people rather than encouraging them simply to accept unemployment as a fact of life—and to this extent I am sorry that I must respectfully disagree with what the noble Lord, Lord Balfour of Inchrye, had to say on this subject and align myself with my noble friend Lady Seear and with the noble Lord, Lord Scanlon, in the remarks they made in an earlier debate on that point.
With that point in view, I should like to spend the rest of the time that is available to me in the debate in saying something about the creation of new jobs for such people, and by way of example to draw attention to the activities of an enterprise agency—only one of about 175 in the country as a whole—which has been operating for the past five years in Cheshire, where I live. It was actually visited very soon after its inception by members of the unemployment committee, and has developed greatly since then. It is located in Runcorn; it is called Business Link Limited; and was established by representatives of industry, commerce and local government to promote employment in Halton—a district where the unemployment rate was—and alas! still remains—relatively high for the North-West. In fact, it is almost part of Merseyside; and I do not doubt that when the right reverend Prelate the Bishop of Liverpool speaks after me he will have a good deal more to say about unemployment among older people in that area.
The core activity of the agency of which I speak is counselling clients, of whom a recent survey showed about three-quarters wished to set up a new business and the remainder wished to receive advice on how to

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improve the efficiency of an existing business. Approximately half the agency's clients between December 1979 and February 1983—the period covered by the survey—responded to a questionnaire which was sent to them. Analysis of the replies has shown that during that time altogether 185 new firms were started, of which 26 have since closed. The net number of new jobs created in these new businesses—that is to say, after taking account of jobs lost in those which later closed—was 491. To these should be added 577, net, new jobs in existing firms which were counselled, making a total of well over 1,000.
The precise age distribution of people taking up these jobs is not known to me, but it is plain from the facts that about one-third of the respondent clients were facing redundancy; that another quarter were unemployed; that nearly half the newly established firms employ only one man; and that a large number of those concerned must be in the category of people who the noble Lord. Lord Balfour of Inchrye, had in mind when introducing the debate.
I do not for a moment pretend that the activities of agencies such as the one I have mentioned can make more than a small contribution to the solution of the complex problem of how to alleviate unemployment among older people. From the CBI I understand that enterprise agencies throughout the country are helping to create jobs at the rate of about 3,000 per annum, but it is encouraging, I suggest, that these community projects represent a partnership between industry, commerce and local government, which I hope we can all agree should be built on.
The enterprise allowance is a vital element in enabling people to start a new business. It now amounts to £40 per week and is payable for one year. In his recent Statement the Secretary of State said that he was proposing to extend the scheme and to allocate to it an extra £72 million next year, rising to £125 million and then to £128 million in the following two years. The Secretary of State said that this would enable the Manpower Services Commission to increase the programme by 25 per cent. to provide for an intake of about 1,250 new entrants every week from among unemployed people. I very much welcome this development, but would be grateful if the Minister could tell us what increase, if any, the additional amount allocated to the scheme will bring to the individual qualifying for payment of the allowance.
Before I leave this theme, it is only right that I should briefly welcome the scheme announced last Monday which is to be financed by the European Regional Development Fund and which is aimed at encouraging the development of small businesses in depressed regions that were formerly heavily dependent on shipbuilding, textiles and steel making.
I end as I began by saying how vital it is, in my view, that in the national interest we should do everything possible to meet the pressing needs of the older unemployed people about whom we are talking in this debate.

Gibraltar: Agreement with Spain
3.34 p.m.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, with the leave of the House, I shall now repeat a Statement on the outcome of a series of meetings my right honourable and learned friend the Foreign Secretary has had with the Spanish Foreign Minister about Gibraltar which is being made in another place by my right honourable and learned friend. The Statement is as follows:
"With permission, Mr. Speaker, I wish to make a Statement about the outcome of the series of meetings I have had with the Spanish Foreign Minister, Sr. Moran, about Gibraltar.
"At the most recent meeting in Brussels on 27th November, we reached agreement about the way to put into effect the terms of the Lisbon Statement of 10th April 1980. I am arranging for a copy of yesterday's communiqué to be placed in the Library of the House.
"As a result of that agreement, the specific measures which I shall describe in a moment will be implemented by a date to be agreed, but not later than 15th February 1985.
"From the date of implementation, direct communications between Gibraltar and Spain will be restored. This means that there will be free movement of people, vehicles and goods.
"From the date of implementation, Spaniards in Gibraltar will enjoy those European Community rights which would otherwise become available only from the day of Spain's accession to the Community. From the same date, Gibraltarians in Spain will enjoy similar rights.
"The legislative proposals necessary for this will be introduced in Gibraltar and in Spain. This arrangement does not affect the derogations and transitional periods which will have been agreed between Spain and the Community. These will of course be applicable to Gibraltar, in particular as regards the free movement of labour.
"The range of matters to be covered will include freedom to enter and settle, rights of establishment, trade union rights, together with the right to provide a service and to purchase land and property.
"In addition, the Spanish Government has agreed that it will take the early actions necessary to allow safe and effective air communications within the air space in the region of Gibraltar.
"On the day that communications are restored, the Spanish Foreign Minister and I will meet to begin the negotiating process envisaged by the Lisbon Statement. That process will be aimed at overcoming all the differences between us over Gibraltar and at promoting co-operation on a mutually beneficial basis on economic, cultural, touristic, aviation, military and environmental matters. The Chief Minister of Gibraltar, Sir Joshua Hassan, will, of course, accompany me to that meeting.
"Sr. Moran has told me that the Spanish side will raise the issue of sovereignty in these negotiations, as they are entitled to do on the basis provided by the

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Lisbon Statement itself. Yesterday's communiqué makes it equally plain that the British Government will fully maintain its commitment to honour the wishes of the people of Gibraltar, as set out in the preamble to the Gibraltar constitution. That commitment stands unchanged. Sr. Moran, for his part, has made clear the importance that he, too, attaches to the wishes of the people of Gibraltar.
"Sr. Moran and I agreed about the importance of establishing practical co-operation between the people of Gibraltar and the neighbouring region. The Chief Minister of Gibraltar has expressed the same view. This will be of benefit to all sides. It will provide an important opportunity for Gibraltar's economy to develop and diversify.
"This agreement marks the development of a new stage in relations between Britain and Spain, who are fellow NATO allies and prospective partners in the European Community.
"Throughout this series of talks, I have kept in the closest touch with the Chief Minister of Gibraltar, Sir Joshua Hassan. I am most grateful to him for his consistently wise advice and support.
"In his statement yesterday, Sir Joshua Hassan said that he welcomed the agreement and believed that it will be beneficial to the people of Gibraltar. In his view, it will be a first step in the process of normalisation and fruitful co-operation between Gibraltar and the immediate vicinity for the benefit of all.
"Sir Joshua Hassan described this agreement as an honourable outcome. I entirely endorse that judgment. I firmly believe that the agreement is in the interests of Gibraltar. The interests of Gibraltar and its people have always been, and will remain, of central importance to the British Government".
My Lords, that concludes the Statement.
Lord Cledwyn of Penrhos: My Lords, we are grateful to the noble Baroness for repeating the Statement and we warmly welcome the decision to re-open the frontier and to restore communications, including air communications, which are of considerable importance to us. We note that this concession is being made in return for Britain's willingness to discuss sovereignty and that sovereignty is to be on the agenda, although the Statement also says that the Government,
"will fully maintain its commitment to honour the wishes of the people of Gibraltar".
We further note that the Chief Minister of Gibraltar, Sir Joshua Hassan, has given his full support to the plan and will accompany the Foreign Secretary to the negotiations, which will obviously be wide-ranging and which we shall follow with great interest.
These talks will be crucial, and we wish them every success. Would the noble Baroness not agree, however, that the critical issue will be that of sovereignty? May we assume that if that topic is on the agenda it is negotiable in some form, and that some such arrangement as lease-back is now to be contemplated by Her Majesty's Government? Further, does the communiqué's reference to,
"the wishes of the people of Gibraltar",
mean that they will be enabled to vote on any draft
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settlement before it is finally ratified? Are we to assume that this is what Sir Joshua Hassan supported when he described the agreement as, "an honourable outcome"?
We welcome the progress that has been made, but I believe it is right and indeed crucial to put the major issues into perspective at an early stage.
Lord Gladwyn: My Lords, we on these Benches would like to congratulate the Foreign Secretary warmly on arriving at what is obviously a large measure of agreement on the vexed question of the future of Gibraltar. On the face of it, it is surely a very considerable achievement and should do much to ease the prospects for Spain's entry into the Common Market. Unfortunately, and as the noble Lord. Lord Cledwyn of Penrhos, has just said, the whole wretched question of sovereignty still remains open.
I wonder whether the Government would admit to a certain similarity between the problems posed by Gibraltar and those posed by the Falklands Islands? In both cases there are rival claims founded on legality and nationality, on the one hand, and on sentiment, history and geographical propinquity, on the other. Therefore, is it not conceivable that both sides, while not abandoning their claims to absolute sovereignty, should at least push such claims into the background for the moment and work, rather, for something which I believe is possible: some kind of equal, special relationship between the contested areas and both contesting parties? I hesitate to suggest that Andorra, wedged between Spain and France, and enjoying perfectly good relations with both, is an example of the kind of thing I am suggesting, but at least it makes one think.
So far as Gibraltar is concerned, the determination of the tiny community to remain British undoubtedly poses a real problem; but I cannot see why we should not in the long run be able to persuade that community (and the communiqué leads me to believe that I am not being unjustifiably hopeful) to accept some kind of compromise, perhaps on the lines I have been suggesting, which is surely now, from a political point of view, an absolute necessity.
Baroness Young: My Lords, I should like to thank the noble Lord, Lord Cledwyn, for his welcome to the Statement, and the noble Lord, Lord Gladwyn, for his welcome and for his congratulations on the achievement of my right honourable and learned friend.
Both noble Lords have raised the question of sovereignty. The noble Lord, Lord Cledwyn, asked whether or not sovereignty was going to be negotiated. The position is that the Lisbon Statement allows any subject to be raised by either side. We recognise that the Spanish side will wish to raise the subject of sovereignty as part of the negotiations, which they are entitled to do.
We, for our part, have stated our position quite clearly. It is set out in the 1969 Gibraltar Constitution. The relevant extract from the preamble to that constitution reads as follows:
"Her Majesty's Government have given assurances to the people of Gibraltar that Gibraltar will remain part of Her Majesty's Dominions unless and until an Act of Parliament otherwise provides, and furthermore that Her Majesty's Government will

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never enter into arrangements under which the people of Gibraltar would pass under the sovereignty of another state against their freely and democratically expressed wishes".
The noble Lord, Lord Cledwyn, asked how we would judge the views of the people of Gibraltar. I would say to him that Gibraltar opinion would be reflected through their elected representatives in government. It is with this end in mind that consultations have been going on very closely with Sir Joshua Hassan, as the Chief Minister of Gibraltar, during the course of the negotiations with Sr. Moran.
The noble Lord, Lord Gladwyn, asked me whether or not there was a parallel to be drawn with the issue of the Falkland Islands. I regret that he should even suggest such a parallel, because there is no parallel at all between the two cases. They are historically, legally and constitutionally different cases. The fact of the matter is that Spain is an ally in NATO and is a prospective partner in the European Community, and that successive Spanish Governments have stated publicly that they will pursue their claim by peaceful means. The Spanish Foreign Minister has spoken of the need to respect both the interests and the wishes of the people of Gibraltar.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that many of us will welcome the fact that somewhat belatedly, after an interval of four and a half years, restrictions whose withdrawal was promised then, and which should never have been imposed, are now being withdrawn? Is she also aware that some of us are a little concerned that the subject of the sovereignty of what has, after all, been British territory for 270 years should be thought worthy of discussion? Will my noble friend make it plain, quite apart from her very clear statement with reference to the 1969 Constitution, that Her Majesty's Government have no sympathy with the demand by the Spanish Government to acquire territory which has been British longer than it was ever Spanish?
Baroness Young: My Lords, I am glad that my noble friend Lord Boyd-Carpenter agrees that we should welcome the fact that there is now a date set for the full opening of the frontier between Gibraltar and Spain. With regard to his point about sovereignty, I hope that I have fully set out the position on this. I am sure that my noble friend knows, as he has read the Lisbon Statement of 1980, that it is possible under the Lisbon Statement for the Spanish side to raise the question of sovereignty. I have no doubt that they will raise this matter at some stage. Equally, as the Statement and the communiqué following from the negotiations between my right honourable and learned friend and Sr. Moran made clear, we have made it absolutely plain that we will stand by and maintain our commitment to honour the wishes of the people of Gibraltar.
With regard to the historical point which my noble friend raised, the 1713 Treaty of Utrecht which ceded Gibraltar to Britain in perpetuity gives Spain the right of first refusal to the territory should Britain ever decide to withdraw from Gibraltar. Any consideration of the future status of Gibraltar must clearly take this into account. The views of the people of Gibraltar are at present not in doubt.
Lord Kilmarnock: My Lords, the Foreign Secretary really has to be congratulated on his achievement. I have two specific questions to ask the noble Baroness. In effect, it seems that we are advancing to 15th February 1985, at the latest, arrangements which would have had to come into effect on accession by Spain to the Community. Can the noble Baroness tell me what would happen if accession were delayed, perhaps through the action of other countries outside our control? Would we then proceed bilaterally, regardless of the Community? I, myself, hope that we would do so. The Community is certainly a convenient peg, but if something went wrong, would we ourselves, bilaterally with Spain, adopt a transitional period on similar lines with the fullest exchange of the rights mentioned in the Statement?
Finally, with regard to what appears at the top of page 3 of the Statement, will the rights of establishment, trade unions, etc., work both ways, reciprocally? Of course, the purchase of land and property is already open to British citizens in Spain. Will there be total reciprocity between the two sides on that point?
Baroness Young: My Lords, in answer to the first question raised by the noble Lord, Lord Kilmarnock, the fact is that Spain is going to join the Community and we do not anticipate any other answer than that. On the second point, yes, the rights are reciprocal. They are for Spaniards in Gibraltar and for Gibraltarians in Spain.
Lord Molloy: My Lords, bearing in mind the massive loyalty displayed by the people of Gibraltar over many decades in very trying circumstances, and in the light of the fact, as seems to be reported in various newspapers this morning that the Spaniards are highly delighted—there is no one on their side with any apprehensions—is the noble Baroness aware that on the Gibraltarian side leaders of the opposition parties are gravely apprehensive? They claim that to them this outcome was an almost total and complete surprise since they were hardly consulted during the talks. Can the noble Baroness confirm that they were consulted? Can she also confirm that if any question concerning sovereignty is raised at any time all the people of Gibraltar—those in commerce, industry, the trade unions and the political parties—will be represented by their various leaders?
Baroness Young: My Lords, I agree with the noble Lord, Lord Molloy, that the loyalty of the Gibraltarians has been very great and it is something which Britain has recognised and continues to recognise. As regards consultation, the Chief Minister, Sir Joshua Hassan, has been consulted, as the Statement made clear, at each step in these negotiations, and he will be fully brought into the future negotiations which will be held on other outstanding issues.
As regards Sir Joshua's consultation with the Opposition, that would be a matter for him in Gibraltar. With regard to any future discussions on sovereignty, as I said in answer to the noble Lord, Lord Cledwyn, in relation to consultation with Gibraltar, this would be a matter for both the Government of Gibraltar and their elected representatives to express a view upon and to express a view as to how further consultations might be held.
Lord George-Brown: My Lords, may I ask the noble Baroness to convey to Sir Geoffrey Howe, the Foreign Secretary, the regret of two of us sitting in this House at the moment—the noble Lord, Lord MacLehose, and myself—that it should be Sir Geoffrey who is credited with an agreement which we made in 1968 with the then Spanish Foreign Secretary but which we were not allowed to carry through by the noble Lord, Lord Wilson of Rievaulx, and the then Labour Cabinet on the ground not that the agreement was wrong, but that one should not do such a thing with a fascist dictator? We were told we would have to wait until there was a social democratic Prime Minister in Spain. They now have one; a good one. I am, therefore, first, delighted and, secondly, I say to all my colleagues above me on the Gangway, "Do not go back on what at that time you thought was right but did not want to do with Franco"—which obviously I understand. "You thought it right then, let us stick with it now" Felipe González needs our help. This is one way we can give it to him. Thank heavens the Foreign Secretary never said in the case of Gibraltar that the wishes of the inhabitants had to be paramount. That is what has saved us from making the same mistake in Gibraltar as we have made in the Falklands.
Baroness Young: My Lords, I think that it would be better if I did not comment on the first part of the statement by the noble Lord, Lord George-Brown. I am glad to hear that he is pleased with the present position and the agreement reached. I am sure that he and his colleagues agree that at this stage it is more constructive to look forward than to look back.
Lord Kilmarnock: My Lords, as the noble Baroness categorically said that Spain would enter the Common Market, can she say whether a date for signing the Treaty of Accession has been fixed?
Baroness Young: My Lords, it has always been intended that Spain should accede to the Community on 1st January 1986.

The Unemployed: Factors of Special Disadvantage
3.55 p.m.
Debate resumed.
The Lord Bishop of Liverpool: My Lords, we come back to the short debate introduced by the noble Lord, Lord Balfour of Inchrye. I remind your Lordships of part of the wording of the Motion:
"To call attention to the needs of those unemployed whose prospects of further employment are slender due to age and changes of economic conditions of trade".
Those noble Lords who have spoken so far have confined themselves to the older unemployed. It perhaps shows where I come from that it never occurred to me, reading those words, that there was any suggestion that this was something about only the older unemployed.
There are areas and definable groups of people which are very sharply excluded from opportunities of employment. The noble Lord, Lord Balfour of Inchrye, said, if I heard him right, that 40 per cent. of
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those unemployed for five years or more—and I do not know those figures—are over 50. That would suggest that 60 per cent. are under 50 and that some of them might be quite young people whose prospects of employment are very slender.
Our greater efficiency and national competitiveness, which I readily say is vital to our national life, is being bought at a very great cost. We see that cost in the waste of individual talents, in the stress on families and on children, in the alienation of whole groups from feeling that they have any stake in the affluent consumer society which all-pervasive advertising proclaims to be the right of normal British people. That alienation is the seed bed for apathy, for a great deal of ill-health, for drug abuse—newly- and fast-growing on Merseyside—and for destructive militancy. It is destroying the sense of fellowship and companionship of our nation.
We must include some young people among those whose propects are slender. One of our clergy, who spent the whole of his years of ministry in Kirkby until this year, told me when, in his opinion, large-scale unemployment suddenly hit Kirkby. It was when the Labour Government introduced selective employment tax—was it in 1966? The recently arrived firms on Kirkby industrial estate immediately shook out all the labour that was not absolutely essential and hundreds of teenagers were on the streets, unemployed. That level of unemployment in Kirkby has never been reduced. In recent years it has of course grown much bigger.
That account suggests what "long-term" means in Kirkby. A 17-year-old in 1966 is a 35-year-old in 1984. Many such people have never had serious opportunity to find regular work and their children are now leaving school. For the last three years the proportion of Kirkby school-leavers obtaining employment has been about 8 per cent. Would your Lordships tolerate that if your children or grandchildren were in such a position?
Of course, there are figures that are very much worse in some of the inner areas, such as Liverpool 8. The inner area study—the most careful inquiry ever made into our cities—was being conducted when I went to Liverpool in 1975. There were then in Liverpool 8 wards with 54 per cent. overall unemployment. I have in my study a working party report from 1939 of a study of 200 black heads of household in Liverpool 8. The unemployment rate was 74 per cent.
There are sections of our population who have never had opportunity for regular work. Many comfort themselves that it is not as bad as the figures suggest. "There are three times more vacancies than there are published" say the Government. "There is a thriving black economy" say many. Let me examine briefly these two comfortable words. In Merseyside in September the number of vacancies published at Jobcentres was 4,086. Let us say there may have been three times as many vacancies and call it 12,000. The number of those claiming benefit in September was 140,000. Of those, 70,000 have been unemployed for over a year.
So far as the black economy is concerned, people have assumed that they know that the unemployed benefit from it. However, such an assumption does not

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have evidence to support it. No doubt there are some small-scale pieces of earning which unemployed people do, but to earn the good money which the language about thriving black economies stresses you need to have your own tools, your own transport. Professor Ray Pahl has shown, in some very recent studies, that those who really benefit from the black economy are substantially those in work doing a second job, moonlighting—not much comfort to be found there.
A woman in Kirby told a group of us that her husband had been out of work for 10 years. "He is a very talented man", she said, "but he needs money to put his talents to use". The Family Service Unit has an unemployed men's group in Liverpool. As the noble Lord said, how important are the voluntary movements at some of these points. The worker who supports that group finished his report very recently like this:
"The image that stays with me is that of five men either stood deep in thought or wandering slowly between deserted wharves and warehouses in Liverpool's dockland. They seem to be reflecting on the human waste and despair that the surroundings represent, and also at the waste and occasional despair in their own lives. One of them expressed his gratitude for that group to which he belonged. All of them, he said, have not broken down again or been back on the psychiatrist's couch".
But, make no mistake, ill health, physical and mental, is marked in the high unemployment areas. What is it like to grow up in this part of Britain? A head teacher told me on Sunday that the children in her school were talking about what they were going to have for Christmas. "I am going to have a computer", said one. What effect would that have on John, whose father has been out of work for two years? The answer is that John tells fibs: "I am going to have a computer and a bicycle", he said.
I talked about alienation with its dangerous effects. The managing director of a company which closed in Merseyside told me he believed that his workforce were good people. He blamed half a dozen militants for leading them into militancy. But we must ask what made it possible for six people to lead thousands of good people by the nose. What was the seedbed for that militancy? How can the difficult process of slimming down take place in parts of industry without disruption if the alternative is mass unemployment? It must be the most urgent priority for Her Majesty's Government to set about restoring the sense of fellowship in this nation.
May I quote some words from Lesslie Newbigin, moderator in the United Reformed Church, for many years bishop in the Church of South India. He delivered the other day the Bishop Gore Memorial Lecture in Westminster Abbey. It was on "The Welfare State—A Christian Perspective". He asked what Jesus meant when He said, "Blessed are you poor, for yours is the Kingdom of God". He said:
"When I used to spend time with people in the slums of Madras or the beggars' home in Madurai, I always felt that I understood those words and needed no further explanation. There is a kind of richness in a place like that, and a kind of poverty in our so affluent suburbs. Is not Jesus saying that these have an actual share now in the blessedness of God's reign, a share which the rich have missed? It is hard to see otherwise what these words mean. And the practical outcome must be companionship: we who are rich must share the bread and so share the blessing".
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I think we must ask why we are having yet another debate on unemployment, for we know the figures. Ought we to go on wringing our hands? Last Sunday had a traditional name in the Church of England's Book of Common Prayer; it was "Stir up Sunday" —the Sunday next before Advent, before the Church's new year begins. The words "Stir up Sunday" come from the Collect which says,
"Stir up, O Lord…the wills of thy faithful people".
We all know there is an urgent need to tackle the most damaging situation wasting human resources, destroying that sense of companionship in our nation. Do we really not have the political will stirred up to change our way?
From where I live and work I believe we must put away the slogan which says, "There is no alternative". There are several alternatives. Each of them is costly. They might quite properly mean the better off paying more taxes or not receiving cuts in their taxation. What we now know is that the present way is too costly for the good of the nation to continue. I have stressed the long-term human cost and the urgency of action. If the Government are to restore that sense of companionship in this nation—and we have much more violent examples of the breakdown of that than I have talked about—they must reach out with practical and large-scale policies, which will reach the unemployed urgently, for action today.
A much needed programme of public works and of public service would provide real jobs. I chair the area Manpower Board for Merseyside of the Manpower Services Commission. I have done it for seven years. I know that we could create real jobs in the service of the community if the 12-month limits were removed. I know that we could treble the Community Programme if the resources were made available. But the evidence is that MSC strategy is being directed less to areas of the greatest need.
There is a current phrase in government departments which is very influential: it is. "output measurement". That is appropriate in some kinds of work, but it is a very crude tool when it is applied to training. The adult training strategy of the MSC for programmes like TOPS, in which I saw some people of 55 years of age being trained in Liverpool the other day, emphasises people who are likely to get jobs in the areas where there are jobs to be found. That is the output measurement. Money this year has been clawed back from each region, from the employment division of the MSC, to give some more flexible reallocation. Instead of receiving priority treatment, the North-West lost over £2 million out of the £3 million clawed back from us. The North-East has lost, too. The money is being redirected where output measurement would show cost-effectiveness in putting people into jobs—in other words, into the South.
Very substantial cuts in manning the Jobcentres have been proposed. The first draft of those proposals included closing a full-time Jobcentre in Kirby. That was about output measurement as well because there are not so many jobs to be found. Energetic protests have meant that this and some other cuts have been pulled back but there are still heavy cuts proposed. It is said that it is no function of Jobcentres to provide tea and sympathy for the unemployed. All right, but it is crucial for the unemployed that Jobcentres are given

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enough resources to play their proper role as the gateway to special employment measures like the Community Programme, the Voluntary Projects Programme, Community Industry and the Enterprise Allowance Scheme.
I fear that public expenditure of 1985–86 is already established with no scope for further places on the Community Programme, which for us is a tiny little dent on the numbers of long-term unemployed that we have. If we are realistic about where jobs are likely to come from in the next 10 years for manual workers on Merseyside, Tyneside, Glasgow, Belfast, not to mention now the West Midlands, where do your Lordships really think those jobs are going to appear? For example, what three practical steps would you hope to be seeing in the next year? The matter is urgent. The long-term unemployed are already into a second generation. The good management of this country cannot afford to waste these precious national resources.

Regional Industrial Policy
4.10 p.m.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, with the leave of the House, I shall repeat a Statement on the Government's review of regional policy now being made in another place by my honourable friend the Minister of State for Industry. The Statement is as follows:
"With permission, Mr. Speaker, I should like to make a Statement on the Government's review of regional policy. I have made four orders to bring into force the new regional development grant scheme and the new map of assisted areas. The orders, including that specifying the new assisted areas, are available in the Vote Office.
"Our decisions have been taken after very full consultation, including consideration of almost 500 submissions. I have placed in the Library a list and a summary of the submissions received.
"The submissions received show considerable support for the Government's proposals as outlined in the White Paper. While the majority support the continuation of regional policy, many were critical of the waste inherent in the present system and consider it possible to make the policy more cost effective.
"To achieve greater cost-effectiveness we have concluded that the new map should have two tiers instead of three, and that the inner tier, which will qualify for automatic grants as well as regional selective assistance, will be re0stricted to 15 per cent. of the working population. This compares with 22 per cent. for the present development and special development areas. The outer tier of the map, which will qualify for regional selective assistance, will cover a further 20 per cent. of the working population. We have included in the new map several areas, most notably parts of the West Midlands, that have previously been denied regional assistance. Both tiers will be eligible for support from the European regional development fund.
"In redrawing the map, we considered the present and future employment patterns of each area, along
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with other factors, including the risk of distortions where non-assisted areas are adjacent to assisted areas. Some such effects are inevitable in any regional policy.
"For the new RDG scheme we have set the rate of capital grant at 15 per cent. In our view the new rate is high enough to ensure that grants are an effective incentive to investment.
"For too long regional policy has unduly discriminated against service industries even when such industries offer the prospect of increased employment. We have therefore decided to make some service activities eligible for regional development grant. These are listed in the relevant order.
"Since unemployment is such an important concern today, it is also right that any policy as expensive as regional policy should be tied more closely to jobs.
"We have already announced our intention to make two changes to give effect to that aim. Firstly, capital grant will be subject to a cost per job limit. Too much money has been spent in support of capital intensive projects that create few jobs and do little for the economies of the regions. The cost per job limit will be £10,000. However we wish to minimise the burdens placed on small firms and this limit will not normally be applied to firms employing less than 200.
"Secondly we also announced that in future firms should be able to receive a job grant as an alternative to capital grant. The job grant will be set at a level of £3,000 for each new job created. Firms will not have to choose between job grant and capital grant: they will automatically receive whichever is greater.
"The Government also intend to continue to give selective assistance to projects that protect existing employment but which otherwise would not go ahead. With the increase in the outer tier of the map, this will mean an increase in selective assistance. Overall the balance between automatic grants and selective assistance will shift considerably towards the latter.
"After the working through of the transitional provisions, we expect the new regional policy to cost nearly £300 million per year less than if present policy were to be continued. This will be a considerable lightening of the public expenditure burden of the policy. Even so we will still be spending nearly £400 million on regional policy in 1987–88 to improve job prospects in the worst hit areas.
"The most important feature of our policy is that that money will now be spent in the areas with the worst problems and that, in terms of new jobs per pound of expenditure, the new policy will be far more effective than the old."
My Lords, that concludes the Statement.
Lord Bruce of Donington: My Lords, the House will be grateful to the noble Lord for having repeated the Statement made in another place. The noble Lord will be aware that this is one of the most scandalous Statements that has been made in the past five years in which this Government have been in office. It is made

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within the context of the situation described in most moving terms by the right reverend Prelate the Bishop of Liverpool immediately before the noble Lord rose to his feet. It is made within the context of unemployment generally in the United Kingdom having doubled since the noble Lord's Government came to office. In some cases, particularly in the distressed areas, it has multiplied itself over three times. This is the time when the noble Lord comes to the House and announces a £300 million reduction in expenditure on regional policy. I have no doubt that the noble Viscount the Leader of the House in his capacity as chairman of the "Star Chamber", fully concurred, whatever his personal embarrassment may have been in the light of the observations of the noble Earl, Lord Stockton, in what has happened.
At a time of unemployment, at a time of distress, the Government announce that, on regional policy, they are going to save £300 million of taxpayers' money. This is presumably in order that the Government shall be able to spend £200 million of taxpayers' money in promoting, under somewhat dubious circumstances and sailing as near to the law as it can, the sale of British Telecom to the public. This is the level of priorities to which the Government have sunk. Is the noble Lord aware, on the basis of the Statement made by him that £10.000 is to be expended for each job involved, that the increase, on the assumption that the policy was fully effective, might reduce unemployment by 30,000 people during a year? That is merely treading the other way on a moving staircase. With bankruptcies running at a record level of 15,000 a year an additional 30,000 to 40,000 a year are already being added to the number of unemployed in this country from that source alone.
The position taken by the Government amounts to the ignoring of some of the most elemental and moral selections of priorities in public policy and should be denounced as such. It was not even taken on the basis of the majority of opinions that were given to them, including that of the Bow Group of the noble Lord's own party let alone the report of Deloitte Haskins & Sells which recommended a considerable increase in expenditure on regional policy at this time. The Statement is careful to point out:
"While the majority support the continuation of regional policy, many were critical of the waste inherent in the present system and consider it possible to make the policy more cost effective".
The noble Lord was careful to indicate that it was not the majority of the opinions proffered to him from all kinds of sources that he adopted. But because many consider—presumably including the Institute of Directors and others that contribute to his party's funds—that the system ought to be made cost-effective, he decided to adopt this course.
We are very grateful to the noble Lord for having at long last made available a map, which we have not seen. We look forward to seeing the orders that he talked about, which we understand are in the Vote Office. Clearly there will have to be a debate on this subject. It is to be hoped that for once not only financial priorities will be involved—and the Government can be criticised on those grounds alone—but that some of the moral priorities of policy can be discussed at the same time.
4.20 p.m.
Lord Taylor of Gryfe: My Lords, we on these Benches very much support the statement that has just been made. Perhaps I cannot contribute with the same eloquence as the noble Lord who has just resumed his seat, but coming as I do from one of the regions, I cannot help but feel that we are rather discriminated against in the Statement which has just been repeated. Last year the total assistance in regional aid under the Industrial Development Act was cut by this Government by one third. For Scotland in fact it was cut by 50 per cent. last year. On top of that now we have an additional regional policy Statement in which a further £300 million is to be saved in regional aid.
The extension of regional aid to the service industries, when there is a limited budget and a limited amount to spend, means that manufacturing industry-will suffer severely. Anyone who has experience of trying to attract inward investment to the United Kingdom, which can contribute to the restructuring of industry and which is so important in getting new high technology industries to Britain, will realise that the substantial reduction in incentives will make new investment go to other areas in Europe and elsewhere which are competing for high technology investment. I regard it as a very serious matter for the future structure of British industry.
The Statement says that the support will now be job-related rather than capital-related. That does not always assist the change which is necessary in British industry and which requires large investment in capital equipment. To reduce the incentives to investment in capital equipment, positively reduces the efficiency of British industry. I should like the Minister to confirm that the Statement which he has just read means a reduction in capital investment allowances from 22 per cent. to an overall 15 per cent., which could have the serious consequences that I have just mentioned. Can he confirm also that some of the areas which are now removed from development area status still have more than 10 per cent. unemployment—that there is double digit unemployment in some of the areas that are now removed on the new map? I have not seen the map but I gather that that is so. Can he also try to tell us just what will be the net impact of the contents of the Statement on the attraction of new high technology industries to areas that are trying hard to get away from the traditional old industries and restructure our economy?
Lord Lucas of Chilworth: My Lords, I should like to have been able to thank the noble Lord. Lord Bruce, for his acceptance of the Statement that I have just read, but I can perhaps thank him for the latter part of his remarks. I thank the noble Lord, Lord Taylor of Gryfe, for his reception of the Statement.
May I deal straight away with the two main points that the noble Lord, Lord Bruce, made? I say to him in all seriousness that the Statement is very much within the context of this afternoon's debate. The Government are extremely concerned with the levels of unemployment. It is an expression of that concern that the review of regional policy has made the shift from purely capital grant to job-related grant. I believe that that is an expression of our feelings in this matter.

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Notwithstanding anything that the noble Lord said, I should perhaps point out that even by 1987–88, £400 million will still be spent on regional aid. Since the noble Lord quoted a paragraph from the Statement, I ought to repeat that paragraph in full:
"The submissions received show considerable support for the Government's proposals as outlined in the White Paper. While the majority support the continuation of regional policy, many were critical of the waste inherent in the present system and consider it possible to make the policy more cost-effective".
That is what we believe will occur over these next three and a half to four years.
The noble Lord, Lord Bruce, said that he thought a debate would be absolutely necessary. I do not think that your Lordships would expect me to comment further than to say that that is not a matter for me but for the usual channels. No doubt the noble Lord will make his bid through those channels.
The noble Lord, Lord Taylor, with his great experience of capital and capital investment, made a number of points which I take on board. He asked me specifically whether the old capital grant which stood at 22 per cent. was to be reduced to 15 per cent. I can confirm that that is so. He spoke of the area from which he came—Scotland. We feel that Scotland has been given a fair share of assisted area coverage. I am sure that he will study the new map carefully. The coverage on it is totally fair as between different parts of Great Britain. How the new map compares with the old is of course another matter; but I noted that Scotland's shares of intermediate areas has not changed and its share of areas eligible for regional development grant has increased. When I was looking at the map I also noted that the whole of the Highlands and Islands Development Board area is eligible for support from the European regional development fund.
The noble Lord asked me whether there were travel-to-work areas not included in the assisted area map but which had an unemployment factor of over 10 per cent. There are 320 travel-to-work areas. I have a list of them, but I cannot from memory tell him which areas—or indeed whether there are any—have an unemployment factor above 10 per cent. I can certainly have a look through the list, and perhaps after we have discussed this matter I can talk to him about that.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that, notwithstanding the febrile, if predictable, rhetoric of the noble Lord, Lord Bruce, many people will feel that greater selectivity in the use of the regional grant is to be welcomed? Is he particularly aware that its extension to the service industries seems to make very good sense in view of the much better outlook for the service industries as compared with manufacturing industry today? Can he say in particular whether that extension takes it into the field of tourism and hotels?
Lord Lucas of Chilworth: My Lords, I am most grateful to my noble friend Lord Boyd-Carpenter for his welcome for this Statement. I am particularly grateful to him for pointing out that now there is a much greater element of selectivity which should enable those astute enough to read the rule book, as it were, greatly to benefit. That selectivity will
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undoubtedly lead to some job creation and further opportunities. This is particularly so in the service industries. As in general terms tourism comes within that bracket, there will be opportunities for benefit under the present scheme.
Lord Sefton of Garston: My Lords, does the noble Lord the Minister agree that the aim of regional aid is to equalise the opportunities for jobs throughout the country, and that as it has now been in operation for approximately 40 years and the disparities between the various areas in the country have become worse instead of better, the question of regional aid has in fact signally failed to achieve its aim? Would he further agree that even now when new jobs are being created in certain industries, most of those jobs are being created in the South-East and the least number are being created in the disadvantaged areas?
Will the noble Lord urge upon the Government the necessity to look again at the question of devolution of Government jobs from the South-East to the regions in order to relieve the congestion in the South-East? We may even reach the stage where perhaps the 3,500 jobs that were promised to Merseyside under the previous Administration would be restored, and we would get back to some semblance of sanity in regard to job opportunities throughout the country. Indeed, we may even get those 3,500 jobs restored—jobs which were so blatantly and arrogantly taken away immediately following the Government's election in 1979.
4.32 p.m.
Lord Lucas of Chilworth: My Lords. I thank the noble Lord, Lord Sefton, for his contribution. I agree that one part of regional grant policy was to equalise particularly job opportunities. We think that in this plan we are in fact going to do just that. Since the unemployment rates for the new map, as at July 1984—just a few months ago—were produced, the new development areas have within them a 19·1 per cent. unemployment factor. The intermediate areas have a 15·5 per cent. unemployment factor as against Great Britain as a whole with an unemployment factor of 12·6 per cent. The noble Lord will see that on the map the Merseyside area is, in the main—in most of the TTWAs—designated a development area. One would certainly expect industry to take advantage of the opportunities that are open to them under the new regional policy.
The noble Lord asked me to urge my noble and honourable friends about the necessity to ensure that there was no further movement of jobs into the southeastern area. I can tell the noble Lord that in the entire south-eastern area there is not one TTWA which qualifies for regional development grant because they are neither in a development area nor indeed an intermediate area.
Lord Sefton of Garston: My Lords, the point of my remarks was that regional aid as we see it and as we have been practising it for 40 years has completely failed to remove the disparities in our economy. Will the noble Lord look at the question of devolving jobs from the South-East to the rest of the country as in fact the Government are urging the private sector to do? The private sector needs to be in the South-East: the

923
Government and the civil servants do not need to be there and they could be moved to the rest of the country.
Lord Lucas of Chilworth: My Lords, I do not think that I understood the noble Lord, Lord Sefton. However, as he has repeated his question I must say to him that I do not accept that the regional policies over the past 40 years have failed to achieve their objective. But I am prepared to accept that they have not been 100 per cent. plus successful. I thought that when I answered him previously I gave the noble Lord the assurance for which he asked.
Lord Cledwyn of Penrhos: My Lords, noble Lords have referred to different parts of the country. Is the noble Lord aware that I visited South Wales over the weekend and found considerable apprehension there about the effect of this White Paper—or at least about what the newspapers had prophesied would be in the White Paper, and they were pretty near the mark? Can the noble Lord say what the effect will be in Wales? He told the noble Lord, Lord Taylor of Gryfe, briefly what the effect would be in Scotland. Is the noble Lord aware that apart from Northern Ireland unemployment in Wales is higher than it is in any other part of the United Kingdom? With unemployment at that level in Wales, in Scotland, on Merseyside, in the north and in other parts of this country, how can the Government possibly justify reducing the amount to be spent on regional aid by £300 million at this time? That is the question which the country will be asking.
Is the noble Lord aware that there will be no criticism of the Government for looking at regional aid because regional aid, like every other Government policy, needs to be scrutinised from time to time. There may be deficiencies and I would concede that there have been deficiencies in regional aid. But what the Government have done is to cut the amount of capital available to create new jobs in those parts of the country that need jobs badly. It is that justification which the Minister must make to the House.
Lord Lucas of Chilworth: My Lords, of course I recognise the concern of the noble Lord, Lord Cledwyn of Penrhos, for the situation in the Principality. But I have to tell him that the coverage of the new map really is quite fair as between the different parts of Great Britain. It would be wrong to attempt to compare the new map with the old map because that really is another matter. The noble Lord asked me how we could contemplate cutting £300 million from regional aid at this time. I must tell him that we are not cutting, as at this time, £300 million from the aid programme—that is the anticipated saving as at 1987–88, because those savings which we hope to achieve will come about as the scheme gets under way. The transitional provisions until 1987–88 really mean that a good deal more money will be spent because both the old scheme and the new one will overlap. We believe that even at that time—1987–88—£400 million of regional aid more properly distributed and spread and becoming more cost-effective, will mean that we are more likely to achieve that which we have set out, than would have been the case under the old scheme which was costing some £695 million.
Lord Taylor of Gryfe: My Lords, I am sorry to detain the House but with due respect I think that one of the major questions which I tried to ask was not really answered. I am referring to the question of reducing the incentives to inward investment. If we cut the capital allowances from 22 per cent. to 15 per cent. we must remember that we are in a highly competitive world as regards attracting inward investment from the United States, from Japan and elsewhere, which has been a resounding success in Scotland. I do not subscribe to the view that regional policy has totally failed. There are many indications that regional policy has been effective in transforming the Scottish economy, but it is in the face of great competition from many other parts of the world that are seeking to attract new, high technology industries. Bearing in mind that competition, if we cut the capital allowance from 22 per cent. to 15 per cent. it is likely that many of the firms that make up what is now called "Silicon Glen" in Scotland will depart and invest elsewhere. I cannot see that that contributes in any way to improving the economy of the nation or creating new jobs.
Will the Minister also confirm that unfortunately it will be the practice of the Government in future to deduct European aid from the regional aid which is now contained in the Statement? Or will he permit European assistance—regional assistance—to be additional to the figure that he has just mentioned?
Lord Lucas of Chilworth: My Lords, perhaps I had better amplify what I said with regard to the 22 per cent. and the 15 per cent. The capital grant rate remains at 15 per cent. in the development areas, although of course, having reduced the scheme from a three-tier scheme to a two-tier scheme, we have taken off the special development area. It was only the special development area which enjoyed the 22 per cent. rate.
I think that I have answered the points with regard to Scotland. Scotland receives a very fair share of the aid that is available. We reckoned that 15 per cent. was the lowest rate which would be generally effective in influencing investment decisions. The noble Lord, Lord Taylor of Gryfe, argues that that is wrong. However, that is the decision that we have made in the light of all the information that was available to us. There is no doubt that he and I may be some percentage points away from total agreement, and I fear that we may have to be that far apart. However, that was the reason.
There has never been any question, nor is there likely to be, of deducting European Regional Development Fund aid from any of the sums which we provide. The way in which the areas have been distributed across the map will have the effect of enabling more local authorities rather than fewer to make claims against that fund. Noble Lords will probably recall that under the new European Regional Development grant fund arrangements there is an increased maximum available to the United Kingdom of some 27 to 28 per cent. of the total available. That is some percentage points increase over that which we have enjoyed in the past.
Lord Bruce of Donington: My Lords, is the noble Lord aware that the statement which he has just made on additionally, wherein he stated that the funds made available out of the European development fund towards public expenditure were made in addition to ordinary Government expenditure, is directly contrary to the evidence given by his department's own officials to the Select Committee of this House on this particular subject?
Lord Lucas of Chilworth: My Lords, no, I am not aware of that and I think that the noble Lord is rather misrepresenting either what my officials said or what I have said. I wonder whether the House will forgive me if I correct one part of the answer which I gave to my noble friend Lord Boyd-Carpenter when he asked me about hotels and tourism receiving grants. The hotel industry would not normally receive grant through the regional development grant programme, but it does benefit from Section 4 of the Tourism Act.
Lord Wade: My Lords, perhaps, I may try to reduce this discussion to its simplest form. Do I understand that, as a result of Government policy, there will be cuts which will involve suffering? When the noble Lord speaks of equality, he really means that we are being asked to accept equality in suffering. Secondly, when we talk about capital investment, is it not very unwise, taking the long-term view, to indulge in cuts in capital investment, when that will be so vital to the revival of industry in this country?
Lord Lucas of Chilworth: My Lords, I think that in fact the noble Lord, Lord Wade, is quite wrong; this has nothing whatever to do with equality of suffering. This is a redistribution of funds to place those funds where, in the light of that suffering, it is thought best that aid could be given. It provides much greater opportunity for industry—both manufacturing and the service industries—to locate in areas where there is the greatest suffering. There is a capital grant with a job-creation ceiling: there is a job-creation grant where there is no ceiling other than the number of jobs multiplied by the amount of money.
Therefore, that is a real and very positive inducement to—I might say investment in—the creation of jobs. I would quite seriously expect industry to take advantage of this new scheme, which we believe—and we have good reason to believe—will prove to be that much more effective than the old scheme.
Lord Rochester: My Lords, will the noble Lord not accept that it is very difficult for some of us to see how his remarks this afternoon amount only to a redistribution of funds when, as I have understood him, overall it amounts to a reduction of £300 million?
Lord Lucas of Chilworth: My Lords, the noble Lord, Lord Rochester, is of course right. There is a redistribution of funds, geographically in terms of the travel-to-work areas and the rates at which the development area and the intermediate area are settled; but there is also a reduction in the total amount available—which is some £659 million under the old scheme—to £400 million by 1987–88.
Lord Diamond: My Lords, is it not the case that today we are debating the effects of Government policy on unemployment, and here is an example where the Government are enacting a policy which, although helpful to service industries—and I am second to none in approving of that—is nevertheless making it less likely that there will be inward investment in manufacturing industry in this country, as a result of which there will undoubtedly be more unemployment in this country than there was before? Is it not right that your Lordships' House should take particular note of policy formation at the point of time when it is being formed, which is now?
Lord Lucas of Chilworth: My Lords, let me first say to the noble Lord, Lord Diamond, in the kindest possible way, that this afternoon we are not having a debate.
Lord Ferrier: My Lords, we are.
Lord Boyd-Carpenter: My Lords, yes, we are.
Lord Lucas of Chilworth: My Lords, I certainly had not intended that we should have a debate upon the Statement. I was quite happy to answer questions and I shall answer the question asked by the noble Lord, Lord Diamond. I do not accept anything that the noble Lord, Lord Diamond, has said. Last Tuesday night I was in Helsinki speaking to a group of Scandinavian bankers and top businessmen about the investment opportunities in the United Kingdom. I was able to tell them something about the plans which were outlined in the White Paper. From their reception of my remarks I received very great encouragement. I do not believe that this policy will be reflected in any reduction in inward investment.
Lord Sefton of Garston: My Lords, can the noble Lord tell me how much less Merseyside is to receive?
Lord Lucas of Chilworth: My Lords, I very much regret that I cannot answer the noble Lord, Lord Sefton. I have before me a great list of 320. If I attempted to answer the noble Lord, I fear that other noble Lords might ask me about other areas. I shall be happy to tell him when we finish our discussion on the principle of this Statement.
Lord Sefton of Garston: But it will be less.
Lord Bruce of Donington: My Lords, are we to understand that the noble Lord communicated these proposals to Helsinki before he communicated them to this House?
Lord Lucas of Chilworth: My Lords, the noble Lord, Lord Bruce of Donington, is being slightly mischievous. I said that I was able to talk to those bankers and leading industrialists about the proposals that were contained in the White Paper.
Lord Ferrier: My Lords, is it in order for a debate like this to continue in connection with a Statement?

The Unemployed: Factors of Special Disadvantage
4.51 p.m.
Debate resumed.
Lord Molloy: My Lords, to continue Lord Balfour's debate on unemployment, I want to say straight away what bad luck the Government had in having the noble Lord, Lord Lucas, come here this afternoon to make his appalling and anaemic Statement, which can be so dangerous for the issues we are discussing and which was rightly roughed-up by the noble Lord, Lord Bruce of Donington. I listened carefully to that little debate inside this debate. Either the Government are being foolish or they do not understand the proportions of what is happening to our country because of unemployment.
In that Statement the noble Lord, Lord Lucas, had to dwell on waste. What a neck for this Government to talk about anybody wasting anything when they are guilty of the criminal act of wasting four million of my fellow countrymen who could be making a substantial contribution but who are unemployed! They rightly say that they are appalled at the number of unemployed. They said that this year, they said it last year, they said it the year before that and they said it the year before that. too. All we have had is different characters coming to the Dispatch Box. wringing their hands and saying how terribly upset they are about this unemployment, and that they intend to do something about it. And they have: they have increased it! They have made it worse. That is what the country must understand.
It is difficult for the country to really understand it, with the appallingly biased press that we have in this nation, which seems to think that the present Government cannot do any harm whatsoever when in point of fact they are the worst Government we have had since the war. When the noble Lord. Lord Balfour, talks about the problems of unemployment for those in a particular age group and for those in a particular economic set-up, do the Government not realise that it stretches right across? There are young folk who have never had a job in their lives. There are skilled artisans who had 10 years left in them to contribute to our nation but who were flung out of work. It goes across the whole lot. There is not much difference, except in one aspect to which I shall refer later.
Unemployment is the most deeply harmful and dangerous of all social tensions, as the right reverend Prelate has indicated a number of times in this House—and I am glad to support him. At the conclusion of what I have to say I shall return to a theme about which I have been talking for the last three or four years. I have to do so. If I do not stick to what I have been saying about how unemployment can be conquered, then either I have not been speaking the truth or I have been guilty of submitting a false prospectus, unless there has been some good reason to change my mind. But there has been no good reason whatsoever.
The Government have been patently, totally and absolutely hopeless over the past four years in trying to cure this, because they are so doctrinaire. Only
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reluctantly did they give up the dreadful policy called monetarism, which they imposed on this country. They knew full well what it had done to states like Israel and some states in South America. They knew that it had lacerated them. In the state of Israel, when you buy a pound of potatoes, by the time the last potato has gone on the scales inflation has increased by 3 or 4 per cent.
The person who dictated this to our Prime Minister and our Government is someone we ought to take care of. I would never accept that we have not got enough brainy and intelligent people in Scotland, England, Wales and Northern Ireland who can indicate the way we ought to go. and run our great industries, so that we have to run to foreign countries and import some of their elderly gentlemen, and take cognisance of other philosophies which have done no good whatsoever.
On the question of social tension, what I would reiterate is that being unemployed does not simply mean a person being out of work. If he is a married man with a couple of children, the tensions of unemployment go through the family. Some of us have gone through it all before. My father was a skilled engineer. I witnessed family rows because he had come in at half past eight after traipsing around the docks of Swansea or Cardiff, only to be told by my mother that she had heard that a few men were being taken on up in the Rhondda, working the machinery in the pits, and she wondered why he was not there. He said, "I did not think. Nobody told me". I beg your Lordships to listen to this: the children were sitting silently, watching the row between their mother and father, and the basic reason was unemployment.
I regret to have to say that one of the contributors to our discovering the answer to unemployment was Adolf Hitler, aided by Benito Mussolini. If this Government cannot find another way, they can make one massive contribution: move out and let someone else have a try. The social tensions now are enormous. I travel all over the country, speaking in universities and technical colleges to groups of young people, sometimes getting all the abuse in the world hurled at me when I even defend the Government by saying they are doing their best. Their best is not good enough.
We do not want to be standing in queues becoming what we call dole paupers. The noble Lord, Lord Balfour, mentioned that it is a waste. Of course it is a waste. I can remember the time in the dole queue—which we took three hours to walk through—when there would be miners, steelworkers, navvies, bachelors of science and masters of arts. They were all there. Then, as in this day and age of 1984, the only thing they shared was the scrap heap.
My nation is not going to survive unless something is done. There was very little confidence in our country in the 1930s. There is a great possibility of people having confidence sapped from them in my country today. I can remember Aneurin Bevan—it is there to read in his book. In Place of Fea —saying that the fear of unemployment was not that you could not get money to buy things, but the rows within families, the rows between one set of workers and another.
I have seen men lined up on the docks and the foreman walking along—I do not know whether they do it in Liverpool now—and having a look. I never

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stood much of a chance, I was too small. You had to be a big bloke of about six foot, because they could probably get more out of you. That was Great Britain in 1937 and 1938. Of course in 1939 the then Government did not care two pins how big I was, as long as I was capable of holding a gun.
The youth of today in Liverpool, Cardiff, Glasgow and London are not going to be as docile as we were. This is what we have to understand. There is an infamous link, a creeping industrial cancer, between some of the Government's activities, their obsession with privatisation, and unemployment.
How on earth can we not get excited when we realise that it is four o'clock on this afternoon in this ancient Chamber and there are a few thousand doctors, a few thousand nurses, midwives and ward ancillaries also on the dole? Some of them have been shoved out because private entrepreneurs have taken over and they have such a big love for the hospital that they want to clean, provided there is a big profit at the end. Nurses and doctors do not calculate their overtime because to them the patient is the most important person, and their reward for that sort of attitude has been to get the sack. It does not give me much pleasure to say this sort of thing, but I want to see my nation lift itself above this terrible problem.
In the field of taxation there is the taxpayer Jekyll, who is pleased and proud of his country which provides old age pensions, widows' pensions and service pensions and provides a health service, education and so on. But then there is the awful bloke Hyde, who resents paying the bill and supports all the cuts and reductions in the state's duty and responsibility which the Government advocate.
It is true, as the noble Lord, Lord Balfour of Inchrye, has said, that there are also other personal disadvantages of which it behoves us to take full cognisance, particularly those of the long-term unemployed. They are unfortunate, but they are human and as British as I am, even if they have low intelligence, if they have a lack of intellectual ability or some illness which prevents them from doing any sort of work, if they are disabled or if they are old. I am proud to be the president of the largest group of branches of the Royal British Legion, the metropolitan group. It hurt me a few Sundays ago when I was taking the salute in Middlesex to know that the chaps walking past with their medals clinking had been to see me to see whether there was any chance of them getting a job because they had been sacked from Hoover's and from other firms. As they said, in these days one does not get the sack but is made redundant. That hurt me. I cannot understand why the Government do not say that they have tried every mortal thing that is possible within the Conservative book of rules and they have all failed. Why do they not try something else. There are some other things which could be tried which will overcome the fact that someone might be unemployed for a long time because of where he lives or because of his trade or profession. There is a way in which we can overcome that and we have done it.
Speaking parenthetically, I get a little angry when I hear the pathos and the bathos from the other side of the Chamber and in the other place about everybody's concern for the unemployed. They all want to help the unemployed but no one was prepared to agree to my
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little Bill for concessionary fares so that when a chap in Fulham thinks that he might get a job in the London docks he does not have to wonder, "Is it worth my trying because by the time I get there and back the fare will have made a hole in the ten quid of my dole?" That probably happens in Liverpool and Birmingham. I know it happens in Cardiff and Swansea and in some parts of London. We were not big enough to hold out the hand, even if not of compassion, of practical assistance so that if one person got a job that would be one family which could celebrate.
I have said before and want to say again that I do not change my views. Having gone through the terrible threat that my country survived in the middle 1930s which ended with the Nazi menace against which at one time we stood alone, I believe we have to have those sort of guts again. We are not being given a lead by our present Government. They are afraid of the solution that was provided in 1937 and 1938 through the economic philosophies of Kenneth Galbraith and Maynard Keynes, which were accepted by Franklin Delano Roosevelt, when the Americans had such a massive unemployment what it makes ours now, as it did then, look almost negligible. They overcame it and one motto Galbraith, the Scots Canadian, nailed to his mast. Simply put, it was "spend and prosper".
We all know that in those days wonderful town halls, marvellous buildings and some brand new lovely roads were created by the construction industry. There are very wealthy firms in the big construction industries such as Cementation, who found the route of recovery for their industry in the philosophy of spend and prosper. The Government said then, "We will build houses for the homeless, new town halls and new hospitals". Hospitals are now falling down today and tens of thousands of men in the construction industry are unemployed.
In conclusion, I believe that we need a big, courageous plan to mobilise the talents of this nation—to march together: the unions, the great captains of industry, the men of practical knowledge and their entrepreneurial staff, men who travel the world to gain orders for this country and the workmen who must now work as hard as they possibly can to fulfil those orders to restore the world's confidence in this nation. We have nothing to lose except our own shame and frustration at having so many of the skilful men of Britain unemployed.
I sit down with the words that there is everything and all to gain. There would be more taxes paid, which would please any Chancellor of the Exchequer. If we could get them all back to work there would be an increase in productivity. What is wrong with that? There would be an increase in the morale of a great many of our fellow Britons and perhaps, above all, with the bold plan that I have only had time to adumbrate and outline, there would be not only an increase in morale but the unemployed would receive the most valued gift, to them as it is to me: they would have their self respect restored.
5.7 p.m.
Lord MeAlpine of West Green: My Lords, in the United States during the last 10 years some 9 million jobs have been created. Most of these new jobs have been in the service industries. Here in Britain, too,

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service sector employment has been rising steadily for two years, with more than 400,000 new service jobs since 1982. While jobs in manufacturing have declined, and probably will continue to decline, clearly the service sector provides us with substantial opportunities.
Yet here we come upon a problem. For some perverse and unfathomable reason there is a strong prejudice against service jobs. They are supposed to be not as worthy or so valuable as manufacturing jobs. A howl of rage goes up when our balance of trade in manufacturers is in deficit, while the critics tend to ignore the fact that our balance of trade in services is in just as strong a surplus.
I have never understood why it is supposed to be better to be a manufacturer of Carmen curlers than it is to be a hairdresser using them. People are proud to be a car manufacturer, but are hesitant about car salesmen. The prejudice against service sector jobs is strong and insistent. Yet as the wealth of those in work grows, as it has, so the opportunities for new jobs in the service sector also grow—in catering, tourism, entertainment and leisure, or even in hairdressing and among second-hand car salesmen. These are all real jobs and every bit as valuable as any job in manufacturing.
It is particularly the elderly unemployed who can benefit from such opportunities. They have a lifetime of working experience behind them and are ideally suited to fulfil service sector vacancies, where success is based not just on training or operating machinery, but also on the ability to respond personally and sensibly to an individual customer's needs. Experience can be much more valuable than youthful vigour or physical strength. The possibilities are tremendous.
Let me take one current example; that of Battersea power station. As a power station it employed approximately 125 people. Converted into an industrial estate, it could employ some 600 people. But as a fun centre it will employ 6,000 people and require no special Government subsidies.
The challenge for Government today is not to spend vast sums of money in an attempt to buy our way out of unemployment. I do not believe that unemployment in the long term is any more responsive to cheque book solutions today than it was in previous Governments. Employment schemes, of course, can and do help, but clearly they are not enough, either.
What is required is a commitment from the Government on two fronts. First, they must stamp out the prejudice in their own thinking about service jobs, which actively hinders their creation; and, secondly they must apply their energies and ambitions to moving the barriers within the Civil Service to job creation in the service sector. This is easier said than done, perhaps. Decision makers in the Civil Service are subjected to all sorts of pressures—not only to create new jobs, but also to preserve the environment, enforce planning codes, conserve the neighbourhood, protect those already in work, and to take heed of the various race and sex equality codes.
But, put at its simplest, the priority today must be in favour of job creation. I am not against conservation,
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preserving the environment, planning codes, employment codes and other similar considerations, but I do not value them above the creation of jobs. We can restore hope and a sense of dignity to the unemployed through the creation of new jobs, and we must. Our present set of administrative rules and regulations was largely developed in the heyday of manufacturing, when large industrial conglomerates employed tens of thousands of people. Today the employment world has changed, and its industrial units may employ just a handful. But the rules and regulations have not kept pace with such changes. It is all too easy for those in secure jobs, such as civil servants and administrators—and even Ministers—to delay and prevaricate while they consider all the traditional pressures in all the traditional ways—all at the expense of jobs. Delays in such circumstances are little short of malicious. While those in jobs delay, those out of jobs are robbed of hope.
There are times for caution and there are times for action and imagination. When I tell my noble friend Lord Belstead that there is one development in this city offering some 2,000 man-years of work which was given outline planning approval 16 years ago and yet is still under appeal, then, clearly, the time for caution has run out.
The rules need changing and adapting to a new era of service industries. The delays and barriers need removing and the attitudes of our administrators need bringing up to date. The prejudice which says that we should prop up traditional manufacturing jobs rather than promoting new service jobs must be done away with.
I am gratified to see the progress already made by the Government. I am encouraging them to further action, rather than criticising them for lack of it, and I noted with considerable satisfaction that the new regional policy rules referred to in the Statement from another place this afternoon went some way towards removing the bias against jobs in the service sector. But I ask my noble friend Lord Young to use his energies and imagination to ensure that priority is given to speed decision-making whenever the possibility of creating new jobs arises.
My Lords, we must give priority to job creation if we are serious about tackling unemployment. There is no easy answer to unemployment, and there can be no easy excuses if we allow bureaucracy to get in the way of new jobs.
5.13 p.m.
Lord Roberthall: My Lords, during the fourth day of the debate on the Address, almost all the speakers spoke about unemployment and the noble Lord, Lord Cledwyn of Penrhos, has put down his name for another general debate on 12th December. I think that we must get used to this. I think it is right that we should go on talking about unemployment, even if we have to say the same things over and over again, simply because it is the major problem at the moment. But I was glad to read the Motion put down by the noble Lord, Lord Balfour of Inchrye, because he was concentrating on a particular aspect of the subject, and I think that, when there are between 3 million and 4 million unemployed it is very good for us to have to think sometimes about particular people because we

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become bewildered by figures of 3 million or 4 million unemployed. We forget that each of them is an individual and each has his special problems.
A good indication of the pressure to talk about this problem has arisen this afternoon, because not only did the Statement on the regions develop into a debate on unemployment, but most of the speakers in this particular debate have wandered far away from the subject put down by the noble Lord—and I do not envy the noble Lord, Lord Belstead, in winding up. I have forgotten the definition of "latitudinarianism", but there was an element of that (shall I say?) in the right reverend Prelate covering the whole waterfront. The indignation of the noble Lord, Lord Molloy, who is so eloquent on this issue, certainly burst all bounds, and although the noble Lord, Lord McAlpine, made a very interesting speech, I think that it was not one that would much help the particular problem.
What I am going to try to say is that this is the worst of all the problems that we are facing. It is a new problem. During the period when full employment was a high priority there was constant unemployment. Firms were closing down, industries were changing and people were coming out of work; but because of the high level of employment there was, broadly speaking, no difficulty, except perhaps in the development areas, in their getting other jobs. I remember that when I was mainly concerned with advising the Government about this there was always an outcry if a firm closed down and there were a lot of redundancies because in those days unemployment was thought to be the thing which would bring down any Government. But if one waited a couple of months and then went back to the place, one found that everybody had a job. In those circumstances the skills and abilities that they had were preserved because the period between when they lost their job and when they got another one still kept them in the running and it was not difficult in that case for them to make the adaptations that would be required by some other job.
But in the last four years the situation has changed entirely because of the growth of unemployment. What is happening now happened very little before. The noble Lord, Lord Balfour of Inchrye, the noble Lord, Lord Molloy, and the right reverend Prelate used very eloquent words for what is happening, which is the rusting away of the skills of a section of the community. And that rusting away is going to continue.
Why I say that it is such a bad problem is that, although the Government virtually say that they cannot do anything about unemployment and that the control of inflation is the high priority, and therefore the deduction (as I said in the debate on the Address) is that we are in for high unemployment for a long time, the body of opinion on this side of the House thinks that there is something that can be done about it. We have made a number of proposals—which have been constantly referred to, and I shall not go into them again—about the desirability of work starting on all the infrastructure jobs which need to be done; jobs on housing, roads, sewers, water supply, and so on. But, my Lords, if that were to be done, it would not help the people whom we are talking about today. That is because there are now out of work so many
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people who left their jobs more recently. Therefore the competition for any jobs that arise due to general measures would preclude those measures from helping the people we are talking about, those whose skills, as I have said, have rusted. And nobody is going to use a rusty part if there is one that is not so rusty.
I come back to the central point that I want to make today. That is that if anything is to be done for these people, it will have to be done by special measures directed to their particular problem; and that gives us an indication of how hard it is. In this context I looked at the speech that the noble Lord, Lord Young of Graffham, made during the debate on the Address, when he very elegantly diagnosed the problem. He was referring to the problem of the long-term unemployed and he put the figure of those who would never get absorbed again very high at 1.2 million. He said this at col. 302 on 13th November, 1984:
"the Manpower Services Commission is now adding a retraining element…that is working very hard and, I believe, very successfully towards returning to the world of work those who have been out of it some time".
That is an encouraging statement which is at least specific, because whatever else the MSC is doing it is doing something for these particular people and I feel that if we are to deal with this problem it will have to be done in that way.
Very few suggestions have been made in this debate. The noble Lord, Lord Rochester, mentioned various suggestions which might alleviate the problem, but taking people off the register is a second-best solution. He also mentioned enterprise centres. I was not quite clear how that would affect this particular one.
The noble Lord, Lord Balfour of Inchrye, mentioned the possibility of setting up leisure centres, and he mentioned one of the settlements but I forget the name of it. They have done, and no doubt could do again, admirable work; but the scale of the problem is much larger than that. There will have to be some decentralisation in order to get the individual attention that is required. I feel that if anything could be done more would have to be done by the local authorities. But when we say that we then see how little can be done, because at the moment the local authorities are being forced to add to unemployment and not to decrease it. The cuts that are imposed on them are causing people to be thrown out of work. Some money would have to be available, anyway; and even if the money were earmarked for the local authorities it would be running counter to the rest of their policy.
Therefore the problem is very serious, and if anything can be done about it, it will have to be done by specific measures adapted to these particular people, and not be available to all the competition waiting around from all the rest of the unemployed.
5.24 p.m.
The Marquess of Ailsa: My Lords, I wish to make a few comments concerning the problem of unemployment. While I am fully prepared to accept that there are over 3 million persons currently drawing unemployment benefit, I find it difficult to believe that there are a similar number who are actually desiring to work. I get the feeling that there is a lack of will and a lack of desire to work. Some years ago I had the privilege of being in charge of an organisation which

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organised young adults' clubs and the purpose was to train young people to take up employment. We had some very nice young people, but if the truth be told they were not very keen on employment.
I go further and speak of some of my personal experiences as a very, very minor employer. Most of my staff have come through various youth employment schemes, but a great number who have been tested on the way have failed. I also have direct knowledge of those who have found it better to leave my employment and to be counted as unemployed, although there is still a vacancy for them. Whenever one advertises vacancies, one is not overwhelmed with a rush of those even seeking details of what the job is.
I can now go slightly further than my own personal experience to that of an industrial organisation which has recently had the same task. They want various forms of trained or semi-trained industrial workers. They advertise, but people do not come forward. If they wish to employ people, they have virtually to steal them from somebody else; so while I have every possible sympathy for those who generally wish to work and are unable to do so, I find it hard to believe that there are not a great many who rather enjoy the situation that they are currently in.
5.26 p.m.
Lord Dean of Beswick: My Lords, let me commence by thanking the noble Lord, Lord Balfour, and complimenting him on the remarks that he made in his speech. It is obvious, when he looked back to his earlier days in the political arena, that he was comparing what is happening today with some of those very difficult years in the early 1930s. I, for my sins, am old enough to remember those, and I think he spoke from the heart.
But in order to deal with this problem—which is without question the most urgent and dangerous problem which we have to deal with today—I do not think that you can cull one section of the community out and say this is how you would deal with them, because just over 12 months ago I happen to have been one of the types of people that this Motion speaks about. By a quirk of the electorate, in June 1983 I found myself for the first time in the dole queue, after having left school at 14 years of age and never having been out of work for a day. It was the most traumatic few weeks that I ever experienced in my life. I was made aware eventually that I might be sent to this place. I just do not know what I would have done if that had not happened. I suspect that although I am a highly skilled engineer (and I have made every thing from locomotives to Churchill tanks during the war and helped to erect some of the massive turbine sets that are now servicing our grid) I would have been surplus to requirements.
I do not believe that any retraining programme for people of my age group will bear very much fruit because whether we like it or not as we grow older we are not as receptive to the assimilation of knowledge as are younger people. The managing director of the turbine generating division of GEC, which I used to work for told me at the time that I had been in Parliament for only about three years, about the type of machine that was being installed in Trafford Park in
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Manchester where I once worked. But I would have been at a loss, after a lifetime in engineering, to cope with that machine unless I had started from square one.
I hope that the noble Lord will forgive me if I cast my net a little wider because I believe that there is such an interdependence among the total unemployment situation we face that it would be wrong to concentrate on a specific group. I also say that at this point in time, though it would be very helpful perhaps to make more finance available individually to cushion the blow, most of the people involved in this age group are people of dignity who want that dignity restored and want the chance to work again, if that can be done.
The noble Lord the Minister, who is to reply to this debate, will know that since my ennoblement 12 months ago I have repeatedly questioned Her Majesty's Government on the unemployment situation. He will also know that the answers given in this Chamber by the noble Earl, Lord Gowrie, who is now a member of the Cabinet and who at that time held Government responsibility in the House for employment, showed a steadily worsening situation in terms of real jobs for school-leavers and adults both men and women. One of the most serious and worsening situations was the continual rise in the number of long-term unemployed.
In my opinion, at times the noble Earl, who I repeat then had responsibility in this House, treated this very tender subject with some diffidence and disdain that was not warranted. He reiterated on more than one occasion, as Ministers have done in another place, that it is not the Government's responsibility to create jobs, but it is the Government's responsibility to create an economic climate where, subject to the usual market conditions, industry itself will expand creating the increase in employment which we all so earnestly desire.
But is it not obvious to anybody watching the situation closely and listening to ministerial answers that, although the number of jobs coming on stream has increased, the dimension of this is nowhere near sufficient to reverse or remedy the present situation, and there are no factors emerging at the moment that suggest any significant change in that situation?
In order to illustrate the present situation, may I, by leave of the House, draw the attention of noble Lords to the Answers which I received from the noble Lord, Lord Belstead, to two Questions which I put to Her Majesty's Government on 24th and 25th October. On 24th October, I asked what was the number of people employed in the manufacturing industries for each year from 1979 to 1984. The answer that I received from the noble Lord showed that on the latest figures the number had been reduced from 7,113,000 employed in 1979 to 5,480,000—a drop of 1·6 million plus in our manufacturing base, which I suggest to the noble Lord is the most important section of our working community. So that is the dimension of the fall there.
On the following day, 25th October, I asked Her Majesty's Government whether they would list the number of people unemployed for over one year, two years and three years: in other words, the group of people who are now classified as long-term

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unemployed. The answer from the noble Lord indicated that the number of people unemployed for over three years had more than trebled from 109,591 to 376,273. Other figures which were quoted in the Answer showed the same trend in the case of those unemployed for over two years and over one year, and, as I understand it, the latest information shows a further worsening of the situation.
I fully accept the noble Lord's answers to these questions, regarding the increased measures that the Government announced during the autumn, and the comfort that 247,000 more people are in work than a year ago. Of course, I welcome the information on both counts. But the underlying trend, according to the latest figures and predictions, is that under the Government's present policies unemployment will continue to rise unless there is a dramatic change in direction.
I have just quoted a number of statistics to support the case for a substantial reflation, as I think there should be, by the Government in the public sector in order to assist us in dealing with the present dangerous situation. But could any statistic illustrate more starkly the peril we are in than the one given by the noble Earl, Lord Stockton, in his both moving and compassionate maiden speech in this Chamber? I want to put on record that I considered it a tremendous privilege to have been able to be present and to listen to that speech, so I pay him my compliments on that.
But what he said was that unemployment in this country now stood at one in eight—I assume that this means the available workforce—and that next year it would be one in seven. I have to put it to the Minister: what are the predictions for 1986? Does it mean one in six and, in 1987, one in five? If that is the type of ball game that we are in, then the sooner people are made aware of it, the better. But these are strange results coming from a Government which fought the last two general elections with one of their main platforms being a reduction in unemployment.
While we in our debates on unemployment, both in this Chamber and in another place, quote statistics at great length in order to argue our case, these are meaningless if you are one of the army of unemployed who want to work. If you are in that position, your unemployment is total and not just a part of general statistics. It is a personal tragedy which no statistics can adequately illustrate.
I now come to what could possibly be done to help the situation, some of which could be done fairly quickly. I go back to three or four years ago, when the TUC were the first to put forward proposals for a general Government—inspired reflation to take place in order to provide some relief from the present situation. Obviously I am referring to the public sector. Now, in addition to the TUC, we have other national organisations supporting to various degrees those proposals of the TUC. For example, the CBI, I think the Institute of Directors and the national bodies representing the building industry in a wide spectrum—and nobody could suggest that, apart from the TUC, there is much sympathy for my party among those bodies—are now on record as supporting such a policy. In addition, we also have the noble Earl, Lord Stockton, the Secretary of State for Energy and a number of other distinguished Tory parliamentarians,
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who would grace any Conservative Government with dignity and distinction, calling for such a change in Government policies. For what are we waiting?
Not for one moment am I suggesting that Her Majesty's Government are solely responsible for the present unemployment situation. I think it is accepted and recognised by most people that the increase in unemployment by 3 million people since 1979— though only 2 million are shown in the global figures—is half due to the world recession and half due to the Government's own policies, and I submit that now is the time for these policies to be changed in the interests of all concerned.
People—certainly those in the building industry— waited with great expectation for the Chancellor's Autumn Statement, but, in a phrase that has been coined, it went down like a lead balloon. He did nothing at all, except cut the money that was to be made available. As surely as night follows day, further unemployment will occur in the building industry. It is on record, and I raised it myself only a few weeks ago in this Chamber, that the Policy Studies Institute report of a short time ago—and this is in line with some of the points which the right reverend Prelate the Bishop of Liverpool made—recommended an annual additional investment of £3.5 million over the next 10 years in the public sector for the building of new houses for the maintaining of our existing stock and for the building of new roads and the maintaining of our present ones, in order to arrest the serious deterioration in our national infrastructure. The Chancellor's statement contained only further cuts. Therefore it contained no comfort.
Most of my life has been spent in a big city not far from Liverpool, to which the right reverend Prelate drew our attention. I was born and spent most of my life in Manchester. It is becoming more and more apparent to people in the North that the big cities of the North, such as Manchester, Liverpool, Leeds and Sheffield, are deteriorating at an accelerating rate because of the lack of, or reduction of. resources made available by this Government. I urge the Minister to use his good offices with Her Majesty's Government to make these resources available, thus enhancing the quality of life in those areas. It is a measure which would also have the effect of substantially reducing the record high levels of unemployment which those areas have been experiencing for a long time.
Both the Prime Minister and the Chancellor of the Exchequer have expressed sympathy with the unemployed but have done little or nothing about it. It is almost like attending a funeral to express sympathy when the death itself could have been avoided. The nation quite rightly united behind the Prime Minister in the fortitude and compassion shown by her during the appalling events at Brighton some weeks ago, but would it be asking too much to ask the Prime Minister and her Government to extend similar compassion to many areas in this country which are dying, both as communities and in a social sense, from the disease of unemployment?
During my maiden speech, delivered in this Chamber about 12 months ago, I warned that people suffering from the adversities of unemployment over a long period would not wait for ever and might resort to measures through the ballot box, and outside it, which

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are completely contrary to our democratic beliefs as socialists, or whatever colour we carry. I suspect that we are now seeing the first signs of this type of action. I am not referring to the insupportable brutality which has been evident during the miners' strike, but to the disenchantment which is spreading rapidly among, mainly, younger people in this country who believe that no future is being offered to them. I am pleased to have had such an attentive audience. We ignore what is happening at our peril.
5.43 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, on one point I can certainly agree with the noble Lord, Lord Dean of Beswick: that we are debating a tragic problem. During the first part of his speech the noble Lord gave an account of his own experience. Unemployment undoubtely represents hardship and a waste of human opportunities. I am grateful to my noble friend Lord Balfour of Inchrye for having introduced the debate and for making clear that whereas a great deal is often said about the problems of the young unemployed there is a greater problem with older workers who in some ways face even greater difficulties.
But it does not help to pretend that there are easy solutions. Unemployment has been rising, under successive governments, for the last 20 years. Many remedies have been tried and failed, but the root causes—economic decline and loss of international competitiveness—have been left unchecked for too many years. The Government believe that only by reversing those trends and ensuring that we have an efficient, competitive industry selling more goods and services can we ensure long-term sustainable growth in output and jobs. Put in blunt terms, that means real jobs for real, deserving people.
Let me look at the brighter side. There are indicators which point to the success which this country has achieved as we have begun to win our way out of recession. Our gross domestic product is at its highest ever level. Total investment for the first half of this year was up 10 per cent. compared with the figures a year earlier. Retail sales are up; inflation is down. Industrial and commercial company profits are, in their turn, up. It is a strong picture of economic recovery. It has to some extent been reflected in the labour market. Vacancies have reached their highest level for four and a half years and the number of people in work has increased by 250,000 during the last year. However, the problem is that there has not been any impact on the total unemployment figures.
Since 1979, about 400,000 people have joined the labour force. We are therefore having to run, in terms of job creation, even to stand still. Our prospects depend, I suggest, most of all upon achieving strong, sustainable growth, which means that we have simply got to do more in terms of cutting costs, increasing competitiveness and adaptfng to changes in technology and demand. That includes manufacturing, as the noble Lord, Lord Dean of Beswick, said, with his very long experience of the manufacturing sector. As my noble friend Lord McAlpine of West Green said, it includes also the
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services sector, where, during the last decade, over 1 million new jobs have been created and where 270,000 new jobs were created last year.
Since the Government came to office we have eased the burden of the employment legislation on small firms. We have reduced labour costs by, for instance, introducing the young workers' scheme and by abolishing the National Insurance surcharge, which undoubtedly acted as a tax upon jobs. We have taken action to modernise training and to make it more relevant to the needs of industry. We have done everything we can to encourage enterprise, both through the Department of Trade and Industry's schemes of assistance for small and medium sized firms and also through the highly popular and successful enterprise allowance scheme. We have encouraged the adoption of new technology. This is one area where new jobs, skills and markets can replace the old. Here in particular the Government can help industry.
Last year the Government spent £200 million on schemes to promote the use of micro-electronics. Fears are sometimes expressed about new technology bringing about job losses. In the short term that must be true, but new technology also creates new jobs. Home computers and video recorder markets come to mind. The consequences of not competing in new technology are likely to be far more damaging to job prospects in the longer term.
The Government's emphasis upon education and training for the future will ensure that we are equipped to meet the challenge of new technologies. In particular the Micros in Schools scheme, which ensures at least one micro computer in each secondary school, is an initiative which should ensure that the young people of today are equipped with skills for the future.
I would suggest to my noble friend who opened the debate that older people need not miss out. It is important not to underestimate the flexibility and positive response to change of many older workers, nor the continuing value of their experience and knowledge. In that respect, I would refer to a point made by the noble Lord, Lord Dean of Beswick, which he has made on previous occasions: that there are difficulties connected with the retraining of older people. The noble Lord is speaking from experience. However, we ought not to underestimate older people. Research suggests that with the right methods of training and a positive attitude, extensive retraining can be achieved and that in many cases the previous work experience of older workers proves to be an advantage. We ought not to run away with the idea that youngsters always have the advantage. That is certainly not the way in which the Government are tackling retraining.
I turn to the training and employment measures generally which the Government have introduced to help employers create jobs by encouraging enterprise and the efficient operation of the labour and product markets and helping people to equip themselves to perform the new jobs so created. Older workers can and do benefit from the training opportunities scheme and the developing programme of adult training. From the speech that he made, I believe that the noble Lord, Lord Roberthall, will welcome the news that from April 1986 the adult training strategy should provide one quarter of a million training opportunities

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in a full year, which compares with some 110,000 under the existing programmes. My right honourable friend the Secretary of State for Employment has already announded in another place that the community programme will be linked with short courses of work preparation and basic skills training as part of the adult training strategy.
Lord Roberthall: My Lords, if the Minister will allow me to intervene, those figures are very encouraging—but do they all apply to the people in the category we are discussing tonight?
Lord Belstead: My Lords, they do not all apply to older people and it is not possible for me to give a forecast to the noble Lord as to how that split would come.
I will say a few final words about the Community Programme. Of the 200,000 or so who pass through that programme in a year, some 50,000 are likely to benefit from such training when the arrangements are fully in operation. Again, I say to the noble Lord, Lord Roberthall, that I cannot say how many of them will be older people and how many younger. But older workers have much to offer on these programmes—for example, in teaching their skills, in supervising or in otherwise leading young people on the programmes.
My noble friend Lord Balfour put forward the idea of minders or helpers for the long-term unemployed— particularly for the older long-term unemployed. The Government feel that this is an interesting concept and one which could well be explored further. I will draw it to the attention of the chairman of the Manpower Services Commission, Brian Nicholson, since I believe that posts of that kind could possibly be funded through the Community Programme.
Opportunities for unemployed people of any age to take on voluntary work are at present provided through the voluntary projects programme and the Department of Health and Social Security's opportunities for volunteering scheme. Nearly 100,000 are participating in those schemes; there is no need, with those schemes, for time to be spent unemployed and wasted. The enterprise allowance scheme, which I have mentioned, is of particular interest to older and more experienced people, as it enables them to leave employment to set up a business for themselves. My right honourable friend has recently announced a 25 per cent. increase in the enterprise allowance scheme, which means that some 62,000 unemployed people will have the chance to start up in business for themselves in 1985.
The noble Lord, Lord Rochester, asked if in allocating more money to the enterprise allowance scheme there is to be an increase in the £40 per week now available. The enterprise allowance will indeed be increased in due course, broadly in line with state benefits. However, the extra money for the enterprise allowance scheme to which I am referring now is to help meet additional demand for the scheme.
The noble Lord, Lord Roberthall, referred to the speech of my noble friend Lord Young of Graffham during the debate on the gracious Speech, when my noble friend referred to the retraining of the long-term unemployed. He was speaking then of the expansion by the Manpower Services Commission of its training
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for enterprise programme, which is designed to provide further help to those who are starting up or running small businesses. It is an earnest of the Government's concern to help those with the initiative and experience to create real jobs in the private sector.
Some noble Lords, including the noble Lord, Lord Rochester, have referred to the job release and part-time job release schemes enabling those nearing retirement age to give up all or part of their job early in exchange for an allowance, provided that their employer undertakes to replace them, directly or indirectly, with an unemployed person. The scheme particularly benefits people one year from pensionable age, but disabled men from the age of 60. Although the noble Lord, Lord Rochester, expressed regret that the qualifying age cannot be reduced at the present time, nonetheless some 86,000 older workers are enjoying early retirement by virtue of these schemes, and their jobs have consequently been released for unemployed people.
The long-term rate of supplementary benefit and national insurance credits have—as your Lordships will be well aware—been made available to men aged 60 and over. However, within the employment and training measures which I have been speaking about, some priority has undoubtedly been given to younger people. The right reverend Prelate spoke of the social consequences of unemployment for young people, and I say to him that I really do believe the youth training scheme is a significant step forward in preparing young people for the world of work. Early results are showing that the scheme is placing 60 per cent. of its trainees in employment and a substantial further number into education and training. Apart from that scheme and the young workers scheme, the measures to which I have referred are open to people of all ages and are used by people of all ages.
My noble friend Lord Balfour and other noble Lords asked in essence this question: what about the future? There are too many different economic and social assumptions to be made affecting future levels of employment and unemployment for the Government to do other than that which all governments have done before; that is, not make predictions about what will happen. But we do not accept that it is inevitable that unemployment should remain permanently high. The right reverend Prelate, the noble Lord, Lord Molloy, and the noble Lord, Lord Dean of Beswick, in winding up from the Opposition Front Bench, called in essence for more public expenditure as being a solution. But as public expenditure has claimed an increasing share of the national income over the years, so, inexorably, has unemployment risen.
Lord Dean of Beswick: My Lords,——
Lord Belstead: Before giving way, my Lords, I will suggest that, if public expenditure were in itself a solution, there would have been almost no unemployment problem for many years now. Indeed, if one takes the specific example of Liverpool, that is an area which has received a higher level of government assistance than any other area in the country. Of course, to be realistic, there will continue to be massive government help to the Merseyside area; I am certain of that. There will continue to be the large

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amount of some £2¼ billion in special employment and training measures. But, if we are to make an impact on the figures, we shall have to do far better in selling more goods and services at home and abroad.
Lord Dean of Beswick: My Lords, I am extremely grateful to the Minister for giving way. I did not mean to convey the impression that I thought expansion into the public sector was a cure for all ills. I believe it is the quickest way of providing some relief, but it would only be part of a package. When I spoke of a 50/50 split between the international recession and government policies, my point was that some aspects of the public sector have suffered literally thousands of jobs being wiped out because of the withdrawal of government finance from local authorities.
Lord Belstead: My Lords, the noble Lord is always very fair in debate and I hope that I am not being unfair when I say that his last few words nonetheless, came awfully close to saying that public expenditure in itself will and should simply support jobs. It is no use saying that the public sector should go on being supported because there happen to be jobs in the public sector—and regardless of the fact that some real jobs for the future can be created elsewhere. But perhaps I ought to study more closely what the noble Lord said; I know that the noble Lord will look at what I said.
Lord Molloy: My Lords, if the Minister will allow me to intervene for just a moment, when we on this side of the House talk about the public sector, we mean this: when I was the leader of Fulham Borough Council, I was giving orders worth millions of pounds to private builders, to private entrepreneurs, to the people who make books for schools, and to the people who build schools. There is nothing magic about the public sector. When the public sector was expanded in 1937/38, it not only enriched the life of Britain, but most valuably helped to recreate the apprentice system, which served us so well after the war.
Lord Belstead: My Lords, I do not think that we can go any further down this particular road. It is interesting that the words "public sector" did not, I think, pass my lips. Noble Lords have perhaps got them slightly on the brain. What I said was that while the amount of public expenditure in this country has claimed a greater and greater part of the national income, so nonetheless unemployment inexorably has risen. If it was the case that public expenditure was a panacea for all ills we would not have had a problem with public expenditure for many years now; but we have had a problem because public expenditure of itself is not a cure and I do not think it is going to be for the future.
May I very quickly answer some questions from your Lordships? There is one important question from the right reverend Prelate who questioned the management proposals for the development of the employment service. The aim of these proposals is to provide an effective service which meets the requirements of the labour market of the 1980s. I am advised that the proposals in fact envisage an increase in the number of Job Centre outlets with greater variation in
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different offices to reflect local needs and circumstances. I assure the right reverend Prelate that the underlying strategy is to promote an efficient and effective service to be maintained.
The noble Lord, Lord Rochester, kindly gave me notice of three questions which he asked. The first was whether the amount of job splitting allowance to be paid to employers will cover the costs of the arrangements being made. I should like to say to the noble Lord that a sum of £840 in this particular respect is being considered at present. The noble Lord also asked whether the Government are considering the restructuring of national insurance contributions and whether there was any prospect now of reducing from 60 to 55 the qualifying age for the higher rate in the supplementary benefit scheme. On both those questions the Government are certainly looking at any cost-effective ways of trying to help the unemployed. Certainly I will, as the noble Lord asked, draw the attention of my right honourable friend to those two suggestions. Without going into detail, the noble Lord will know that I shall say, on his second suggestion, that it is a very expensive suggestion indeed.
My noble friend Lord Balfour gave us an extremely interesting account of what my noble friend had seen and learnt of the provision of facilities for older unemployed people at Toynbee Hall. I simply say to my noble friend that there are other facilities to be found. For instance, I am told that Hammersmith and Fulham, under their urban programme, run a scheme called Alternatives which provides counselling and leisure guidance for unemployed people aged 35 and over. The scheme is funded to the extent of £25,000 in the past financial year by the urban programme; a programme which provides money specifically for sport, leisure and recreational facilities in inner-city areas.
There is one last question to which I should reply and that is form my noble friend Lord Ailsa who referred to those who, he felt, might lack the will to work. Recent research suggests that the vast majority of people who are suffering the tragedy of unemployment genuinely want to get back into work; but as the time goes by one can understand how difficult they find it. There may be a problem of skill mismatch; but here we hope that the youth training scheme and the adult training strategy will help.
I am grateful to your Lordships for bearing with me in answering this debate because it is a subject on which it is quite clear that all noble Lords, many having a close knowledge of the subject, feel very deeply. I will only say, in concluding, that on behalf of the Government we are spending—it may have sounded from the debate that so little is being spent—on the special training and employment measures alone some £2¼ billion. I think that some of the ideas put forward in this debate can be explored within that very large budget for those measures. I assure your Lordships that we shall continue to keep that programme of measures under review in the light of the financial and economic situation. We shall look very carefully at the sound ideas which have been put to us today. But, ultimately, our prospects have to depend on achieving strong and sustainable growth, which means we must be prepared to respond quickly

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and flexibly to changes in technology and demand. Through that method I believe we can ensure a future for all our citizens of all ages.
Lord Balfour of Inchrye: My Lords, in view of the number of speech-hungry noble Lords I see all around the Chamber, there is nothing for me to do except to thank those who have kindly taken part in this debate, to thank the Minister for his reply, and to ask leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

Books: Problems of Production and Sale
6.5 p.m.
Lord Annan Lord Annan rose to call attention to the problems facing the production and sale of books, in particular of those read in schools and institutions of higher education; and to move for Papers.
The noble Lord said: My Lords, the main reason why I am rising to move this Motion is this. Your Lordships may have seen a kite flying over the Treasury with a streamer inscribed "Why not put VAT on books, newspapers and all publications". When Government fly a kite to see how people react, it seems good sense to ask your Lordships whether you in fact agree.
Of course, in theory VAT on books would bring in about £85 million a year in revenue. But against this one must offset the reduction in spending on books in universities and schools; and there would also be a reduction in corporation tax. So the actual yield might be something in the order of £45 million; still, a tempting figure. What is more, our partners in Europe, except for Greece and Ireland, impose VAT on books; so why not grab the money and run? Here are some reasons why not.
First, the effect on education would be deplorable. The Secretary of State has made a name for himself by taking practical steps to raise standards in the schools and improve literacy as well as numeracy. We all know, of course, that when local education authorities are cut they react like universities. They take the easier option of cutting the library and book grant instead of cutting yet more staff. They should not, but they do. It is a fact of life. That is why the purchase of books has declined every year and this year has nose-dived into a decline of 16 per cent. If VAT is imposed local education authorities will have to find £15 million more. Could the noble Lord, Lord Lucas, confirm that the Government are not intending to undermine the policy of the Secretary of State for Education to raise standards in the schools?
The second reason: English is the lingua franc of the world. Unlike European countries, we have an enormous world business in books. English is the language of computers and information technology. As we export £276 million a year, or 30 per cent. of the product, our publishers are contributing to maintaining the balance of payments. That figure of £276 million is 1 per cent. of Britain's total export of manufactured goods. It is produced by 0·1 per cent. of the British workforce. Why hit such a highly productive industry? Why give away our share of the
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market to American publishers, who are only too willing to grab it? Increase the price of books and the markets in Europe, North America, the Antipodes, India, South-East Asia and Africa will be wide open to American publishers.
This is the third reason. If VAT is imposed it will bankrupt hundreds of small booksellers. It will also add numbers of publishers to the unemployed. The Government make great play of the fact that they encourage small businesses. Well, booksellers are small businesses. Over half of them have a turnover of under £60,000, but they have to stock 7,000 to 10,000 titles. Books are not like groceries, where one can stock only a few brands. Even the largest booksellers who survived would stock still fewer books.
There are some arguments one cannot put into figures. There are certain traditions, such as free entry to public libraries and—dare I say it?—to museums and galleries, formed in Victorian times which are grand and dear to those who believe in liberty of thought. The tradition not to tax books or newspapers was not established by intellectuals such as myself bleating in their own self-interest. It was established by a long line of Chancellors of the Exchequer, beginning with Gladstone and continuing with Iain Macleod, Lord Barber, Sir Geoffrey Howe and, as late as September a year ago, Mr. Lawson.
At this point I feel somebody tapping me on the shoulder. It is Mephistopheles. Mephistopheles says: "Don't be so pious and po-faced. Don't give us that stuff about great literature and taxing knowledge. Why not tell the truth and admit that vast quantities of what is published is cheap, trashy entertainment, ranging from pornography to do-it-yourself books? If the rest of the entertainment industry pays VAT, why should books be excepted? As for the schools, they would be far better off using a word processor and a Xerox: then at least their textbooks might be up to date. All those great biographies, novels and philosophy you jaw about are simply the froth on the pint of lager—lager which ought to be taxed".
Mephistopheles, as we all know, is a devilish clever fellow, but he cannot understand any argument which is not put in pounds and pence. Our culture—not just literature or history, but the way we think of ourselves in relation to our friends, to other human beings and, indeed, to the universe itself—comes to us, even if the images appear on television, ultimately from the written word. How should I live? What is it my duty to do? What qualities matter most in life? Those are the profound questions which men and women can explore adequately only in books. Make them that bit more expensive and it is those books which would disappear. Serious books and magazines with short print runs will become so unprofitable that the sales of popular items will no longer be able to finance them.
They will not be able to finance serious literature because the sales of popular books will also fall. Ephemeral books often awaken or satisfy curiosity—the curiosity not only of the young, but of the old: of all those who learn to fill their leisure hours by consulting books, say, on gardening or on angling.
"Ah", sneers Mephistopheles, "I see you have avoided saying how the Chancellor of the Exchequer could raise £85 million. I suppose like all intellectuals you think it should be raised by direct taxation to

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bolster your interests and your ego". Unlike some noble Lords who call for greater government expenditure, while at the same time protesting that they want inflation to fall, I take that sneer to heart. If you must raise more revenue, do not tax books; tax television advertising. I beg to move for Papers.
6.14 p.m.
Lord Hardinge of Penshurst: My Lords, it is natural and proper to feel humility and trepidation in addressing this House for the first time. I ask the indulgence of the House.
I must also declare an interest. I have spent most of the last 35 years as a book publisher, working on what has been called the coal-face of publishing—that is, discovering and encouraging authors, and doing one's best to see that their creative work is properly respected. I have worked as an employee for various famous book publishers, though never as an owner or shareholder. I have little detailed knowledge of educational publishing, despite the fact that the company I now work for is a leader in that field. My main concern has been and is fiction—fiction both good and popular. The two very often go together.
Therefore my knowledge is peripheral to the central subject of the debate, though I would suggest that these lines are not, in practice, very clearly drawn. It is perhaps worth noting that books read in schools and institutions of higher education are not necessarily books that were first published as educational books. This is part of the complexity of the whole problem. One has only to mention writers like Thomas Hardy or George Orwell in this context, or in another context authors like Koestler or Solzhenitsyn, to see that the most erudite specialist tome may have a great deal less influence than books first published under the general heading of "entertainment".
To come to the subject of the Motion, it is probably naivety on my part, but I am not quite clear what the terms of the debate mean. The Motion refers to,
"the problems facing the production and sale of books".
It is the word "production" that puzzles me here. When we see the absolute avalanche of new titles being published every year—every variety of book from coloured atlases, encyclopaedias and pop-ups to novels—it is difficult to see who is having problems over production. Indeed, book publishers are always being charged with producing too many books. So I can only register my failure to understand what is intended.
As for the problems of selling books, these are—and have always been—manifold. Indeed, it would be possible to weary the House for hours on the subject. Such valued and established practices as the net book agreement would feature large in any such debate. So I will touch only on one aspect which is clearly relevant to selling books, and that is their price.
It is said that books are expensive, and I agree with this. We are told that the rate of inflation—the multiplier used to measure the great debasement of the pound sterling through which we have lived—is something like 21:1 over the last 50 years. Against even these shocking figures books are expensive. In the case of hardback novels the book that cost 7s. 6d,
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before the war in likely to cost about £9 now. This is a multiplier of 24, which is not much out of line. In the case of paperback novels, it is much worse. Sir Alan Lane's Penguins cost 6d each. The comparable price now is somewhere between £1 and £2. It is reasonable to take £1.50 as an average, and this produces a multiplier of no less than 60. So books are expensive without any direct blame being attributable to any Government.
This debate is being conducted at a time when there is a great anxiety in the book trade about the possibility that VAT may be imposed on books in the next Budget. There is some very well-informed gossip on the subject and reason to believe there is something in the wind. If the gossip is true—as I fear it may be—we have the suggestion that it is newspapers, magazines and books that are chosen for inclusion, almost as though they had something in common. But really these are very different creatures. A yardstick that trade publishers often use for comparisons of price is the cost of theatre tickets. Another comparison is gramophone records. It seems to me that all these curious associations and comparisons merely serve to stress the fact that books are different. There really is nothing—but nothing—that they can be sensibly compared with.
I return to the question of price. As I have said, books are expensive, but the reasons for this are complex. Book publishing is still a cottage industry in the United Kingdom, and what is more it is extremely competitive. No doubt the normal process of competition will contain these prices and as time goes on reduce them in real terms. It is worth noting too that the profits of book publishing tend to be low compared with most other industries. So the idea of making books artificially more expensive—if such an idea exists—is a very bad one. My argument and submission therefore is that books really are different, as the search for comparisons shows. They are also indispensable—I really do not see how even in this electronic age there can be any argument about that.
On first taking advantage of the immense privilege of addressing this House, I was advised to be both brief and dull. I have had no difficulty in following this excellent advice.
6.21 p.m.
The Earl of Longford: My Lords, it is a great pleasure to follow my old friend the noble Lord, Lord Hardinge, making his maiden speech. He was certainly brief, though hardly briefer than the noble Lord, Lord Annan, who said more in eight minutes that perhaps any speaker in this House since the noble Earl, Lord Attlee—who was a very brief speaker—on the subject of Suez. That comes back into my mind now. The noble Lord, Lord Hardinge, was brief, but certainly not dull. It is also a great pleasure to think that he is just beginning his political career at a time when some of us happen to have been excluded from office. I looked his name up in Who's Who , and so far as I can make out he is about 64. Well, there is no harm in being 64. The noble Lord, Lord Donaldson, did not become a Minister until he was 66 and look where he has got to. So, after his speech tonight. I see a very bright future in politics for the noble Lord. Lord Hardinge.

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I am very glad that I am being followed by another maiden speaker, the son of my old friend—the old friend of so many of us, who was so prominent and so fruitful in this House for so many years. I remember the debate he started on Christian unity; then another one on badgers, and then another one on homosexuality—which became quite a topic, almost an obsession, of his in late years. I remember that debate when Lord Montgomery moved an amendment that the age of consent should be 80. That was the age that Lord Montgomery had just attained himself at the time. I am sure that noble Lords will dwell on further matters as time goes on.
In order to keep well within the time limit, following examples so wonderfully well set, I should like to say clearly that I regard the imposition of VAT on books, if it takes place, as a seriously damaging event in the whole history of the culture of this country. I hope that it will not take place. Curiously enough, the Chancellor of the Exchequer was my pupil. That may not be a great claim to distinction on his part. Of course it is a dangerous point to bring up, because pupils are often quite nasty about their old tutors. I remember Evelyn Waugh had a tutor called Crutwell and as time went on he never wrote a book without bringing in a rather sordid character called Crutwell. So I am not suggesting that my having been the tutor of the Chancellor of the Exchequer will be helpful here.
Now I come to think of it, I should declare an interest as the author and the publisher of quite a few books. I am not a publisher in the league of the noble Lord. Lord Weidenfeld, who has published more than 30 books written by my wife, myself, or two of my children. That shows a broad mindedness on his part which certainly wins my praise. However, I have those connections.
I do not intend to say very much. It has all been said so well in those eight minutes by the noble Lord, Lord Annan. I feel that the noble Lord, Lord Hardinge, dwelt on a very important point when he talked about the cost of books. I have just lately reviewed a very fine book published by the noble Lord, Lord Weidenfeld, The Diaries of Barbara Castle. That costs £20. I got it for review. I would not have been able to afford it otherwise. In case anybody thinks that books are more expensive from that great house than elsewhere, I can assure them that The Diaries of Hugh Gaitskell, published by Jonathan Cape last year, cost £25. These figures are very high. The real point about this discussion is that eventually costs will be driven so high that these books cannot be bought. The noble Lord, Lord Weidenfeld, published the first volume of my wife's book on Wellington 15 years ago and the price was £3.50. So the prices of books have gone up a great deal. There has been a tremendous rise in costs. I am not suggesting that the publishers are doing so tremendously well.
If any noble Lord has a relative who has left behind some extraordinarily interesting memoirs and he goes to a publisher and tries to get this book published, assuming that his relative was not Mr. Gladstone—or even if he were—he will probably find that he is asked to guarantee at least £10,000. And he certainly would not get a book published for that unless there was a good commercial prospect by the firm—the firm that
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I know best; I do not know about other publishers. So it is very expensive to produce a book. I think everybody has to realise that. We are reaching a point where we are pushing the prices beyond the buying capability of the public. This tax would be the straw breaking the camel's back. It would be a vicious move against the culture of this country. I hope it will be strongly resisted.
6.27 p.m.
The Earl of Arran: My Lords, since these are my first words in your Lordships' House, I have particular apprehension this evening, knowing so well the great understanding and compassion that my father showed in this House, not only for his fellow humans but also for members of the animal kingdom whom he loved so much.
In making my maiden speech on Lord Annan's debate, I must declare an interest of a financial nature in a group of central London bookshops. Not unsurprisingly therefore it is on a much discussed and indeed expected imposition of a value added tax on books that I wish to talk. Very shortly, as the first salvo is fired in this anti-VAT campaign, a mass of stickers on cars will be appearing across the country, bearing the message, "Don't tax reading". The surprise and delight that Santa is coming so early this year with such fond messages of generosity and good will will scarcely be able to be contained by the good citizens of Reading.
One of the very real problems on the threat of VAT being introduced in any industry is how best to develop those arguments which will most successfully persuade the Chancellor to divert his attentions elsewhere. In this case, as in all other cases, the bookselling industry is besotted with financial arguments, some of which may be justified but many of which have all been heard before—heard before so often from so many industries which have set delegation upon delegation upon those wearied men at the Treasury, industries convinced of the justness of their case and strong in their determination to resist the ever-hovering talons of the taxman.
The booksellers' plea is not exceptional in its economic arguments. It is my firm belief, however, that if the bookselling industry is successfully to resist this tax, it must assemble arguments which are first and foremost of a nature and appeal that will attract all those in the land who read and love books, and those arguments must be well and truly publicised. The compelling argument is that it is against the national interest. The book trade is, and has been for many years, one of this country's best export earners. In fact, it is the largest exporter of books in the world. Conversely, the domestic market has traditionally never been very strong. If VAT is imposed, our competitiveness abroad would be bound to suffer. In the EEC countries, all other member states saving Greece, levy a tax, with the exception of Ireland, which eliminated VAT because of the considerable damage it did to its domestic publishing and bookselling industry. Unlike this country, most member states employ overall VAT rating ranging between 2 and 7 per cent. Here 15 per cent. is being envisaged.
In the home market, it is an indisputable fact that if VAT is imposed on books, their sales will undoubtedly

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fall. And what will that mean to our local friendly bookseller? It will of course depend very much on where the shop is. In the more affluent communities the probable result will be an immediate fall-off which is likely to be quickly remedied as those with more disposable income readjust. In the poorer and more remote areas there is very likely to be an immediate and sustained sales decrease which in many instances will probably lead to the closure of that bookshop
Even the smallest bookshops which, by tradition, represent the heart of the quality book trade, carry thousands of individual titles in stock—a wider range than supermarkets normally carry—but are, sadly, supported by relatively small sales. It is so easy nowadays to dismiss at a stroke the closure of the small shop. But are we not terribly aware of all the attendant misery that it brings with it? Not only does it succeed in furthering the disappearance and fragmentation of the community, but it also adds to the costs to this nation as unemployment shows scant signs of abating. Would it not be yet another nail in the coffin of the community? And are we really to let this particular nail be driven home to raise some £80 million to £90 million on gross revenue per annum? The final figure is likely to be very much less.
Furthermore, there are many who believe that such a tax. leading inevitably to even tighter margins than currently exist, could prove a serious threat to the continuity of the net book agreement, with smaller shops being put out of business by larger chain stores. But beyond this community aspect. I believe that there is an even nobler and more important element to be considered which affects us all as individuals and thereby the nation. It is that if this tax is brought to bear, it will be a tax on culture, a tax on knowledge. If, my Lords, you weaken either of these, the logic is simple. Illiteracy will increase. So, therefore, will ignorance which, in turn, leads to a weakened quality of democracy. And are not the edges of democracy already frighteningly frayed?
Can any Government really afford to tinker, however indirectly, with that fragile state, and never more so than today? Do we not all have the responsibility as iron guardians of light and liberty? And can any Government afford to endanger the knowledge of the next generation, to tax the books that our children will need in their schools? Are poor Peter Rabbit and Ba Ba the Elephant to suffer the indignity of a value added tax upon their innocent tails?
The Time newspaper, during the course of the repeal of the Stamp Act in 1855, referred to it,
"as a tax on knowledge, a tax on good order and good government, a tax on society, a tax on the progress of human affairs and on the workings of human institutions".
In closing, I beg three questions. Are we to add to the fast fading status of the community? Are we to imperil that already endangered species, democracy? Are we to levy a tax upon reading and learning and to increase ignorance, all for a few million pounds? I humbly suggest to you, my Lords, that the continuity of a civilised society depends upon these very qualities, that these qualities are above value and are in no need of a value added tax.
6.35 p.m.
The Lord Bishop of Chichester: My Lords, it is a privilege to follow the noble Earl and to be the first to offer congratulations to him on his maiden speech. The noble Earl, Lord Longford, has anticipated this by an account of the contributions of the noble Earl's father in this House. I can only say therefore that a great tradition is being maintained. We are helped greatly at the beginning of this debate to have a speech giving us so much informed and sensitive advice from someone who is in a position really to know about the subject. We hope to hear the noble Earl on many further occasions.
I should like to apologise to the noble Lord, Lord Annan, if I have to leave before the end of the debate. There is, I am afraid, an urgent matter with which I have to deal before I go home to Chichester tonight. As noble Lords seem to be declaring interests, I should perhaps also declare an interest as an author, although my half dozen works can hardly rival the family production of the noble Earl, Lord Longford. I should like to address myself to the part of the Motion referring to books, in particular those read in schools and institutions of higher education. I start with the problems created in schools by the shortage of books and the difficulties faced by authorities in finding the money to keep an adequate supply of books used in the classroom. I give an instance, about which I heard only the other day, of a class in a secondary school where 24 pupils were studying French. There were 12 copies available of the book being used. One of those had to be used by the teacher. This meant that there were 11 books available between 24 pupils.
Consider the effect of a situation such as this. First, it means that no books can be taken home to be used for homework. No exercises can be set from the book to be done at home. If it is suggested that the exercises could be photocopied, you run into all the problems of copyright and that sort of thing. This puts an extra burden on already over-burdened teachers who have to work out material for homework to be given to pupils to take away. If this school is one of those, of which, unhappily, there are quite a lot, with serious problems of classroom discipline and order—one hears at first hand of places where there are very serious problems indeed, including filthy language used by pupils, girls and boys alike—then having to share books contributes to the problem. Nothing helps more to enable people to have a pretext for disorder than the sharing of books. This leads on to the whole problem of violence in our society of which the state of things in school is so very much the beginning.
A table issued by the Educational Publishers Council shows that there has been a very big rise in the cost of production in the last 10 years. It also shows that the educational book publishers have done their very best to keep costs down and have indeed kept them below what would have been warranted by the rise in the cost of production. But one really wonders how much longer this can go on and how quickly the situation in schools as regard school books will deteriorate much further.
I should like to move on to the more specialised field of religious literature. There is always a sale for the sensational. The latest theory that Jesus did not really die on the Cross—particularly if it can be linked with

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some occult movement or some new pseudo— scientific theory—will always find a ready sale, especially if it is put out just before Christmas. But there is also a sale for some of those paper books which are subsidised by fringe organisations.
By comparison, serious theological literature suffers greatly. The market is much smaller than that for books of general interest; hence, the publishers have to print smaller quantities, their costs are higher and the retail prices are proportionately higher. This hits the field of source books and books for background material particularly hard. Those are the books which are essential tools for the student who often has very great difficulty in being able to afford them. This again runs into other areas: the cuts in grants to libraries so that they are less readily available there; and the cuts in grants to students so that they are less able to afford these essential tools.
In preparation for this debate I have been in touch with three religious publishers who all tell exactly the same tale; but I have little doubt that other specialists in minority interests would say the same. Certainly as an historian I have noted how even in that field of much more general interest the cost of source books has risen fantastically and they have become almost prohibitively expensive except where they are subsidised. This must place great hindrance in the way of research and scholarship.
I am told that many booksellers are now recovering from the recession and from the cuts of the mid to late 1970s. But there are already signs that recent increases in production costs are slowing down and limiting that growth in the market. Publishers in some areas—notably education—are exploring new techniques of book production which may quite possibly in time reduce costs materially. But at present, so I am informed, the number of systems available makes this a very hazardous and costly exercise if one invests in expensive equipment only to find that in a very short time it is obsolete almost before it has become operational. It is possible that the position may improve in a few years' time, but at present there can be no doubt that in the whole field of scholarly and educational book production the situation is very grave and is becoming worse. If a tax on books is introduced it will be, whatever anyone says, a tax on knowledge and we should remember that that is something which the country and Parliament rejected as abhorrent even in the crisis of a world war.
6.44 p.m.
Lord Weidenfeld: My Lords, let me congratulate the two maiden speakers on their pertinent and thoughtful remarks. I must say that it is heart-warming to be able to welcome two new contributors to future debates on cultural topics, topics which are rarely—perhaps I dare say too rarely—debated in your Lordships' House.
In declaring my interest as a book publisher, I am in good and indeed vast company for the insistent—dare I say?—anguished plea against a departure from zero rating of books, which is not just the reflex action of an endangered vested interest, but one that is passionately shared by the entire literary community of this country: publishers and booksellers, writers and large sections of the public, readers old and young, rich and
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poor, left and right. They are all joining in a concerted call on Her Majesty's Government to retain and thus respect the status of the written word intellectually as well as materially, thus keeping faith with their own avowed and electorally endorsed programme of making Britain prosperous as well as keeping her civilised. For, my Lords, nothing less is at stake.
Book publishing, as the noble Lord, Lord Annan, has reminded us, is a small industry. It employs around 40,000 people and yet they produce 400 million books each year with a turnover of more than £1·3 billion. At least a third of that is attributable to exports, and books account for 1 per cent. of all our manufactured exported goods. Approximately 75 per cent. of all books currently produced can be considered as educational material. The book publishing industry has had its ups and downs in recent years, with short-lived booms alternating with recessions. The current overall profitability of the industry is well under 8 per cent. The effect on this industry of value added tax could really be calamitous for it would lead to steep rises in prices and concurrent dramatic drops in demand. According to recent impeccable research, a 15 per cent. rise in prices must be assumed and would lead to an equivalent 15 per cent. drop in demand. This would entail a lowering of publishers' profit ——margins to well below 4 per cent.—possibly 3 per cent.—which means (most certainly in the high quality ranges of the industry) certain losses for and the probable demise of many time-honoured names as well as many independent young publishing houses.
The process of polarisation of taste and quality, which has already begun, would accelerate. Polarisation means that in order to survive, more publishers would chase fewer best sellers, cut their lists and play safe. Concessions to scholarship and experiment would become unwarrantable. Authors would face far lower incomes from their works. The risks of nursing young talent would become unbearable. The House of Macmillan proudly stated that Thomas Hardy never made them any money until he ceased writing. It is indeed the pride of any self-respecting publisher to have deliberately in each list "loss leaders", works of scholarship and literary experimentation. Constrict and imperil the publisher; how much scholarship will remain stillborn, how much talent unfulfilled?
A weakened home market—weakened by the imbalance of mounting costs and shrinking sales, weakened by the plight of the bookseller whose margin is even smaller than that of the book producer—also means a drastically weakened export market. It is quite clear that you can only export at an inevitably higher discount rate when your home market is strong enough to serve as a base. But our export performance is not only a tangible contribution to the national total: it transcends its commercial role; it is a manifestation of British civilisation, part of the national ethos and that intellectual influence which sustains Britain's reputation as a cultural great power.
As it is, our share in the world's vast English language market is not unchallenged. The powerful American publishing industry, reliant on its vast home market, has only begun to flex its muscle and discover its enormous world-wide opportunities. I remember that 10 or perhaps even eight years ago American

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publishers hardly bothered about the world market, or only very marginally. Today they have set themselves the enormously ambitious target to dominate it. Already our outposts in the Commonwealth as well as in the open market are threatened. Do we really wish to endanger opposition further and yield our place unnecessarily?
Let me turn to two related issued issues. What is the fiscal logic of abandoning the zero rate on books? The optimum assumptions of £85 million or even £90 million gained by the tax man are demolished by the inevitable drop in publisher's profits so that perhaps only a fraction could be retained—but at what a loss to the nation! Reduction in staff and investment means unemployment and denial of access to a profession coveted by dedicated and enthusiastic young recruits. It means less output of books destined not only for the general reader or the registered student but also for the large number of unemployed in whose ranks there are many avid readers to whom the book means hope and self-improvement. In this repect value added tax discriminates against the disadvantaged.
The other issue begs a side glance at how others live with value added tax on books. Australia and New Zealand are like ourselves free of that tax. As for Europe, the EEC as such does not press for new legislation in this country. It is true that, of the Ten only Greece and Ireland have zero rating, and that all but one of the rest have a special rate of value added tax which is only a fraction of the standard rate; but these countries, if you look more closely, have different cultural environments and traditions. They have vastly compensating tax advantages or public grants governing all phases of the written word from bursaries to authors, to heavy export subsidies. France, which by tradition can almost be described as an intellectual theocracy with the French language as the supreme being, has a robust system of helping writers and exporting-publishers in an environment in which books, writers and literary prizes are front page news and the furtherence of the French language is one of the great national priorities. In Germany, the home market is solid, the writer fiscally favoured. The Government spend substantial sums on translations from German into other languages and underwrite many books of educational relevance. Even a small country like Holland prides itself on keeping the book business in good shape through Government and municipal subvention. At a time when Her Majesty's Government cuts Arts Council spending on literature and curbs the British Council, it would be unrealistic to seek major redress from those quarters either at home or abroad.
I earnestly hope that even a brief overview of a case that has been amply documented should lead the decision-makers in their current deliberations to come to the same conclusion as those who scrutinised this very problem on three previous occasions. In 1940, a national government retained zero rating on books. In 1957, a Conservative government upheld the decision until 1969 when a Labour government re-endorsed it. It is to be ardently hoped that in 1985 a government which harbours writers and scholars in its midst, which has in your Lordships' House a responsible Cabinet Minister who is a poet and was a don, and a
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Prime Minister who more than once paid tribute to the book as a civilising force will come to the same conclusion: that a healthy book industry is a substantial factor in the recovery of Britain at home and the retention and renewal of British prestige and influence in the world at large.
6.54 p.m.
Lord Roll of Ipsden: My Lords, I should like to join previous speakers in congratulating the noble Lord, Lord Hardinge of Penshurst, and the noble Earl, Lord Arran, on their maiden speeches, both of which augur well for the many future contributions which we hope to have from them in this House. Like some previous speakers, I must begin by declaring an interest, but I hasten to add that it is not a pecuniary one. I am not connected with any business involving books, except account books, but I am honorary chairman of the Book Development Council, which is the export arm of the Publishers' Association, and for some years I was chairman of the National Book Committee which brings together all organisations interested in the book from authors to publishers, booksellers, librarians, and so forth.
Therefore, in what I am about to say I shall confine myself to books and not deal with any other types of publications. This is a short debate and there are still a number of speakers, so I shall endeavour to be brief. But the subject is of such importance that even if I have to repeat some of the points which have already been made, I think that the House will bear with me. As I understand it from the noble Lord, Lord Annan, to whom we are all very grateful for initiating this debate, the purpose of the debate is, if I may put it this way, a contraceptive one: we are trying to deflect the thoughts of the Chancellor—should he have such thoughts—from the idea of imposing VAT on books. I need hardly say that I agree wholeheartedly with what has been said by previous speakers about the special nature of books. As the noble Lord, Lord Annan, said, this is a point which is perhaps difficult to demonstrate strictly scientifically, but I hope it is one which will be accepted by most, if not all, noble Lords in this House.
I also agree wholeheartedly with those who have spoken of the retrograde nature of the imposition of value added tax, the present zero rating on books in my view being one of the more enlightened parts of our otherwise not very glorious tax system. In most countries of Europe, as the noble Lord, Lord Weidenfeld, has just told us in some detail, where incidentally the history of taxes on knowledge is not as gratifying as it is in our country, books already enjoy a special status: in some—unfortunately perhaps not in all—there is zero rating; in many others a special status: a rate lower than the standard rate, and in those countries there is a great deal of evidence that the pressure for introducing zero rate is constantly growing. I believe that the preservation of zero rating in Britain will be a powerful inspiration to other countries on the continent to go along that same road.
In the few remaining remarks that I have to make to the House, I want to concentrate on the economic effects that would follow if the Chancellor were to be so misguided as to make this unfortunate change. The first question to ask. as in all matters affecting taxes, is:

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what will it bring in? The noble Lord, Lord Annan, has told us that it will bring in of the order of £85 million. I believe that this is the estimate of the Treasury and I have no reason to question it, although I believe that the allowance made for the decline in volume, to which I shall refer in a moment, again is probably too modest and may have to be increased.
In this connection, I should like to remind the Chancellor, through the noble Lord, Lord Lucas of Chilworth, of Adam Smith's famous maxim of the economy of taxation. I take the liberty of mentioning that name in the hope—indeed, in the exception—that it will be received by the Chancellor with respect and approval, unlike the names of many other economists of whom I can think. Adam Smith, in his maxim of the economy of taxation, said that it was important that a tax should take out of the pockets of the people not much more than it puts into the public Treasury.
By that he did not mean only the costs of collection, because he went on to state that a tax that may obstruct the industry of the people and discourage them from certain branches of business would be bad and would offend against this maxim of economy. He added:
"While it obliged the people to pay, it may thus diminish some of the funds which might enable them more easily to do so".
This is exactly the case that would be found to operate were we to have VAT on books, because in the instance of the value added tax on books, as several speakers have already pointed out, there is first to be taken into account the decline in the yield of corporation and personal income tax which would follow on the decline in the volume of business, to which again I shall refer in a moment, both in book selling and in publishing; and there must also be expected, as a number of speakers have already pointed out, increased pressure for greater public expenditure for universities, students, local authorities, and so forth, as well as the cost of unemployment which would result not only directly in the publishing industry, but would spread quickly through book selling and other branches of industry.
In short, I believe that because of the effect of the, shall we say, lack of economy in taxation by the imposition of VAT on books we probably should not count on more than about half of the original estimate of the yield. I think a number of speakers, including the noble Lord, Lord Annan, have already said that something of the order of £40 million to £45 million may be expected.
Beyond these aspects there are other questions of wider economic effects beyond these immediate commercial and fiscal ones. Here the arguments rest essentially on an economic concept which is known as the price elasticity of demand. This sounds very portentous, but it is really a simple concept. It means simply what effect on demand may be expected from a change in price.
This is not the easiest calculation to make, but some careful calculations have been made for the case of books, and the best opinion that can be obtained on this subject is that books have a price elasticity of minus one, which means that any percentage increase in the price of books can be expected to lead to an equivalent percentage decrease in the demand for
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books. The noble Lord, Lord Weidenfeld, has given us a calculation of what this might involve through a reduction in sales in its effects on publishers' profits, and so on.
The first effect of such a decrease would of course fall on the suppliers, the publishers, and the booksellers, but it would also fall behind them on the producers; namely, the authors. As always in economics, this is a question of judgment: what is likely to be the reaction of those involved in any change in the circumstances that face them in the data on which their original calculations for their actions have been based?
I shall not attempt to take noble Lords through all the intricate chain of first, second, and third stage consequences that might follow from this decline in the demand for books through an increase in price. But consider the cost structure of publishing—to which a number of noble Lords involved in the publishing industry have already referred—and the structure of publishing and bookselling in our country, as well as the important part played in both by relatively small units—a point which has already been made several times—notoriously always on the margin of viability. Given those circumstances—and I am sure I may make this point with, I hope, some favourable reaction so far as this Government are concerned, given their many public professions in this regard—these industries and these small units both in publishing and in book selling are extremely important because they are, and they demonstrate that the industry is, highly competitive; and entry into this industry is always open.
However, the almost inevitable effect of a shrinkage in the demand in the market would be to concentrate more heavily on the larger units, with a consequent decline in competition in this industry. The effect of a decline would be a reduction in titles published or in print runs, or both, and in a reduction in stocks carried by publishers, but more particularly by book sellers. Let us remember how many highly important books are published, even though publishers know in advance that they will not even break even but will result in a loss, as the noble Lord, Lord Weidenfeld, has reminded us.
I remember clearly that my own publisher, the late Sir Geoffrey Faber, who was responsible for encouraging many brilliant authors, particularly poets, to the greater glory of English literature this century, once told me that his greatest pride was to have published a book which became the standard work on the Italian risorgimento but which sold in the first five years exactly 280 copies. This kind of thing could not happen if the margins are severely reduced because it is the books with more popular appeal which have to carry these works of scholarship.
There is one further point. When one remembers the heavy pressure on the budgets of universities, on libraries—many of which will, incidentally, not be able to reclaim VAT; not all these public authorities and universities are in a position to reclaim value added tax—and the greater responsibility which will therefore fall on students and their parents to provide their own books, just at a time when their own access to public funds for tuition and maintenance is being reduced, the wider powerful economic effects of these consequencies can easily be appreciated.

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Even exports, which have been referred to several times by previous speakers, are bound to suffer. May I just add to the evidence which has already been produced, particularly by the noble Lord, Lord Weidenfeld, about the importance of book exports to the industry of this country, let alone to culture and, dare I say it, to the political influence of this country in the world. I wish to point out that books are, I believe, second only to Scotch whisky in the proportion of the total output that is exported, which is a considerable achievement and something to be proud of.
Thus even if we leave aside the larger cultural arguments which have been adduced so eloquently in this House this afternoon, in sheer economic terms, in what is nowadays called the cost-benefit equation, it must be clear that the imposition of value added tax would produce highly unfavourable results. Thus the question, "Would such a change be worthwhile?" must, in my view, be answered with a categorical, "No".
7.7 p.m.
Lord Howie of Troon: My Lords, I should like to support the noble Lord, Lord Annan, in investigating the kite which has apparently been flown, and to join every other speaker tonight who has attempted to tread on its tail—and I hope successfully. Before I go on I should like to congratulate the two maiden speakers who have spoken today. I wish to congratulate them especially on choosing such a civilised subject to speak upon and on choosing, too, the civilised side of that subject.
Most speeches so far have been fairly general in that they have covered publishing as a whole. I should like to narrow the discussion down for a moment or two to a specific and small part of the subject, the part which is within my own experience, which is the publishing of technical information by learned societies and professional institutions. It is a narrow, small part of publishing, but an extremely important one for a highly technical society such as ours. My experience of this—and I declare an interest here—is gathered in Thomas Telford, which is the publishing arm of the Institution of Civil Engineers, one of our oldest engineering learned societies, with which I have been connected for quite a number of years.
A publisher like Thomas Telford—and there are many others in the other engineering learned societies and other institutions in the scientific world— publishes the proceedings of the Institution of Civil Engineers learned society meetings, the proceedings of its conferences, monographs on the state of the art of engineering, academic treatises, journals and periodicals. They tend also to run a bookshop which sells not only their own publications, but also technical publications—always technical publications—from other publishers.
Publishers of this kind do not have a cushion of popular titles with which to support their learned works. The nearest thing which appears in engineering to a popular title is The Theory of Structures by Pippard and Baker, one of whose authors is a well-known and distinguished Member of your Lordships' House. It is a wonderful and popular book, but it will
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never be filmed. Books such as this start off by being extremely expensive. Each page is covered with mathematical symbols; there are differential equations, graphs and perhaps other diagrams. Typesetting is extremely expensive, proof reading is extremely expensive, and so these books start off by being dear.
It is made worse by the fact that in the nature of things the demand for a technical treatise is likely to be small. If one published 1,500 or 2,000 copies that would be a lot. This is not the world of Frederick Forsyth with many thousands in hard back and a few million copies in paper back followed by the variety of spin-offs in the film world, television, musicals and things of that sort. These are small readerships, buying very expensive books. The costs are dear for readers who are students, academics, researchers, practising engineers, to all of whom cost is acutely important. Cost is always the key.
Lord Hardinge and Lord Longford both mentioned earlier the price of books. Lord Hardinge spoke of books costing £9 and Lord Longford spoke of books costing £20 or even £25.
The Earl of Longford: My Lords, perhaps I ought to have said that they are both very big books.
Lord Howie of Troon: My Lords, I know them both well. I ought to say something, which I hope nobody will listen to—they are both actually too big.
That is perhaps an editorial comment and nothing to do with price. What I wanted to say was that a book costing £9, £20 or £25 would be very much at the cheap end of the engineering spectrum. I will give a few examples. I have brought along a bookshop catalogue to illustrate my comments. Both this House and the other place have recently enjoyed Select Committee reports on acid deposition, populary known as acid rain. Earlier this year Butterworth's published nine volumes of the proceedings of a symposium on acid deposition held in Las Vegas about two years ago. That costs £240. Should VAT be added to that at 15 per cent. that would be another £36 bringing the total to £276. I shall not claim that that set of books is absolutely essential for the study of acid deposition, but it would certainly help.
One of the conclusions of each of the Select Committees was that knowledge of this sort should be disseminated much further than it now is, and how better than through books of that nature? That is perhaps a special case, but in my catalogue here I see that a book called The Handbook of Engineering Economics— which would no doubt appeal to Lord Roll—costs £54. Let us add 15 per cent. to that. I turn the page and I see that Probabilistic Methods in Structual Engineering costs £47.50. Cable Supported Bridge comes in cheaply at £37. The Introduction to the Theory of Thin-walled Structure costs £57.50, and there are many more. So these books are extremely expensive. If one were to add 15 per cent. to each of them what joy would that bring to the mind of a student or a practising engineer or researcher? These books are dear enough as it is and they do not need arbitrarily to be made any dearer.
We all know that many books of that nature will not be bought by the average undergraduate. He will go

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along to the library; not the public library but the library at his university, college or in his firm. About 40 per cent. of our output goes to libraries of that nature. But in my experience—I think this bears out a comment made earlier by Lord Roll—libraries are an inelastic market. I do not wish to fall into economists' jargon, being an engineer, but my impression is that a 15 per cent. increase in price to a library would be followed by a 15 per cent. reduction in the number of books bought; that effect would be near if not precise, so it would have a severe knock-on effect for the publishers of technical literature.
Technical literature of this sort is essential. It needs to be encouraged; it needs to be supported rather than discouraged. All these institutional publications deal with information and knowledge. In no way do they deal with entertainment, except for very special people who seek their entertainment in strange ways. Information and knowledge are the aims of that body of publications, and a tax on them is a direct and a brutal tax on knowledge. If the Chancellor of the Exchequer has any notions of this kind for his forthcoming Budget, I strongly suggest that he should forget them.
7.16 p.m.
Lord Beloff: My Lords, we authors—if I may use a phrase once used by Benjamin Disraeli to Queen Victoria—we authors, who also have to declare an interest as well as the booksellers and publishers, are impecunious and often in search of free refreshment. The noble Lord, Lord Annan, and I drank a glass of wine earlier today at a reception to celebrate the four hundredth anniversary of the oldest continuing publication house not only in this country but in the world—the Cambridge University Press—which since 1584 has not let a year go by without publishing at least one, and nowadays it is very many, books. It struck me then how odd it was to be going on to discuss this misbegotten child of some back-room official in the Treasury who believes that uniformity is more important in taxation than its consequences, either economic or cultural.
The economic argument has been so well dealt with by others that I should like only to add a footnote or two about the impact on schools and universities. As the noble Lord, Lord Roll, reminded us, certain public authorities, for instance, local education authorities, can reclaim VAT. This does not apply to universities. It does not apply to parents, whom we are told nowadays buy some one-third of books which their children use in school; and it does not apply to the independent sector of education, for which Her Majesty's present Government have so often expressed particular affection. This is a tax of a very uneven kind and, as the noble Lord who preceded me said, it is a tax on knowledge.
There is another economic point which I am surprised neither of the two maiden speakers—whom we were very pleased to hear—mentioned in regard to book selling. There is not merely the fact that books will become more expensive, and therefore harder to sell, but the fact that the business of administering value added tax (by which one is made to do the work of the Inland Revenue for it) will undoubtedly be a big disincentive particularly to those small bookshops and
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small enterprises which one assumes that the Government, to judge from their own declarations, are keen to encourage. I think the argument is not, and should not be, wholly on these economic bases. The economic argument is so patent that I cannot believe that the Chancellor of the Exchequer, who is said to have studied economics, could possibly bring himself even to try to refute it.
There is a much more important argument—and here, if I may, I should like to dissociate myself for a moment from the noble Lord, Lord Annan, who brought in newspapers as well as magazines, periodicals, and books. I do not think that the words "tax on knowledge", appropriate in the 1850s to newspapers, are quite so appropriate in the 1980s. The only form of knowledge that one obtains, as far as I can see, from the publications of Messrs. Murdoch and Maxwell is knowledge of the female human anatomy. And that, although a perpetually interesting branch of knowledge, is a very limited one. But I would, if I may—and it is improper perhaps even to question what a maiden speaker has said—say that the word "magazines" is an ambiguous one.
It is not only of the first importance that books should not be taxed; it is also (as again we have just been reminded from the technical side) enormously important that learned periodicals of different kinds should not be taxed. They have been suffering, quite without the question of extra taxation, very difficult times in the light of costs which have been rising for a variety of reasons with which noble Lords will be familiar. I do not think that it is sufficiently appreciated that, quite apart from this new threat, there has been a major fall in the purchase, by nearly all of our universities and polytechnics and other institutions, of learned periodicals necessary at the moment for their students and necessary for future generations. As anyone who has tried to start a university library (as I once had to) will be aware, if you have missed a number of years in the life of a periodical it is very difficult to recover it. So our universities are already suffering an important blow to their capacity to attract good students, particularly graduate students; our competition with the United States (to which the noble Lord, Lord Weidenfeld, referred in relation to the export of books) is also a competition for retaining brains.
I am also worried, and I think this must have been in the mind of the noble Lord, Lord Annan, when he phrased this Motion, in the deeper sense, in that I think there has been a notable decline in the attraction that books have for the youngest members of our community, for children at the earliest stages. I, myself, think that, by and large—and I shall not go back to our vexed debate of yesterday—television has been an unmitigated disaster; and, in particular, that the facility of looking at a screen—which is a facility easier for a young child than learning an alphabet and easier for the mother than reading to it from books—has been a major educational setback.
We have a higher degree of virtual illiteracy in this country than many educationists like to admit, particularly on international occasions, and some of it derives from the fact that unless children acquire the thirst for books at a very early age indeed, they may never acquire it. Anything which is done which would

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make it more difficult, not only for schools to buy the kind of books to which the right reverend Prelate referred for use in class, but anything that makes it more difficult for families to have enough books about—a variety of books so that they can try out what is likely to attract a particular child—anything which makes that more difficult would be a major blow to our whole cultural future.
It is at all ends of the scale, from scientific research, which is what we are told is in the end going to enrich us, to the ordinary everyday intercourse of society and politics, that books and learned journals and magazines of different kinds are of very great importance. I find it unimaginable that any Secretary of State for Education and Science could remain for 24 hours a member of a Cabinet which had agreed to a tax of this kind; and I hope that, whatever else the noble Lord who is to reply does after this debate, he will refer both to the speeches of the maiden speakers (who, I think, may be a powerful voice if this subject is ever discussed again) but also will give that opinion which is mine and, I suspect, shared widely in this House, to his noble friend the Secretary of State.
7.27 p.m.
Baroness Darcy (de Knayth): My Lords, I should like to thank the noble Lord, Lord Annan, for enabling us to debate a subject which is so important to us all. Realising what expert knowledge many of your Lordships have of writing, publishing, of education and of economics, I was initially very hesitant in taking part today. But it is precisely because books are important for everyone that I felt that I should give the view of the ordinary consumer. Books are for people of all ages, and it seems to me that the imposition of VAT on books would adversely affect people at every stage of their lives and particularly those least able to bear the extra cost, which the noble Lord, Lord Weidenfeld, has already touched on. Where children are concerned, any book which encourages them to read is a good thing and we would be doing anything but increasing the standards of literacy by raising the price of books, which are already having to compete, as the noble Lord, Lord Beloff, has said, for children's interests with television and with the computer.
We are told that 6 per cent. to 10 per cent. of the adult population are at present, for all intents and purposes, illiterate and it is a devastating restriction on a person's life and it affects it in all aspects. I am particularly worried about children with special educational needs, especially those with physical and sensory handicaps. The greater a child's physical disability, the more essential it is to develop its mind to the maximum possible potential in order to compete successfully in an adult, able-bodied world; and the more severely-disabled children tend to be in special schools. A considerable number of these are charitable institutions with the local authorities paying the pupils' fees. These schools would not be able to reclaim VAT on books.
University and polytechnic students will be increasingly having problems making ends meet and may be faced with a price rise in books of from 17 per cent. to 25 per cent., which is quite a large sum when, in some cases, we are talking about books of from £20
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to £30 each or, indeed, as the noble Lord, Lord Howie, has indicated, in some cases a very great deal more. Students may find that university libraries have to reduce purchase still further and that they can even be deprived of some works of scholarship altogether because certain specialist books with a very small market may simply not be published. And this, my Lords, is at a time when we are undergoing a technological revolution and it is very important to produce a generation of highly-qualified, well-trained people.
I do not see that it would be practical to exempt educational books from tax, even if it were desirable. It is quite impossible to make a distinction between what is educational and what is not. It would entail dangerous value judgments being made about the quality of individual books. The dangers of such a distinction, I think, apply particularly to adult education. Just because learning about wine is enjoyable, is it any less educational than studying Arabic or, for instance, applied engineering? We are very fortunate in this country to enjoy such diversity of opportunities in adult education; and none of the hundreds of thousands of people who attend evening classes and the Open University—and we must remember that the Open University has very many disabled students—can reclaim VAT on their required reading materials.
When we look at leisure reading, again that would affect the less well-off: the elderly, the disabled and the unemployed. Many, particularly the elderly disabled, are housebound and very avid readers. Even the more mobile disabled still face problems of access to cinemas and theatres and so they find books very important. A rise in the price of books would be a blow to those trying to cope with the additional costs of disabled life. They might even lose that great boon, the mobile library, if libraries are forced to cut down on their services because of an increase in costs due to VAT.
The unemployed will also be affected. According to the British Journal of Social Psychology, a recent study shows that 31 per cent. of unemployed people read more books, compared with only 2 per cent. who decide to take evening classes and courses.
I find it extraordinary that, at a time when we are being told that we must re-think our lives in regard to work and leisure and what an important part leisure will play in our futures, this tax is even being contemplated. For over 100 years successive Chancellors have rejected taxes on the dissemination of knowledge, as has already been said many times, because they recognised the value of books to this country and the damage—out of all proportion to the revenue—that taxing them would bring. The damage will not only be to the consumer and to education generally; noble Lords have fully and expertly covered the problems of those in the trade.
Although the noble Earl, Lord Arran, in what I thought was a very interesting maiden speech, referred to the problems of the small bookseller, may I just point out how concerned I am too, because the small booksellers cannot cut their overheads any further. They already operate with a minimum of staff and any attempt to cut down further on, for example, publicity

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would just be pointless penny-pinching. Furthermore, the problems they face with small order surcharges would probably worsen if VAT were imposed because they would be encouraged to cut down on stock coding.
Small bookshops provide an invaluable service. Book-selling is very much a matter of responding to an individual buyer seeking a particular book. As the noble Lord, Lord Annan, said, books really are not like groceries. Larger chain stores just do not give the same sort of service and they offer a much more uniform choice. The imposition of VAT is a very real threat. One of my local bookshops, which was family run, and excellent, was recently sold to a chain bookshop, precisely because the family feared they would not be able to cope if VAT was imposed; so they sold out.
Books are a very important part of a nation—one could almost say they are part of a nation's identity. In Orwell's 1984, all literature of political or ideological importance was continuously altered so that every prediction made by the party could be shown to be correct. Of course, it would be ridiculous to suggest that the imposition of VAT would represent a similar violation of a national asset—although, after the words of the noble Lord, Lord Roll, I am not sure that "violation" is not quite the right word after all. But I do feel very strongly that it would be imposing a serious handicap. It would be particularly ill-judged in that it would affect adversely establishments and individuals already under economic pressure at a time when education and training have never been more important; and it could seriously damage an industry we can be very proud of—all for a relatively small yield to the Treasury. I very much hope that 1985 will not see this come about.
7.34 p.m.
Lord Blake: My Lords, I suppose that I too, like the noble Lord, Lord Beloff, ought to declare an interest as an author. I shall be very brief. I should like to express my appreciation of the maiden speeches made by the two noble Lords: they were absolutely excellent and most interesting. I think we should be very grateful to the noble Lord, Lord Annan, for having introduced this subject.
My own view, as your Lordships would probably guess, is that the imposition of VAT would be an iniquitous and retrograde step. The often-quoted words of Mr. Gladstone—and I am rather surprised that they have not been quoted already during the debate—when pressing for the repeal of the pepper duties in 1860 are as true today as they were then. He said:
"The tax has long stood in evil odour."
If my right honourable friend the Chancellor of the Exchequer, who was taught by the noble Earl, Lord Longford—I believe I actually had the responsibility of admitting him to Christchurch myself, although I do not think I actually taught him—imposes a tax of this sort in his next Budget he will be doing something, as noble Lords have already pointed out, which, even in the dark days of 1941, when every penny the Government could get was needed, was not done. The Chancellor of the Exchequer was obliged to withdraw
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because of the public uproar of the whole nation. And if the Chancellor of the Exchequer does this, he will indeed stand "in evil odour"—and, what is more, for a long time to come. Furthermore, he will stand in evil odour with his own political supporters, just as much as he will with those on the Opposition Benches.
One of the successes of the Conservative Party in the last 10 years is to have captured some of the intellectual ground which for so very long seemed a monopoly of the Left. My right honourable friends, the Chancellor of the Exchequer and the Secretary of State for Education and Science, have themselves notably contributed personally to this success in the intellectual and academic world. But can one imagine a step better calculated to alienate the support of the admittedly largely middle-class, intellectual, reading and book-loving world than the revival of taxes on knowledge? That class in society is really the middle and professional class. It is in any case going to be hit very hard by the latest changes in student grants —something which will affect them and their children most adversely if they go through in their present form.
We are not debating that subject today. I mention it only to suggest to the Government that there are limits to the degree to which they can safely alienate their own natural supporters, if I may use the phrase. If, on top of these heavy charges, and on top of all the cuts that have been imposed on institutions of higher education, books and knowledge are to be taxed, I think that alienation will be very greatly enhanced.
I hope that the Government will be convinced of the merits of the case by the cultural and economic arguments which have been used with such eloquence and so convincingly in your Lordships' House this evening. But, in case they are not convinced by reason and sense, they might possibly be influenced by expediency. The imposition of such a tax will rightly and justifiably incense some of their most loyal supporters.
Perhaps I might conclude by venturing to remind my right honourable friend the Prime Minister of the observation of one of her greatest predecessors, the third Marquess of Salisbury. He was faced with the prospect of legislation which would be bound to annoy, if it went through, some of the traditional elements in his party. One of his colleagues argued that politically such people had nowhere else to go, so it would not matter. Lord Salisbury replied:
"It is all very well to say that they must vote for you, but they will not work for you and you will find it out in the polls."
7.39 p.m.
Lord Donaldson of Kingsbridge: My Lords, certainly it is a very important and wise thing to scream very loudly before you are hurt, and it seems to me that on the occasion of this, on the whole, infinitely enjoyable debate, where there has not been a whisper of difference from the view of the opener, we are certainly making a very loud noise indeed, which I hope the Government will be able to hear.
It seems to me that the reply we are entitled to expect from the noble Lord on the Front Bench whose task it is to reply to this very enjoyable debate will be along the lines of: "This has been an interesting

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debate: I have thoroughly enjoyed it. I do not know quite what the reason for it was because there is nobody in Her Majesty's Government who has the slightest intention of doing away with the zero rating of VAT". If he says that, then we can go home earlier than we can if he gives other explanations. That is what I look forward to—and look forward to confidently.
All that needed to be said, except for our pleasure, was said by the noble Lord, Lord Annan. It was, I thought, a powerful, eloquent and irresistible opening, and extremely short. We could have left it at that, and then had the answer I have given, and by now we should have all been elsewhere.
But there are one or two points that I want to add. First, it is wonderful to have both a publisher and a bookseller as our two maiden speakers. This shows, to some extent, the cultural level of this House, particularly on the hereditary side, and we are very glad to welcome them both. I noted a couple of points—I always try to notice a particular point in a maiden speech—and I especially liked a couple of the adjectives of the noble Lord, Lord Hardinge. He said that books were both different and indispensable. I do not think that you could describe books better. I think that it was a very good concatenation of adjectives. The noble Earl, Lord Arran, asked: Can any Government afford to tax the knowledge of the future?—and went on to include the future child's book, Peter Rabbit, which was exactly right.
The point about the whole debate is that we are concerned with scientific and educational works, but we are also concerned with reading for pleasure. I want to say very little about the first, because I made a long speech 20 months ago in asking an Unstarred Question about the Government's intentions. I pointed out, in particular, the severe reduction in purchases for scientific institutions, for colleges, for polytechnics, for universities and for libraries. The noble Lord who replied agreed that it was a very serious situation and agreed that there was a distinct downward trend. He produced some figures, which were not quite as ominous as mine, but which were still down all right. I was perfectly certain that nothing whatever would be done by the Government, and nothing has.
But now there is a threat, coming, I hope, not from the Government but from some unnecessary and false rumour that they are going to take some action, but in the wrong direction. They are going deliberately to increase the fall in purchases in these various categories of books; in the scientific books and in the scientific papers, purchases of which are, I gather, falling rapidly in some of the universities, and, of course, in the libraries, too. I am told that the library in Somerset is to purchase no new fiction at all this year. This is a very serious situation. I do not believe that any Government will make it worse and I am confident that we shall have the reply which I have already outlined.
I want to say one word about the books in my life. For the first five years of my life I do not think I used them much, but for the next 72 I have never been without two books "on the go' and this has made the
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background quality of my life one of general contenment. I admit that it has been a very agreeable life and not a very effective one but at least I have enjoyed myself. Very largely this is because I have always been reading books—some good books, some bad books, some long books and some short books, but always books.
I remember Monty James, that great scholar, coming to tea in the country when I was about seven. My mother, who was a widow, asked in despair, "What am I to do? He will not read anything but Buffalo Bill." Monty said, "As long as he reads, that is all he need do" and he was perfectly right, because althought I have acquired no scholarship, I have acquired great contentment.
Is it not the business of Government to secure the contentment of their people and is not one of the most obvious ways of diminishing that contentment to do what has been suggested today? We have had enough of this. I think I am right in saying that, without exception, we all agree, and I am absolutely convinced that the noble Lord on the Front Bench will give the reply that I have anticipated.
7.45 p.m.
Baroness David: My Lords, I, too, should declare an interest, though not a financial one, as chairman of the National Book Committee. I succeeded the noble Lord. Lord Roll, in that job. There could not be a more opportune moment to be discussing books and education. It was very lucky that the name of the noble Lord, Lord Annan, was pulled out of the hat in the ballot for short debates. We have had a debate of very high quality and great interest, brilliantly opened by him. and with two excellent maiden speeches as well.
The debate has been very effective and I sincerely hope that the Government spokesman will think so too. I had a feeling that, in a way, this debate might be rather a re-run of the debate of the noble Lord, Lord Donaldson, in March last year when, as he said, he put an Unstarred Question, asking for an assurance that the fall in the purchase of library books for universities, polytechnics, colleges and public libraries would be halted. Today we have a similar but a wider theme, and we have had a wider cast to take part, with a different prologue and epilogue.
I must confess, I am disappointed that the noble Earl, Lord Gowrie, is not responding to this debate, as his position of Minister for the Arts and Libraries and spokesman on tax matters in this House would appear to make him the obvious choice. This is absolutely no disrespect to the noble Lord, Lord Lucas, who is responding, and I hope that he has found the debate educative.
But having first thought that there would be a lot of similarities, when I considered the situation a little more I realised that there have been quite a lot of differences between March 1983, when we had that last debate, and November 1984. I saw three reasons for the difference, the first of which is the students and their new situation. I would say that their ability to buy books is likely to be seriously curtailed as a result of the recent announcement on grants. Many more students will depend on a parental contribution, which may or may not be paid. In 1982–83, 47 per cent. of students

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did not get the contribution that was expected. The grant is being increased by less than the rate of inflation—and this after it has declined in real terms by 10 per cent. since this Government came to power.
If there is a shortage of cash, book purchase will inevitably be affected and reliance on university and college libraries will be greater. And what has happened to the libraries? The National Book League survey on library book spending in universities, polytechnics and colleges from 1978 to 1982 showed that in universities there was an effective reduction in real expenditure on books and periodicals of over 19 per cent. per student. In the polys the story is even worse; there was a 29 per cent. reduction. The importance of journals to scientists need not be stressed here and the noble Lord, Lord Beloff, has mentioned this. It is significant that university libraries cancelled, on average, 350 subscriptions to periodicals and journals between 1980 and 1983. How do the Government think that our scientists, on whom we depend for inventions, can keep up?
My second point is on new Government legislation and local authority expenditure. In 1983 school books had "a disastrous year", so the Education Publishers Council reported last August. Already, in the first half of this year, school book purchases have fallen by at least 16 per cent. in real terms. The Secretary of State is doing a grave disservice to education when he says that additional cash for teachers' salaries will have to come from school book funds. The 1944 Act makes it clear that the provision of books and equipment is an entirely different responsibility from that of providing teaching staff.
The effect in the schools is all too apparent from HMI reports. I quote from that published in May on primary education, which states:
"There was a need for many pupils to be provided with more demanding reading and to use books more regularly as a source of information and pleasure".
On secondary education it reads:
"In most lessons the teaching methods did not encourage individual learning and the poor supply of text books and inadequate library provision militated against independent study".
The latest HMI report on Norfolk was damning:
"Each of the schools visited was short of textbooks…There were instances of the inappropriate sharing of books…The book shortage restricted teaching methods, resulted in too much reliance on school-produced reprographic material and reduced the opportunities for pupils in their secondary years to learn to use books".
In the three lines on education in the gracious Speech, we heard that educational standards were to be raised. How does the Secretary of State think that that can happen if the basic tool of knowledge and learning, the book, cannot be supplied to the pupil?
I understand that the analysis of expenditure on books by shire county libraries in 1983–84 will show that the shrinkage of book funds will mean that it will now take from six years at best to over 20 at worst before current stocks are wholly replaced. The noble Lord, Lord Donaldson of Kingsbridge, mentioned that Somerset is buying no fiction books next year. The sad situation in local authorities which I have outlined can only be made worse when the Rates Act brings in rate capping, penalties, claw-back and so on.
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My third point, and most alarming, is the threat of VAT. It is as yet, mercifully only a threat. I hope our debate can help to influence the Government against imposing it. Many noble Lords have given very good accounts of what the consequences would be. I need not repeat them. However, I would add two observations: one about the unemployed which has already been mentioned by the noble Baroness, Lady Darcy (de Knayth). Research at Sheffield University shows that when people become unemployed, 48 per cent. read more newspapers, 31 per cent. more books, 13 per cent. more books for study. This compares with only 2 per cent. who say they have started going to classes or courses.
The evidence shows that the unemployed turn to reading as a major means of occupying their enforced leisure to some purpose and that books provide their major source of self-help and retraining. For a Government which profess to believe in self-help and retraining and which deplore the "nanny" state, a tax on the books of the unemployed seems curiously inconsistent.
My second observation concerns the publishers and booksellers, the channel by which all books reach the public. Publishers are already facing a good many difficulties arising from the shrinking of their markets as a result of the factors to which I have referred. In addition, the copyright laws are out of date and are constantly being infringed. Photocopying is widespread and books are widely pirated in many countries abroad. For all these reasons, publishers' margins are being reduced. They could not possibly absorb the cost of VAT in their prices, and increased prices must inevitably further damage sales in a vicious spiral. Some publishers must go under. Those who remain will be less innovative and experimental, just at the time when new examinations and a change in emphasis are to be introduced into our educational system.
Booksellers, especially the small booksellers, who provide advice and an exellent service to their local communities—something which is not available, as the noble Baroness, Lady Darcy (de Knayth), said from supermarkets—must suffer in the same way. I shall quote from a letter from a Cornish bookseller:
"If the Chancellor imposes VAT on books he will be directly responsible for forcing me out of business. My turnover is too small to make me eligible for registration, so any VAT I pay is unreclaimable, as is probably true of most booksellers in Cornwall and other outlying parts of the country where we endeavour to serve the small communities. Trade terms are between 25 and 35 per cent. discount, already breadline stuff. Any further erosion would be the last straw and make me part of the unemployed statistics, though I would then be better off".
I am not here to plead for the book trade. There is a good economic case to be made out against VAT on books and it has been made by many other noble Lords. But it is the educational case that I would emphasise. If this tax were to be imposed, a tax which could only be passed on to the customer, it would increase to alarming proportions the damage to the education and culture of our country, already inflicted by the other factors I have mentioned.
Twenty-two years ago my husband was giving evidence for the publishers in the Restrictive Practices Court, pleading—successfully—for the retention of the

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net book agreement on the grounds that "books are different". I did not think that all this time on I should be making the same plea; but I am, because without books, or with fewer and less adventurous books, the whole intelligence and intellectual drive of this country would be impoverished. Books are different.
7.55 p.m.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, first I must thank the noble Lord, Lord Annan, for putting his finger, in a very exciting and racy eight-minute speech, exactly on the point which he failed to make in the Motion on the Order Paper. With one notable exception, all noble Lords who have taken part, in a most interesting and sometimes amusing way, in the debate have concentrated on one element: tax. I shall deal in a moment with tax. Believing that this might be the case, I decided to take the opportunity to look at the latter part of the Motion; namely, those books which are read in schools and institutions of higher education. Therefore, I shall use most of the time allotted to me, perhaps to the disappointment of the noble Lord, Lord Donaldson of Kingsbridge, to examine what is happening and what is being done in that connection before I turn to the narrower but undoubtedly important tax issue.
Before doing so, I wish to endorse the warmth of the congratulations to my two noble friends, Lord Arran and Lord Hardinge of Penshurst, on their maiden speeches. Is it not odd that both maiden speakers come from the world of book publishing and that, with the exception of two speakers, all noble Lords who have taken part in the debate are directly concerned with book writing, book publishing, book selling, book making and other related activities? It is that which makes your Lordships' House so unique. Tonight we have heard from the experts.
The noble Baroness, Lady David, regretted the fact that the noble Earl, Lord Gowrie, would not be replying to the debate, since he is the Minister responsible for the Arts. Perhaps my noble friend Lord Gowrie might have answered the questions relating to tax on books. However, I take comfort from the fact that the noble Lord, Lord Howie of Troon, and I are the two engineers who have taken part in the debate. We are not ashamed of that, are we?
Lord Howie of Troon: My Lords, I sincerely hope that the noble Lord is going to agree with me.
Lord Lucas of Chilworth: My Lords, the Government fully appreciate the unique contribution made by books to the social, educational, cultural and even the political life of this country. Several noble Lords referred to this aspect. This point has been made on numerous occasions. When my noble friend Lord Swinton replied in March of last year to a debate in your Lordships' House, he spoke of the importance for the wellbeing of this country of an adequate level of provision of books in universities, colleges, polytechnics and public libraries being maintained.
The Government have consistently made it clear that they would like the overall spending per pupil on
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new books in schools to be increased. I am aware that there was a decline in the expenditure on books in 1980–81. However, the Government responded immediately by making allowances in successive rate support grant settlements for increased expenditure per pupil on books. This indicates how important we believe it to be that there should be adequate book provision in our schools. That probably answers in a nutshell the specific if perhaps rhetorical question which the noble Lord, Lord Annan, addressed to me at the beginning of his speech.
In fact, in 1982–83 there was a significant increase in local education authorities' provision for new books per pupil in England. That was nearly 13 per cent. more in primary schools and 10 per cent. more in secondary schools. Overall, expenditure per pupil returned to its 1978–79 level. The Government are not complacent. The annual report of Her Majesty's Inspectors of Schools on the effects of local authority expenditure policies on education provision in England in 1983, which was published in May this year, confirms an improving situation but states that current levels of expenditure need to be maintained or improved to get provision to an acceptable level generally. I hope that all local education authorities, whose responsibility this is, will take heed of that message.
We do not have the expenditure figures on books for 1983–84. No doubt the noble Baroness, Lady David, can tell me where she obtained her figures; we do not have any, and so I am not able—
Baroness David: My Lords, I obtained the figures from the Educational Publishers Council.
Lord Lucas of Chilworth: My Lords, I am obliged to the noble Baroness for that information. The council will have to send me a copy of those figures because, I can assure her, I do not have them. We are quite optimistic about continuing improvements, and the Government's plans for the current financial year made allowance for further improvements in provision of books—provided of course that local education authorities contain their costs. Looking ahead, if they can contain costs and make savings in certain areas—caretaking and cleaning are two that quickly come to mind—then there is scope within the Government's plans for local authority expenditure on education in 1985–86 for more to be spent on books per pupil compared with even the 1982–83 levels.
It is of course up to local authorities to determine their own priorities for expenditure within the limits of total expenditure set by the Government. We do not dictate how they should spend the sums available to them.
I will deal briefly with the question of universities. Government funds for universities are made available, as noble Lords will recall, on an annual basis in the form of a block grant. In 1982–83, university expenditure exceeded more than £1·8 billion, of which more than 80 per cent. was provided from public funds. That money goes to the University Grants Committee. The Government have consistently made clear that universities must expect to operate with a high degree of economy and efficiency in their public expenditure plans. Nevertheless, when particular

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needs have been identified—for example, new blood lectureship, information technology and equipment— additional resources have been found. It is a matter for the University Grants Committee to decide how the grant available should be distributed.
The Government endorse the importance attached to book purchase by the University Grants Committee as recorded in the chairman's grant allocation letter of February 1984, in which he states:
"The committee consider it important that all universities should seek to maintain expenditure on departmental consumables and on book purchases at levels which maintain the health of both the research and the teaching function.".
I am pleased to note that with the objective of making better use of what resources are available, the Standing Conference of National and University Libraries is working well to improve co-operation and collaboration between those libraries and to ensure that their policies are matched. I know that there are many other formal and informal arrangements between library services.
Before I leave the subject of book provision, I will touch on the public library service, which is still the envy of the world. In the financial year of 1982–83, total expenditure by public libraries on books was nearly £60 million. That was 12 per cent. more than in the year before. That represents about one-third of this country's total public institutional spending on books —a proportion which has been steady now for some eight years or so. That has to be seen against a background of increasing expenditure by libraries on other essential items such as sound and video recordings and the staff needed to support the services.
Lord Donaldson of Kingsbridge: My Lords, if the Minister will allow me to intervene, does not the figure he has given of a 12 per cent. increase fail to take account of the fact that the price of books has, I would say, gone up a good deal more than that?
Lord Lucas of Chilworth: My Lords, I shall come to the price of books and I believe that I shall be able to contain the question asked by the noble Lord in my comments then. I was going on to say that it had to be seen also against a background of the libraries' purchasing power due to the relatively high level of inflation in book prices compared with the general retail price index. This has been particularly noticeable in the case of some very specialised material.
We have heard from my noble friend Lord Hardinge, in his maiden speech, about some elements of cost. He expressed some disappointment that costs had risen so high. Quite fortuitously, I was talking a couple of days ago with a publisher of technical publications. I was surprised to learn from him the breakdown of the retail cost of a book and how, in his particular sphere, so little of the retail price actually goes to the author and how much goes in distribution and wholesale margins. Perhaps the industry there might take note of the concern your Lordships have expressed with regard to the price of books.
Certainly, publishers' input prices—paper, wages, and so on—have risen recently, but there is no doubt that publishers appear to have achieved some enhanced margins in 1983 and in the first half of this
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year. One has heard this evening figures ranging from 1.9 per cent. to 4.9 per cent. and 8 per cent., and I have heard a figure as high as 10 per cent. mentioned as the gross margin. There seems to be some divergence of opinion within the industry as to the level of profitability it has enjoyed. I do not quarrel with that at all because in a free enterprise system, with free competition, such is to be expected. But I would not want the industry to cry in aid poor profit records against what they have been doing throughout the course of your Lordships' debate.
In respect of public libraries, we should not forget that one other way the Government encourage the wider availability of books and stimulate the reading habit is the public lending right system established in 1979. Parliament allocates a sum—currently £2 million—which is distributed to authors proportionately to the number of times their books were lent out. The first payments were made in February this year. The sum involved was £1.5 million, and that was distributed to more than 6,000 registered authors.
Before answering specific questions, I come to the note I have about taxation. Much has been said—everything has been said, I should think—about the damage that might be caused if VAT were to be imposed on books and on learned journals. I know that there is much concern in the media and elsewhere about the speculation that VAT will be imposed on reading matter. In all seriousness, I have to say that that is all there is to it; it is speculation. It is fed from a variety of sources and is worked up by those who foresee the dangers and the implications of VAT.
All your Lordships will appreciate that Treasury and other Ministers are receiving many representations at this time on this very topic, and your Lordships will be aware that a number of campaigns are being organised. In response, my right honourable friend the Chancellor of the Exchequer is making it quite clear that the Government are committed to a shift in the burden of taxation from taxes on earnings to taxes on spending. This does mean that the indirect tax base may have to be further extended so that income tax can be further reduced. The Government have no set views at present on how this might best be done and all representations are being carefully considered.
Since all bar one noble Lord has spoken on this VAT issue, I cannot deny my noble friend Lord Beloff his appeal. Yes, I will ensure that my right honourable friend the Chancellor of the Exchequer is made aware of the content and feeling of the speeches made in the debate this evening.
Lord Beloff: My Lords, it was to his right honourable friend the Secretary of State for Education and Science that I asked my noble friend the Minister to convey this message. It seems to me that in the Cabinet he, above all, is responsible for books.
Lord Lucas of Chilworth: My Lords, let me give my noble friend a double assurance. Both my right honourable friends will be made aware of the noble Lord's feelings in this matter.
Turning briefly to one or two of the major points that have been made to which I think I should

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respond, my noble friend Lord Hardinge spoke of the publishing industry's contribution to the economy. I cannot, of course, deny that. He mentioned some figures and I would not deny those. Certainly my figures indicate that the publishing industry employs around 40,000 people, producing around 400 million books a year. I sometimes think that 53,000 new titles a year is perhaps a rather extravagant usage of its resources when one compares that to the level of 40,000 titles barely five years ago. Certainly of the turnover of £1.3 billion last year there was a considerable contribution to our exports.
The noble Lord, Lord Weidenfeld, spoke briefly and mentioned subsidies in other countries. I suggest to him that there are many United Kingdom publishers who would not perhaps welcome government subsidy because they would probably feel that government subsidy would bring unwelcome controls, investigation and the like. So perhaps it is best that they restrain themselves in calling for subsidies which might have an effect adverse to what they would like.
The noble Lord, Lord Roll, and others, including the noble Baroness, Lady David, spoke about parental contributions. I do not want to get too deeply into that tonight but it has long been a tradition in this country that parents have voluntarily raised funds for schools and have supported their children in various and different ways. The Government welcome the way in which parents so generously demonstrate their support in children's schools, always provided that such support is given on a genuinely voluntary basis.
My noble friend Lord Beloff and the noble Baroness, Lady David, referred to expenditure in schools. My noble friend spoke particularly, as did other noble Lords, about the importance of getting young people (I think they were talking about the very young) to start reading at an early age and emphasised its importance in those early school years. I remind the House, to put the matter in perspective, that in 1978–79 primary school purchases of books in pounds per pupil—I take these figures from the Publishers' Association—was £6.2. The following year it was £6 and the next year £6.2. In 1981–82 it was £6.2 and in 1982–83 it was £7 per pupil. All those figures have been adjusted to 1982–83 prices. Therefore, there has been, particularly in that area, a fairly sharp increase.
I do not think there are other outstanding points on which I should comment. The noble Baroness, Lady Darcy (de Knayth), said she was amazed that there should be any contemplation of a tax on books. I do not know where the contemplation comes from, but I think I have answered that point in my earlier remarks.
In conclusion, if I had to say any one final thing to encapsulate what I have been trying to say tonight, it might well be this. Books do, and we acknowledge it, occupy a special place in the life of the country and in the daily lives of individuals. In an ideal world there would be no limit on what we as a country could spend on providing books for our children, students and those who choose to use libraries, wherever they are. But we do not live in a perfect world. Books have to be paid for along with all the other things that society also deems essential. Despite resource levels and limits,
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those making the purchasing decisions have to assess priorities for expenditure. Nothing the Government are doing requires those decisions to affect book provision adversely—quite the reverse. The Government have repeatedly stressed the importance of adequate book provision across the whole educational spectrum and I hope that that message is not only being received but, more important, is being acted upon.
Lord Annan: My Lords, I rise simply and solely to thank all noble Lords who have taken part in this debate tonight and particularly our two maiden speakers. I am afraid that I have to convict the noble Lord, Lord Hardinge of Penshurst, of an inaccuracy. He was certainly brief but he was far from dull and I very much hope that we shall hear his expert knowledge and that it will be at the disposal of the House in future.
As for the noble Earl, Lord Arran, I cannot help remembering that it was 19 years ago that I made my maiden speech on one of the Bills which his father introduced into this House and which led to the reform of the law on sexual offences. It is a measure which will always be associated with the name of Arran. I am greatly honoured therefore that the noble Earl made his maiden speech tonight. Our names sound so alike that I can now look forward to receiving his mail as indeed I did in times gone by when I received many letters on the subject of badgers which were very near also to the heart of his father, who did his best to protect them.
May I also conclude by thanking the noble Lord, Lord Lucas, for winding up for the Government and simply say that I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

Famine: Preventive Steps
8.18 p.m.
Lord Walston Lord Walston rose to ask Her Majesty's Government what steps they were proposing to take to help to prevent a recurrence in any part of the world of the present Ethiopian famine.
The noble Lord said: My Lords, I beg to ask Her Majesty's Government what steps they are proposing to take to help to prevent a recurrence in any part of the world of the present Ethiopian famine. The response to the Ethiopian famine has been one of the most heartening things that has occurred for many months, if not years. As soon as it was brought to the attention of the great mass of people in this country there was no hesitation about what should be done, and while I might convict the Government of not giving a lead in this matter I give them full credit for following the lead of the people, following it wholeheartedly and with a great deal of efficiency.
I am not proposing to talk about the Ethopian famine. What I want to do is to draw your Lordships' attention to the dangers of such a famine occurring; the fact that it is already taking place in other parts of Africa and indeed in other continents also; and that without any doubt in the months and years ahead it will, alas, spread its tentacles very much wider than at present.
What can we do in order to minimise the effects of that impending disaster and to prevent it in the long term, in so far as it lies within our power, continuing as it has done for countless generations? It is nothing new. What is new is to a certain extent the scale of it but it is the fact that it is brought into our living rooms by the medium of television which really has made us aware of it. But do not let that awareness evaporate as soon as the immediate crisis appears to be over, as soon as people have sent their generous contributions and as soon as the television no longer shows us pictures of those dying babies and the other horrors that we have seen. We must not forget that when that stops the famine in many places is still going on.
The first thing that we must realise is that the famine is not confined to Ethiopia. It is taking place on a somewhat smaller scale, but still entailing an appalling amount of human suffering, in neighbouring Sudan, in Chad and even in relatively prosperous Kenya to the south. What is more, all the indications are, and all the experts are telling us—and there are many of them, and they are very wise people—that it will spread over the next 18 months to two years into many other parts of Africa. If I concentrate on Africa it is not because I forget the starvation, hunger and malnutrition which is an everyday event in such places as Bangladesh, in parts of Asia and in parts of Latin America also.
As I say, what can we do about this? What should we be doing? We the rich countries of the West, the model of how government should be organised and how economies should be organised, priding ourselves on our Christian tradition and on our charity and love for our neighbours, what should we be doing? I would divide the solutions into two parts—the medium-term solution and the long-term. The medium term I take as meaning from the next six months, perhaps over the next two. three, four or five years, when famine will still be rife.
There I suggest the following. We have in this country at the present time a surplus of grain of the order of 10 million tonnes. In the Community as a whole the surplus is infinitely larger. Until this famine took place, we concerned ourselves with the surplus purely because it was an embarrassment—purely because it was costing a lot of money to store and even more to dispose of. It is an obscenity to look on surplus food in that light when there are millions who are starving for lack of it.
I think that I can best illustrate that and perhaps bring it home to those who are not aware of it—and I do not include any of your Lordships in that category—by asking such people how they would feel if they themselves were living in a small community (possibly as a farmer who had had a good harvest) and they had a surplus of 10 tonnes in their barn that they did not want; and outside in the community there were 20 or 30 people who were dying in the village street because they did not have enough to eat. They would not for a moment hesitate. They would not lock their gates and bar them, and say, "We will keep this until we can sell it to some rich person". They would hand it out to those starving people.
We are in precisely that situation in this country today, when we have not 10 tonnes but 10 million
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tonnes; when the people are not 50 but 5 million or more; when they are not a few hundred yards away but a few thousand miles away. Therefore we must be prepared to make at least some of that surplus grain available.
My suggestion is that we should pledge for international famine relief at least 1 million tonnes of our surplus grain on a continuing basis over the years so that it is known that that is available for the relief of famine and that when it is gone it will be replenished from subsequent harvests. We should do all that we can—and I do not believe we would find it all that difficult—to persuade our partners in the Community to do exactly the same, either as individual countries or acting as a community.
But it is not enough, as we know full well from the experience of Ethiopia if we have not known it before, simply to make grain available. It must get to the place where it is needed. It is not enough simply to put it on board a ship and deliver it to Port Sudan or wherever it may be. There are not normally facilities for unloading these large quantities coming in suddenly. There are certainly not facilities, as we see so well in Ethiopia, for distributing it along the very poor tracks—hardly roads; many hundreds of miles of them—with very little in the way of vehicles to transport the grain.
At the same time as pledging our 1 million tonnes of grain we must also pledge from our military resources a very small amount of the equipment needed for unloading vessels, for handling the grain and for transporting it. It needs light trucks. The big heavy ones would get stuck on the roads. But if we make them available so that they are always there in case of need, we shall have taken the first steps towards dealing with this recurring famine.
But again that is not enough. We must not wait until the famine has gained a hold on these people—until we see the pictures of the hundreds dying every day. We must be prepared to listen to those who know—and in the past we have not done so sufficiently—and to take action ourselves so that we are informed in good time. Here I would suggest that we instruct our missions overseas in all the countries where malnutrition and famine are a potential danger, even if not an actual one, that they should have one of their officers—the agricultural attaché, if there is one; otherwise, one of the secretaries at the embassy—whose job, among other things, would be to keep himself informed of the state of affairs in that particular country in order to give prior warning, through his embassy, to Her Majesty's Government of the state of affairs as it is developing; and, of course, to keep in close touch with the voluntary organisations that do such magnificent work in all those countries. So that there will be a complete line of information, it being carried back to us here in this country so that action can be taken in good time to prevent in future the sort of thing that is happening at the present time. Once again here, if we can do this through the Community, through the officers of Brussels who are stationed in the Lomé countries, so much the better. But do not let us postpone action on the grounds that we cannot get agreement there. We can always act on our own and hope that they will come in after that.
But that is dealing only with what I call the medium term, though the medium term will go on for many years indeed. In the longer term the task must be to enable all these countries now under the threat of famine to increase their own agricultural production, to grow their own food, so that they can provide their own people with proper nourishment. That is far more important but far more difficult and a very slow operation indeed.
That great man, John Boyd-Orr, foresaw all this during the latter years of the war, or immediately after the war. As a result, the Food and Agriculture Organisation was set up. We must not minimise the work that they have done. They have done admirable work. They can be criticised. I do not want to criticise them unduly but they are very large, they are pretty top heavy and they have enormous costs of administration. I have studied these matters very closely and been concerned with them directly and indirectly for nearly 40 years. My own view is that the best result comes from relatively small organisations. When you have the huge international organisation it is very hard indeed to get the results.
Here, I commend to your Lordships two particular organisations. Before doing that, I do not want to give the impression that there is no need for large-scale works: of course there is. It is important to have certain irrigation schemes which can only be carried out on a pretty substantial scale. It is essential to have good communications, infrastructure, schools, roads, power supplies and so on. Of course, all those things are necessary, but they can be provided and maintained only by government or such organisations. They must continue as they have done at present, and I hope to an increasing effect. However, I believe that we should concentrate our views increasingly on the smaller organisations.
I shall only mention two of these organisations with which I am happy to say I have been associated for quite a long time, though with One of them I am no longer. Those are the Commonwealth Development Corporation and Voluntary Service Overseas. Voluntary Service Overseas, as I am sure your Lordships know, send young and sometimes not so young people (sometimes 60-year-olds), with skills, graduates in some form or another, from this country to live in the developing countries. They send them to live largely in the rural areas among the people themselves, to work with them and impart the knowledge which they themselves have been able to acquire, leaving the local population better fitted to make better use of whatever their natural environment enables them to. That is not only in agriculture, though that is very important, but in matters like health, education and so on.
VSO at the moment have something like 1,100 volunteers posted overseas and about 20 per cent. of these are in agriculture. They are supported to a modest extent by a voluntary contribution and to a large extent by the ODA. That is one of the best investments that the ODA make and they treat VSO generously. The actual cost per volunteer averaged out to the ODA is something of the order of £4,000 a year for each person. That is a very small sum indeed—is it not?—considering the value that the receiving country gets from the work these fine people put in.
There should be more of these people. It would be good if the scheme could be doubled. The people are there; the organisation is there; but the money is not there. I would urge the Government to think very seriously about consulting with the VSO about means for increasing the amount of money they have. It must be on a continuing basis—it cannot be a sudden increase for one year and then a dropping off, because new staff have been taken on and so on—so that they can over the years, as rapidly as possible, move up to doubling the number of volunteers they have. As I say, the people are here in this country, anxious to go, and the receiving countries are crying out for them. The gain in terms of cost benefit is enormous.
The CDC is a very different kettle of fish. It does not directly receive any grants from the Government. It receives its finance from the Government, largely soft loans but some at commercial rates. It pays its interest on all that it receives and it repays the capital sums on the due date without any fail. It has already invested £500 million, half a billion pounds, in the third world in various development projects. A good half of that money is invested in agriculture and in forestry. Last year there was fresh investment amounting to £100 million of which half was in agriculture.
It is worth mentioning that these are not only, or, indeed now, primarily, vast great plantation schemes but nearly half a million small farmers are included in the CDC schemes. The experience that has been gained over the years of how to deal with small cultivators in remote areas, how to deal with the local officials, how to deal with governments, is vast. Again, if more money were made available on loan—and, I repeat, not as grants but as loans to be repaid and carrying interest—the work of the CDC could be extended in a very significant manner with, over a 10-or 20-year period, very significant results so far as increasing food production in the third world is concerned. I believe that in this sort of manner we can get a far better return on our money—and the people in the third world will get far more benefit from such money as we are able to make available to them—than by going in for the grandiose schemes which in the past have attracted too large a proportion of our aid efforts.
There is another point here which I shall just touch on very briefly. That is development education—small but very important indeed. I am afraid that here the United Kingdom is lagging behind. In 1984–85 we provided for development education £106,000, compared with what we did in 1979–80, only five years ago, £560,000. We have reduced our amount there to one-fifth of what it was. Our £106,000 compares with France, which gives £425,000; Norway, £1½ million; and the Netherlands, nearly £5 million. That is not a record of which we should be proud. I think it is something which I would urge the Minister to look at and I hope we shall increase what we are doing there.
I have hitherto been very modest, not in the length of time I have taken—because this is a vast subject—but in my demands on the Government's purse. I intend to continue in that way because I realise the constraints. But, for all that, I do believe that our aid effort is one of which we must—can only—be ashamed. Our aid fell from 0·52 per cent. of GNP in 1979 to 0·35 per cent. in 1983, which is only half of

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the United Nations' target, to which we agreed, of 0·7 per cent. France, Germany and Japan give nearly twice what we give in total volume. Norway gives over 1 per cent. of GNP, Netherlands 0·91 per cent. and Sweden just under 0·9 per cent. That is not a record in which we can take any pride at all.
Ethiopia has shown that the people of Britain are caring and generous. Her Majesty's Government are prepared to spend money on certain things. They are prepared to spend billions to safeguard the way of life of 2,000 people on the Falkland Islands. We paid £4,500 per head in the Falkland Islands. In the Sudan we give £1.67 and Bangladesh £0.28. Is that the sort of proportion that we really think is right? I ask the noble Lord when he replies to tell me whether he supports that type of proportion; or does he think that it should be looked at again? Surely we cannot grudge, and I am certain that the people of this country would not grudge, that we should give a few more millions—I am not talking about billions—to save hundreds of thousands from death by starvation.
8.41 p.m.
The Lord Bishop of Hereford: My Lords, the noble Lord, Lord Walston, has already concentrated on Africa. I intend to do the same as that is the part of the third world with which I am most familiar. The noble Lord has also referred to the response of the British public to the famine in Ethopia. It has been quite remarkable. By the end of last week the latest agency appeals for Ethiopia had raised in the region of £8.8 million. The British public itself has given £20 million since July. For the last five months it has been giving £4 million a month over and above normal aid donations for famine in Africa. There is a growing public response to the Famine in Africa petition launched by seven development agencies.
Your Lordships will rember that there was a public outcry over rumoured cuts in the overseas aid budget. Her Majesty's Government finally acknowledged that this budget should remain at its planned 1985–86 level which, although representing a 3 per cent. cash increase, after allowing for 5 per cent. inflation, represents a cut of 2 per cent. in real terms. Although it is the appalling plight of Ethiopia that has hit the headlines, there are in fact 24 African countries affected, and most of sub-Saharan Africa faces disaster.
Famine is of two kinds, both of them avoidable. Where a country has a real food deficit only adequate emergency food aid in the short term and help to grow enough of its own food in the longer term can prevent famine. And several African countries are now in this position. But famines also occur sometimes when there is enough food in the country. It may be in the wrong places, and the landless, the jobless, the urban and rural poor are just too poor to buy it. Hunger is a problem of food access more than food production. And famine is more a product of poverty than of drought.
British foreign policy therefore needs to tackle with vigour not just aid, but also the wider issue of poverty in the third world. It needs to look at our share of responsibility for keeping the third world poor. It can help the poorest countries out of their economic crisis by easing their international debt burden and by
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pressing our European partners for greater concessions in the terms of our trade with the poorest countries. Above all, we must work to ensure that poorer countries can become self-reliant in their food supply.
A much greater proportion of our aid budget should go towards stimulating domestic agricultural production in developing countries, as the noble Lord, Lord Walston, has already said. A much greater proportion of our aid budget should go towards stimulating this area—and production not of more cash crops for export, but of subsistence crops for local food. The current overseas aid budget is over £1 billion. Of this, £236 million is given as bilateral aid to Africa, but of this figure, only £27 million is given as project aid to the agricultural sector.
Many of the schemes that could have a greater impact on domestic food production are the small, grassroots schemes designed to help peasant farmers. They often need only subsidised seeds, tools, livestock and fertilisers or help with irrigation and water supply. Small conservation and afforestation projects could also achieve much. We should give every encouragement to domestic economies to favour small rural producers, rather than the urban consumers and food importers. Better prices and marketing facilities would help them.
Too much British aid has been for large, high technology, capital intensive projects, often tied to the interests of British firms. Such projects do nothing to improve local food supply, but take large slices of the aid budget. The pressure to give priority to cash crops over subsistence crops is maintained not only by foreign economic interests but also by governments anxious to attract foreign exchange to compensate for unfavourable trade terms. Peasant farmers, as I say, need a simple supply of tools and oxen, rather than Western style technology. Too often, our help to them is not only too little and too late, but of the wrong kind. Non-governmental organisations can make a great contribution to the local agricultural projects that are needed. They are in the best position to organise peasant farmers and to promote community participation in decision making. They are also more sensitive to the experience which women, with their great understanding of domestic life, can bring to food projects.
More British aid should therefore be channelled to the multilateral agencies which do most to promote small agricultural projects. We should support with extra funds the World Bank's special programme of action on sub-Sahara Africa and the International Fund for Agricultural Development. When emergency food aid is needed, it is often not available. Only 10 per cent. of the European Community's food aid is normally reserved for emergencies. The rest is allocated as long-term, programmed food aid which rarely goes to help the starving. The European Community food aid should be reformed so that it concentrates on emergency needs and can be speedily and flexibly available in a crisis.
The whole international emergency aid system needs to be better co-ordinated. Warnings such as those from the Food and Agricultural Organisation and the World Food Programme need to be listened to in time. Warning was given of the famine in Ethiopia as long ago as 1982, when it was said that if the next

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harvest failed, there would be the disaster that at present that country is experiencing. There need to be accessible reserve food stocks already located in a region like Africa, so that transport difficulties can be minimised in a crisis. If we are to have grain mountains at all, would we not do better to station them within the food deficit countries?
The aid budget has been maintained at roughly its present level, and for that I give two cheers. But the aid budget covers a multitude of virtues, some more virtuous than others. There are ways in which we can use the aid budget to prevent future famines, above all by concentrating aid on small rural producers of food, as the noble Lord. Lord Walston. has said.
Do we channel our aid to the poorest countries, to the poorest people in the poorest countries to enable them to escape their poverty and dependency? The answer to that is: not yet. After safeguarding the quantity of our aid, we must now urgently look at the quality of our aid and make it first and foremost a support to food security.
8.50 p.m.
Lord Auckland: My Lords, the House, will be very grateful to the noble Lord, Lord Walston, for having initiated this very timely debate. The Motion is very relevant, and indeed, the most relevant words are, "any part of the world". I have never been to either Africa or India, which are undoubtedly the continents which suffer by far the most so far as these problems are concerned. But like all of your Lordships and most of the general public, I have seen the horrific and very distressing pictures on television from Ethiopia, Chad and other parts of Africa, India and Latin America where real starvation is taking place.
I noticed on the tape this evening that my right honourable friend the Minister for Overseas Development has now returned from Ethiopia and made mention at a press conference at London Airport of the communication difficulties which exist in that country. One has only to see from the television pictures the geographical problems and the trucks which have to travel over narrow mountain roads which make any kind of communication extremely difficult. I read about the suggested provision of dumper trucks. That is vital. In my view, it is the provision of vehicles and agricultural equipment which is so vital to these countries, notwithstanding the communication problems.
There is one organisation which deserves special praise for what it has done, and that is the Save the Children Fund. It has done some marvellous work through its dedicated people. I would certainly endorse what the noble Lord, Lord Walston, said about the Voluntary Service Organisation. I believe that it comprises very dedicated people of all ages who have the expertise to help in these areas.
There is one part of the world which has not been mentioned and that is the Caribbean. I visited Jamaica some seven years ago for the annual conference of the Commonwealth Parliamentary Association of which I, like many of your Lordships, am a member. There are certain areas not far from Kingston where there is a real poverty problem: bad housing, bad drainage and
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a shortage of good agricultural facilities. Although at the moment there may be no real starvation problem on anything like the scale which Ethiopia and Chad are suffering, one must appreciate that if one looks to the future there is a real danger that such a situation could arise. I hope that my noble friend the Minister will take on board the problem, because Jamaica is a Commonwealth country, and their are also other countries which are independent members of the Commonwealth where this problem could arise. Indeed, I note in particular Dominica, which soon after independence suffered a most fearful hurricane which did enormous damage to roads and to the hospital at Roseau, the capital. Such a problem could lead to the type of situation which we are seeing in some of the African countries.
I should like to ask my noble friend the Minister the following question—and clearly he may not be able to answer it this evening because I have not given him notice of it. What is being done to provide assistance for agriculture, particularly in countries such as Jamaica and other independent Commonwealth countries where, if these problems are not investigated, they could result in years to come in a situation similar to that which we are seeing in Africa now?
There is also the problem of airport facilities. One noticed from the television pictures of Ethiopia, for example, a shortage of airport space. Have we the resources or the troops to send to some of these countries to build airstrips or to enlarge existing airstrips? In fact, I do not necessarily mean troops; I am thinking of our own firms which could usefully do this work. Obviously, the more airstrips there are, the more chance there is of getting the grain and other foodstuffs quickly to the areas where they are most needed.
As regards the amount we spend on aid to these countries and what we have spent on aid to Ethiopia and elsewhere, I cannot help feeling that the figures quoted do not always tell the full story. As a nation, we have a great many home problems to support. We have housing problems. There are people of many nationalities living in this country, including some from countries where there is real poverty among children. I am not for one moment suggesting that we should cut aid or that we should not increase aid wherever possible. But I believe that aid in the form of equipment, in the provision of trucks and expertise, is sometimes more relevant and helpful than money. However, a real service has been done by the noble Lord, Lord Walston, in raising this problem this evening, and as my right honourable friend the Minister for Overseas Development has been on the spot in Ethiopia one now hopes that real action will take place.
9 p.m.
Baroness Ewart-Biggs: My Lords, I too should like to say that we are grateful for this opportunity, coming at such an opportune moment, to debate this particular subject. I do not want to speak at very great length as it is rather late, but I should like to speak on two different areas. First, I should like to make a few general points about the vital need for long-term development projects in third world countries, and I should like to make these comments

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from the new vantage point that I acquired a few weeks ago as president of the United Kingdom committee of UNICEF. Then I should like to give one example of a particularly valuable afforestation project for which I and a small group of associates have been trying to raise funds and support in order to put it into effect in the Sudan.
Therefore, first, there can be little doubt that the voice of UNICEF was one of the most insistent among those issuing the warnings of a deteriorating situation not only in Ethiopia but also in other African countries. Following these warnings, UNICEF's executive director appealed to his board for no less than £50 million for special programmes for mothers and children in 13 African countries, and the estimate for the current programme of emergency activities by the United Nations children's fund between now and the end of 1985 in Africa alone comes to a total of £65 million.
Her Majesty's Government have so far contributed £1 million towards its total; but unfortunately in all up till now less than one quarter of that £65 million has been either pledged or given from member countries. So there seems a terrible irony that in the first place UNICEF warned the world what would happen in Ethiopia and was not heeded and now, through setting up an emergency programme, it is trying to prevent the same thing happening in other African counties and there has been only a minimal response to its appeal for funds.
So one can but conclude that overseas aid is not only too little but often it comes too late. It is true, as the noble Lord, Lord Walston, said, that the general public's response to the Ethiopian tragedy proves that people will respond generously when disasters occur, but the effect of those disasters and the levels of emergency relief needed for them would be very much reduced if both more attention and the wherewithal were given by governments everywhere to long-term development plans, and in particular to community and social development needs.
Here I am convinced that the press and media have an importat role to play. Quite rightly, they alerted us to the plight of the Ethiopians, but at the same time they could perhaps do more to focus attention on work going on in the development field and educate the public as to the long-term advantage of that less emotive but crucially important kind of assistance. This is where most of UNICEF's work lies—in water projects, health, agricultural and reforestation projects of every kind. But like other organisations, such as Save the Children, Oxfam and many others, it is entirely dependent on voluntary contributions from governments and people. It possesses the ideas and expertise to teach the people of the developing world to help themselves and in this way to try to rule out and reduce the effects of future disasters. But in spite of this we are all aware that, as again the noble Lord, Lord Walston, said, the Sudan, Chad, Mali, Mauretania, Angola and Mozambique are, as every day passes, nearing a similar crisis. Surely it is impossible to envisage that this further catastrophe be permitted to happen after the example of the Ethiopian tragedy. If famine does strike those countries too, it will be only through the lack of will and political commitment by governments of both
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developing and industrial countries to devote more resources to long-term objectives. At this point I was going to quote the figures of Britain's record in her aid. My figures were exactly the same as those of the noble Lord, Lord Walston, and I fear that they did not look quite good enough beside the examples of other countries.
Secondly and lastly, I should like to give one example of a development project which will give the deserved long-term effect which food aid and emergency aid does not. This is a project rather on the lines mentioned by the right reverend Prelate. It has been set up by a small non-governmental organisation called SOS Sahel, which has its headquarters in Dakar which was set up for the great drought in Sahel countries in the early 1970s. This particular project, which has been funded by the British committee, is an afforestation project in the Nile province of the Sudan where the plight of the farmers is getting even more desperate, coming as a result of the Nile no longer overflowing its banks, and diesel pumps for irrigation being needed together with the steady advance of the Sahara covering vast areas of what was once the most productive soil in the world.
The aim of our scheme is very simple. It is to plant fast-growing seedlings to provide wind breaks and reduce the sand drift round the farmers' fields. The project would be carried out over four years covering 48 local villages with a total population of 200,000 people. It would then be hoped that at the end the local farmers, having profited from these nurseries, and having recognised the benefits of the shade, the fuel, the fodder, the fruit and of the building materials of these nurseries, would then continue the work themselves.
For those of your Lordships who are interested in trees, may I explain that nine different species of trees will be planted. They will mainly be eucalyptus and acacia but the species most appropriate for the purpose is a very fast growing tree called the ipil ipil, which can reach 18 ft. after one year, which seems a remarkable rate of growth, and which has a property of fixing nitrogen in the soil which improves its fertility. I am told on good authority that 18 ft. is the truth.
One of the great virtues of this project is that of simplicity. There is no machinery for the Sudanese to maintain; no on-going expenditure for them to support; the women will be included in the project; and the project will include the hand-out of seeds as they go around the villages. In conjunction with the tree-planting scheme the project will use an educational puppet show using characters drawn from local folklore archetypes to try to demonstrate to the villagers the importance of trees and the different ways of safeguarding and respecting their environment. This particular method has been used with great success in various developing countries where the message of looking after your environment is put in a way which they best understand, which is not on a cinema screen but done through puppet shows.
May I end by saying that surely one way the Government can help to prevent further tragedy such as the one which occurred in Ethiopia, (referred to in the words of the noble Lord's Motion) is by channelling more aid through, for one, UNICEF,

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whose whole focus is on long-term development projects rather than immediate emergency aid. They have proved their complete commitment and ability to carry out themselves these long-term projects. It can also be done through small, non-governmental organisations, such as the one I have described, SOS Sahel.
I have gone around myself, cap in hand, for about two years to try to raise funds for this long-term development project. It is an irony that the money quite rightly comes in for an emergency and a disaster so heartrending as that in Ethiopia but it is difficult to raise money for a long-term project because there is much less that is sensational about it.
I would suggest—it has been tried before—that the Government should try the matching pound-for-pound system with some of these small NGOs which really do not have the time to go on and on trying to raise the money, but are able to carry out these innovative plans which go to the heart of the problems in these communities. It would also prove that the Government really have a concern for the future wellbeing of the poorer people of this world and do not believe in dealing with the problem only by providing emergency aid, primarily in the form of surplus grain, which in so many cases arrives too late.
9.11 p.m.
Viscount Falkland: My Lords, I cannot help feeling some measure of sympathy for the Government. I had not planned to express sympathy for the Government, but they have been under a considerable barrage of attack in the press, the rest of the media and elsewhere, and even in your Lordships' House, for the seemingly tight-fisted and parsimonious approach to their future aid contributions. But of course a number of your Lordships have used the phrase, "long-term", and our Government, as are other Governments, are locked into conventional wisdom which is based on short- or medium-term thinking in this regard. So long as this continues—and I shall go into it in more detail in a moment—we shall not be able to plan to counteract future disasters which will inevitably arise.
The Ethiopian disaster was forecast many years ago, but no measures were taken to prepare for it. I am pessimistic enough at the moment to feel that unless there is a radical rethinking by donor countries, there will not be any measurable improvement in these preparations. We are in a slightly better position than some of the other European countries because we have been guilty of short-term thinking not only in terms of our foreign aid and the philosophy behind foreign aid, but also in terms of our own development.
It would be unfair to criticise the Government for having a meaner-minded approach than some of our European neighbours, because the motivation of some of our European neighbours in terms of overseas aid is much stronger. For example, perhaps many of your Lordships travelled in France 15 years ago and can recall the difficulty in making a telephone call. In that country today there is a modern and efficient telephone service, not only in the private home but in the street, too. It compares with the best in the world, and I am afraid that ours compares badly with it. This development required a huge expense on research and
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development over a number of years. The domestic market having been satisfied, France, being a modern country in terms of telephone communications, now has no option but to seek outside markets. The third world is an excellent market even if France has had to go to the extent of helping the customer to buy the equipment.
This pattern one sees in other European countries where there has been similar development of sophisticated industrial equipment. I can think of railways and road transport equipment and types of more sophisticated radar and so on. We have lost out in this particular field, so the general feeling among the public is that we are more tightfisted than our neighbours. But in fact we just do not have the impulse to go out because we do not have to. The French and the Germans have to be a lot more helpful to countries who buy their equipment because, unless they do so, their research and development will have gone for nothing and they will have to put numbers of highly skilled people out of work. The cost of that is too horrible to contemplate.
The current thinking in terms of aid—and we are not alone in this—is devoted to developing and marketing goods which we can pass on to third world countries. As a result of this we sometimes lag behind in our energies in developing the basic infrastructure in those countries.
To illustrate my point, it may be interesting to your Lordships to learn that I have some experience of this in African countries and know exactly how aid is administered. The average African country which has, as it were, the Good Housekeeping Seal of Approval, in that it is the good books of the IMF and the World Bank, produces development plans. The plans may be for three, five or seven years. They are generally short or medium term. These plans are based on improving the infrastructure, improving roads, harbours and anything which will facilitate the country's endeavour to earn more foreign exchange. The foreign exchange which they earn in such countries, which are agricultural economies, comes from cash crops. We have heard other noble Lords speaking of that. The whole system in developing Africa is geared towards the earnings of foreign exchange from cash crops with which to purchase further goods and so on. I have seen the development plans of two countries in recent months and in neither of those plans have I seen any mention of any action to be taken which would effectively counteract the kind of disaster which we have seen in Ethiopia. As many noble Lords have said—and I have mentioned before in your Lordships' House—the possibility of famine and future misery stretches right down the eastern central side of Africa. It is not just a passing disaster which will be solved by the generous efforts which are continuing to feed the starving millions—efforts which people can now see are really sadly and hopelessly inadequate.
The possibility of future disaster is very real indeed, particularly because it seems unlikely that within the present thinking in the West there will be any breaking of this terrible deadlock. I agree entirely with my noble friend Lord Walston in all the measures that he puts forward, and indeed those which other noble Lords have mentioned: in an ideal world that would be possible. Indeed, in an ideal world I should not

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disagree with the thinking behind the Government's rather glib phrase which has been bandied about, "aid with trade". It is totally inappropriate and totally unrealistic today to talk about aid with trade; because most of the countries which require aid do not have the ability to trade. They will only have the ability to trade in the way suggested in that particular slogan if we develop the long-term thinking and the long-term strategy which will enable them to build up their infrastructures, to improve the lot of ordinary people —and this requires a basic and very patient and concerted effort on behalf of the whole of the Western world.
I do not think that we can do it and I do not think that we in Europe can solve the problem of developing Africa, which is quite enormous. At the moment, the short-term and medium-term thinking is much more concerned with balances of power, with any deterrent that one can produce against infiltration of Russian interests into central Africa and so on. Not until we can all get together and see that this problem is one which cannot be dealt with by short-term and medium-term financial and economic solutions will there be any real inroad into the really terrible prospects which face Southern Africa.
9.22 p.m.
Viscount Hood: My Lords, I add my thanks to those of other noble Lords to the noble Lord, Lord Walston, for initiating this debate, which seems to me to be both timely and of real importance. The public support for Ethiopia is amazing. Indeed, it is so amazing that some of the recipients are concerned that there may be so much tied aid to Ethiopia that the other countries which are emerging on the horizon in equal trouble will find difficulty in obtaining the support needed. I do not share that view. I think it will be there. But I should like to address my few remarks to the longer-term problem. The need is surely to overcome the cause of the famines, and to do that, to increase the food production of the countries where these dangers arise.
This is very much easier said than done. There are the natural causes—the problem of water, of which one is so well aware—and also the administrative problems. I should like to illustrate the administrative problems from Angola, of which I have some
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knowledge. I should perhaps declare an interest in that I am a director of the Benguela Railway, which is the main thoroughfare and line of communication through the country going from the coast, 1,300 kilometres right through the country, to the Zaire border.
In the days before independence and the civil war which followed so closely upon it, the custom was for a Portuguese, commercial organisation, to go up the line village by village every year. Basically, they asked two questions: "How much food can you grow?" and, secondly, "How much food do you need for your own consumption?" This worked well because the company would then contract for the surplus, carry it and market it.
With the troubles which have come to that country, the railway is now disrupted and the organisation which in effect supported the agriculture has vanished. They need to be replaced. These requirements lead to two fundamentals. One is peace and the other is an incentive to produce food. These have got to be reproduced. It is impossible, obviously, to revert to the form of government which existed before. It is necessary to find a way of achieving the same requirements in another way, because what I see in Angola is all too evident in other parts of Africa. Funds, assistance, money is one thing, but it also requires aid in other forms—advice, persuasion, and maybe also conditions, without which perhaps the essential results will not be achieved.
Those in turn are going to be achieved only if there is proper co-ordination—and I follow what the noble Lord, Lord Auckland, has just said—of this tremendous effort which exists. We see it in Ethiopia. The Government are helping; other governments are helping. The European Commission is in the act, together with the World Bank and the International Monetary Fund, in their various ways. But the coordination to make it one effective effort does not seem to be there and, while entirely supporting the view that there should be more aid, I should like to put the plea to Her Majesty's Government that they take a part—a lead perhaps—in achieving such co-ordination. It has been done before. The memory of the Marshall Plan is not entirely irrelevant. There it came from one source, but it was distributed, and effectively distributed, over a very wide area. So aid is needed, but co-ordination is needed, too.
9.26 p.m.
Lord Oram: My Lords, my congratulations to the noble Lord, Lord Walston, go well beyond the usual courtesies on these occasions, because I admire very much the drafting of his Unstarred Question. It is rare, in my experience, to have a Question such as this, which in the compass of two lines of print gets right to the heart of a very complicated problem. I would invite your Lordships just briefly to look in turn at the main elements of the noble Lord's Question.
In the first place, he puts the responsibility for action to help prevent famine where it undoubtedly and overwhelmingly belongs: on the Government and on their partner governments in the Community. Of course there are many other agencies involved, which have been referred to during the course of the debate—some voluntary agencies and some official, multilateral organisations—but what we are primarily concerned with this evening is what our own Government are doing and propose to do about the drought and famine situation.
Of course, the noble Lord draws attention to the famine in Ethiopia, as almost every other speaker in the debate has done. Indeed, I suggest that no debate ' today about famine in the world could fail to take the Ethiopian situation as the starting point. But the noble Lord's Question does not make the mistake, as many commentators do, of focusing almost exclusively on Ethiopia. As the noble Lord, Lord Walston, has explained—and others have also made this point—there are many other countries, particularly in the continent of Africa, where widespread destitution and death on a massive scale are threatening to reach proportions just as critical as those which we have witnessed in Ethiopia.
Then the noble Lord's Question refers to the need to prevent the recurrence of famine conditions; and that I believe to be the most important aspect of the problem we are examining this evening. Nothing I should say or that anyone else should say in these discussions ought in any way to detract from the immediacy of the present crisis and the need to mobilise all possible resources to rescue those who are dying. That of course must engage our immediate attention.
But also we cannot avoid the long-term aspects of the problem, and the Question that we are considering does not avoid those long-term aspects. We should not fail to ask—and, indeed, the noble Lord, Lord Walston. in his Question does ask—how can we stop this tragedy from happening again? I suggest that we should not avoid looking back and asking ourselves: what has gone wrong? As one speaker in the debate said, there have been warnings for years and we should ask what warnings went unheeded. There were many such.
But in the case of Ethiopia perhaps the most tragic failure, to my mind, was the failure by the Ethiopian government themselves to implement, even to publish, the notable United Nations report by a team headed by Dr. Keith Griffin, the president of Magdalen College, Oxford, and I invite your Lordships to read the extract from that report which appeared in the Guardian on 9th November. If you read that extract, you will find there spelled out a
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strategy for rural development in Ethiopia, based on mobilising the seasonally surplus labour which is Ethiopia's main resource.
The report advocates the widespread use of voluntary co-operatives as the means of accumulating savings for capital investment in the rural community. That is the method, as I have seen on two recent occasions, that is currently being used with notable success in the vast country of China. I am convinced that before long the world will wake up to the fact that very important development changes are taking place in China, and that many third world countries will need soon to learn from that country the way in which they can regenerate their countryside and avoid the threat of widespread famine, as, in fact, the most populous country in the world is succeeding in doing at the present time.
But these other third world countries will not be able to mobilise their rural resources without massive support from outside. President Nyerere of Tanzania, when he attended the recent meeting of the OAU conference, said that his country could produce much more food than it is producing, but to get the process started his country needs resources from outside.
That brings me back to the first element of the Question of the noble Lord, Lord Walston: what do the Government propose to do? What, I wonder, will be the Minister's answer to that question this evening? I have no doubt—and this we will welcome—that he will bring us up to date about the emergency aid for Ethiopia; and we can all commend what the Government have done, even though we might wish it were more. But what about long-term policy?—a question which a number of noble Lords have asked. Here, again, I think I can forecast something that the Minister will say, because I believe that the essence of his speech is contained in this document—the annual report of the Overseas Development Administration.
Lord Trefgarne: Not at all!
Lord Oram: That will be unusual! I do not doubt that on previous occasions the noble Lord has called our attention, and that on future occasions he will call our attention, to what the Overseas Development Administration is doing in the poorest countries—in particular, what the ODA is doing for the agricultural sector of developing countries and what it is doing to develop various natural resources. If one reads the report one cannot but welcome the splendid work which is being carried on by the ODA.
While welcoming that work, we can welcome it only up to the point at which one begins to make comparisons and ask some of the questions which have been asked in our debate. When, for example, we compare the size of our aid programme with what it was when this Government took office, or compare expenditure on aid with other public expenditure and take note of the fact that it is less than one penny of every £1 spent by the Government, when we take note of the fact that it is misleading—as the Foreign Secretary has misled the country—to claim that the aid budget is being maintained, and when we know, as the right reverend Prelate pointed out in his speech, that inflation, both at home and even more overseas, is diminishing our aid in real terms, just as it has been

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diminished year after year since 1979, we realise that the Government's record, admirable though it is in detail, is open to serious question and is found to be seriously at fault.
I began by commending the noble Lord, Lord Walston, for asking a succinct, relevant and meaningful Question in a very few words. I would suggest to the noble Lord who is to reply for the Government that he could make an even more succinct reply to that Question. He could make the shortest and best speech of his career. The true answer to the question which the noble Lord, Lord Walston, has asked: "What are the Government doing?" is, "My Lords, we are not doing enough; we could afford to do much more and we ought to do much more".
9.38 p.m.
Lord Trefgarne: My Lords, I shall not immediately rise to the bait offered by the noble Lord, Lord Oram, but will begin by saying how grateful I am to the noble Lord, Lord Walston, for giving us the opportunity to debate this important matter and, hence, an opportunity for me to give a response to it.
The scourge of famine has been with man for centuries. Very real and sincere efforts have been made by the international community to stamp out this scourge, particularly following the World Food Conference in 1974. It is a cruel irony that that conference was called largely as a result of a dreadful famine in Ethiopia, which now, 10 years on, has returned. There are lessons we can all learn from the Ethiopian experience. As my right honourable friend the Foreign Secretary made clear in another place last week, since 1982 we have given more emergency relief aid to Ethiopia than to any other country. This amounted to about £ 15 million, even before the further measures which I recounted to your Lordships on 30th October.
To ensure that everything possible is being done, my right honourable friend the Minister for Overseas Development has just made a visit to Ethiopia to see Britain's famine relief effort in operation. In a Written Answer this afternoon in another place, my right honourable friend reported that he had met representatives of the Ethiopian Government, voluntan' agencies and international organisations and had had a long talk with Chairman Mengistu. He also met members of the Royal Air Force detachment engaged in ferrying food and supplies within Ethiopia to famine areas, and he went by RAF Hercules to relief camps at Korem and Mekele and to the Port of Assab. He was impressed by the splendid work of the voluntary agencies and the superb operation of the Royal Air Force, which has won it an enviable reputation in Ethiopia. He has decided to send a substantial quantity of further supplies and is now considering what additional steps to take.
I believe your Lordships will agree that the British Government have responded to the urgent need to help the victims of famine in Ethiopia, but a much more important question is how to prevent famine from occurring in the first place. That is the question we are considering this evening. The major need is for the governments of the affected countries to pursue appropriate policies and programmes—but there is also a role for aid to play. Some years ago, we were
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actively involved in the type of long-term development projects in Ethiopia that would have helped to avert the present tragedy.
In the early 1970's, when my noble friend Lord Home of the Hirsel was Foreign Secretary, we were developing in the very heart of the present famine area a long-term agricultural strategy for Tigre Province. Its major components were soil and water conservation, small-scale irrigation development and crop and livestock improvements. But the programme had to be abandoned in 1976 because of a serious breakdown of law. In fact, one of our people was shot and 14 were temporarily kidnapped. This demonstrates very clearly that, with the best will in the world, there is little that external agencies can do to help prevent famine if the basic conditions within the country are hostile to such assistance.
As the noble Lord, Lord Walston, said in his opening remarks—and other noble Lords referred to this point as well—famine is occurring in countries other than Ethiopia. Although there is a need for constant vigilance throughout the world, it is clear that the most pressing need is in Africa. To get to the roots of the problem, one needs to understand the clear distinction between drought and famine. Drought is endemic in semi-arid areas but local people can farm and store food in ways which provide a good measure of insurance. Famine arises when the shocks of occasional droughts are compounded by other factors.
There can be successive seasons of low rainfall, civil war, population pressures, and poor governmental food and agricultural policies. In many countries, the rate of growth of food is not keeping pace with the growth in levels of population, and desperate attempts to try to wring more production out of marginal land degrade and erode the soil. It is estimated that each year millions of hectares are irretrievably lost to deserts or are temporarily taken out of useful production.
Increased food production is vital but it is not the only answer. Famine can exist in the midst of plenty. Systems are needed to get the food where it is needed. That means proper national and local food distribution arrangements. Action to tackle famine must therefore mean both increased food production and improved access to food. In many countries—notably in Africa—there has been a widening gap between food production and population. During the 1970s, the population in Africa increased at a rate of 3 per cent. per annum, and is still accelerating, while food production grew at less than 2 per cent. Until this fatal arithmetic can be corrected, famine will be a persistent threat.
But the outlook is not all bleak. Other countries—mainly in Asia—have been highly successful in increasing food production, and the so-called green revolution of the 1960s and 1970s has removed the spectre of widespread famine from most of Asia—at least for the present.
Turning first to production, many countries have areas of good quality land. But in the last 15 to 20 years the potential of these areas has not been fully realised. First, governments often spread their budgets widely over their countries for understandable political reasons. Secondly, populations have grown and

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have increased pressure on arable land generally. Thirdly, governments have pursued policies, for instance on over-valued exchange rates and low agricultural prices, which many of them are now beginning to see as misguided. Added to this has been the decline and virtual collapse of many national agricultural research organisations.
But the solution is easier to set out than to secure. Good quality land could yield more if these policies were changed and if proper attention was paid to adaptive research. Some success has already been achieved. In many African countries, incentives to farmers have been improved, exchange rates have been altered, and the emphasis has been shifted from state to small farms.
It is also important that the marginal areas should be developed in a sensible way. Irrigation is not likely to be a major solution, but wherever practicable it should be developed. These marginal areas vary widely. In some, good yields might be expected in the fairly near future. In others which are virtual deserts, there can be no agricultural answer.
As well as increased production, access to food through national and local food strategies is very important. This needs properly managed systems of food storage and distribution. Developing countries need seasonal storage for their domestic surpluses and need especially the improvement of local, communal or village stores. More effort must also be put into reducing storage losses from pests or disease. Strategic reserves of imported food, on the other hand, have been abandoned in many countries on grounds of cost and wastage.
Admittedly, it makes more sense for food surpluses to be stored in their countries of origin, where modern technology and a temperate climate cut down losses. This is not to say that having surpluses in the European Community means that we should give vastly increased quantities of food in the form of aid. Quite apart from the fact that the very large sums involved in buying and transporting food can often be put to better use, long-term food aid can sometimes do more harm than good. Its real value is in emergencies, and we are urging the European Community to make more of its food aid available to meet urgent needs.
As my noble friend Lord Hood made clear, the marketing and distribution of food within countries is also important. Improvements are needed both in the performance of the organisations involved and in the physical infrastructure. Better cargo handling at ports, programmes to construct rural access roads, rehabilitation of railway networks; all have their part to play in enabling available food to get where it is most needed.
One further element in the search to avoid or mitigate the worst effects of famine would be to improve the forecasting of food import needs. But these needs are not necessarily a reliable measure of human distress. First, food plenty can exist with famine if people in the countryside are too far away and too poor to be able to buy what is available. Second, import needs can be grossly exaggerated by wrong policies, overvalued currencies, subsidies to urban consumers, or poor official marketing which
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leads to unofficial parallel markets springing up. And third, even where food has to be imported it may not be right to provide it as aid, especially if the country concerned is thereby encouraged to spend its own foreign exchange on items or projects of a less essential nature.
In drought-prone areas most people depend heavily on their live-stock. At one extreme they can be an asset; a source of revenue in the good years and an insurance against famine in the bad. At the other extreme they can be a burden, particularly if their numbers rise to the point where they destroy the vegetation. The surplus stock from these pastoral areas could be moved for fattening in the agricultural areas; this was a common practice in our own country in the past.
Finally, in this survey I must underline the importance of conservation and especially the need for improved forestry, which was much in the mind of the noble Baroness, Lady Ewart-Biggs. We really need an imaginative approach to forestry—and we shall need one if we are going to countenance those 18 ft trees that the noble Baroness was talking about—in all its guises, from firewood to timber. It is certainly not difficult to establish its importance: deforestation in Africa is taking place at 10 times the rate of new plantings.
May I turn now to some of the other points that have been raised during the course of our debate this evening? The noble Lord, Lord Walston, for example, in his opening remarks asked me about the possibility of more involvement of the Government in Voluntary Service Overseas. ODA's financial support for VSO and other British volunteer programme agencies is helping them to make that contribution. ODA grant support for VSO has increased from £1.65 million in 1979–80 to £4.8 million this year. A special supplement to the VSO grant this year has been agreed to enable it to commence a new programme in Ethiopia. A VSO representative is in Ethiopia this week discussing possible volunteer placements and the establishment of a permanent VSO field office in that country. Indeed, in 1984–85 we are granting nearly £6 million for volunteer programmes generally—17 per cent. more than the year before.
The noble Lord also referred to the CDC and his own distinguished role in that corporation. I recall that my own family has a connection with that enterprise, too. I agreed with almost everything that he said about the splendid work that it is doing and continuing to do.
The noble Lord also referred to food surpluses, particularly referring of course to the European Community. The Community and its member states have a combined food aid programme of around 2 million tonnes of cereals, as well as other products, annually. That is enough to make a substantial impact on urgent needs if sufficient priority is given to them. The noble Lord was right I think to refer to distribution. In fact we estimate that it costs about £250 per tonne to get grain to the needy in Ethiopia. I note his suggestion about military aid for those purposes, but I wonder how acceptable that would be at least to some governments. Surely the main aim must be to build up their own capacity to distribute these products.
I shall not be drawn down the avenue of our aid budget generally. I have a good many notes in front of

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me that I could draw on for that purpose if I felt so inclined, but your Lordships may think that at this time of night that is best left for another occasion.
The right reverend Prelate the Bishop of Hereford referred to the project aid to agriculture in Africa. I think that he felt that the sum was insufficient. I believe that he understates what we are doing. Increasingly our financial aid is for spares, fertilisers and small machinery to keep things going. Taking that into account, and our manpower aid, our aid to agriculture and similar sectors is nearly one-third of our total aid to Africa.
The right reverend Prelate also referred to the possibility of prepositioning of emergency stocks, but I have to tell him that that is a very expensive way of getting grain to famine affected areas quickly, for we in Britain can deliver grain by ship within about eight weeks of deciding to do so. It is quite likely to take that long to get the same quantities by road and rail from one country in Africa to another. In addition, such stocks can quickly deteriorate in hot and humid climates, and they need good management, which is sometimes in shorter supply overseas than it is here.
The noble Baroness, Lady Ewart-Biggs, in addition to her trees, asked me about UNICEF. I should like to congratulate her, if I may, on her new role on the United Kingdom Committee for UNICEF. We contributed over £6 million to UNICEF last year and are fairly high on the list of debtors—of donors, rather, though we are probably a debtor, too, I have no doubt. We are expecting now a further special appeal from UNICEF for Ethiopia and undertake to consider urgently what we can do.
The noble Baroness also emphasised the role of the voluntary agencies. I referred just now, in replying to the point raised by the noble Lord, Lord Walston, to what we are doing in that direction. If the risk of further famine is to be lessened, it needs a joint approach by all donors with the countries concerned.
Britain can play its part on the following lines. First, our aid to agriculture and other natural resources can be used to encourage the sorts of policies, backed up by all donors, which will raise production in the good quality areas.
Secondly, we can promote the fundamental research effort required before marginal land can be exploited in a way that is environmentally sound. That will take a long time. There is something of a precedent in the co-operative effort organised by the World Bank in relation to the control of river blindness in West Africa. Over 10 or more years this has achieved much success. A most important element would be the work of the institutions of the Consultative Group on International Agricultural Research. We should encourage them to take a much more active role in nurturing national research organisations, primarily in Africa.
The third main element in our strategy must be aid provided through the European Community. We shall urge the Community to play a full part in the international operation, combining both long-term development projects, including forestry, with the short-term needs for emergency and food aid. In this case we shall seek to associate British manpower with the international efforts.
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My Lords, these measures are aimed directly at preventing famine by increasing the availability of food. But the other side of the equation—the number of mouths to feed—is also an important factor. The contribution that our aid programme makes to family planning activities, particularly through international organisations, will rise considerably over the next few years. We hope that this, too, will have an impact.
House adjourned at three minutes before ten o'clock.