Lords Sitting of 17 April 1985

Preamble
The House met at half-past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Ely.

VAT: Zero-Rating Policy
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 the difference of view between them and the EEC Commission in respect of the interpretation of Article 28 of the Sixth VAT Directive regarding the zero rating of certain goods and services is yet resolved; and whether they will make a statement on the current position and prospects in this matter.
The Chancellor of the Duchy of Lancaster and Minister for the Arts (The Earl of Gowrie): My Lords, it is not resolved. In their reply to the European Community Commission the United Kingdom Government have said that they do not accept the views set out in its reasoned opinion. A full summary of this reply is reproduced in the report of the Treasury and Civil Service Committee on Harmonisation of VAT, published on 6th February 1985. It is now for the Commission to decide whether to pursue the matter to the European Court of Justice.
Lord Broxbourne: My Lords, while thanking my noble friend for that reply relating to the current position, may I ask him, without tempting providence unduly, to go a little further as to future prospects in the matter? Do Ministers remain convinced, subject to the uncertainties of the law, of the validity of their contention that these goods comply with the specified criteria for zero rating in the 1977 directive? If that is so, having regard to the uncertainties imposed on undertakings as varied as the production of animal feedstuffs and the construction industry, will Ministers now urge the Commission either to come to a satisfactory and speedy settlement or, in default, to use its powers under Article 169 of the treaty and refer the matter forthwith to the European Court of Justice for a final decision?
The Earl of Gowrie: My Lords, Ministers are indeed satisfied that our present zero rates are legitimate, that they work well, and that they are clearly understood and well accepted. It is our view that they do not cause significant distortion of Community trade. The difficulties perhaps spring from a desire for harmonisation for its own sake. As to the other parts of my noble friend's supplementary question, I am, of course, unable to say what the Commission will decide to do.
Lord Stoddart of Swindon: My Lords, will the noble Earl go a little further and say that the question of British taxation is a matter for the British Chancellor
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of the Exchequer and the British Parliament? Will he also confirm that in this matter it is possible for the British Government to use their veto? Will he confim that, if necessary, that veto will be used?
The Earl of Gowrie: My Lords, I am sorry to say that the noble Lord has not got it quite right. We have treaty obligations as well as autonomy in terms of domestic taxation.
Lord Bruce of Donington: My Lords, is the noble Earl aware that the Luxembourg Convention covers situations of this kind and that it would be quite legitimate, if Her Majesty's Government so wished, for them to exercise their veto? Is the noble Earl further aware that this country and Belgium were the only countries in the EEC to ratify the sixth directive prior to its due date in 1978? Therefore, we have shown ourselves to be communautaire. Will the noble Earl give the House an assurance, in words often used outside this context, that he will "see them off-if there is an attempt to damage the interests of the United Kingdom?
The Earl of Gowrie: My Lords, I am glad that the noble Lord is showing himself a master of contemporary political idiom. The fact is that a lot of this anxiety is hypothetical. My right honourable friend the Chancellor of the Exchequer has stated in another place that, for his part, he does not intend to make any further extension whatever of the VAT base during the lifetime of this Parliament. The European Commission has not yet put the matter to the European Court of Justice; but it has not, I have to say, yet given indications that it intends not to do so. If it did do so, those proceedings would of course provide a further opportunity for us vigorously to state our case.
Baroness Seear: My Lords, will the noble Earl agree that, Luxembourg agreement or no Luxembourg agreement, the veto should be used extremely sparingly if the new start in Europe that we all look to see is to come about?
The Earl of Gowrie: My Lords, I agree in general with the noble Baroness but I have to say that I feel very strongly about this issue. It would be quite intolerable, I think, if we were to be put under needless pressure to harmonise VAT for its own sake.
Lord Broxbourne: My Lords, while not wishing to urge on my noble friend the belligerent courses suggested to him by noble Lords opposite and without wishing to enter into the complexities of the Luxembourg Convention, would he at any rate make certain that the Community Commission does refer the matter to the court as soon as possible, having regard to the fact that there is a one-sided aspect to this? It alone can refer the matter and not a member state under this particular procedure.
The Earl of Gowrie: My Lords, while I do not wish to use the convention that I shall draw my noble friend's remarks to the attention of the Commission, I imagine that it will find a way of listening to what he has had to say.

Unemployment Statistics: Criteria
2.42 p.m.
Lord Dean of Beswick: 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 criteria being used at present for assessing the number of people unemployed enable that number to be correctly assessed.
The Minister without Portfolio (Lord Young of Graffham): My Lords, while the monthly unemployment count necessarily reflects the administrative system for paying unemployment benefits, we are satisfied that the figures are a reasonable reflection of the level of unemployment, as shown by other less frequent estimates from household surveys of the number of unemployed people seeking work. The 1983 Labour Force Survey was in broad agreement with the monthly count. Results for 1984 will be published in the next few months.
Lord Dean of Beswick: My Lords, I am grateful to the Minister for that reply. Will he not agree that various independent outside bodies come to the definite conclusion that the Government are understating the case? Will he confirm that, if the Government were using the same criteria as those they used when they took office, we would be talking in terms of nearly 33/4 million people? Therefore, why are the Government indulging in this exercise and not presenting the real facts?
Lord Young of Graffham: My Lords, inflation still looms in the land but these days it is confined only to those bodies which reinterpret the unemployment statistics to their own benefit. At this point I think that it would be appropriate to remind your Lordships that the number of people in work in the year to December increased by 343,000: that the number of people in work increased by 613,000 in the 21 months to December 1984; and that in the year to December employment in services increased by 244,000. Nothing demonstrates better that the Government's policies are working than a continued and steady increase in the number of people in employment.
Lord Dean of Beswick: My Lords, is the Minister aware of the article published in the Sunday Times on 7th April by Mr. David Lipsey, the economics editor? That says that the figures being produced by the Secretary of State and which the Minister has just used are a complete misrepresentation of the situation to the point where Mr. Lipsey says:
"on this basis, the minister seems unlikely to be invited to take up a fellowship of the Royal Statistical Society".
When can we expect the Government to tell the truth on this matter?
Lord Young of Graffham: My Lords, in the past few months one of the benefits of my particular occupation has been to read week after week and month after month different interpretations—or, dare
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I say, misinterpretations—of the economic facts of life that appear every week and every weekend in our papers. The figures that we use are those for the number of people receiving benefit. They include many people who would not otherwise be regarded as being unemployed, and they exclude some other people who would otherwise regard themselves as being unemployed. Taken together, they reflect the best possible estimate of the number.
Lord Ross of Marnock: My Lords, I should like to return to the original Question. There have been considerable changes in assessment for unemployment registration. For the benefit of the House, will the Minister list in the Official Report the changes that have taken place over the past five years?
Lord Young of Graffham: My Lords, the changes that have taken place in the unemployment count, which I believe changed in November 1983—although it may have been November 1982—have not been continued in the statistics. I shall list in the Official Report what information we have.
Lord Cledwyn of Penrhos: My Lords, although we are extremely glad to hear the information given by the Minister of the increased number of people at work, perhaps he can clarify one point. Is it not the case that, out of the total number of additional jobs he gave. over 300,000 are part-time jobs for women?
Lord Young of Graffham: My Lords, I should have hoped that each and every Member of your Lordships' House would rejoice at the opportunities that are arising of part-time work for women. But again I think that I should remind your Lordships that the employed labour force in the United Kingdom has risen by 21/2 per cent. since March 1983. It has risen by 1 per cent. in Japan, and it has actually fallen in Germany. Occasionally we should look beyond the waters.
Lord Diamond: My Lords, as regards part-time workers, can the Minister give the number of hours per day employed which constitute an additional person in terms of his figure of the addition to the number of employed people in the country?
Lord Young of Graffham: My Lords, I shall write to the noble Lord giving those particular figures.
The Earl of Halsbury: My Lords, will the Minister agree that the complexities of statistical truth should be authenticated and presented in such a way that they are not tools in the hands of party political manoeuvring?
Lord Young of Graffham: My Lords, I would completely agree with the noble Earl's statement. The statements which we announce each month are indeed the count of those receiving unemployment benefit, and that is an unequivocal and unshakeable figure, and one upon which I believe your Lordships' House would do well to continue to rely.
Lord Maude of Stratford-upon-Avon: My Lords, first, through his department can my noble friend do

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something to counter the continually repeated claim of Opposition speakers on radio and television that there are 4 million unemployed people in this country? Secondly, will he realise that it is common knowledge that the number of involuntarily unemployed people genuinely seeking work is considerably below the published figure of unemployed people?
Lord Young of Graffham: My Lords, I should like to thank my noble friend for his question; but, alas‡ I am a Minister without a portfolio and even if I had one, I think I could do little to prevent those who so desire exaggerating the bad news and minimising the good. The registered number of unemployed stands at the figure that we give. Within that figure it is sensible to assume that all are seeking work; but your Lordships will have to make up your minds for yourselves.
Lord Dean of Beswick: My Lords, is the Minister aware that I am not someone who is invited to go on television or radio, and that I have never used the term 4 million unemployed? However, I am saying to the Minister that the figures being presented do not in any way convey the truth of the situation. When will the Government give us the truth?
Lord Young of Graffham: My Lords, for once I am in total agreement with the noble Lord. The figures that we present on the unemployment count do not represent the truth of the situation. The truth of the situation is represented by the figures that I endeavoured to give in my supplementary answer which show that the number of people in employment is steadily and surely rising. That is the figure on which we should concentrate. I assume and expect that figure to continue to rise until the number of unemployed starts to diminish.
Lord Hatch of Lusby: My Lords, the noble Lord has given a number of statistics. In order to make those statistics correct and to put them in context will he give some other statistics beside them? When he says that the number of people employed is increasing will he set beside that the increase in the workforce at the same time and the increase in the unemployed at the same time so that the whole picture may be seen and not just the number of people who are employed?
Lord Young of Graffham: My Lords, the point I was endeavouring to make in answering these questions was simply that the total workforce of the United Kingdom is increasing, and so is the number of people in employment. At the present time the rate of increase in the workforce is such that the number of unemployed is not diminishing, but I expect that it soon will. Perhaps I may make this point. We have one of the highest proportions of populations of working age in employment in Europe. Our figure is 65 per cent.; in France and Germany the figure is 61 per cent., and in the OECD as a whole it is 59 per cent. We keep nearly two-thirds of all our people of a workable age in employment.
Baroness Gaitskell: My Lords, are we right in trying to minimise the number of people who are now unemployed in this country? If we are, we are not doing a good job.
Lord Young of Graffham: My Lords, we would not be right in trying to minimise the number of people unemployed in this country, but nor would we be doing a good job if we did not draw attention time and time again to the sheer economic fact of life that Government policies are working.
Following is the information referred to:
CHANGES IN THE COVERAGE OF THE UNEMPLOYMENT COUNT
1. The effect of changing from registrants to claimants in October 1982.
2. The effect of the 1983 Budget measures which meant that since April 1983 certain men aged over 60 no longer needed to sign on in order to receive national insurance credits or supplementary allowances at the higher long term rate.

Electronics: EC Collaboration
2.52 p.m.
Lord Rodney: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps they are taking to encourage collaboration in the electronic engineering industry between member states of the EC.
Lord Brabazon of Tara: My Lords, collaboration in the electronics industry is primarily a matter for the companies themselves. However, the Government acknowledge that they have a role in creating the right environment. This is being achieved through the harmonisation of international technical standards and through effects to create a truly single market within the European Community. The Government are also promoting research and development, primarily through the Esprit programme, which, being based on joint research activities, will also encourage collaboration.
Lord Rodney: My Lords, I should like to thank my noble friend for that Answer. Can he tell the House what progress is being made in implementing the Commission's programme for basic technological research which goes by the name, I believe, of Brite? Can he also tell your Lordships what funds have been allocated to it and what is the United Kingdom's share in this?
Lord Brabazon of Tara: My Lords, Brite is a collaborative programme aimed at introducing new technologies into traditional industries. One hundred and twenty-five million ecu—about £75 million—has been allocated for its four years' life, of which the United Kingdom contribution will be 22 per cent. The first call for proposals has just been made. We have conducted seminars and used the technical press and direct-mail shops to publicise it. To judge from the expressions of interest made last year we have high hopes for the participation of United Kingdom companies.
Lord Orr-Ewing: My Lords, is my noble friend aware that co-operation with Western Europe might be easier if the financial assistance given by the respective governments were rather more equal? Is he further aware that in the important field of microelectronics the French Government are now giving five times as much as this country, and that Germany is giving over twice as much as this country? Is this not disturbing to the long-term future of this important industry?
Lord Brabazon of Tara: My Lords, I thank my noble friend for his question. I am aware of the figures to which he refers. They should be interpreted with care because they are not directly comparable. For instance, they differ in their coverage of expenditure by Government departments for defence, R & D, and telecommunications. They vary in their coverage of support for regional investment and inward investment. They omit expenditure on programmes of the European Community, and some of the assistance is of a type that this Government would not wish to offer.
Lord Bruce of Donington: My Lords, can the noble Lord give the House an idea of the fields in which Her Majesty's Government consider that collaboration in particular sections of the electronics industry would be favourable to this country? Will he also give as indication as to what consultations he has had with the various sections of the electronics industry in this regard, and towards the establishment of the internal market in the EEC itself?
Lord Brabazon of Tara: My Lords, as regards consultations, the Esprit programme is a joint programme between industry, Government, and the European governments, as is the Alvey programme between industry and Government and the universities. Regarding the development of the internal market, it is vital that we get as soon as possible the advantage which the United States and Japan have of a large domestic market. We believe that European companies also should have that advantage. The Government are taking every opportunity to press for the reduction in checks and formalities at frontiers, for the freedom to provide services, and for the opening up of markets through open tendering. There is a number of different fields in which these programmes are taking place. For example, the Esprit programme is in microelectronics, advanced information processing, software technology, office systems and computer integrated manufacture.

Northern Ireland Social Security Benefits: Deductions
2.57 p.m.
Baroness Ewart-Biggs: 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 how many people in Northern Ireland have had money deducted directly from social security benefits,
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including invalidity or widows' and old-age pensions, during the last financial year, by the Benefit Allocation Branch under the Payments for Debt (Emergency Provisions) Act (Northern Ireland) 1971.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Lyell): My Lords, I regret that the information is not held in the precise form requested by the noble Baroness. However, at 31st March 1985 a total of some 10,800 deductions were being made.
Baroness Ewart-Biggs: My Lords, I should like to thank the Minister for those figures, although I find them quite horrifying. Is the Minister aware—and I am sure that he is—that this Act was brought into force to combat the rates and rent Act 1971 in Northern Ireland? While it is generally accepted that the emergency created by that strike came to an end in 1976, the emergency powers are still in force now, in 1985. How can the Minister justify that Northern Ireland's poorest families should be subjected to different and more draconian methods of reclaiming debt than people in the rest of the United Kingdom? Would the Minister not agree that it is time to revise the whole debt legislation in Northern Ireland with particular focus on the repayment of debt Act in order to bring it into line with the rest of the United Kingdom?
Lord Lyell: My Lords, the noble Baroness will no doubt be aware that this particular Act has been in existence since 1971. It has been reviewed every year, including the years 1977, 1978 and 1979, when the Government supported by the noble Baroness did the reviewing and saw fit to continue it. I can tell the noble Baroness and your Lordships that it has been reviewed this year, but there are no plans 'at present to bring forward proposals to repeal this particular Act. I would stress to the noble Baroness and to your Lordships that the total amount of debt outstanding is £40 million.
Lord Beswick: My Lords, I have had a case brought to my attention of a single parent in Belfast, with a child of six, taking home £40 a week as a part-time cleaner, who has £20 a week deducted from that sum under the emergency provisions to which my noble friend refers. Could this happen elsewhere in the United Kingdom, and ought it to continue to happen in Belfast?
Lord Lyell: My Lords, perhaps I may inquire further from the noble Lord and then write to him. This is a special case, as your Lordships will appreciate. There will be a combination of many factors, with many different allowances and at least two separate Acts which would empower the deductions. Possibly, if I may write to the noble Lord, we could take this further.
Baroness Jeger: My Lords, can the noble Minister tell us whether there is any ceiling on the deductions which can be made from invalidity pensions, widows' pensions and old-age pensions, so that there is not total impoverishment of those people who are trying to

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make ends meet in these circumstances? Can he also tell us what has happened to a resolution which was passed by the Assembly in May 1984 asking for a review of debt legislation? What answer has been given to the Assembly? Is it the Government's policy not to take any notice of what the Assembly says?
Lord Lyell: My Lords, the question of how these deductions are made from the various allowances is a complicated formula. May I write to the noble Baroness?
Baroness Jeger: No, my Lords.
Lord Lyell: My Lords, I shall need to. I shall need to do this, otherwise I shall be detaining your Lordships for a good hour this afternoon. I am sure the noble Baroness will appreciate that. We take note of motions by the Assembly, but the noble Baroness and your Lordships will also note that the 24th Report of the Public Accounts Committee, published in July 1984, recommended that the departments and bodies concerned, including the Northern Ireland Department, should continue to seek ways of improving control over debt and should keep under regular review the effectiveness of the methods which they use.
Lord Mishcon: My Lords, will the noble Lord the Minister take it that the House is very concerned about the creation of bad will in a territory where we should be creating as much good will as we can? Will he also consider that the title of this Act contains the word "Emergency", and that the emergency in question, the rent and rates strike, finished in 1976? Lastly, will he look at the question of appeal, which is not known or publicised in Northern Ireland and is limited to an informal tribunal which has no statutory force to examine cases of hardship?
Lord Lyell: My Lords, on the last point, perhaps I may write to the noble Lord, since he clearly knows that there is an appeal mechanism. I am sorry that it is not more widely known. I shall endeavour to find out, and I shall write to the noble Lord. The noble Lord is quite correct in that the rent and rates strike ceased, but the noble Lord will be aware that the debts continue to pile up. As I stressed to your Lordships, at present the debts stand at £40 million. They are being paid off at an average rate, last year, of £3·15 million. Your Lordships will see that there is a colossal debt. Nevertheless, £3 million was paid last year under this Act.
Lord Stallard: My Lords, will the noble Lord accept that rent and rates debts are not peculiar to that part of the United Kingdom? This piece of emergency legislation, which was enacted originally to combat a particular emergency, has been in operation for nine years following the end of the emergency for which it was designed. Is that not discrimination against a part of the United Kingdom that would not be tolerated elsewhere? Will the noble Lord also confirm that under this Act child benefits can be reclaimed as part of the debt? Can he tell the House how much has been reclaimed from child benefits under this Payments for Debt Act since 1976?
Lord Lyell: My Lords, on the last point, if I can I shall, but I advise the noble Lord that it might be extremely difficult and will be at disproportionate cost. I do not believe that we are discriminating against Northern Ireland. I am sure your Lordships will agree that the scale of the problem is unique to Northern Ireland; and, as your Lordships have heard, it was brought on by a rent and rates strike which may have ceased in 1976, but the debts are still with us.
Lord Mishcon: My Lords, I hope that the Minister will forgive me for returning to the Dispatch Box. Will he assure the House that copies of the series of letters which he will now be signing will also be in the Library? Will he take it from the questions that he has been asked that this is a matter upon which Ministers who are dealing with it ought to be fully briefed in future because the House regards it as a very important matter indeed?
Lord Lyell: My Lords, I am grateful to the noble Lord for asking this question. My noble friend has indicated to me that the case is, as I thought, that when I write to the noble Lord and to your Lordships copies of those letters should be made available in a certain form in the Library. I must confess that I had not yet discovered this, but I shall do so. That is probably one more point that the noble Lord might be worried about.
The noble Lord and your Lordships will agree that six or seven different allowances are covered under Section 1 of the 1971 Act. Perhaps not all of those are being paid, but how the allowances are covered for the purposes of Section 1 of the Act is a complicated matter. As is customary when seven different allowances are involved, I am sure that noble Lords would prefer that I should write to them. I am sure that the noble Baroness will accept that.
Lord Stallard: My Lords, I am sorry to come back again but in the first part of my question I asked whether it was not a fact that under Section 18 of the original Act—at least, that is my understanding—this provision would only continue for six months after the emergency. Has that part of the Act been repealed; and, if it has not, when will it be?
Lord Lyell: My Lords, it is under review every year, as I told the noble Lord.
Baroness Ewart-Biggs: My Lords, can the Minister say whether money taken direct from wages under this Act is taken on a more excessive scale in Northern Ireland than it is in the rest of the United Kingdom?
Lord Lyell: My Lords, I do not have any information about money taken from wages. I understand that the main recovery methods under the 1971 Act concern the seven different benefits which are spelled out in Section 1 of the Act.
Lord Beswick: My Lords, is the Minister aware that in this case the money was deducted from part-time earnings simply because the supplementary benefit payable did not cover the £20 a week which they wanted to deduct?
Lord Lyell: My Lords, as the noble Lord will know, that case is a complicated one in which a number of factors will be taken into account. I have promised to write to the noble Lord, and I shall certainly do so.

Business
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Trefgarne will, with the leave of the House, repeat a Statement to be made in another place on the future of the Royal Dockyards.

Wealth Creation and Employment Opportunities
3.6 p.m.
Lord Boardman Lord Boardman rose to call attention to the obstacles imposed by legislative and administrative action which inhibit the creation of wealth and opportunities for employment; and to move for Papers.
The noble Lord said: My Lords, I must first say to your Lordships how much I look forward to the maiden speech we shall shortly be hearing from my noble friend Lord Vinson, who I know will bring to this debate and to future debates much wisdom and experience.
I do not propose to take any of the time available to me in praising the achievements of the Government, although I hope my noble friend will take those praises as read or spoken. Perhaps I could encapsulate them by saying that I think the Government have transformed for the better the attitude of the vast majority of people in this country, and have inspired a new dynamism. They have also eased the burden of some of the bureaucracy, form-filling and the like, but there remains a tremendous amount still to do. Some of these elements are very important, and some—indeed, most of the major ones—are under review by the Government at present, so I will touch upon them hut briefly.
The wages councils are now undergoing review, and in my view they have added significantly to the level of unemployment. The Employment Protection Act has probably done more to prevent the creation of new jobs than any other single measure on the statute book. I recall that some 10 years ago the noble Lord, Lord Lever (Mr. Harold Lever as he was then), was the Minister responsible for the introduction and supervision of that measure. I led a delegation from the Association of British Chambers of Commerce to see him, and we spelt out very clearly how many jobs we were not prepared to provide or would have been able to provide but for that measure. Here we are, 10 years later, slightly reformed and changed, but this Act still greatly interferes with the provision of new jobs. It enables a sacked employee to bring a quite frivolous claim before a tribunal where the sacked employee has nothing to lose but the employer has to spend a great deal of time and resources. It is time we looked again, and seriously, at major reforms and improvement to those measures. Surely it is better to have a job without
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any assurance of long-term employment than it is to have no job at all.
Then we have youth employment where a combination of Government regulation and trade union restrictions has, I believe, played a major part in preventing the young from acquiring the skills and experience which would give them long, proper and useful jobs. I ask my noble friend to look at the position in Germany with which I am sure he is familiar, and to contrast what happens in Germany; on youth employment with what happens here. I recall, too, the occasion some years ago in this House when the noble Lord, Lord Scanlon, was speaking in a debate on youth employment and how, much to my surprise, he made such wise remarks and criticisms of the apprenticeship scheme and of the lack of an adequate differential between the young learner, and the mature and experienced ones. They were wise remarks which I hope will commend themselves to his successors in the trade union movement.
If I touch on the question of rates—and I have no intention of developing now a subject which I am sure will occupy this House for many hours in the future—I would draw attention to the very severe penalties that are imposed upon industry and commerce which add to the problem of jobs and the creation of wealth because of the way in which industry and commerce are having to foot the bill for local authorities to pander all too often to the non-ratepaying electorate. I hope that in the review which is now taking place the Government will heed the advice from many of the commercial and business organisations which urge that the industrial and commercial rate, whatever form the levy may take, should be divorced from that which falls upon the domestic sector.
We had an excellent report produced last week, I think, on the burdens on business. I welcome that report. It displays a number of problems which industry is facing at the moment. I think that in that report we may be looking only at the tip of the iceberg because there is a great deal of legislative and administrative burdens which this comparatively short report cannot touch. Indeed, on the basis of the report alone, the Financial Times last week gave an estimate that those restrictions, regulations and so on had cost this country something between (I think it was) 700,000 and 1¼ million jobs in the last five years.
I know that my noble friend is studying the experience of the United States of America. There they have been trying to tackle the bureaucracy and regulations which they have felt were frustrating their business; and they have been doing so with some considerable success. Indeed, the impact of their review of existing regulations in the first year was to make a saving of some 8 billion dollars in compliance costs. As noble Lords will be aware, they have created some 30 million new jobs, mostly in businesses, in the last few years.
To start a new business here with only one employee, you have to look at 99 (so I am told) separate regulations and comply with a large number of them. They include safety, health, heating, fire, and so on. They are all no doubt quite admirable and they are all no doubt designed to cover all contingencies, but they lack any flexibility. Surely the right way to approach such matters is to define the objective—what

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it is that we are trying to regulate and control—and then to leave it with individual firms to find a way to meet it. For example, fire regulations occupy volumes. Surely the real thing, the only thing that we are concerned with, is that the occupier or employer, whoever it may be, should ensure that the premises are safe against fire. Leave him then to discharge that duty in the most effective way, taking account of his own circumstances and of course to the ultimate satisfaction of the inspectors.
May I give some examples—and I am sure that noble Lords could quote a legion of them—of some of the nonsense which arises at the present time? To remove one asbestos tile in order to get at a telephone cable, you have to give 28 days' prior notice. Think of the poor chap with his one telephone trying to start a business and having to wait 28 days before he can get that telephone operating again. I know of a case which was reported to me last weekend of a young man who was a very keen cook who decided that he would set up to bake Christmas cakes, something in which he had great skill. Towards the end of last year he baked a lot of Christmas cakes in his kitchen. He sold them very successfully and, with a lot of satisfied customers, was making a good living. Then the health inspector arrived. The health inspector said: "You must tile your kitchen"—which was perfectly hygienic—"from floor to ceiling". Really, this is a nonsense. I wonder how many of your Lordships have kitchens tiled from floor to ceiling—and we are really quite a healthy bunch, I think.
I am just trying to pick a few examples at random, but let us take the case of farriers, sometimes better known as blacksmiths. In order that a young man can become a farrier, apart from apprenticeship and all the other things he has first to have CSE levels, at grade 3 or better, in English literature, mathematics and arithmetic. My own horses certainly understand best the language that does not appear in any CSE examination; and I think that the noble Lord, Lord Paget, who I am happy to see is intervening later, will find that his own horses react in the same way. Surely the test of these things in the case of a farrier is: "Can he shoe horses safely and well?"—not all this other nonsense.
Then we return to compliance costs. To comply with many of these Government regulations is a vastly expensive operation. The Government monitor very carefully the Government's own expenditure. The Public Accounts Committee sits and looks at a lot of it, and Bills that come before this House have to say how many additional people will be employed and what the cost will be. But no one is concerned with what it is going to cost the poor devil who is going to have to comply with the regulations. This is an important element of it. I could move on to licensing and permitted hours and all that sort of thing, but I am sure that all noble Lords will know of many instances there where there are complete nonsenses and where the controls were imposed in conditions which are certainly no longer relevant.
Then we have a mass of legislation, much of it defective, much of it ambiguous and much of it no longer relevant. When departments agree (as all too often they do) that the law should be changed if it does not make any sense, they also go on to say, "We regret
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that we have no parliamentary time to deal with it". We do not even have now the noble and learned Lord, Lord Denning, who used sometimes to inject a little commonsense into some of those Bills, for he is no longer on the bench. I should like to give one example, in which I declare an interest as chairman of a bank, because it does affect it. It is an example which perhaps illustrates the kind of problems that must arise in a great deal of legislation. I refer in this case to the Consumer Credit Act 1974. A lot of the regulations are coming into effect on 19th May. The Department of Trade and Industry agrees that the Act is defective in many respects. It agrees that much of it is ambiguous and says that it will be necessary to have a test case before one can see what it means and whether it means what it was intended to mean. It agrees also that parts of the Act and its regulations could well have an effect opposite to that which was intended.
These are not small points which arise. These are points which affect many millions of pounds of investment and masses of jobs. They cover things like multiple agreements, connected credit liability, cancellation notices, EFT/PoS (Electric Funds Transfer/Point of Sale), a project which is going to require the investment of many millions of pounds if it is to be developed. But it is inhibited at the moment because of uncertainties in the Act which there is no parliamentary time to amend. There is franchising, which is providing a growing appeal and opportunity for the young to start their businesses and to get their businesses off the ground. That is faced with difficulties because of uncertainties in the Act. Even the Small Firms Loan Guarantee Scheme is faced with similar problems.
These are technical matters, and I do not ask my noble friend to comment on them in any way. However, I do suggest that they should be looked at, and if my noble friend looks at them, with his great experience in these matters he will see the possible adverse impact that this uncertainty and these defects could have on investment and unemployment—and all because there is no parliamentary time to amend or clarify them.
There are in addition a mass of similar Acts which are no doubt equally bad. I have a proposal to put forward on this. I should like consideration to be given to the setting up of a standing select committee of both Houses to which these sorts of nonsenses could be referred—nonsenses about which such an all-party committee would no doubt say, "We quite agree that is a nonsense".
Then I would suggest that we should have each year a miscellaneous provisions reform Bill to give effect to the recommendations of that select committee. As the recommendations will be coming from an all-party committee which we hope will cure the nonsenses, they should not take up a great deal of parliamentary time. But would it not be a glorious "slum clearance" or "spring cleaning" if once a year we were able to pass a miscellaneous provisions reform Bill to get rid of all the nonsenses that have been referred to that select committee during the year? I would therefore ask my noble friend if he would give thought to that. I am delighted that my noble friend Lord Young is chairing the committee which is tackling these problems and I

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have no doubt that, with his great experience, we shall receive some sensible answers and some speedy action.
The Government have done much to get rid of some of these obstacles but there are a great many of them and they have accumulated over the years. If we are to develop that dynamism to which I referred earlier and which I believe is coming through, and if we could create the wealth and the jobs that we are all seeking, these obstacles must be removed. My Lords, I beg to move for Papers.
3.22 p.m.
Lord Bruce of Donington: My Lords, the House will be grateful to the noble Lord for having moved this particular Motion. In his opening remarks he described himself as a fervent supporter of the policies that have been pursued by Her Majesty's Government, and I must immediately say to him that only his considerable sense of public duty could have impelled him to put an item on the Order Paper which is so embarrassing to the party which he supports.
The noble Lord has referred in very general terms to some of the restrictions that he says are a burden on British industry. He has voiced many general propositions, and if I may say so with the utmost respect he has voiced a good number of generalities which amount to little more than ingrown prejudices. However, he has been rescued, fortunately, by none other than the Government themselves. They have produced a booklet, to which the noble Lord referred, called Burdens on Business, which comprises a survey in very precise terms involving the sampling of a representative series of small firms, from which it is possible for the House to arrive at some assessment as to the real impact of the burdens of which he complains.
I am well aware of the feature that appeared in the Financial Times of Wednesday, 10th April, which reviewed this particular document and which indicated, on the basis of the figures given in Appendix 3 on page 45 of the booklet, that the net loss to British employment and the net addition to the unemployed people that we have at the present time amounted to no fewer than one and a quarter million. They modified it at a later stage, being a little more conservative, and said that 770,000 or thereabouts had been added to the unemployment total by reason of various restrictions with which I shall deal presently and which are discussed in the report itself.
May I immediately say this. If it be true (and there are some reservations that I have to make about it, as the noble Lord will gather) then this is a massive indictment of Her Majesty's Government. Throughout the five years during their time in office they have said "there is no alternative"—remember TINA, my Lords?—and they have denied that the Government could do anything about the level of unemployment. In fact, as recently as in the publication of Cmnd. 9474, Employment: The Challenge for the Nation, everybody else but the Government is blamed for the continued existence of unemployment.
However, if this report is true and if the argument put forward by the noble Lord can be sustained, it means that the Government have been pretending to the country for the past five years or more that we had
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to have tax incentives to release the energy and enthusiasm of executives, we had to become more and more competitive, and we had to do A, B, C and so on, including cutting public expenditure. It means that all the time the solution to at least a large proportion of our unemployment was under their noses because the Government have been in office and the legislation has been there throughout their period of office, and the administrative steps, to which the Motion refers, have been in existence all that time.
If what the noble Lord has said is true, the Government stand indicted for not having taken effective action to reduce unemployment by a minimum of 770,000. The argument they have put to the House is that there is no alternative and there are no quick solutions: yet according to this report and the calculations derived from it, a quick solution—or at any rate a very substantial part of it—has been under their noses all the time. What more massive indictment of inefficiency, short-sightedness and slovenliness in government can be attributed to them than that? Either they did not know the facts or they were too lazy to find them out, and they were protesting to the country that there was no easy solution to the problem and that it all rested on us—lower wages should be taken and so on—when all the time there were these regulations and these administrative steps to hand.
That is the logic of the argument, but of course it is not quite so simple as that. If your Lordships will turn to page 31 of the document that was provided to the Department of Trade and Industry, you will find a summary of the results obtained from the sample interviews that were undertaken. I must say that the investigation was carried out in rather a droll fashion. The statistics provided throughout are of two kinds: first, there are the unprompted responses; and, secondly, there are the prompted responses. Oddly enough, on being prompted the responses are rather higher than those which were originally unprompted. It is almost as though the interviewers went around with a list in order to find out what was the reaction of small businesses and asked, "What are your principal complaints about? What burdens do you think you are bearing at the moment which are inhibiting you in employing more people or which have caused you to employ fewer people than you otherwise would have done?"
For example, in the case of employment protection only 5 per cent. of those interviewed made any mention at all of it until they were prompted and asked, "Are you quite sure that employment protection has not affected you?", when the percentage immediately went up. If your Lordships look down page 31 at the shaded columns, which are the unprompted responses of the firms to the various questions that affected them, you will find that with the exception of value added tax, which exceeds all the rest combined in the unprompted responses, the percentages were comparatively small.
For example, the complaints about sick pay are negligible, complaints about PAYE are insignificant; health and safety produced very few complaints —under 21/2 per cent.—and there were very few complaints at all about the environment. Apparently, nobody complained about fire regulations without

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prompting, and 1 per cent. of those interviewed said that consumer law was a burden to them; and company law likewise. For NIC the figure is 1½ per cent.; for minimum wages it is 2 per cent.; for restrictive trade practices 1 per cent., for antidiscrimination nil, and for data protection nil. The greater part of the complaints related to VAT and it is that to which I now turn.
Everybody knows that the completion of VAT returns, the compilation of the documents and the staff time that is necessary for the compilation are very extensive indeed. But I am bound to point out that VAT was introduced by the party opposite in 1972 and they have had a very long time, since they were elected in 1979, to reform the procedures. But have they? They have done nothing of the kind. Even after the publication of this report, only today, in spite of all the complaints about the complications of VAT, they have issued a Finance Bill which contains no fewer than 28 pages of variations to the VAT law and regulations.
I do not know whether the noble Lord opposite who is in charge of these operations has any friendly contact with the Treasury. I do not know what are his relations with the Chancellor of the Exchequer. But surely, if the gravamen of the complaints, which is confirmed by the survey, is that the VAT regulations and the whole method of collection of VAT are a grievous burden to industry, it appears a very odd reaction to devote 28 pages of the Finance Bill to putting even more stringent requirements upon small businesses, on the very people that the noble Lord, Lord Boardman, said—and I agree with him—are being hammered by Government restrictions.
On the basis that the burdens of VAT account for one-half of the total complaints that were made to the researchers without prompting—and this is borne out by the sample—then, quite clearly on a pari passu basis the VAT regulations are responsible at minimum for 350,000 or more unemployed at the present time, without mentioning any other effects. I shall not read the press comment this morning about these 28 pages but it can be found in The Times, Perhaps the noble Lord will have access to The Times before he makes his reply, and will tell us exactly what are his responses to the arguments. However, I can tell him that, although The Times is now a Conservative Party news sheet, it takes him very severely to task.
The remainder of the complaints involve regulations or laws which have as their purpose either the protection of workers' rights or the protection of the public on environmental and safety grounds. I do not know how far the noble Lord will wish to change these but my noble friend Lord Stoddart will deal with them in the course of his reply to the debate. However, it is noteworthy that, whatever may be the effect on small businesses, the CBI for one does not really think that it will be very considerable.
The arguments which the noble Lord, Lord Boardman, has put forward today are based on the supposition that the removal of burdens, as he has described them, and as they are defined at page 5 of the report, will contribute significantly to reducing unemployment in this country. In its latest report, the CBI casts a slight doubt on that. But I have to quote the CBI because, from the Government's point of
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view, it is untainted by any deep or abiding association with the Labour Party.
This is what the CBI says:
"Smaller firms have a significant role to play in creating new jobs but, given the size of the unemployment problem, they cannot provide any quick solution even though they are particularly important to job creation in hard-hit regional areas."
That does not sound to me as a particularly enthusiastic response. How, then, in view of the opening remarks of the noble Lord, Lord Boardman, and of the contents of the report that has been published under Government auspices, is one to regard the true significance of the burdens that have been referred to? Surely it must be said that they are mere propaganda, that all the threats that are being made about the reduction of workers' rights, and so on, are calculated only to have a psychological impact on the workforce at this time. If that be so, then may I venture to draw your Lordships' attention to the fact that this may be a very dangerous thing to do.
Of course, unemployment is an emotive subject. I am well aware of the political and party uses to which it can be put. Nevertheless, it is a real problem for those who are afflicted, outside anything that may be said in this House, where most of us are far more comfortably situated and have a greater opportunity for personal serenity. But the CBI, your Lordships may feel, have got the position right. Perhaps I may refer to the foreword to the latest CBI publication, where they say this:
"We must accept that if the system"—
that is, the system of free enterprise—
"cannot find ways of ending the blight of unemployment in this country and allow for the development of deprived peoples here and overseas, then its validity is in question. The second principle is a belief that continued decline in the UK cannot be merely a comfortable reversion to some supposedly happier and more rural `golden' age. For most people not born into power and wealth, such an age never existed. It is more likely continued decline would mean social upheaval, increased bitterness, decay in all change and even a move back towards the violence of earlier societies."
I hope that those words of the CBI will burn into the minds of those people to whom they are addressed and that they will take very great heed of them. I say this not wishing to be offensive but with rather a lighter air than the situation demands.
The Motion referred to administrative and legislative steps. I have dealt, I hope adequately, with those set out in Burdens on Business but I have some constructive suggestions to make which are of far greater significance than the paraphernalia of propaganda on such thin evidence as appears here. The first suggestion of administrative action I have to make is that the Government should pay their bills properly and quickly to the small contractors who do business with them. That would be a very great help to start with. Secondly, the Government should permit the release of capital funds held by local authorities as a result of the sale of council houses and allow those sums to be invested forthwith in the building and construction industry. That is what they should do.
The administrative action by which they have been deprived of that opportuity is one of the biggest inhibitions to the growth of employment and the reduction of unemployment in the construction industry at this time. Remember, my Lords, that the construction industry is an assembly process. It uses

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the products of a 100 different trades, many of them small firms and businesses, and the injection—the quite legitimate injection—of funds which are in any case completely outside this theoretical and lunatic concept of the public sector borrowing requirement would in fact mean much more employment and a reduction of unemployment in the building industry.
The third administrative restriction which the Government should remove, aside from all these ridiculous trivia that are discussed in this report, is the quite arbitrary financial limits imposed upon public industries—the financial restrictions put upon them which prevent them from carrying out the full capital programmes which they have projected ahead. Remember, my Lords, that the expenditure of these public authorities is with British private business—with engineering firms and trades of all kinds. An injection of funds under the control of these various public bodies would do more to relieve unemployment than these matters that have been suggested in this report.
I have no doubt that the Government will pay no heed to this. They will seek to shelter behind this miserable document. I hope that when they take it to bed and read it, on the assumption that they have not done so already, they will take with them also the Finance Bill, published today, with its 28 pages of new regulations which will confront British business from now on.
Lord Harmar-Nicholls: My Lords, before the noble Lord sits down, may I ask him this? While he has made clear that on party political grounds he does not like the present Government, does he think that the inhibitions, the difficulties and the regulations which inhibit business doing its job today should be reduced or not'? Will he make that clear?
Lord Bruce of Donington: My Lords, for my part I do not seek to decry and have not sought to decry any legislation or any administrative act that is useful and serves its purpose and is not superfluous to the purposes for which it is devised. Remember, my Lords, that the regulations and the legislation which are referred to in this report and to which the noble Lord has already referred went through both Houses of Parliament. Are we to assume that Parliament approved regulations and approved restrictions for the good of society—the good of society still matters to some of us; the good of the whole society—which were in themselves completely unnecessary at the time?
Lord Harmar-Nicholls: My Lords, the noble Lord does not want to reduce them, then?

The Royal Dockyards
3.45 p.m.
The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne): My Lords, with your Lordships' permission I should like to repeat a Statement being made in the other place by my right honourable friend the Secretary of State for Defence. The Statement is as follows:
"With permission Mr. Deputy Speaker, I should like to make a statement on the future arrangements for the Royal dockyards at Devonport and Rosyth.
"The Royal dockyards employ some 20,000 people. Their turnover is £400 million a year. They repair all of our nuclear-powered submarines including the Polaris force and nearly 80 per cent. of our conventional warship fleet.
"As the House is aware, there has over the years been a succession of studies and reports on the future of the dockyards. These reports generally agreed that change was essential. But all previous attempts to introduce a changed structure have come to nothing.
"This Government believe that it is essential to get full value for money from the defence budget. If we are to achieve this in the dockyards, three main conditions need to be met. First, local managers must have the freedom and authority to manage in a more competitive environment. Secondly, the dockyards as suppliers of services to the fleet must be separated clearly from their customer. Thirdly, their financial and accounting arrangements must reflect normal commercial practice so that the true price of the work can be properly judged.
"I am today issuing an open Government document, copies of which I have placed in the Library, and a consultative document to explain to those who work in the dockyards the likely consequences of change. I am not today announcing a decision on the way forward, but I am opening a period of consultation. I hope there will be a wide, constructive and fruitful discussion over the next two or three months. My intention is to announce to the House a clear way forward before the Summer Recess.
"The main options for change range from the creation of a trading fund to full-scale privatisation. Although it would be possible to achieve some improvements within the strategy of a trading fund within the public sector, this would not give the enterprise sufficient freedom from Civil Service constraints for it to operate efficiently in a competitive environment.
"The options which would provide this freedom are full privatisation or a system of commercial management under which each dockyard, while remaining in Government ownership, would be operated for a period of years by a company chosen by the Government following an open competitive process. Under either of these options the Government would insist that control remained in British hands.
"It is the option of commercial management that seems to the Government to be the best way forward since it secures continuing competition, while maintaining control over the national strategic assets involved. It would require legislation. This option, like full privatisation, also offers the prospect of outside work for the dockyards from customers other than the Ministry of Defence. If implemented, we could therefore look forward to a tauter, more flourishing enterprise.
"The House will recall the many successful transfers to the private sector from the public sector

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achieved by this Government. In all these cases the rights of employees have been protected. Similar protection would form part of a move to the private sector should the Government choose that option.
"Whatever the new framework for the longer term, there is an inescapable need for adjustments to the workforce in the short-term in order to improve dockyard efficiency.
"Management will be discussing the way forward with the unions involved, starting today. The package of efficiency measures they will be looking for may involve job reductions at Devonport of about 15 per cent. and at Rosyth of about 5 per cent.
"Natural wastage and voluntary retirement can be expected to achieve most of the reductions sought by management, particularly at Rosyth. Compulsory redundancy will be used only in the last resort.
"My department, as would any good employer, will do all that it can to alleviate the effects of the efficiency measures; particularly it will consider how new business and employment opportunities in these areas might be fostered, including work in support of the new dockyard organisation. I intend to ask my honourable friend the Under-Secretary of State for Defence Procurement to take a particular interest in co-ordinating the efforts required in this positive approach.
"Mr. Deputy Speaker, these two dockyards have served the Royal Navy and the nation loyally for many generations. I wish to stress that under this Government their long-term future is assured. But in giving this assurance and recognising the significance of the yards to their local economies I must also expect them to be run to proper levels of efficiency. I believe that the House will accept that there is broad agreement that change in the management of the dockyards is needed now.
"I hope that all concerned will join constructively in the consultation process to assist the Government in the decisions that need to be taken. Once the difficult but short period of adjustment has been completed there will be considerable opportunities for expansion and enterprise. I will do all I can to bring about these new opportunities."
My Lords, that concludes the Statement.
Lord Graham of Edmonton: My Lords, the House is grateful to the Minister for repeating the Statement which his ministerial colleague has given in another place. I am bound to say that the Statement sounds to me like a further step by the Government to get out of the business of providing an efficient public defence capability. Efficiency is the key word in this Statement, and later I shall be asking the Minister precisely what is meant by the word "efficiency" in this particular context.
It certainly appears to us that this Statement is yet a further step towards the mania which the Government have in respect of privatising as much as they possibly can of our national assets in public hands. We believe that in this instance it is a further small step along a very dangerous route. Does the Minister not appreciate that besides the taxpayers' interest there is
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also the national interest? Have the Government learnt nothing from the experience of the Falklands war, when we were reduced to very dangerous levels in terms of having the capacity to respond in the right way at the right time?
A number of questions stem from this Statement. We know that since the defence review of 1981 a number of measures have flowed. One of them is the measure we are discussing today. We are constantly being told that there is pressure in order to make the defence capability and potential of the nation more commercially orientated. Other than from the Government's imperative to reduce costs, will the Minister tell the House where the pressure is coming from to make our defence potential more commercially orientated? Will the Minister spell out the real savings—not the words and the flowery language—which the Government envisage will be made as a result of this particular exercise? The Statement talks in terms of controls over future management. Would the Minister care to tell us the steps which the Government have in mind to ensure that the management of the dockyards in the future will be wholly and absolutely accountable to the Government, so far as strategic matters are concerned?
Will the Minister tell us also what consultations have taken place hitherto with the trade unions concerned? The Minister said, quite fairly, that the document in the Library is a consultation document. May we have it understood that all options are up for grabs, or is the Minister really saying, "We have decided precisely what we want to do, and we now want the trade unions to collaborate with us in bringing it about"?
The Statement refers to successful previous transfers out of the public sector and into the private sector and to the fact that the rights of trade unions and of trade unionists have been protected. The Minister must be aware that in the past 12 months there has been a trauma at the Royal Ordnance factories. Although at the end of the day there was more satisfaction than there was at the beginning, the Minister must know this was due to enormous pressure, agitation and determination on the part of the workforce at that particular time.
I should like the Minister to tell the House whether the trade unions concerned will be involved more meaningfully in protecting the rights of the workers in the dockyards at the beginning of this exercise than was the case with the ordnance factories. I hope that the Minister and his colleagues have learnt something from that experience.
Can the Minister say anything about the immediate redundancies envisaged in the Statement? It states:
"The package of efficiency measures they will be looking for may involve job reductions at Devonport of about 15 per cent. and at Rosyth of about 5 per cent".
Did the Minister read the item in the Guardian last week which suggested that there could be anything up to 2,000 or 3,000 immediate redundancies arising from the 15 per cent. and 5 per cent. reductions mentioned in the Statement?
The Minister must be aware that there is growing abroad the belief that the Government are concerned not with the best and most secure but with the

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cheapest solution that is on offer. We had evidence of that in respect of the RAF trainer aircraft, and we have seen it in many other ways. Can the Minister satisfy us that there is a break-even point beyond which even this Government are not prepared to go if an element of security is involved?
What consultations have taken place with the Ministry of Defence police federation? They must be concerned if there is a change, not only in the calibre but also in the nature of the management. As far as we are concerned, a Labour Government would not be in the business of privatising and selling off our defence industry, or of weakening our defence capability. Sadly, the Government's measures smack all too often of saving money at any cost. In our view, the cost is high and will prove to be a false economy.
3.58 p.m.
Lord Mayhew: My Lords, is the noble Lord the Minister aware that there would be a wide welcome for effective measures to secure economies in the Royal dockyards? We shall be looking very carefully at the Minister's proposals from that point of view and asking questions about overtime, demarcation between trades, security, and a number of other matters of that kind.
Would the Minister not also agree that the main duty of the Royal dockyards is to keep the Royal Navy in operational readiness? Throughout the whole Statement there is no sign of any awareness of this supreme duty of the Royal dockyards. There is no mention of the subsequent relationship between the dockyards and the navy. There is only this mention in the Statement:
"The dockyards as suppliers of services to the fleet must be separated clearly from their customer".
That is a commercial judgment in commercial language, but if we consider this matter as it ought to be considered, from the operational point of view, it could be powerfully argued that the dockyards must be closely integrated with the Royal Navy. Noble Lords would not expect me to argue this point now, but I shall argue it later.
In the meantime, I ask the Minister this question: why is there no awareness in the Statement of any factor in this problem other than the commercial factor? This is another sign, I am afraid, of the doctrinaire urge to commercialise, to privatise everything, that has marked this Government; and whereas in certain respects my friends and I would accept the need for looking at the Royal dockyards we are going to look very carefully at the proposals at present being put forward by the Government.
4.1 p.m.
Lord Trefgarne: My Lords, I shall reply to both noble Lords. I think the noble Lord, Lord Graham of Edmonton, and to a lesser extent the noble Lord, Lord Mayhew, labour under the misapprehension that it is necessary, for the national interest to be served, that these facilities should be in the public sector. I do not for a moment accept that proposition. The fact is that over 90 per cent. or more of Ministry of Defence requirements come from the private sector, and in a time of crisis such as we experienced in 1982 the
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private sector rises to the occasion just as well as any organisation in the public sector; so I would not accept any proposition which suggests that for the continued maintenance of these facilities they need to remain in the public sector. That is why we have brought forward this range of proposals.
The noble Lord, Lord Mayhew, asked particularly about the need to maintain the efficiency of the fleet at sea. Of course that is a crucial point but, again, it does not require an organisation in the public sector to achieve that. At present the dockyards occupy, I am told, about 10 per cent. of their time on day-to-day running matters rather than long-term refits. It is their primary purpose. Indeed, naval base facilities are generally separate from dockyard facilities, as the noble Lord, Lord Mayhew, will recall from his experience in these matters, and there are base activities which are primarily concerned with maintaining the fleet in current running condition going on at the dockyards separately from the refit arrangements, which are the essence of what we are talking about today.
The relationship between the Ministry of Defence and the operating company, if we decide to go along the commercial management route—and I emphasise that what we are asking for today are views on the various proposals that we bring forward—which the Government have said is the one that they favour, is that of course we would need to pay particular attention to the contracts between the Ministry of Defence and the operator of the dockyard to ensure that the right facilities are available at the right time: for example, to carry out the kind of work that the noble Lord, Lord Mayhew, had in mind.
I cannot over emphasise the fact that we are today embarking upon a process of consultation, which will of course include the trade unions very fully. My right honourable friend the Secretary of State has today written specifically to each and every one of the employees of the dockyards, and for your Lordships' information a copy of the letter is included in the consultative document.
Lord Ironside: My Lords, I will, if I may, ask my noble friend two questions which I believe come under the heading of the commercial management option. I think it is true to say that the bidders for operating the dockyards under the management option would be from the major engineering companies in this country which are also supplying the capital needs of the dockyards; and they have great experience of repair and maintenance and that kind of thing in dockyards.
Does my noble friend see that the successful contractor will also be able to supply the capital needs of the dockyard concerned if he is the owner of an operating company under the management option, if this is the way it is to go? Secondly, does my noble friend visualise that the successful operating company under the commercial management option will be able to seek work elsewhere: for example, to be able to undertake work on ships from the Commonwealth navies or even from other overseas navies?
Lord Trefgarne: My Lords, perhaps I may answer my noble friend's two points. The first was about the capital needs of the contractor if we go along the

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commercial management route. I am not quite sure what capital needs my noble friend has in mind, because it would not be proposed, if that were the course to be followed, that the contractor would have to purchase the dockyards. They would remain in Government ownership. On the second point that my noble friend makes—about the possibility of work coming from elsewhere—my answer is, yes: we most certainly do see the dockyards, under such an arrangement as this, being able to seek (and I hope secure) work from other navies to keep the yards going.
Lord Ross of Marnock: My Lords, I wonder whether the Minister can tell me if he considers three months' consultation, which is virtually what it is, enough. What are the Government consulting about? Is the Minister consulting with the unions, for instance, as to whether it is to be option A, B or C? Option A is full denationalisation; option B is the trading fund; and option C is private management, though some people call it the franchise option. Or are things going to follow on from there? The Government have obviously already made up their mind that it is option C that they are going to discuss, and they have given us a figure of, I think, 15 per cent. in one of the Royal dockyards and in Rosyth, 5 per cent.
This must surely have been based on some option which the Government already have in their mind. I am not finished yet; far from it. It is all very well to say that there has been a need for change over some years, but only recently we had the experience of the value of these dockyards with the Falklands campaign when praise was there in barrowloads for Rosyth and for the excellence and quality of their output, their turn-out of ships, and the speed with which they did it. It is poor change for them, poor recompense, to be told by a Government that all this has to go and that it has to be handed over to someone inexperienced, though surely experienced in management. We do not know who they are.
There are not many companies in Britain which can take over a dockyard and run it. I wonder what Samuel Pepys is writing tonight in his celestial diary about the present Government in respect of their handling of his dockyards and his navy. This is important for Scotland because the biggest industrial complex in Scotland now is Rosyth with 2,000 employed in the naval base and about 8,000 in the dockyard. I am very glad that there is to be legislation about this. It will go through with much more difficulty—I am glad that the noble Viscount the Leader of the House is here—than the abolition of local government. It will represent a departure from 300 years of tradition in respect of the Royal dockyards. It is wrong to think that we can carry this obsession with privatisation into gambling with the security of the nation.
Lord Trefgarne: My Lords, I assure your Lordships that there is no question of gambling with the security of the nation.
Lord Ross of Marnock: My Lords, the noble Lord the Minister does not know what he is going to do.
Lord Trefgarne: My Lords, there is no question of gambling with the security of the nation, as the noble
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Lord, Lord Ross of Marnock, suggests. We are bringing forward proposals to solve a problem which has been widely recognised for a very long time. As I said in the Statement, difficulties and problems with the dockyards have been evident for many years, including the time when a Government of which the noble Lord opposite was a distinguished member were in power.
We are now bringing forward proposals to deal with this problem. We are inviting views on those proposals from all concerned. We have not brought forward a single proposal; we have brought forward a range of options and we look forward to hearing the views on them. The noble Lord, Lord Ross of Marnock, said there were not many companies in the United Kingdom which would be capable of running a dockyard. Indeed, that may be true. There are not many, but there are some. There are enough, and we look forward to hearing their proposals if that is the route we choose to follow.
Lord Graham of Edmonton: My Lords, would the noble Lord the Minister care to say a little more about his confidence that the private sector has been able to supply the needs of the nation in defence procurement? The Minister said more than 90 per cent.—I believe it is 95 per cent.—of our defence needs are supplied by the private route. Does the Minister envisage that as each little fraction of what has been wholly in our hands appears—6 per cent. down to 5 per cent., to 4 per cent., to 3 per cent.—then one day 100 per cent. of our defence procurement needs will be in the private sector? Is that what he is working towards?
Lord Trefgarne: My Lords, we have no particular target as to what percentage should be in the public or private sectors. However, I have no difficulty with the proposition that 100 per cent. should be in the private sector.
Lord Graham of Edmonton: Oh‡ I thank the noble Lord.

Wealth Creation and Employment Opportunities
4.11 p.m.
Debate resumed.
Baroness Seear: My Lords, in examining the two documents, the consultative paper on wages councils and Burdens on Business, in preparation for today's debate, somewhat to my surprise I found a number of points on which I could agree. In the first place, it is easy, if somewhat absurd, to agree that unnecessary regulations, once they have been established as being unnecessary, should clearly be removed. There is no problem about that. I can also agree, with a certain amount of pleasure, that if it has been established that the Government and the administration in their wisdom have produced a positive cat's cradle of regulations, paper, red tape and forms to be filled in, then it is entirely salutary that they should set about the job of tidying up the muddles that they have created. I have no objection to that whatever. We give it the strongest possible support.

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I also very much agree that much better information could be made available to employers, small and large, about what it is they are supposed to do, what the real meaning is of regulations, and the difficulties they are up against in implementing the requirements made upon them. I give just one example. One is constantly told, and I am sure all your Lordships will have had the same experience, that it is not possible to get rid of unsatisfactory labour. You are told that not only is it the cost of employing more people—and I have been told this again and again—but that if you take anyone on you can never get rid of them. One can point to the figures which are regularly published (but not where most businesses see them) which show that more employees lose their cases in industrial tribunals than win them. This can be said again and again; but apparently it has not gone home. It is up to the Government, the administration, to see that these very damaging and totally false impressions about how legislation works out and how the administration should be handled are corrected. It should not be beyond the wit of the departments to see that correct information about how these things operate should get to the people who need to use them.
I am also very much in agreement that we should take certain steps. I believe your Lordships are aware that I speak as an enthusiastic supporter of the European Community and that I have been a most interested member of the Scrutiny Committee and the sub-committee to the Scrutiny Committee; but I am very aware, partly as a result of that experience, that sometimes Brussels, in forming its directives, loses its head completely. It has even forgotten, it seems to me, and should be reminded of again and again, the important distinction which itself made between a regulation and a directive. A regulation lays down in detail what should be done and it should be kept for the rarest occasions. A directive lays down the objective to be achieved and leaves the member state to devise ways in which that objective should be attained. There has been far too much confusion through directives reading like regulations, and therefore imposing almost impossible burdens on member states because the directive, as it comes out, simply does not fit the existing procedures and legislations of this country; and does it not need to fit if the objectives are to be attained?
This is where the Government—and I agree with the recommendations made in these papers—could bring pressure to bear in Brussels to see that directives are formulated in a different way, recognising the freedom of individual member states to reach the objectives laid down in the directives in their own way and as best suits their country. There is much work to be done there: first, to put right what has gone wrong in past directives; and, secondly, to see that future directives do not take the same shape. In all those ways I very much accept what is said in these two papers.
I shall even say that there are certain points in relation to wages councils where I agree there is room for action to be taken. Wages councils' legislation has grown up piecemeal ever since the old Trade Boards Act 1909, and it is probably time that we took another look at them. I have always believed that in some areas the starting rate for young people has been too high and has tended to price them out of jobs. That needs
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to be looked at. I also agree that in some cases wages councils deal in a great deal too much detail with what is required in particular organisations. To attain the objectives for which wages councils exist it is not necessary for them to be able to lay down in such minute detail what different organisations are required to do.
Many years ago I had some responsibility inside an organisation for applying wages councils regulations. I felt that there was a great deal of room for rationalisation, with agreement with the wages councils, where there were wages councils' regulations applying inside an organisation—sometimes two or three different sets of regulations if the organisation had within it a catering establishment and a laundry as well as the main productive processes. There was a lot of scope to save considerable time and money and to obtain agreement to align the requirements for people employed under the wages council regulations with those that prevailed in the main industry which the organisation was pursuing, provided the overall conditions of the people who were subject to the wages council regulations were not, as a result of that alignment, less favourable than they would have been if they had been subject solely to the wages council regulations. Ridiculous but very expensive and irritating differences between one set of regulations and another cause a great deal of unnecessary burden on management, particularly middle and lower level management, which should not be unduly and unnecessarily hampered in this way.
Therefore, I am not against having a good look at all these things. Indeed, I go along with the suggestion of the noble Lord, Lord Boardman, or some variation of it, that we probably have reached the time when a Select Committee, or a similar body, could consider the whole of the protective legislation and the wages councils regulations to see whether there is anything which could usefully be done to tidy them up in the areas to which I have referred. So, your Lordships will see that I am straining myself to agree with the proposals which have been put forward. However, I have reached the point where I can strain no further. In reading these papers and listening to the noble Lord, Lord Boardman, it is the assumptions that lie behind the papers and behind his speech which I find it essential to challenge.
In the first place, I have never understood why what goes on in a small business should be regarded as of a quite different order of importance from what goes on in a larger business. Of course we are all in favour of small businesses, my party not least. I must say that I wish that Mr. Schumacher, who in some ways was a great man, had never coined the phrase "small is beautiful". It does not stand up to a week's experience in the lives of any of us. Small can be perfectly hideous. There is nothing more hideous than a small family business which has gone bad on itself. I would rather work in the most disagreeable, mechanised, large organisation than work in that kind of small business. It is nonsense to say that small is beautiful. It can be beautiful, but it can be ghastly. Large can be ghastly and large can be beautiful. So we might as well forget that one. There is no great merit in being small. There is certainly no merit which justifies people treating those whom they employ in a quite different way from

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the way in which they would be treated if they were in a larger organisation.
There are some regulations which are plainly ridiculous if only three or four people are employed, but there are others from the point of view of the employee—and, after all, that is what employee protection is about—which are important. It seems to me odd to argue that it makes a difference if you have been fairly or unfairly dismissed whether your employer happens to employ 20 rather than 200 people. You are still unfairly dismissed. The number of one's fellow employees makes not the slightest difference.
It makes not the slightest difference if the safety conditions in a small concern are such that you lose a leg whether the employer employs four people or 400. We cannot make a distinction, surely, as to what ought to be required of an employer solely in terms of the number of people he employs. It is not logical and it does not make sense in terms of the objectives of employee protection. This is one of the things which I would hope the Select Committee will look at. There are certain regulations which could well not apply to small businesses, because of particular circumstances which need to be established and which would justify a logical exemption, and for no other reason.
Then there is a strange assumption that seems to run through the whole discussion that it is always inefficient to put in employee protection. Incidentally, one would think that none of our successful competitors had any employee protection at all. Nearly every other industrial country carries a great deal of protection. Some of it is more expensive and more detailed than ours; some of it is less. It has grown up in different ways and in response to different circumstances. But they all have it. In fact quite a lot of employee protection contributes to the efficiency, and therefore presumably to the profitability and job creation capacity, of the employer. It does not reduce it. Would any of your Lordships argue that a thoroughly slovenly, dirty and ill-cared for factory is likely to be more efficient than one that is properly maintained? Those of us who have worked inside industry know that bad housekeeping is the greatest single cause of accidents, lost time and therefore lost production.
I do not say that employee protection marches step by step with efficiency; but in a great many respects good protection is also good business. I have always argued, for example, that equal opportunity legislation, if properly applied, enhances and does not reduce efficiency but increases an organisation's capacity for profitability. It does not reduce it. Let us not assume in this discussion that we are making choices between employee protection and efficiency. We are not. The two things do not always coincide but not infrequently they do.
Running through the whole discussion is somehow the idea—and this comes out very much when we talk about levels of pay—expressed in the rhetorical question which has been asked so often and which I think the noble Lord, Lord Boardman, used today: "Would you rather have low pay or no pay?". And people do not wait for an answer. If one pushes that
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question to its logical conclusion, how far are we going? We shall be poking boys up chimneys again before we know where we are. Of course we would not do it, but we have to make a deliberate decision as to where we shall call a halt.
There is a feeling, and it has been expressed by the extreme free market people, that we should let pay find its natural level, as they see it. A much lamented Member of this House, Lord Vaizey, when he was a member of the Select Committee on Unemployment, argued along just those lines. It is argued that if we let market forces govern wages and let individual employers fix whatever rate of pay they can fix as they take people on, the market will clear the labour force and unemployment will disappear. That was the argument put forward by a man as intelligent as Lord Vaizey.
Of course columnists always get out of problems of that kind by saying, "Other things being equal". What are those other things? They say that it can be done if there are no trade unions, if we do not have social security payments, if we have complete labour mobility throughout the country and if we do not mind to what low level of pay the lowest paid are to sink. That is where that argument really leads.
Behind it lies a much more profound consideration. As one listens to the discussion one would really think that society existed in order to produce a successful economy. But surely we want a successful economy in order to produce the good society that we want. It is that way round. Therefore we have to make choices. We have to say that at a certain point we are not prepared to pay the price that is required in economic terms and in terms of the society that we shall get if we let those forces work.
We were brought up on Adam Smith, too. The only difference is that we read the text and not just the blurbs. I have here page 427 of the sacred text in which Adam Smith himself says that one pays a price for defence. We might perhaps refer that to the question that we have just been discussing. We are prepared to pay a price for national security: less wealth, more security. We must be prepared to pay a price for a decent, humane society and decent and humane working conditions. That is why we cannot go along with those suggestions.
4.26 p.m.
Lord Young of Graffham: My Lords, I am grateful to my noble friend Lord Boardman for introducing the debate this afternoon. It is indeed important and timely. It will also give the House the opportunity to hear for the first time my noble friend Lord Vinson, with whom I fondly remember working not so many years ago. I look forward to hearing him in your Lordships' House on many other occasions in the future.
I greatly appreciated the contribution of my noble friend Lord Boardman in introducing the debate, not least for his report of conversations with his horse. He took us for a canter round the course which I believe amused your Lordships greatly. However, I have to say this. Amusement at individual examples begins to pale when we look at the effect that, collectively, they have on the economy, jobs and the wealth which we so

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desperately need if we are to achieve a fairer and more equitable society. I say to my noble friend that I am indeed interested in his suggestion for a standing Select Committee. It is an idea which I see is supported by the noble Baroness, Lady Seear. We shall take it away and examine it.
I am afraid that my heart sank when I listened to the contribution from the noble Lord. Lord Bruce. As keen as I am on party matters—and no one is keener—I had hoped that this afternoon would be an occasion on which we could forget party just a little and look at problems which are common to Governments of whichever party. I was very much struck by one remark that the noble Lord made. He said that the removal of burdens was dangerous. My Lords, freedom is dangerous. But I believe that anybody who talks of regulation and has the attitude that it is dangerous to let people be free misses the point of the issue which we are discussing this afternoon.
I was very glad to listen to the noble Baroness, Lady Seear. I believe that once again she showed the great common sense which I always admire in her contributions to our debates. She is right to warn us of the dangers of regulations from Brussels. Only a few days before Easter, at the last meeting there, our Prime Minister drew attention to the danger of excessive regulations appearing in Europe. One could perhaps almost correlate unemployment with the incidence of regulations. It is a matter which we are taking on board. I hope very much that Brussels will now begin to look at itself and at its contribution to the welter of regulations with which we have to deal.
But I would perhaps take issue with the noble Baroness about her "small is beautiful" arguments. I confess to your Lordships that every morning when I stand on the scales I say to myself, "small is beautiful", but not necessarily with success. I honestly believe that she is perhaps thinking of the difficult period that we went through in the 1960s when we confused everything with economies of scale. Small is beautiful because "small", I believe, means better control. However, it is not true to say that regulations which are shrugged off by large companies are not a burden on smaller companies. Large companies can have the luxury of large personnel departments, personnel managers, personnel directors and people to deal with the plethora of regulations, while in small businesses individuals tend to be their own finance director, personnel director and indeed get put off by the experience, which is the subject of our debate this afternoon.
What I should like to say is a word or two about the Motion itself, for it speaks of the inhibitions to the creation of wealth and the opportunities for employment. Surely there is not one of us in this House this afternoon who is against the creation of wealth or making opportunities for employment. Whatever we do, we must create a climate in which businesses, particularly small businesses, can thrive, because the small business is the seed corn of our future and out of it will grow the large business of the 1990s, the year 2000 and thereafter.
The vital element in changing this climate is the freedom to which the noble Lord opposite objects so
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much—freedom for a business to innovate; freedom for a business to expand; and freedom for a business to react quickly to fresh challenges without the dead hand of bureaucracy and red tape stifling it. All too often Governments have not realised this. Instead of giving enterprise room to flourish, they have smothered it. It is fine to be paternalistic but all of us who are fathers know that we have to give room for our children to grow. It is that opportunity to give room and that inducement to grow which we should look at this afternoon.
Year on year, the amount of legislation getting on to the statute book goes up and up. Today, it is double what it was 30 years ago and it is not a matter which is peculiar to this side of the House. I suspect that Governments of both parties have been equally to blame. The result of all this plethora of regulation, of statute, has been that the requirements of Government themselves are now a major drain on resources of industry and particularly, as I have said, on small firms. Regulations impose burdens in terms of management time, time required to understand them, to meet them and to deal with the agencies that simply go around enforcing them.
Surely we should ask ourselves: how many new firms have simply not been started, not been born, because of the inhibitions of excessive regulations? If there is one thing we need it is a baby boom of new firms if we are to deal with the problems of unemployment. The Americans across the Atlantic know full well of this problem and they are now taking energetic steps to deal with it, and I assure your Lordships that we shall not be far behind.
I do not know how many in your Lordships' House read a recent article in the Financial Times that estimated that before you could start up a business you had to wade through some 270,000 words of Government literature explaining all the requirements that you would have to meet. It would take some 24 hours of solid reading.
A few weeks ago I received a letter from a Member of the European Parliament, who wrote to me that he was about to employ his secretary full-time and asked the Inland Revenue for their "Starter Pack", which is an improved and simplified system for use when one is taking on a first employee. It contains 16 different printed items, each one requiring careful attention lest one falls foul of the law. I wonder from time to time how many people faced with those 16 separate pieces of paper, those 16 forms, those booklets to read, find other, different ways of giving people employment.
One major public company alone estimated that health and safety legislation alone added 5 per cent. to their capital costs. That may be 5 per cent. additional cost well spent, but I believe that from time to time we should examine those requirements to see whether that 5 per cent. and these extra regulations are worth while. What I am not saying this afternoon is that we should do away with all regulation. That would clearly be absurd. Some regulation must always be necessary to protect employees, consumers and the general public. Indeed, Government are well aware of this and will not seek to remove such essential protection, so I do not think we should be frightened by scare-mongering stories about removing all kinds of regulatory protection.

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If I may say this to the noble Baroness, Lady Seear, of course there is a price for a decent human society and there is never a choice, to my mind, for this Government between low pay or no pay. What we must examine not only now, but, I suspect, again and again as the years go by, is whether we have the balance between protection and burdens right. We must strike the right balance between licence and liberty. Balance there must be, but I suspect that that balance is wrong today. Much regulation is either unnecessary or too complicated and it imposes costs which outweigh any benefits that are gained.
It is ironic—is it not?—that some measures designed to protect workers have become so complex and onerous that they actually deter people from taking on employees at all. Is it not also ironic that the end result of 70 years of rent regulation has been to destroy, not to help, the tenant? Today, when perhaps we need mobility of labour more than anything else, do we not miss the amount of rented accommodation which has disappeared around the country? I sometimes wonder whether the problems of the North-East and North-West would have been quite so bad today if we had had opportunities for people to move down to where the jobs may well be.
The Government have already made much progress in freeing enterprise from the shackles of regulation. Therefore, I would ask the noble Lord opposite to look at what we have already done and at the benefits that have arisen out of it. I remember the outcry in July 1980, when the only operator to Hong Kong was British Airways and then first Cathay Pacific and later British Caledonian began services. Did the ruin occur? Did the airlines close down? No, my Lords, all three are trading profitably today. The traffic to Hong Kong has far more than doubled; and the standard of service, as all those who have been on the airlines will testify, has improved.
In 1980, we also passed an Act which abolished road service licensing for long-distance coach services. What has been the result of that? It has been dramatic. Between 1980 and 1983, fares dropped on average by 40 per cent. in real terms, and applications for 700 new services were registered. There are some who travel on these coaches in the morning from Kent and from further away, who are offered the newspaper of their choice and a cup of coffee or tea. I do not recall these services being offered at that time, or indeed today, by British Rail. The deregulation of long-distance coaches represents a better deal all round for the travelling public.
I have heard much recently about the perils of deregulating the buses, even about the morality of taking such a step. I must tell your Lordships that trials have taken place. One took place in Hereford and Worcester. What was the result? There were 70 per cent. more bus services provided in the Hereford city area; there was a 38 per cent. reduction in ratepayers' subsidy; there was an equivalent reduction in subsidy for the schools services; Midland Red—the bus company—benefited from a 25 per cent. to 30 per cent. increase in productivity; and on average there was a 30 per cent. reduction in fares. I can see very clearly the morality of undertaking steps of that sort.
I now come to telephones. I remember clearly the time in 1980, when I was working for Sir Keith Joseph
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in the Department of Industry and we liberalised, deregulated, the telephones. In those days, we had a very clear choice of telephones. We had a Trimphone or nothing. I wonder how many of your Lordships remember the Trimphone? Look today at the enormous variety of telephones that are on offer—the PABXs and all the other services which have come through, and the revolution which has taken place by deregulating the services of British Telecom. British Telecom itself appears to me to be in great heart and expanding briskly. Look at what happened when the Government licensed and deregulated the provisions for car telephones and the enormous increases in services which are coming through there.
Finally—in case your Lordships think that I am looking at all of this through rose tinted spectacles—let me talk about spectacles themselves. It seems to me not so long ago that, on the occasions when I was in Hong Kong, I would order glasses and get them the same day. I would go around and see signs up in New York saying, "New reading glasses. Service in one hour or two hours". Then I would come back here and it would take me two weeks to get them. The steps that the Government have taken to encourage competition and the supply of spectacles by deregulation have brought prices down and the consumer is already getting a better deal. I pass a shop not far from where I live where already signs have gone up saying "24 hour service". Is there anyone in your Lordships' House who seriously asserts that the result of deregulation in this case has been harmful?
The noble Lord, Lord Bruce of Donington, suggested that it was an indictment of the Government that we have done nothing to remove existing regulations. In fact, as I have illustrated, we have already done a great deal. But we are not content. There is much more to be done. That is precisely what I hope to do. I say to my noble friend Lord Boardman that up to now we have at least been deregulating. We are privatising. We have increased competition. I suspect that the record of noble Lords opposite when they were in office was rather different. They were concerned with regulation, with nationalisation and with the very avoidance and absence of competition. However, to the extent that there are further things to be done, I hope that I can now assume from what the noble Lord says that the Opposition will not stand in the way of measures that we intend to introduce to remove regulation.
I come back now to the report called Burdens on Business. I hope that noble Lords have read it and that they will have seen that nowhere does it refer to the number of unemployed. That was an extrapolation by a journalist of the Financial Times about the number of jobs—between 700,000 and 1³3 million—that may have been lost through regulation. I would not stand in your Lordships' House and quantify the number of jobs that have been lost. I do not know. I doubt if anyone knows. Of one thing, however, I am sure—that no jobs have been created by regulation. It behoves all of us in times of employment difficulties to see what we can do to revitalise the economy and to develop businesses and allow them to grow and flourish and so let employment grow.
The report reached three main conclusions. The first was that Government rules impose a real burden on

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small firms. Regulations often look even more daunting to potential entrepreneurs than they actually are. They can inhibit business start-ups. Secondly, it is the burden as a whole that matters. Looked at in isolation, requirements may seem reasonable and modest. Taken one upon the other and taken together, they amount to a daunting and serious obstacle to enterprise. Thirdly, many firms interviewed said that regulations tended to stop them employing people. So action to cut the burden can play an important part in the Government's strategy for jobs.
I was rather depressed about one aspect of the report. The noble Lord opposite has referred to it. I can do no more than refer to it myself. It is the simple statement that many people in small businesses did not consider, until prompted, that regulations inhibited them or prevented the growth of their businesses and employment. What an indictment it is of our society that we so expect this terrible burden of regulation, this terrible burden of statutory requirements, that we no longer know what it is like to be free. One has to look and see the virility of new businesses and new firms in the United States of America and the absence of many of the regulations that I suspect inhibit the growth of business here to realise what it is like to be free. It is almost as if a man who has lived all his life in this country does not miss the Mediterranean sun until he has experienced it. It is my ambition to give people starting new businesses in this country an opportunity of spending a period in the sun.
Over the next few months I shall be leading the follow-up to the report and looking more widely at ways of reducing the burden of Government requirements on business. This will cover businesses large and businesses small. It will cover individuals. I shall aim, with colleagues, to make real progress in reducing the cost to industry of compliance with Government rules. In order to target our efforts most effectively it is vital that we consult as widely as possible. I should welcome any suggestions or comments that noble Lords may wish to make either this afternoon—I shall listen attentively to our discussions—or in writing. Many Members of your Lordships' House have direct experience of working in industry and are well placed to make a valuable contribution to Government thinking. I believe that there is a great opportunity today to achieve decisive progress in our task of creating a climate in which enterprise can flourish. We intend to make the most of this opportunity. I welcome today's debate. Let us say, on what is perhaps the first warm day of the spring and summer, that this is the opportunity for a real spring clean.
4.45 p.m.
Lord Vinson: My Lords, I am sure that other noble Lords will recall with mixed feelings of anxiety and pride the occasion on which they made their maiden speeches and that they will make due allowances. I should like to thank many noble Lords for their warm welcome and also to say how well served we are by the staff of the House who go out of their way to be helpful.
I am grateful to my noble friend Lord Boardman for inviting me to cut my teeth in this debate. The creation of wealth since the discovery of the wheel has
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depended upon invention. So I have to declare an interest. On my passport I have, for many years, been proud to declare myself an inventor. Recently, I heard a very fine sermon given by the most reverend Primate the Archbishop of Canterbury. He praised the work of that great man Albert Schweitzer and rightly held him up as an example for young people to follow. Sadly, what he did not find time to say was that to make possible Schweitzer's good deeds required the provision of food, medical services and money by well wishers from the more prosperous western economies. Schweitzer's work at Lambarene provides practical demonstration that nothing can be given away that has not been produced. It illustrates that the creation of wealth has a fundamental ethical purpose and justification. It shows indeed that charity begins at work.
It is a truism that a necessary condition for the provision of food, shelter and warmth, the education of the young, the care of the old and handicapped and a better quality of life for the individual and the community depends on industrial success. That is why, my Lords, I am sure we agree in all parts of the House that the subject of wealth creation is central to our best hopes for the future. Alas, though, for generations we have taken prosperity for granted. Even at the turn of the century, that perceptive man Rudyard Kipling wrote:
"Our England is a garden but such gardens are not made by saying `Oh how beautiful' and sitting in the shade".
He saw the writing on the wall—then. But national attitudes are influenced by personal experience. It is to be expected that for many people wages and salaries appear to be paid from some crock of gold controlled by Government.
In our sophisticated society, many jobs are insulated from the harsh winds of international competition. They are at one remove from the fundamental forces of supply and demand and the realities that inescapably confront a trading nation. Too many workers, both by hand and brain, have become detached from the basic process that provides their daily bread. It is hardly surprising that this detachment from the wealth creation process has led to a wide misunderstanding of it. How often one sees that the very natural quest for job security has led to the introduction of practices that in the long run result in the opposite effect—that of job destruction.
The road to the dole queue is indeed paved with misdirected intentions. Yet the prospect of national decline focuses the mind wonderfully. I believe that today there is at least the beginning of a new realism, a new awareness, that national prosperity and individual job security alike depend on producing and supplying things that people want to buy at a price that they can afford. History shows that attempts to frustrate this free process invariably lead to economic decline. And today's debate is of course examining that. I expect that others will examine the rigidities that prevent the economy naturally adapting to changing consumer demand.
I should like to concentrate on what I regard as the heart of the matter—and that is society's attitude to the wealth-creating process because unless we get the cultural climate right, we shall continue to introduce legislation or fail to make changes in existing legislation that inhibit that very process.

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Leaving aside the cultural attitudes to wealth-creation induced by our educational system—which have been well debated in this Chamber—there is one prevailing attitude in particular that gives me much cause for concern; namely, the belief that it is to the service sector that we must look in the future for our economic salvation. While it is true that the service sector will undoubtedly play a very significant part in job creation, it will not by itself contribute much to wealth creation; the essential point being that the cake has to be baked before the service industry can cut it up.
My worry is that failure to understand this simple truth may mean that both personal and Government priorities are misdirected from our primary need—that of a healthy manufacturing sector. The division between manufacturing and services is often very imprecise. The economic difference between growing peas, canning peas and selling peas is blurred in practice, and all three functions are obviously interdependent. But they start with the production of peas—they all feed off the production process. The professionalism of our service sector is one of the envies of the world—but its activities currently pay for only some 15 per cent of our imports and it would be quite unrealistic to suppose that it could sensibly supplant our manufacturing base.
It is all too easy to confuse the difference between making money and making wealth. For example, we cannot eat insurance policies, and traded options will not keep us warm. Insurance policies need properties to insure, and traded copper futures need somebody to produce copper. The provision of goods remains fundamental to wealth creation. Perhaps I may illustrate this by drawing a parallel with the agricultural industry. In 1800 one in three of the labour force worked on the land, yet we were barely self-sufficient in food. Today, in a nation five times the size, we are kept virtually self-sufficient in food by 3 per cent. of the labour force. But the fact that so few of our population achieves this does not diminish the importance of agriculture or the importance of eating. It was the release of labour from the land that enabled the Industrial Revolution to happen which, in turn, raised the living standards of the whole of the Western world.
This pattern is repeating itself again. The numbers employed in manufacturing industry will continue to decline as automation increasingly comes into use. But this in itself does not diminish the importance of having a profitable manufacturing base—a base that needs to depend both on modern sunrise industries and the more pedestrian midday and evening ones too. As with agriculture, it will be the wealth created by manufacturing that will enable employment to grow in the expanding service sectors. Holidays, hotels, hobbies and travel all depend on the leisure that is made possible by the wealth created by production—the well-spring of economic success. It is then all the more essential that we recognise this; and that industry attracts not only some of our best brains but also brains capable of good leadership—leadership built on participation because a sense of common purpose at work is a pre-condition for national success.
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The year 1986 has been designated Industry Year. We must hope that it will encourage a better understanding of industry's essential economic role and the way in which it serves the community. Not least, it should aim to foster the pride of all those who work in industry in their achievements and their contribution to the welfare of this nation. The heart of the wealth-creating process is to make the best of our most important national assets—the abilities, inventiveness and enterprise of the British people. I have no doubt that this debate will contribute to that essential purpose.
Finally, a number of noble Lords have asked me why I chose for my title to be "Baron Vinson, of Roddam Dene". It happens to be where I live, and it is also an area of special scientific interest because it contains a unique geological formation. This formation has many similar properties to a bad speech. You could say, my Lords, that it has gone on a long time; that it is dull, thick and not very exciting. It will be a constant reminder for me to keep my speeches short‡
4.55 p.m.
Lord Henderson of Brompton: My Lords, it is a great honour and pleasure for me to follow the noble Lord, Lord Vinson, and to congratulate him on a most notable maiden speech. He has clearly demonstrated great powers of oratory as well as expertise in the creation of wealth, and we all appreciate the expertise as well as the oratory. I believe that the noble Lord is a Member of the Victorian Order; I believe that he has been in the services, both as a soldier and as a sailor. We have heard about his scientific interests. We also know that he is closely interested in the fine arts and in the crafts. So perhaps I may adapt those great words from "Hamlet" and say that the noble Lord has:
"the courtier's, soldier's, [sailor's] scholar's eye, tongue, [heart) sword".
I am sure that we all look forward to further contributions by the noble Lord to our debates in future.
I particularly welcome the initiative of the noble Lord, Lord Boardman, in bringing this subject before the House, because it is of the highest importance. But it is also a subject of the greatest delicacy. In my view there is absolutely no right or wrong approach to the creation of wealth and the opportunities for employment. In view of the intractable nature of the unemployment problem which so oppresses this nation (and not only our own), and the primal importance attached by this Administration to the creation of wealth as the necessary prerequisite to the creation of jobs and all other good things in life, it is fine for this House to have the opportunity to examine whether legislative and administrative actions can be relaxed without (and this is what I claim to be the cardinal principle) damage to the fabric of society; and, if so, to what extent.
It is that condition which makes this a subject of such delicacy. But in its way it is akin to the detailed debates that this House has had on the Insolvency Bill. A balance has to be struck between the freedom given to the wealth-creator and to the general public interest as a whole, which of course includes the law, both criminal and civil, and such matters as pollution,

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public health and safety at work, and so on, as referred to by the noble Baroness, Lady Seear; and to the individual members of society, whether or not they are employees of the wealth-creators. The balance has to be struck and, as the noble Baroness, Lady Seear, said, we may well get more wealth if the balance is properly struck than if we take matters to their logical conclusions, as some people tend to do when they talk on this emotive subject.
I wish to confine myself solely to one Act which I regard as a paradigm of the good intention which, in the eventuality, has not been fulfilled; that is the Disabled Persons (Employment) Act 1944 as amended by the 1958 Act. I asked one or two Questions on this subject in the last Session of this Parliament, and perhaps I might very briefly say what this legislation does and why I think it might be dispensed with.
The 1944 Act, as amended by the 1958 Act, establishes a voluntary register of disabled people and places certain duties and obligations on employers of 20 or more workers, and those workers must be registered under the Acts. Under the quota schemes employers with 20 or more workers have a duty to employ a quota of 3 per cent. of the employer's total workforce. It is only a duty; there is no power to enforce it. It is not an offence to be below quota, but if the employer is below quota he has a duty to engage a suitable registered disabled person if any such person is available when a vacancy arises. An employer below quota must not engage (though there is nothing to enforce this) anyone other than a registered disabled person without first obtaining a permit to do so from a job centre. There are also restrictions on the employers discharging a registered disabled person.
A permit may be issued by a job centre to enable employers to fill an immediate current vacancy with a non-disabled person if there are no suitable registered disabled persons available, or—and here is a blanket exemption; you can drive a coach and horses through the Act by using this blanket exemption—he may be given a bulk permit to authorise in advance the engagement of a specified number of workers who are not disabled.
Therefore, it will be readily seen that the 1944 Act, so very well intentioned and indeed a model of its sort—it is enlightened, and was very much in advance of its time—has, alas, proved to be ineffective, partly because it has no teeth and it cannot be enforced. To use the words of the noble Viscount, Lord Long, who was the Government spokesman last Session when I asked these questions (and I quote from Hansard):
"The problem, at the moment, is that the legislation does not hold up at all".
And again:
"At the moment, it is very difficult to carry out this legislation".
That seems to me a clear indication that the legislation should be repealed. Nonetheless, he went on to say that Her Majesty's Government had,
"decided to retain the existing legislation on the employment of disabled people for the time being".
Finally he said:
"consideration is being given by a working group to suggestions for making the existing quota legislation more effective. The group will Submit its report to the commission"—
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that is the Manpower Services Commission—
"later this year".—[Official Report, 23/7/83; co1.9.]
That was last year, 1984.
Since then, the quite admirable Code of Good Practice on the Employment of Disabled People has been published by the Manpower Services Commission, and I wish to pay the highest tribute to the Manpower Services Commission (as I did last Session) and to repeat that tribute again especially in the context of this code, which places the emphasis firmly on encouragement rather than penal enforcement of statutory provisions. That, to me, is the psychologically correct way to approach the whole question of the employment of disabled people. Nonetheless, the statutory provisions remain, and are, I regret, incorporated in the code, though admittedly they are not given so much prominence—rightly, in my view—as the other provisions in the code.
The question is whether it is right for the 1944 Act to remain on the statute book, especially when it was conclusively proved in 1981 by the Manpower Services Commission itself that the Act was inoperable and unenforceable if only for the reason—the purely statistical reason—that there was then, and I presume still is, less than 3 per cent. of the work-force registered as disabled. Therefore, it quite literally statistically cannot be enforced. If ever there was a case for the repeal of a statute I should have thought that this was it. I would ask the Minister whether he would be good enough to say: how can its further existence be justified? I should have thought that this Act was a candidate for Lord Boardman's Miscellaneous Provisions Bill for repeal.
I must emphasise here that I am speaking entirely for myself. I know that many disablement organisations would be dismayed if the quota legislation were to be repealed, and it may well be that dismay which has led the Government to hold their hand. But I still think that it is legitimate to ask these questions of Her Majesty's Government. First, how much does the quota scheme cost the public sector and the private sector respectively in the keeping of these registers? Is the keeping of these registers cost-effective? Why, if the legislation is to be retained, are not the provisions extended to include all disabled people and not just registered disabled people?
Many people do not register when they are disabled for a number of highly respectable reasons which I do not need to go into. It seems to me that, well intentioned though this Act was in 1944, it is out of all contemporary feeling about the disabled when it draws this distinction between registered and un-registered disabled people. It is out of date as well as being inoperable.
Therefore, I should like the Act to be either phased out or preferably repealed, and instead to rely wholly on the admirable, comprehensive and I would say morally compulsive code of good practice. In doing so those who are unproductively engaged in keeping up and monitoring the registered code could be more profitably engaged.
There is a case for repeal of the 1944 Act. There is even possibly a case (though I am not sure about this) for giving the code of good practice statutory status. Then I believe that the wealth creators would be less

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inhibited than they now are, unproductive labour could be released, and greater opportunity for employment of disabled people generated whether they are registered or not. There would then open up a much more positive, liberal and less oppressive cultural—I use this word because the noble Lord, Lord Vinson, used it—climate of opinion about employment of people who are disabled, and this could be actively promoted by the Government and actively followed by industry in voluntary cooperation. I very much commend serious consideration of repeal of this legislation to Her Majesty's Government.
The Earl of Selkirk: My Lords, may I ask the noble Lord one question? Would the noble Lord agree that a good many firms in fact observe the 3 per cent. rule?
Lord Henderson of Brompton;Yes, my Lords, indeed I think they do, and many have a quota much in excess of 3 per cent. I have no wish whatsoever to criticise industry in many ways, but it is statistically impossible because the number of people who are registered as disabled are fewer that 3 per cent. of the workforce. It is statistically impossible for this Act to be implemented.
5.8 p.m.
Lord Ellenborough: My Lords, it is my most pleasant task and honour to be the first from these Benches to welcome and congratulate my noble friend Lord Vinson. If I may say so, he made an outstanding and most stimulating speech, speaking from great experience as, I believe, the chairman of the Development Commission, and therefore especially well qualified to speak in this debate. I know he said that he was an inventor. I do not know what new innovations he may bring to your Lordships' House, but at any rate I know that noble Lords from all sides of the House hope that he will frequently be making contributions to our proceedings.
I too am indebted to my noble friend Lord Boardman for giving us the opportunity to debate this important subject today. My noble friend Lord Young of Graffham and the Chancellor and his colleagues are certainly to be congratulated for the amount of hard work, thought, and imagination that they have put into these recent White Papers and documents, and the various measures announced in the Budget since.
Although we must never lose sight of the fact that inflation is the root cause of unemployment, nevertheless, as the polls indicate, the public at large is today concerned about unemployment above all else and that is perfectly natural. Even now the Government have to ram home their overriding concern about unemployment because, unfair though it may be and unjust though it certainly is, there is much grossly misleading propaganda that the Government do not care deeply enough and are halfhearted about taking measures which they have taken, are or will be taking. That is what this debate today is all about. It is refreshing to have a debate on employment. We never hear much about employment, which is still going up, with half a million new jobs in 18 months to September 1984. All we here about is unemployment.
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Part of our trouble is due to attitudes, and perhaps I may say a word about that. I was particularly glad when my noble friend Lord Young, in his speech on 3rd April, referred to the somewhat defeatist articles written by reputable journalists such as Brian Walden in the Standard and Peregrine Worsthorne in the Sunday Telegraph which have appeared recently in certain newspapers. The gist of their remarks was that all British people really want to do is to sit on their backsides, not too much effort is required to be reasonably comfortable and it will all turn out all right in the end. Although they may perhaps contain just a grain of truth, I believe that such articles have got it completely wrong, and they do immense harm. It is important because we have to realise that as a nation either we go up or we go down. By sitting on our backsides in this highly competitive and very unfriendly world we can only go one way and that is down with a nasty bump.
Since the war we have suffered as a nation as one after another of our once great old industries has been largely destroyed because our policies and attitudes have failed to ensure that they remained competitive. No matter how much we spend and what laws we pass, unless we have competitive industries there will be fewer and fewer jobs in the future. The recent White Paper was quite right in emphasising that jobs will come from customers and nowhere else. These are words which should be shouted from the rooftops, written on placards and paraded through the streets.
My noble friend Lord Young has made it very clear that he is well disposed towards small firms and that he wishes to encourage the right climate in which they may flourish. In his speech just now he referred to them as the seed corn of the future. In his speech on 3rd April he said something to the effect that what we miss sorely today are people ready to start small firms and make them large firms—the small firms of 15 to 20 years ago would be employing 500 to 1,000 people today.
I have always been in small firms. I have been a director for many years of a firm which started out in business about 25 years ago with a payroll of three and today employs over 300. It does not quite come up yet to the target set by my noble friend. It is my belief that many such firms feel very frustrated at times and snipping away at the red tape bedevilling them is essential.
In so far as PAYE and National Insurance are concerned, companies are acting as unpaid tax collectors. They not only have to ensure that these taxes are deducted from salary but they also have to make annual returns. In many types of business the new national insurance rate will act as a payroll tax, particularly where a large proportion of staff are earning substantially in excess of the old maximum basis for national health insurance. The change will have a damaging effect upon the firm of which I am a director. I agree with the noble Lord, Lord Marsh, who criticised the new proposals in the debate on 3rd April, that there may be a positive disincentive to employment in this undoubtedly well-meaning piece of legislation, as substantially increased wage or salary bills will result. Many firms in certain sectors may not take on so many people at the top or in the higher parts of the scale as they would otherwise and thus not so

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much new business will be generated. That will mean that fewer people will be taken on at the bottom end of the scale or some at the bottom end will go and not be replaced. As I have said, I am sure this proposal is well meant and overall it will probably help, but I fear it may be a case of three steps forward and two steps back.
There are many other matters which I could mention in detail, but I shall not, and which interfere with the running of small firms. These P.11.D forms are an awful nuisance as again firms are acting for the Government in producing returns for every employee whose earnings and expenses exceed £8,500. This requires a considerable amount of work in analysing expenses and these returns provide a basis for the Inland Revenue to collect additional taxes. Such things as statutory sick pay records involve a lot of work, company registration and the various Department of Employment forms. It is all time-consuming and the time has surely come when for every new form or regulation at least two should be scrapped.
Lastly, I want to say something about the appallingly high burden of rates on all industrial and commercial firms, to which my noble friend Lord Boardman referred during his speech. Industrial and commercial firms have no vote, and they contribute roughly 55 per cent. of total rate revenue. This varies very much from one place to another. There is no doubt that these high rates are encouraging firms and businesses to move to lower rated areas. This causes increased unemployment and still higher rates in the districts from which they have moved. There is then less rateable value on which rates can be levied. Moreover, domestic ratepayers who become unemployed can claim rate rebates, and thus the remaining ratepayers have to pay more. I think other noble Lords will be able to recall many companies who have moved their offices from London and the big cities to relatively affluent areas and comparatively small towns such as Salisbury, Exeter, Knutsford and so on. No one has contributed more to rates forcing businesses out and causing unemployment than people such as Ken Livingstone in London, and David Blunkett in Sheffield. They have earned a place in the annals of high unemployment as the best recruitment agents for the dole queue.
A survey undertaken by the London Chamber of Commerce and Industry in 1983 showed that high rates led 15 per cent. of companies to reduce their recruitment and 23 per cent. to cut their workforce. I do not know what can be done about this, but suggestions have been made that instead of paying locally-fixed rates varying from district to district, industry and commerce should pay to central government a local government levy which would be related to turnover. The total levy would then be allocated to the various local authorities on the basis of a predetermined formula. This would ensure that, no matter where they were located and irrespective of the level of the local rate payable by domestic ratepayers, all businesses would pay on the same basis towards the local cost of local government services. They would therefore derive no financial advantage from migrating from a higher to a lower-rated area, thus
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helping to reduce unemployment in the inner cities and concentrated areas. But that, I imagine, could hardly be tackled unless as part of a major rating reform.
My Lords, I end where I began. While inflation is the main enemy, bringing down unemployment is the top priority but it must be done in a way that does not damage our improving competitiveness in wealth-creating industries.
5.20 p.m.
Lord Thomas of Swynnerton: My Lords, like my noble friend Lord Ellenborough I, too, should like to congratulate my noble friend Lord Vinson on his admirable maiden speech. It is extremely satisfactory that he should be with us in this House. He must be one of the very few inventors who has been received here. There have been a great many entrepreneurs in the past who have been ennobled but, on the whole, the lot of the inventor in this country, despite the number of inventions for which we have been responsible, has been rather ignominious. Indeed, many of the best of them have fled from these shores to the Continent. It is a great satisfaction therefore to congratulate the noble Lord, Lord Vinson, on his speech and to say that I hope that we shall hear him very often again in the future.
I speak on this Motion, proposed with such wit by my noble friend Lord Boardman, with all the obstinacy, parochial arrogance and pride of one who has filled in his own VAT forms ever since VAT was instituted. I filled them in grudgingly, reluctantly and on the whole adequately. The only satisfaction that I have had from these years of VAT-form filling was to be able to note, a few years after VAT was introduced for the first time, that that intolerable publication, VAT News, was withdrawn from circulation.
As a self-employed man, I am one of, I suppose, 7 per cent. or 8 per cent. of this country's population, in comparison with something like 20 per cent. in the case of most of our competitors abroad. This is a factor which I am sure my noble friend Lord Young of Graffham has borne in mind. I am sure that we do so much on our private plots, as it would be referred to in the Soviet Union, that he will be considering means of increasing our numbers. I speak as a writer whose financial dilemmas were not among those discussed very much, so far as I could see, in that great debate that we had in this House a week or two ago on the future of the arts. Nevertheless, this side of our activities should be remembered. I am sure that when it comes to the point, the writers and artists of 1985 will be remembered (shall I say) for as long as politicians, although of course we do not quite know which writers will be so remembered. We are substantial earners of foreign exchange even though, unfortunately, even if we make something like 80 per cent. of our income from foreign exchange, we do not qualify for the Queen's Award for Exports since that award is given only and specifically to organisations and not to individuals. What an extraordinary confession to have written that regulation!
Furthermore, I must say that some of those who participate in my profession, including, I am glad to know, many Members of your Lordships' House, contribute a very substantial section of the world

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market in their particular product. I can myself claim at a certain point to have made such a dent in the world market, for example, in histories of Cuba, even though my work on that subject is now out of date. My noble friend Lord Blake, I should have thought, would have contributed something like 60 per cent. of the world market in lives of Disraeli, and I have no doubt whatever that the noble Lord, Lord Bullock, has something like 99 per cent. of the world market in lives of Ernest Bevin. Nevertheless—and noble Lords will be relieved to know that this personal series of complaints will not go on for a moment longer—we are treated rather worse than ordinary small businesses since, of course, we cannot sell our business to anyone else; we cannot pass on our place of work to our sons, even if they happen to be writers or artists themselves; and naturally we pay full rates even if we are unwise enough to live next door to rate-free farmers.
Having delivered that personal appeal to my noble friend Lord Young, I should like also to congratulate my noble friend Lord Boardman on introducing this debate and also to congratulate my noble friend Lord Young on his speech. It is extremely encouraging to those who think as he does and as we do that he should be in such a position as to influence policy on these questions. I would also congratulate the Government on those actions to which he referred. I must confess to a certain sense of disappointment in the speech of the noble Baroness, Lady Seear. Could it be possible that a Leader of the Liberal Party was giving such a grudging reaction to this Motion? Where, I wondered, would Mr. Gladstone have stood on this issue? I have no doubt whatever that he would have stood foursquare behind my noble friends Lord Boardman and Lord Young.
My noble friend Lord Boardman dealt with many of these regulations about which we have rightly complained with the best weapon which one can manoeuvre in this particular debate; namely, wit. We will remember for much longer than most of the points in other speeches in the course of this debate (including, I suspect, my own), the asbestos tile which he flung at all sorts of restrictive regulations. I think that there is one point I want to make on this specific question of the regulations which are so entangling. It relates (as do so many of the points that have been made in this debate) to the burden placed on small businesses. If you are trying to start a business and you are going to employ one person you have to behave exactly as if you are going to employ 1,000. You have to have the same number of documents per man, and you have to do it yourself. Secondly, you have to deal with three separate Government departments: the Inland Revenue, the DHSS and Customs and Excise. There is no difference in this respect whether you are starting a tiny business or a big one. Another restriction is that you cannot take on labour which itself is self-employed. This has been a restriction for many years. And if you are going to be a shopkeeper and if you are going to do this adequately, there is no doubt whatever that you will have to spend something like 10 hours a month on filling in your VAT forms satisfactorily.
Many of these things could be dealt with if the Government were able to consider the possibility of
736
raising the VAT forms to cover those enterprises which contribute most of the revenue from VAT. I think that something like 90 per cent. of the revenue from VAT comes from something like 10 per cent. of those enterprises which now contribute to it. Many suggestions have been made and no doubt many will continue to be made in the course of this debate; and we all think, as we leave the Chamber, of several which we would have wished to put.
Could enterprise zones in some way be extended to become deregulation zones? Could individuals perhaps become, as it were, enterprise zones of their own in certain circumstances? Could we perhaps copy not only the American but the Italian example and see whether we could not arrange the businesses which employ, say, fewer than 15 persons or perhaps five in agriculture (as is the Italian rule) not governed by any of the regulations which we have been talking about? Could we perhaps force, as has been suggested, regulation-giving bodies to carry out some sort of discussion on the impact of such regulations before they are actually issued? Some of these ideas, and others, have been put into a pamphlet which I know my noble friend Lord Young has read. The title is Worried to Death, and it is written by my friends Theresa Gorman and Russell Lewis. I strongly recommend to noble Lords that they get hold of a copy of that.
There is no question, I believe, that we need to act on all these matters. I do not think that we need to be perhaps so apocalyptic as to remind ourselves that the Roman Empire probably collapsed more from an excess of regulation and government intervention than anything else. However, we should take seriously the thought that unless we create and develop a much more lively atmosphere of enterprise in this country some of the best ideas of this Government may not be fulfilled as we would wish. A friend of mine, whom I respect greatly, Ralf Dahrendorf, who until recently was Director of the London School of Economics, made a most doleful statement recently which I propose to quote to your Lordships because it seems to me far more pessimistic than the speeches of many Members of the Opposition. He wrote:
"Britain is a society of many solidarities totally averse to the spirit of competition between individuals. If you try to set one against the other you get nowhere in Britain. America is exactly the opposite. There is a great tradition of trying to get somewhere on your own. In Britain you always pretend you are not trying".
My Lords, that is a very damaging statement, by an eloquent and admirable man; but I think he is probably wrong. He is thinking in terms of the years of the 1950s when he was an undergraduate here, and not of the 1980s when there has been a radical change. He made the same sort of mistake, I say in all seriousness, that Mr. Costa-Mendez, the Foreign Minister of the Argentine Government made, when he recalled his undergraduate days in Britain a generation or two earlier. He did not notice the change.
We have all noticed that there have been a number of alterations in our society in the last generation, many of them disagreeable. We are obviously a much more violent society than we were and certainly much less inclined to accept self-discipline. The hierarchical notion of values which existed in our youth does not

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exist now but there may be some compensating benefits: the spirit of enterprise which certainly characterised Britain in the past when we had just such a violent and undisciplined society in the 18th century might be able to be revived as well.
I think that many Members of the Opposition, when they criticise the Government for thinking that they are concerned to revive 19th century Victorian values, perhaps make a mistake because the values that we hope will be revived as a result of this Government's endeavours will be the society of initiative such as characterised Britain in the 18th rather than the 19th century. Before your Lordships have a moment to think about that particular historical reference, I have one or two suggestions to make to my noble friend Lord Young of Graffham. I hope that he might manage to persuade his right honourable friend the Prime Minister that his title should be changed from Minister without Portfolio to Minister for Enterprise. I wonder whether he could encourage us all to talk a little more about creating entrepreneurs rather than creating employment because after all the second would follow the first. Words mean a great deal in all these matters. Could he perhaps encourage us all to talk more about some of the successes of Britain in the last generation and not just about the failures? After all, we now know that around Cambridge in the past five years there have been built up something like 350 small high-tech industries of one sort or another which have transformed the pattern of employment in that county, and I think in consequence Cambridge has the smallest number of unemployed in the country.
There are a number of schemes which could perhaps be looked at in a different way. I wonder too whether the Minister could not consider what might be called a target approach to problems of British industry. There are particular sections in British society which could do more. I shall take graduates as one example. The mood in universities among those leaving courses is still very strongly anti-commercial. Could we not perhaps have some sort of inducement in the form of enterprise scholarships to encourage young ex-students to go into business? Could we also think of inducements whereby those in middle life (35 or 40) could find some way of getting out of the very successful enterprises in which they are working? If you are 35 or 40 you might not want to leave Shell, for example, but if there were some inducement to try another enterprise for perhaps two years, with the certainty of being able to go back afterwards, that might be helpful. After all, people did that in the war.
Above all, I hope that my noble friend will seek, through the eloquence which he has shown today, and certainly in public relations, to remind us all that the United States, Germany, Italy and other countries who have been our competitors have done the sorts of things that we are trying to do. History can play a part as well as international comparison. It must be of use to remember that Liverpool was not just a twilight zone two centuries ago. It is a matter of inspiration and of reminding the population as a whole that only through revived enterprise can we hope to recover that positive mood which itself will lead to greater employment and greater prosperity.
5.36 p.m.
Baroness Carnegy of Lour: My Lords, my noble friend Lord Vinson, in his admirable speech, has told us that he wears the badge of an inventor. What he did not add was that, having made his initial invention, he manufactured it in a Nissen hut. He floated the invention on the stock market and it won the Queen's Award for Industry. I am not sure whether my noble friend Lord Thomas would be prepared, having written his extremely eminent books which have achieved such enormous exports and have made this country so famous, to print them in a Nissen hut and thus perhaps qualify for the Queen's Award for Exports. However, he has made a very valid point. We are extremely fortunate to have the noble Lord, Lord Vinson, in this House. He has shared his experience and knowledge with us up to a point and we shall learn more of it as time goes on.
I too have to thank my noble friend Lord Boardman for making this debate possible. If I may, I should like to say one thing to him and to the Government, looking at the problem rather from the other end. My noble friend has suggested that there might be a standing committee in Parliament to look at what he called the nonsenses from the employers' end. I wonder whether such a standing committee, or some other organisation, might seek to get much more factual information together about what is really happening in the labour market at the present time, from the point of view of the people who want to work and cannot do so, and who want to work in different ways from the ways in which they are working at the moment but cannot do it because of barriers. This is about wealth creation because the level of unemployment affects wealth creation. It is also about what the economy exists for: which is individual people and their enjoyment and fulfilment in life.
The Manpower Services Commission labour market quarterly report is an admirable document but it has to be based on official statistics which are available at the current time. I think that its limitations were up to a point demonstrated by the interchange that we had at Question Time earlier this afternoon. It tells us about the number of people who are claiming benefit and national insurance; also the number of jobs and the nature of jobs which are available at the job centres. The trends which it draws out are projections forward from the past and projections based on a past which is illustrated by the official statistics that are available.
The rapid and radical changes which are going on at the moment in the labour market are not necessarily being analysed or projected. For example, how many people actually want to earn, are trying very hard to earn and cannot earn? Is it 3 million or is it 5 million? Is it less or is it more? We do not know. The questions that we need answered are these. How many people now are in fact working from home? How many would like to work from home and are not for some reason or other, though the reason could be overcome? How many people are working now for more than one employer? How many people would like to work for more than one employer but cannot do so because of some obstacle?
How many people are partly employed and partly self-employed? How many more people would like to

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be? How many unemployed people would like to be employed? In general, what new ways are people finding to earn? How many are deterred by benefit regulations? With a picture of this kind that is absolutely up to date, it would be very much easier for the country as a whole to see the future and to overcome the barriers, and it would be very much easier for the Government to prove to people that the kind of changes that need to be made must be made.
If I may give an example, I went to visit two of the Manpower Services Commission's training workshops. In one of them young people were learning to repair old furniture which they had been given. They repaired it, renovated it and sold it. In another they were learning to make fashionable sweaters on knitting machines. In those two training workshops, both situated in the less advantaged parts of cities in Scotland, those young people were worried about how they were going to use the skills which they had gained. Most of the young people working in both training workshops lived in council houses. They would have liked to buy furniture and to have repaired it at home and sold it. They would have liked to buy a knitting machine in order to make fashionable sweaters and to sell them. Both were forbidden by the local housing authority. They were not allowed to trade from their council houses.
Likewise, only last week I met a young person who had learned to design and make children's clothes in another city in Scotland. She had not been allowed to do this in her council house. She had been fortunate enough to find a small unit on an industrial estate where she could do it. I bought a garment from her. She gave me her card and said that in one year she had already sold £7,000 worth of children's clothes. I met a young man at the same event who was a graphic designer. He was doing that from a small business unit. He was not allowed to do it in his council house. If you want to run a hairdressing business at home, you cannot do so in a council house. It is impossible, I believe, under almost all local authorities to trade from council houses.
It is quite difficult to get permission to trade from your private house, even if your trade is a clean, quiet kind of trade which would not raise any objection whatever from the neighbours. This is because of the way in which we used to think about council houses and when we considered that because public money had gone into a house people should not get advantage by trading from it. Now we allow people to sell council houses at a discount. Our thinking about employment from businesses carried on in council houses has not caught up with our other thinking about these matters. So that whole area is something which a Standing Committee of Parliament might look at.
There are very many traditional constraints of other sorts on what you can do in a housing estate. There are boarded-up council houses all over the country. Why should they not be transformed into work premises? Is there any reason why people should not develop self-employment, taking lodgers into their council houses? What about sub-letting? Are enough disused industrial premises being made into small very cheap units in which young people, or indeed older people, might start up? Our whole attitude has to change about these
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matters and this is the other end of the problem that we have been discussing.
Neither have our attitudes to education and training caught up with the subject that we are discussing. Every young person needs entrepreneurial skill and needs a basic foundation skill as his or her possession, as he or she moves through the new flexible work patterns that we are seeing develop before our eyes. Every young person needs in the future to be able to upgrade his or her skills and abilities as a person, in his or her spare time if necessary because there will be much more spare time from work for learning. We need far more opportunities for distance learning, for learning on the Open Tech pattern or on the Open University pattern. Colleges must go into the areas where people live to give them the training that they need. We have to think quite differently about all these things.
The barriers here are largely attitudes and conventions. We are still thinking in the way we thought in the old days of the old type of full employment and the old type of working aspirations. There are many facets to this. We need the figures, we need the picture of how it is looking to workpeople and potential workpeople now, as well as the picture that we have in the Burdens on Business document, which looks at the subject from the employers' point of view. If we could develop for the public of this country a scenario for the future so that they can see how they can move through the labour market through their lives with an ability to earn, as well as a picture for employers so that they can see what are the possibilities for them, then we shall be able to move forward more rapidly than we are at the moment.
5.48 p.m.
Earl Ferrers: My Lords, my noble friend Lord Boardman has done the House a great service this afternoon by introducing this debate, because there is no doubt that of all the pressing and anxious domestic issues which face the country at present unemployment heads the list, and from that follows the stimulation of employment. I was delighted to hear my noble friend Lord Young's speech in which he depicted the successes which have come about as a result of deregulating business. I am sure that he is right. I congratulate him on it and I hope he will continue that work.
But one sometimes forgets some elementary things, such as that if there is a worldwide recession (which there has been) demand drops. Fewer goods are wanted and those which are wanted are those which are most competitively priced. The Government have therefore, in my opinion, been wholly right in making the control of inflation the highest priority; and they have succeeded. If inflation is controlled, firms have a chance of being competitive. But to be competitive they have also to cut waste and surplus manpower in order to meet the smaller demand. This itself adds to unemployment. So there is in effect a double jeopardy: first, reduced demand creating unemployment; and, secondly, the search for higher competitiveness to meet that lessened demand also creating unemployment. So the ratchet twists twice.
People tend to think that this state of affairs is peculiar to Britain, but of course it is not. My noble

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friend referred to this at Question Time this afternoon when he gave figures to suggest that the United Kingdom has a greater percentage of its population in work than has any other country in Europe except Denmark. So in that respect we have a positive advantage over our neighbours. There are those who say that we shall have to live with a permanent level of 3 million unemployed because of the impact of computers, microprocessors, robotics and so forth, all the advances of modern technology. I have never been of that school. Man has always invented, and it was a delight to hear the speech of my noble friend Lord Vinson this afternoon when he referred in particular to the fact that it is necessary to invent and to bake the cake before you get others to come in and cut it up.
In the 1890s farm workers burnt the threshing machines because they thought that those modern inventions would do them out of their winter work of flailing corn. It is true that the internal combustion engine did away with the horses, the wheelwrights, the saddlers and the coach builders, but of course it created the garages, the motor manufacturers, the oil tankers, the tyre manufacturers and so on. Invention therefore did not of itself create unemployment, though it altered the pattern of unemployment. I do not believe that the introduction of modern technology will in the total create unemployment, as so many people say, though it will have an immediate impact at the sharp end. In fact, the reverse will happen.
The introduction of these new technologies will create employment by making our goods competitive and wanted. These new technologies are our friends to be welcomed and not things to be frightened of. Nor do I believe that in the 1980s man has come to his limit of ability to create work and to create new ideas. Of course he has not. These new techniques will enable us to do that which we should have been unable to do without them, and so to create employment.
We labour under one great difficulty, which is that for 30 years we had full employment. Everyone said, "Now we know how to control the economy of our country and as a result we have full employment. This is the right of every person. Unemployment is a thing of the past". How wrong we were! We did not know how to control the economy. Unemployment was not a thing of the past—it is here again. Now everybody is saying, "Because we have modern advances we will never have full employment again". My modest reply to that is, nonsense! World economies, by which we are influenced and over which we do not have control (though we do not like to admit it), go in and out like the tides of the sea. We can paddle our lilo in certain directions of our own choice but we cannot control the tide. In my view it is just as unrealistic to say now that there will never again be full employment as it was 25 years ago to say that there would never be unemployment again. So our problem now is how to create employment.
One of the benefits, if that is the right word—and it is not—of the redundancies from the larger firms is that it has stimulated people who have found themselves unemployed to become independent and to start up their own businesses. Small businesses are the foundation of a sound economy. Despite the
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difficulties of starting up new businesses, to which my noble friends Lord Boardman and Lord Young have referred, in 1983 the net growth of new small businesses was three times higher than it was in 1980. So that is a success.
I shall never forget that when I had the privilege of being a Minister I visited a firm in Staffordshire, which was a depressed area, which had been started up by a man who had been in the steel industry. He had £5,000 and he started with 10 people. When I saw him three years later he told me that he would not sell his business if he were offered £350,000 for it. Only 12 months ago he wrote to me to say that he had moved his factory to a new site and he had a turnover of £2 million. What a success story that was. Out of hardship, in a time of recession, in a depressed area of Staffordshire and in the depressed industry of steel, he had created employment. We ought to shout that kind of story from the rooftops, but for some curious reason we do not.
There are people who create jobs because they can do so competitively, but the irony is that by being competitive they help to lose jobs in those firms which are less competitive. The Government have done a lot to create jobs, but governments can only set the scenes, offer financial incentives and try to stimulate. They cannot provide the initiative and the entrepreneurialism of the businessman. Nor should they try to do so—that must be left to the individual. Governments can provide incentives to work. Oddly enough, they can also provide incentives not to work.
I remember the noble Lord, Lord Energlyn, saying some four or five years ago that people had likened the unemployment of today to that of the 1930s. The noble Lord then said that there was one single difference. In the 1930s the cry was, "Give us work. We want jobs". One does not hear that now. The government have over the years, in their search for compassion, removed the financial anxiety which lack of work created. But they have at the same time in some areas removed the necessity or the incentive for work. Worse still, they have actually made it inadvisable to work. This is unbelievably absurd. It is so unbelievably absurd that one could hardly think it happens, yet everyone knows that it does.
We have heard today a number of generalities as to what might be done and how we could stimulate employment. I should like to refer to one or two specifics. There was an article in the Daily Telegraph of 11th March which said:
"£70 B and B man says 'It's not worth working'".
The article continued:
"An unemployed building labourer living on social security with his pregnant girl friend in a £70.50-a-week bed-and-breakfast room in London said yesterday:'I could get a job, but what's the point? I could not pay the rent'.
"On top of the rent for the double room at the … Hotel … West Kensington, the Department of Health and Social Security is also paying the couple £75 a fortnight supplementary benefit. The man said … 'If I could get a council flat for £25 a week it would be worth getting a job. But where I am now I'm better off with social security'.
"Another unmarried mother, Brigitte, 24, holding her three-week old baby … said she and her jobless boyfriend David, 31, from Manchester, have a £65-a-week room at the … Hotel, Paddington. They have lived there for 18 months with the Department paying their rent and giving them £27-a-week supplementary benefit".
If one were to curtail one's remarks to saying that if the welfare state is so constructed that these kinds of

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examples are provided for, that it makes them a liability on the state and actually makes it imprudent for them to work, then I suggest that those regulations ought to be altered.
Contrast that example with the person who finds himself unwillingly unemployed and who wants to take part-time work, but cannot do so because he would be worse off if he did. I know of one such man—and I am sure your Lordships know of similar examples—who was unemployed, who was offered part-time work, and who wanted to take it. He took advice from the local DHSS and the supplementary benefit people. If he had taken on part-time work, what he earned would have been deducted from his social security payments. He would have been content with that, as he wanted to work—but he would also have had to pay a share of the stamp and so would have been worse off.
If the prospective employer had paid his share of the stamp, that would have been benefit in kind and so the individual would still have been worse off. On top of that, if he reached a certain level of earnings, he would have lost the assistance on his rent and would have been still further worse off. So this man concluded that, despite finding a job and despite wanting to take it, he could not afford to do so.
That was not the end of the story. His wife who, because her husband was unemployed, had become the breadwinner, found that she, too, was restricted as to the hours that she worked. If she earned too much, it would cause cuts to be made in the supplementary benefit paid to her husband. Think of the business of policing all this—"How much money have you earned? How many hours per week have you worked? How many days per week?". In the end, this couple decided that it was not worth it.
Where a system is such that it deters both husband and wife from working, it is a system that needs overhauling. And where a system is such that it deters young people from getting jobs, it is a system that needs altering. Young people when they leave school want to get jobs. They need them for their pride and their character, and in order to be contributors to society. But the potential employer finds that what he has to pay the young man or woman—the novice, the person with no experience at all—is far too high. By comparison with the mature, experienced person the differential is not big enough. Many more people would be employed if the starting rates were not so high. Young people would find themselves proud of a job and earning money rather than being unemployed.
It is not a question of getting cheap labour. It is a question of recognising that the novice has to learn and as such he is a taker from the business as well as a giver to it. That is why I am glad that the Government are considering abolishing the wages councils which often, in disparate industries, set rates of pay at such levels as to deter employment.
Wages councils cover some 2.7 million people and about 400,000 establishments. The councils cover an extraordinary range of extraordinary businesses. Apart from there being a wages council for licensed residential establishments and licensed restaurants, there are wages councils for hairdressing undertakings, for
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unlicensed places of refreshment and for general waste materials reclamation. The aerated waters industry has its own wages council. Hats, caps and millinery have their wages council, as do linen and cotton handkerchiefs and household goods and linen piece goods. Made up textiles have their own wages council, and so do the rope, twine and net industry, button manufacturers, and the perambulator and invalid carriage industry. Ostrich and fancy feather and artificial flower businesses have their own wages council, and so do sack and bag manufacturers, the lace finishing people, and the cotton waste reclamation business. I should have thought that many of those industries had passed the way of many mortal people by now, but if they have not, maybe it is time that at least their wages councils did.
In what one might call the sympathetic era of 10 or 15 years ago, Governments introduced measures which provided more security of employment. This may have been fine for those days but it did detract from the mobility of employment. It has now become difficult—absurdly difficult—to remove people from their employment if they are bad, and even if by being bad they adversely affect the business and thereby the employment of others.
My noble friend Lord Boardman referred to this point when he spoke about employment protection legislation. If I may say so, he was quite right to do so. The threat of action by industrial tribunals for unfair dismissal and of possible reinstatement hangs like the sword of Damocles over many men wanting to sharpen up their own businesses. It has enabled the thumbscrew to be turned by the more disreputable type of employee, knowing that the employer will not wish to see himself featured in local newspapers and endeavouring to extract a higher settlement from the employer.
The noble Baroness, Lady Seear, said it was not always known that more employees lose cases before tribunals than win. This merely shows the number of people who are prepared to go to tribunals to test the system. They have nothing to lose, but others have. The cost of getting rid of a bad employee can now be exorbitant. This applies not just to the work force but also higher up the scale. The higher up the scale the person is, the greater the cost and the greater becomes the problem. The present law makes it difficult to dismiss bad people and consequently difficult to employ good people.
The same also goes for redundancy payments. These were introduced for the highly meritorious reason that when a person had worked for many years for a firm, he should not find his employment terminated without any recognition being made of the years he had devoted to that firm. That is wholly commendable, but the cost of redundancy to a firm can be substantial. When the firm is in financial difficulties and needs to trim its workforce, frequently the cost of redundancy is yet another burden. Sometimes, rather than accept that burden, the firm hopes for better times only to find that better times do not appear. Having not accepted that burden earlier and trimmed its labour force, the whole firm goes. No doubt many noble Lords have seen this happen as I have.
Also, redundancy payments were not meant to cover—nor should they, in my view—the situation

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where a company wishes to create a subsidiary and to start it off with employees who work for the original company. Such employees have to be dismissed from the original company, only to be taken on the next day by the subsidiary. On the way, the employees collect considerable redundancy payments from the original company. There is of course no redundancy in such a case; there is just a transfer.
Being redundant and having no job is one thing; being made redundant in order to be transferred is quite a different thing. Indeed, the Government are inadvertently guilty themselves of creating this problem. In order to reduce Government expenditure, the Government have decided to curtail grants made to certain institutions in the hope that funding can be round from private sources. That is entirely understandable.
The irony arises because private industry, when funding items of research, sometimes requires to enter into contracts which are different from those which a Government body can entertain. It is therefore sometimes necessary for the research councils or institutes to set up a private company. The private company may in the main be staffed by research workers from the institute whose funds the Govenment have curtailed. These research workers may have to be made redundant by the institute—only to be taken on, if all works out right, the next day by the private company operating alongside and within the research institute.
So two research workers who have been sitting next to each other for some time can find themselves in the position where one may just have received a capital sum in redundancy pay whereas the other has not. This is hardly good for morale and presumably somebody—probably the Government—has to finance the redundancy caused by the Government's efforts to privatise research. I am not saying that the Government are wrong to encourage the privatisation of research. I am saying that it does produce some curious and unexpected phenomena with regard to employment in the process.
There is another example which is topical. When the Government abolish the GLC certain of its employees will be taken over by other bodies, but many of those employees will first pick up redundancy payments, not because they are being put out of work but simply because they are being transferred. I fail to see that that can be right. The Government have to find the money to finance these redundancy payments, and therefore the principle lacks impact. But apply that same principle to private industry and the impact is substantial; and it gives the potential receivers of redundancy payments a feeling that somehow there is some free money hanging around if only one is astute enough to collect it. I do hope that the Govenment will take advantage of this debate to take a long hard look at the many ways in which both the Government and the law have unintentionally produced obstacles to growth which inhibit the creation of employment and new jobs.
I like my noble friend's idea of a standing committee. I think they will be standing for quite a long while. I also like his idea of an annual Miscellaneous Provisions Bill to sweep away the
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absurdities. They will be long Bills; they will be fascinating; but they will be welcome.
6.12 p.m.
Lord Harris of High Cross: My Lords, I was delighted to hear my noble friend Lord Vinson, whose arrival among us will simultaneously raise our standard of eloquence and reduce our average age by a useful fraction. I really must congratulate the noble Earl, Lord Ferrers, on his remarkably outspoken speech. When I recall the arguments that we fought and lost with him on the Government Benches, even on wages councils, I detect that privatisation has liberated him to make speeches with which I can now wholly agree. I must also say that I am grateful to the noble Lord, Lord Boardman, for inviting us to discuss the obstacles to the creation of wealth and employment.
From the no-man's land of the Cross-Benches I should like to open up a rather wider field of fire than some previous speakers. My target is not therefore confined to Her Majesty's Government, though I agree with others that they have been somewhat tardy in removing impediments to increased production and job opportunities. My chief target would be the deeply entrenched conservative thinking in which the worst obstacles to economic progress are stubbornly rooted. The conservative pattern of mind I hold responsible is, alas!, now most commonly found on the Labour and Liberal Benches, and we got more than a whiff of that from the noble Lord, Lord Bruce of Donington, and the noble Baroness, Lady Seear. I observe that from a list of some 20 speakers, if we leave aside the opener and the closers, we have a tally of one contribution from the Labour side (and I look forward to hearing the noble Lord, Lord Kagan) and none from the Liberal side—and this on an issue investigating restraints and restrictions on freedom in the economy. As the noble Lord, Lord Thomas of Swynnerton, implied, it is a disgrace, and we long to hear the liberal trumpet more surely from the Government Benches.
It is characteristic of the backward-looking conservative approach, most prominent on the Labour and Liberal Benches, that there is a nostalgia for a return to the old post-war consensus in place of what they denounce as the politics of confrontation. Consensus can be made to sound seductively appealing, because surely discussion and agreement are preferable to unilateral decision and action. The trouble with that old, I hope banished, consensus, was that it always concealed fundamental inconsistencies in our economic and political objectives. It was like a honeymoon: nice while it lasted, but it could not last indefinitely. It depended upon avoiding awkward issues; it depended upon ignoring clashes of interest which eventually assert themselves in the best of marriages and in all economic and political life.
The central issue dodged by the consensus was the basic cause of the persistent obstacles to which the noble Lord, Lord Boardman, and others have called our attention. They were highlighted half a century ago in a largely neglected book by an Australian economist, Professor A. G. B. Fisher. His first volume was vividly entitled The Clash of Progress and Security, published in 1935. Ten years later, in 1945, he wrote a larger treatise called Economic Progress and

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Social Security, which was fundamentally a deep, searching analysis of the threat to prosperity and employment from the failure to adapt our economic arrangements and activities to the ceaseless challenge of change. With a clarity rare among economists, he saw that the overriding political priority then being given to security represented a lethal threat to economic success, on which employment at rising wages ultimately depended.
Fisher illustrated the primacy accorded in those days to security with a couple of telling quotations from Labour and Conservative members of Churchill's war-time Cabinet. The first was from Ernie Bevin in 1940:
"At the end of this war, and indeed during the war, we accept social security as the main motive of our national life".
Not to be outdone, Anthony Eden, a year later, in 1941, is quoted as saying:
"Social security must be the first object of our domestic policy after the war".
Today, 40 years later, such well-meaning aspirations have a rather hollow ring when social benefits and the high taxation of low income necessary to pay for them have removed the incentive for many family men to contribute at all to wealth creation and, instead, have led them to settle for subsisting on unemployment pay.
Social security, however, is by no means the only obstacle to higher output and employment implied by the study of Professor Fisher. He foresaw a period of rapid change in techniques and products which would call for the continuing shift of labour and capital from the older or declining industries into newer and expanding employment. Yet the pursuit of security in its many guises increasingly obstructed the flexibility and adaptation of the labour market to these changing opportunities. The plain truth is that the preservation of the post-war consensus survived only by appeasing vested interests threatened by disturbance from new competition. Thus, for 25 years or more Conservative and Labour Governments acquiesced in every trade union and professional restrictive practice and closed shop which inhibited the creation of new wealth and new employment opportunities.
As our once pre-eminent manufacturing companies fell further behind foreign competition, they were embalmed in ever-higher subsidies. This protectionism gave a temporary illusion of security, but only at the long run cost we are now paying in delayed adjustment to change. When preservation through protectionism failed, Labour Governments tried conservation through nationalisation; and when, with mounting losses, we found we could no longer avoid drastic surgery, we had to send for people whose names are still remembered—Beeching in railways, Edwardes in motor cars, Day in shipbuilding and MacGregor in steel and now coal—to undo the damage accumulated in those years.
In every case the search for security against the impact of change led to what this Motion calls "legislative and administrative" obstacles to wealth creation and new employment. The same could be said, as the noble Earl, Lord Ferrers, has mentioned, of wages councils, rent controls, the dock labour scheme and the so-called employment protection laws—and even, I would argue, of the Shops Acts and licensing
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laws. Under the old corporatist consensus, "phoney" security and safety first were practised at the expense of the postponed and aggravated insecurity that we are now reaping. It is because this cosy consensus has led through unprecedented inflation to unparalleled unemployment that we must now give priority to wealth creation and to jobs.
Despite the rhetoric it is not, in my view, Mrs. Thatcher who is confronting union leaders and other entrenched political interests: it is the reality of change and the imperative of adapting to it that is now confronting employers and their workforces. I must say that an acid test of the success of the noble Lord, Lord Young, will be some early action on the repeal of wages councils and, I believe, rent control on new lettings. Both of those measures protect the insiders with jobs and homes only by excluding the outsiders who are unemployed and homeless.
On wages councils, the game was given away recently by Mr. Hattersley, who, in a speech in February, acknowledged that ending wages councils would increase employment, but he hurriedly concluded:
"We cannot just be concerned with jobs to the exclusion of all other goals".
In its context, what this meant is that Labour wills the end of high unemployment but simultaneously withholds the means of dismantling obstacles towards that end. Until Her Majesty's Government give a more radical lead to the emancipation of employers, workers, tenants, taxpayers, shopkeepers and entrepreneurs, I fear they will continue to be vulnerable to captious criticism for unemployment remaining far higher than would prevail in a freer economic environment.
6.21 p.m.
The Earl of Dundee: My Lords, I should like to congratulate my noble friend Lord Vinson on an excellent maiden speech in which he illustrated so effectively the importance of manufacturing and reminded us of the ethical purpose of wealth creation. As chairman of the Development Commission and president of the Industrial Participation Association, the House has been fortunate to have my noble friend's advice today, and we hope there will be a great many future contributions from him on a wide variety of subjects.
I should like also to join with other noble Lords in congratulating my noble friend Lord Boardman on introducing this debate. He and other noble Lords have pointed out very eloquently the evils of regulations, and while it was not just his own reference to telephones which rang true it was also not just my noble friend Lord Young's allusion to spectacles which has increased our vision.
Regarding the creation of wealth and jobs, it will be generally agreed by most governments and their subjects that the highest priority should be given to the consideration of all possible means, including legislation, of achieving these ends. However, if a distinction were to be made between, on the one hand, administrative and legislative obstacles which have taken many years to gather and, on the other hand, legislative incentives which may need only a short while to produce and to allocate, it might well be

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objected that disproportionate attention is generally paid to the latter. It is, of course, always easier to superimpose new measures than to restructure or replace old legislation, even if this has revealed obstacles and anomalies. To whatever extent that objection may be valid in this country, it is at any rate very useful to have emphasised in their own right, as my noble friend's Motion does today, the problems of accumulated legislative and administrative obstacles, which in practice in all countries often remain unremedied for far too long and which, equally, are often underrated, if not obscured, by respective national governments in discussion of their own economy.
However, if harmful obstacles are professed to exist, it should be asked, conversely, why their reduction or removal would necessarily benefit certain categories of business and, secondly, why these categories, if thus benefited, would necessarily be able to help create to a significant degree more wealth and more employment in the country. To take the effect of current regulations on small firms, there may well be no precise evidence that rules and regulations themselves are the major causes of business failure; yet at the same time there is a strong case for believing that if these regulations had already been substantially reduced and revised there would not now be closing down almost as many businesses as, with the help of incentives, are able to start up. Between 1980 and 1982, roughly 360,000 started up and roughly 340,000 closed down. And, to understand the contribution which small businesses can make to employment and the economy, one has only to look at examples of other industrialised countries to see the results which have already been achieved in the United States or in Italy, where 28 per cent. of the workforce is self-employed compared with our own low proportion of 7.7 per cent.
Turning to the assessment of various methods and expedients which have been proposed for reducing restrictions, there is of course the question of discovering the best balance between measures to deregulate in some areas and measures to amend or replace existing legislation in other areas. If it is accepted that many enterprises to some degree, and small firms in particular, are inhibited by regulations in making a significant contribution to the economy that they otherwise could make, then there is a case for exempting categories of a particular size or type from regulations thus connected with non-expansion and high failure rate.
My noble friend Lord Thomas of Swynnerton has already referred to that. When he comes to wind up, will my noble friend the Minister indicate whether the Government are prepared to introduce a Bill in the near future which will give powers to the Secretary of State to exempt from regulations certain categories of small business?
Another aspect is the need to ensure that the cost of regulations does not exceed their benefits. American research estimates that the current annual cost of United States regulations is in the region of 100 billion dollars. Here in the United Kingdom we already know that the administration of consumer legislation alone costs the private sector anything between £300 million and £500 million a year. Does my noble friend the Minister agree that, while
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disclosure of the total British annual cost of regulations, if made more available, would serve to increase national awareness of the problem, the Government should also adopt a formula similar to that of the American Regulatory and flexibility Act so that no new regulations can go forward until it can be shown that benefits will exceed costs?
In regard to the need to deregulate existing legislation, the noble Baroness, Lady Seear, and my noble friends Lord Boardman and Lord Ferrers have already suggested the use to which parliamentary Select Committees and miscellaneous provisions Bills might be put. My noble friend Lord Young of Graffham has already responded to that. Are the Government willing to amend the Law Commissions Act 1965 to establish a deregulation unit charged with reducing the volume of legislation within a five- to 10-year, or otherwise specified, period?
Then there is the adverse effect of some current taxation arrangements on firms and, again, in particular on small businesses; whether this adverse effect arises from the cost and time spent in collecting VAT, the high level of rates for business premises, or insufficient encouragement to firms to establish their capital base and to expand. On VAT it is calculated that 93 per cent. of the total comes from firms with an annual turnover in excess of £100,000, but three-quarters of all VAT registered businesses have a turnover which is under that figure. For that reason, among other recommendations, it has been strongly urged to the Select Committee which reports to my noble friend Lord Young of Graffham, that the starting point for VAT should be raised to £100,000 turnover per annum. Contrary to some allegations, it is also pointed out that such action would not be inconsistent with any EEC directive. Does my noble friend the Minister agree that, if this action is pursued, while saving small firms millions of working weeks as well as relieving the burden of Customs and Excise, it will hardly diminish revenue to the Exchequer? Would he further agree that among other alterations to help mitigate the adverse effect of taxation on small firms should be included the averaging of tax and profit over several years, an amendment to enable pension schemes to qualify to be linked directly to family businesses and an amendment so that family members can qualify for the same expansion schemes as outsiders when investing in their own business?
Regarding the need to protect the employee and the consumer, there are no grounds for supposing that the present combination of laws is particularly efficient, still less that it strikes a satisfactory balance between the interests of business expansion and those of employee and consumer protection. In that connection, can my noble friend reveal whether the Government are prepared to shift responsibility from the Employment Protection Act instead to contracts of employment between the relevant parties enforceable under common law? That course of action has also been strongly recommended to the Select Committee which reports to my noble friend's department.
In relation to wages councils, while maintaining protection for minimum and low wage earners over 21 years of age, what revised arrangements would the Government support to encourage an increase in the number of apprenticeships or of those in first time jobs under the age of 21?

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My Lords, satisfactory solutions to excessive regulations and related obstacles can of course by themselves offer neither a miracle cure for unemployment nor a magic recipe for wealth creation. But undoubtedly they can constitute major contributory factors to those ends. The Government have already shown that they are anxious to tackle the problem of those restrictions. Provided that comprehensive and wide-ranging measures are now introduced, the well-meaning intention of the campaign against unemployment can then receive some realistic backing and British business endeavours would also be given new vigour and confidence.
6.30 p.m.
Earl De La Warr: My Lords, I should like to start by adding my congratulations to those of other noble Lords to my noble friend Lord Vinson on his excellent maiden speech. I hope that we shall have many more. I am delighted to find that my noble friend is, like me and some other speakers, a farmer—a VAT-free farmer—so of course together we wept for the plight of my noble friend Lord Thomas of Swynnerton which he so passionately described.
I am very grateful to my noble friend Lord Boardman for giving us the opportunity to have this rather wide-ranging debate. I should say straight away that I will probably be ranging rather further away than some of your Lordships from the question of new enterprise and perhaps a little bit more into the politically contentious, against which we were very properly warned by my noble friend Lord Young, who made an unpolitical speech until, if I may say so, he came to the point where he gave us a splendid trailer for the forthcoming Second Reading speech of my noble friend Lord Belstead on the Transport Bill, about which some of us have been nursing certain doubts.
I am, however, going to discuss a prime barrier to wealth creation, and that is the capture of unions over the past three or four decades by Left-wing militants whose interests are not by any means always those of their members and whose training all too frequently has taken place in countries that by no stretch of the imagination could be called friends of the Western democracies. To put it briefly, that has led to a modern type of luddism which has resulted in a dramatic loss over the decades of our share of exports and a serious growth of import penetration, and, it has to be said, has sent this country way down the European standard of living league. If that subject is not a barrier to wealth creation, I do not know what is.
It has already been said in this debate that we are moving into a period where more realism is creeping into our industrial affairs and, albeit with some massive exceptions, I would agree with that. Legislation cannot by any means do everything. But I should like to say that the package of the three trade union and employment Acts that we have had since 1980 has done an enormous amount in that direction and to create new attitudes. I say that rather specially because I am going on to be slightly critical of one aspect. I have always thought that the achievement of regular, properly conducted elections by the unions for their national officers was the most fundamental of the
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union reforms that is required. That is why I feel that Part I of the 1984 Act is so important—that is the part which deals with national elections for officers—and that is why I want to offer some comments on it and in a minute come to a few suggestions that I hope may interest the Government.
I cannot embark on that without saying to your Lordships how much I regretted—and I was not alone on this side of the House—the fact that the Government did not go the whole way in the direction of making postal ballots mandatory. They gave a let-out which was almost complete. I think that we shall see much of the result of that decision by the Government, possibly even in the months that lie ahead. Nevertheless, let us agree that they did make the very important presumption that postal ballots were to be preferred, and we must not minimise the importance of that.
Let me quote a few words that were spoken by my noble friend Lord Gowrie towards the end of that Bill when he was discussing union registers, to which I shall come in a minute. He said:
"My noble friend is quite right in saying that they"—
that is, union registers—
"are a logical continuation of our commitment, strengthened by the debate on Lord Beloff's amendment, to an inexorable move towards postal ballots".
I hung on his words then and I hang on those words today.
But, having said that, let me not dwell on the battle we fought last year. Let us look at the situation which we have today. But we must face the fact that we are going to have many workplace ballots in the near future and also that by no stretch of the imagination can a workplace ballot, as we know it now, be conducted in such a way that it is as much proof against rigging as would be postal ballots conducted with other safeguards. The Government have to be extremely alert because they have brought the whole question of balloting out into the open.
I say very seriously that in this country we cannot possibly afford another piece of publicity such as that attending the affairs today of the Transport and General Workers' Union. I make no comment on whether it is right or wrong. I simply say that it is enormously damaging to this country, to our economy and to the way in which we are looked at from abroad.
I come to the first suggestion. Section 3 of the 1980 Act allowed the Secretary of State to:
"issue Codes of Practice containing such practical guidance as he thinks fit for the purpose of promoting the improvement of industrial relations".
I quote again:
"The Secretary of State may from time to time revise the whole or any part of a Code of Practice under this section and issue that revised Code".
There is a great deal of flexibility there. Finally, I remind your Lordships that a code of practice issued under this section shall not of itself render anybody liable to any proceedings, but any such code shall be admissible in evidence before a court.
Under that section we had a code of practice on picketing. Some may feel that it was not as effective as it might have been. I have yet to be convinced that in the long run it will not have been found to be doing a

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good job. We did not, however, as I think we were promised at the time, have a code of practice on balloting. I remember in the debate we had on the first Green Paper—which I think was on trade union immunities—asking that the Secretary of State at the time should hurry up and produce one. I think the time has now arrived and I should like to commend this idea to the Government. It could spell out the requirements and the procedures in much more detail than the Act.
It could, for instance, deal with how to make members aware that there was to be a ballot; and we have heard much about that lately. It could include a requirement that any ballot, whether it be at the workplace or by post, should be subject to independent scrutiny—something that the Act did not mention and something that I hope your Lordships will agree is absolutely fundamental.
I am aware that the certification officer is at this moment talking to unions about model rules to do with the political votes, but that is not at all the same thing as a code of practice by the Secretary of State. That is the first point that I want to raise. My second point deals with Section 4 of the 1984 Act, which requires that each union shall prepare and keep up to date a register of the names and addresses of its members; and, moreover, it must be ready and complete by the time the Secretary of State triggers Part I of that Act. I believe, though I am not sure, that that is due to be on 1st October this year.
This is a crucial part of this whole legislation, if only for the simple reason: no registers, no postal ballots. It just is not possible if you do not know who are your members. Indeed, I would say that unions need to have registers, in any case. I have often thought it was monstrous, in companies with which I had to deal and where the workforce was well split, that the local secretary had to go to my own general manager to find out who were his members. The general manager liked it; I thought it was a monstrosity.
What I want to draw to the Government's attention is that this requirement came in very late. It came in at Report stage when the Bill was in this House. That is about four-fifths of the way through. Very few people know about it. No publicity was given to it. I should like to know just how much the unions are doing in order to get ready. I inquired this morning from a friend of mine who is very near the top of the EEPTU—a union that knows much about these things—as to what his information was. He said, "Well, some of them are doing it, but they are doing it with feet of lead". I should hope that the Government, using the ways that are open to them, would he quietly urging the unions to get on with this job, which they will jolly well have to do, and to get on with it quickly.
I hope that when this part of the Act is triggered and becomes law the Government will use all the techniques of publicity that are at their command to make sure that trade union members, and indeed the whole public, know of the existence of this crucial little section. It is an integral part of the whole matter and it must be seen so to be.
I therefore hope very much that the Government will feel that they can take on board the various suggestions that I have tried to make today. Much has
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to be done still on all sides of industry to revive our competitive edge. Employers must do far more by way of consultation and the unions must curb their wild men. Then, and only then, shall we have industrial relations of the quality which is necessary for the further creation of wealth.
6.48 p.m.
Lord Orr-Ewing: My Lords, I should like to follow other noble Lords in thanking the noble Lord, Lord Boardman, for introducing so succinctly—in 14 minutes—this particular subject. It is time for us to consider what obstacles there are and what can be done to reduce them. I was disappointed in the opening of the noble Lord, Lord Bruce. I timed it as 19 minutes of abuse and, at the end, a maximum of three minutes of little pinpoints which were not very constructive. I am sure he will realise that the Labour Party is coming to the stage where it really must start putting some constructive thoughts before the electorate if it is to have a hope in the next election.
He poured abuse on the Burdens on Business paper. It was not very thoroughly done, but it is a good idea to get people to look afresh at some of the obstructions. You can go on talking about them. It was a good initiative which was prepared quite quickly. It was asked for last October and in 90 days a worthwiile summary was produced. It did not deal with one of the subjects with which I wish to deal. A leader in The Times, commenting on this White Paper on 29th March, said:
"Very late in the day the Government seems to have discovered that the structure and rigidities of the British economy are the cause".
I want to deal with one of those rigidities, of lack of flexibility, and in fact lack of mobility for the workforce.
Secondly, too many regulations—with which my noble friend Lord Boardman dealt so adequately; and I have a few more examples—are injuring the growth or even the start-up of small companies and particularly the self-employed. It is even worse if you are by yourself and faced with this vast amount of newsprint, which I shall detail later. Lastly, there is the need to press on with a more thorough technical and vocational training. If there is one good thing to come out of unemployment—we all deplore it at this totally unacceptable level—it is that it has made us think about whether we are handling our young people correctly when they leave school between the rather abortive years of 16 and 18.
At one time, national service very aptly filled that gap. It does not do so now. The fact that we are now making training available is a plus. Even if there were no unemployment, it would be a plus for the future of our nation and the people who undertake it. It could be argued that we have more flexibility than is apparent. Every month 400,000 people come off the unemployment register and go into jobs. That is quite a big turnover. It means that over 4 million people in a year change jobs. The figure put around of 3·3 million unemployed people does not represent a standing army. It is a turning-over army, although it involves of course young people at the receiving end in many cases of a frustrated future.

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I wish to draw attention to the difficulties of young people who go to find work in areas where unemployment is relatively low and jobs more forthcoming than in some places in the North of England. In the old days it was quite easy to rent rooms. Now, rented rooms are very difficult to find. I recall that in my former constituency of North Hendon, where I served as Member of Parliament for 20 years, there were people who had moved into houses big enough to accommodate themselves and their children during the years when the children were at play school, primary school and secondary school. When the children had grown up and left home, those people, who perhaps found themselves rather hard up, tended either to put their house on the market or live in some penury or—shall I say?—hardship in a large house with many empty rooms where they were perhaps very lonely.
Is it beyond the wit of man somehow to make an allowance so that young people can take rooms in areas where jobs are available? Landladies and owners are still reluctant to let. They fear that tenants may be noisy, unpleasant and also perhaps slow payers, and that they may have got themselves a lodger for life. I cannot believe that it is impossible to devise a solution. I would urge my noble friend the Minister to examine this among the many issues that have to be considered. I also feel that the Rent Acts have to a great extent frozen people in accommodation. There is no need for this to be so. Such people would probably like to move if they did not have to pay so much more than they are currently paying. Surely, again, the Rent Acts were invented for a time when people stayed in an area and probably the same job for the whole of their lives. It is now a different economy. It is a moving and flexible economy. It has to be so if we are to reduce unemployment. Surely, when new accommodation is rented it should not be controlled. This would enable people to obtain a decent return for the help that they are offering someone.
We heard at Question Time yesterday that there are 30,000 empty council houses in London; 9,000 of them have been empty for a year. There are also many empty council houses in the North. I wonder again what has happened to landladies. Surely there are widows and elderly couples who, given enough incentive and some support by the Government, would take in students and tenants. It is difficult even in Oxbridge areas these days to find digs. One does not like to see empty houses and rooms not used. Every incentive should be given for young men to go to areas where there are jobs.
I should also like my noble friend to examine the exchange scheme for council houses. We have moved into the computer age. It must surely be easier than in my day for someone in a council house to arrange a swap in an area where there are jobs. It would probably be found that people who are retired do not wish to stay forever in the area where they have lived. Now that we have a house-owning democracy—60 per cent. of the nation are now houseowners—we should look for a system under which it is easier to buy and sell houses. The knock-on, domino theory acts in the housing market in a most irritating manner. You think you have sold your house but then find it difficult to
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exchange contracts. Eventually, they are perhaps exchanged on one side, but not on the other. The Scots, who have set the example in many fields, have a much better system. On acceptance of the first letter of intent, both sides have entered into a form of contract and are thereafter bound by it. I hope that my noble friend will also consider this proposal. The sale of houses in different areas would help mobility, and I believe the creation of jobs.
I come now to bureaucracy. As stated so many times, small firms starting up should surely be exempt from some of the existing restrictions—planning controls, VAT, health and safety at work regulations and other millstones around their necks. I have seen the list from which my noble friend was, I believe, quoting in his admirable opening speech. My copy was printed in the Free Nation in its March issue. It listed 27 documents totalling 269,000 words which had to be read by someone wanting to set up a company employing two people and wanting to ensure that he was reasonably on-side. Health and safety at work reading amounted to 10,000 words, Offices, Shops and Railway Premises Act reading to 36,000 words and the Employers' Guide to PAYE 50,000 words. The Employers' Guide to SSP—that is sick pay—amounted to 39,000 words. Is this really necessary, especially for one-person or two-person firms? I would also mention the tremendous expansion of self-employment. Self-employment is the start of the two-man, the 10 man and the 100 man firm. There has been expansion amounting to 1 million extra people in the past three years. An increase from 1.5 million to 2.5 million self-employed shows that enterprise exists. It needs, however, to be made easier and less burdensome.
I wish finally to deal with education and vocational education for the job. Before doing so, there is the issue of licences. It is staggering to discover that one needs a licence to sell game, to sell milk, to sell petrol, to run a hairdressers, to breed dogs and to run a pet shop. Is this really necessary in this day and age? I believe that Michael Grylls, the Member of Parliament, put it well when he said in an admirable article in the Sunday Telegraph:—
"Surely at a stroke many of these could be abolished".
I hope that my noble friend will take this on board.
Lastly, I urge the Government to double and redouble their efforts to provide better and longer education and to make it match the needs particularly in the electrical and electronic engineering areas. My noble friend Lord Vinson dealt with this in his admirable speech. Much has been done especially in the computer field which was a brave and imaginative initiative. We have increased the output of our graduate scientists and engineers—but too slowly. The gap between ourselves and our main competitors, the United States and Japan, is growing. It is not getting narrower. It is widening. I would point out that education in Japan is compulsory from the age of six to 15, and that thereafter parents have to pay for all further education between the ages of 15 and 18. There are no student grants. The cost falls on the parents. Alternatively, they can get loans. Or the student can be sponsored by a company. Yet the fact is that 94 per cent. of Japanese young people stay in

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education until they are 18 years old. The equivalent figure in this country is 21.6 per cent. That is a glaring difference. Surely, we have something to learn.
In Japan 37.5 per cent. go to places of higher education, universities and polytechnics; but in our country only 12 per cent. do so. Therefore, in this country only one-third of the people go to universities and polytechnics. The Japanese are turning out eight times as many graduates as we are, and the American figures are very similar. I urge the Government to keep up the pressure on universities to increase the availability of engineering places. I know that in the Budget they granted another £43 million to be spent on more technological education, which is good. Since 1982 the Government's information technology initiative has added an extra 5,000 higher education places, and that is good.
However, how different the situation is today from the day in 1930 when I went up to Oxford. I had to obtain credits in the school certificate in divinity and Latin, and among other subjects maths and physics because they were my specialty. Now of course compulsory divinity has gone, perhaps regrettably so. Latin has gone; and what is so strange is that maths has gone. Surely if we are looking at the future curriculum at least people should be trained with some numeracy if we are living in the information technology era. I ask my noble friend to look at this matter. One engineering graduate gives job opportunities to 20 others, so it is important that we have the engineers if we are to create jobs. I ask my noble friend to carry on with the good work that he is doing. I ask him to look at the housing situation, which is far too rigid, to encourage engineering places to be created at places of advanced learning, and above all to try to get rid of some of the bureaucracy which many of us have mocked.
7.2 p.m.
Lord Kagan: My Lords, bureaucracy is common to all administrations—democracies and dictatorships. But to a democracy it is a handicap and a yoke. That is not the case as regards a dictatorship. After all, a dictatorship's primary object is the retention of power and exacting of obedience, and bureaucracy is a helpful tool by which to achieve that. In fact, a dictatorship thrives with the help of bureaucracy. It helps to control; it relies on coercion. In short, everything is forbidden that is not allowed. Law and regulation control every activity and every aspect of life. The wider the net, the more effective the control. I recall a statement by a very powerful bureaucrat who said:
"Give me a name, and we will find something to pin on him".
With that knowledge no one escapes fear or would risk disobedience.
After all, dictatorship is safe as long as the privileged few have affluence and as long as the masses do not fall below the threshold which leads them to despair. It is not accountable. That is not the case with democracy. The primary objective is the well being of the people in freedom. It relies on consent, and not fear; on persuasion and not coercion. Yet law in a civilised democracy is unavoidable, and the power of law is massive. The resources of law are almost unlimited. The law-makers and administrators at the highest
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level in a democracy are well aware of this and they match power with responsibility. They are aware of the aims and they are aware of the side effects.
However, for administration and enforcement the law has to be handed down the line to minor officials, and that is where the problems arise. Law is rigid; it operates with full force at every level; it is inflexible. The minor official at a citizen's level or at the small businessman's level is purely concerned with literal interpretation not with aims and not with effects. With the massive power at his disposal he can be subject to heady temptation. It may lead to arbitrariness, to abuse and even an opportunity for pompous power assertion and eventually, to quote from "Hamlet" to:
"the insolence of office".
When enough people feel discouraged, disheartened and disillusioned, the economy suffers and democracy is in danger. We need less law and very careful scrutiny as to whether law is necessary. Perhaps I may quote Yasuhiro Nakasone, the present Prime Minister of Japan, who only a few days ago declared:
"Freedom in principle; restrictions as exceptions".
The noble Lord, Lord Boardman, suggested a Select Committee to scrutinise methods and systems. Perhaps I may suggest an extension of the ombudsman's activities. He has wide powers and is in a position to have access to departments and to documents, and he could use his powers to remove obstruction and to clear log-jams. This would he a great contribution, particularly because, through the ombudsman, the average citizen can more forcefully bring his grievance to attention.
7.8 p.m.
Lord Campbell of Alloway: My Lords, I hope that your Lordships will accept my apology for not having been able to be present when the opening speeches were made. I was detained in the courts; but I shall read those speeches in Hansard. In particular, I am extremely sad to have missed the maiden speech of my noble friend Lord Vinson, about which, while I have been present in your Lordships' House, I have heard so many complimentary observations.
In the last month we have had the White Papers, Employment—the Challenge to the Nation and Education and Training for Young People, and the Statement by my noble friend Lord Young of Graffham on these two White Papers; and we have had a debate on the Budget proposals on unemployment. For my part, with your Lordships' leave, may I take all that as read, including the consultative paper on wages councils?
However, there was one crucial contribution in all that from my noble friend Lord Young of Graffham, in which, in a sense, he set the scene for today's debate with a report of the Department of Trade, Burdens on Business. I suggest that it is not so much the content of the report as the concept which lies behind the report which is so commendable. The concept shows that the Government accept that certain burdens are a major drain on the resources of industry, especially on the small firms which are the seed-corn of our future. In that debate my noble friend said that he would be leading an initiative to follow up this report, to build on deregulation and to consider deregulation more

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widely in the light of current circumstances. That is excellent, and it is necessary.
One has to bear in mind that it was not so very long ago that the noble Lord, Lord Scanlon, drawing on his wealth of practical experience, warned your Lordships' House that there would be a shortfall of about 40,000 skilled technicians. I think that that was the figure he gave. There are on offer about 60,000 such vacancies today, and it will take about two years to find the men and women to take up these jobs. If only Her Majesty's Government can count on the goodwill and co-operation of the trade unions, on employers, and on our educational resources, we can make progress in this regard. It cannot, however, be done overnight. If these policies of Her Majesty's Government are intrinsically sound they ought surely to be supported broadly in this regard beyond the plane of party politics.
We as a nation shall not only survive but shall return to dominate the commerce of the world if only in this connection we can make some measure of common cause behind the essential concept. But alongside the employment policies of the Government, far more far-reaching than those ever devised anywhere in the world, so long overdue, we must also take this initiative to ease the burdens of business and to implement a policy of balanced and pragmatic deregulation. The importance of the Motion is that it recognises the essential link between the creation of wealth and opportunities for employment in the high technology of this new industrial revolution.
Under this Administration, thank heavens, there is to be no fudging, and we have to face the economic facts of life in the world in which we live. Setting the people free was no mere political gimmick or catchword. It is basic Government policy, and, having been heralded by prior enactments, it is now going to be pursued with even greater vigour—a policy of gradual decentralisation, a policy of deregulation. Surely the old Clause 4 dogma of control and regulation of all sources of wealth, of production, of employment and of much else besides is the antithesis of what is requisite for the country and for any Administration which would presume to govern this country.
The conservative approach of this Government is such that it upholds the virtues of self-reliance and the incentive of individual initiative alongside substantial means of state subsidy to create sufficient wealth to balance the books. The pursuit of profit in this regard, the creation of wealth, put it how you will, is not only laudable, it is requisite.
The Motion is cast for the present time and well into the future; but it is perhaps permissible to say just a word about the recent past, about the anti-inflationary Budget, because it cut personal taxation and national insurance contributions, which affect lower-paid employment. There is the major expansion of these training schemes; there is direct help for the long-term unemployed; there are schemes to help the unemployed set up in business; and there is the job release scheme to encourage premature retirement.
However, the Budget preceded this debate on a Motion which demands attention to obstacles, and so one comes to the future. The Budget heralded two
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important aspects of deregulation which inhibited, and inhibit, opportunities for employment. There are, first, the wages councils. Noble Lords have spoken about these. There are 26 wages councils and 2·75 million workers, mainly in the service industries. These councils set legally enforceable minimum rates by wages orders. I do not know whether any of your Lordships have ever seen them, but they are prolix, incomprehensible and rigid, and at times they even have retrospective effect. The whole concept fails to recognise the link between pay and jobs.
In practice, they in no way prevent the East End sweatshops and other wage abuses. They no longer provide, as they did at one time, a minimum basic figure upon which bargaining takes place only on the increment. They make it illegal for employers to take on staff at prices they can afford, and the sooner they are abolished the better.
Then there is the problem of unfair dismissal. Is it not much to be doubted that merely increasing the qualifying period for unfair dismissal to two years, bringing it into line with the position of firms with less than 20 employees, is perhaps tinkering? One wonders whether the whole system of unfair dismissal and redundancy, as dealt with by the industrial tribunals, subject to appeal to the Employment Appeal Tribunal, is not now ripe for review and reconsideration, which brings one right into the middle ground of this debate.
This body of legislation was inherited from In Place of Strife. It is open to the most serious abuse. The law is complex and technical. The proceedings are time-consuming and protracted. In the ordinary way there is no power to award costs. The provisions as to reinstatement are onerous and largely impracticable. The competence of many who sit on these industrial tribunals leaves much to be desired, as the reported appeals to the Employment Appeal Tribunal bear witness.
It has afforded a bargaining weapon in the hands of any unscrupulous employee to force unjustified out-of-court settlements. It hangs like an albatross around the necks of employers, and serves to inhibit employers from engaging new employment. This is the only part of the Act of 1971 which was left standing by Labour, and now we have got it. Consideration might well be given as to whether the regime should not be replaced by a new regime based primarily on common law wrongful dismissal with such modifications as might be deemed appropriate, and that it should be dealt with in the courts in the old way and the ordinary way.
Another inhibition which prevents employees from seeking new employment is want of accommodation. My noble friend Lord On-Ewing has dealt with this. Here there is no doubt that the Rent Restriction Acts kept much-needed accommodation in cold storage. Again, ought one not to consider whether the old legislation should not perhaps be replaced with legislation which imposes minimum duties on landlords, but also enables them to charge fair open market rents to tenants only having limited security of tenure?
There are other issues arising, such as raising the VAT threshold (I would suggest to £50,000); whether capital gains tax operates as an obstacle to mobility of

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funds for investment; to what extent it inhibits the creation of wealth; whether at the end of the day the tax gain is worth the legislative and administrative candle; whether, having regard to the abolition of the old Prices Commission, references to the Monopolies and Mergers Commission, where there is no evidence of any restrictive trade practice, serve any useful purpose, and whether that is in accordance with Conservative philosophy. Indeed, is the definition of public interest under Section 84 of the 1973 Act not, as indeed my noble friend Lord Cockfield thought on more than one occasion, long overdue for revision?
We should consider whether the whole legislative and administrative regime affecting restrictive trade practices, as it affects the creation of jobs, is satisfactory. In this we have the Office of Fair Trading, the Director General of Fair Trading, the Secretary of State, the Monopolies and Mergers Commission and the Restrictive Practices Court, now more or less moribund. We have the Commission in Brussels and the Court of Justice in Luxembourg. Is this not really totally out of hand, and ought we not to see whether this does not impose an unacceptable burden on industry?
In conclusion, is it not time—and this takes and develops a point made by other noble Lords—for some arbitral machinery to be set up to deal with the restrictive labour practices such as overmanning, demarcation and so forth? The shameful acquiescence to which the noble Lord, Lord Harris of High Cross, referred was the heritage of compromise in an age when our world trading situation was sufficiently strong to accommodate wasteful and uneconomic compromise. Arbitral machinery, with the co-operation of the unions sitting as members on the arbitral board, contributing as they do to the employment appeal tribunals, is something that ought to be considered. If such machinery were to be set up it could also be used for the settlement of inter-union recognitions.
It is not within the spirit of this debate to seek any answer to these questions or, indeed, on some of the very contentious points that I have raised, to seek any reply from my noble friend the Minister. The only hope is that they may receive consideration; and I, too, must express my gratitude to my noble friend Lord Boardman of having afforded the opportunity for what I hope your Lordships will agree has been an essential and constructive discussion.
7.24 p.m.
Lord Marshall of Leeds: My Lords, I bring up the rear, but first I apologise to the House as I was not present in the Chamber when my noble friend Lord Boardman introduced this Motion. This was due to an inescapable engagement arranged long before I knew I would be speaking in this debate, so I hope your Lordships will excuse me. I also missed the maiden speech of my noble friend Lord Vinson, but I have it on the highest authority that it is in order for me to congratulate him on that maiden speech. I do so most sincerely.
The whole House will be indebted to my noble friend Lord Boardman for initiating this debate and thus affording the opportunity for concerns to be
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expressed regarding the obstacles and inhibitions to which the Motion draws attention and which were referred to in the scrutiny that the Prime Minister announced in August 1984. There was never a more appropriate time to consider these burdens which militate against small businesses and act as a serious brake on enterprise and employment. This is all the more important if we consider that it is estimated that small businesses account for at least one-third of private sector employment. This is even more important if we acknowledge that in 1984 a record was set with nearly 100,000 new companies starting up.
It is a daunting challenge for anyone wishing to set up his own business and perhaps employ a handful of people in that enterprise. First, he will have to persuade his bank manager to assist him. In this context I cannot but mention that a certain institution which refers to itself as the "Action Bank" in its television advertisement claims already to have loaned to small businesses some £500 million.
Lord Boardman: It is £5,000 million, my Lords.
Lord Marshall of Leeds: My Lords, I am sorry; it is £5,000 million. I find it difficult to deal in astronomical sums of money. The figure is £5,000 million—more money than was spent on putting a man on the moon, I believe. That is a wholly worthy and I hope rewarding exercise.
Having received his financial backing the entrepreneur has to realise at the outset that he is required by law to be an honorary tax collector for pay as you earn. He has, according to the nature of his business, the strictest obligations in the fields of value added tax, national insurance, sick pay and so on. If he has to adapt premises he will have to obtain planning permission. That in never easy and it is almost always a tedious process. If he has to build or convert premises he has to comply with the building regulations. He will be visited by the most reasonable inspector from the fire brigade, who will then proceed to make some very unreasonable recommendations about fire precautions. His premises will have to comply with the health and safety at work regulations.
He will have to ensure that he offers the appropriately acceptable terms and conditions of employment and, where relevant, comply with company law, consumer law and very soon the new insolvency law. He will have to avoid the pitfalls which await the unwary in the thickets of sex discrimination, equal opportunities and race relations legislation, to name but three. All these and the cost of compliance is likely to make all but the most bullish of aspiring entrepreneurs blanch. In fact, what is of more concern is that it may turn an entrepreneur towards the black economy as the easy way out of not complying with tedious regulations. It may also induce an aspiring entrepreneur to employ only part-time labour, with all the implications that that has.
If he wishes to proceed, he will proceed with caution and, if costs allow, he will be wise to employ someone back at the office, a Man Friday who, while the employer is away getting business and putting the business on its feet, will be in the office able to cope with the fiscal, regulatory and other statutory burdens that I have described. But what a price to pay! The

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price is higher production costs and lower profits. I need not quote from page 3 of the Government Blue Book, Burdens on Business, which describes the most precious time of the entrepreneur in building up his business and having to cope with the impediments of regulations at the same time.
If Government, by deregulation, can achieve a significant reduction in compliance costs this will mean more profit and in the end will lead to a higher level of employment. If, on the other hand, Government cannot achieve a significant reduction then many a small business aspirant will opt for self-employment; and, however laudable, self-employment cannot have the same implications for employment potential as the small business. This is not to say that we must spurn the cottage industries which grew up in the Victorian age and particularly in my part of the world in the textile industry. Nor must we spurn the current, modern cottage industries where many a computer program is written by a girl who is a married woman, has had her first baby and is doing part-time computer work at home.
My noble friend the Minister was right when he recently drew attention to the major obstacles to enterprise, particularly for small firms, when he called for concerted action to minimise that regulatory burden. Certainly when I retired from practice I had an overhang of company directorships which I took into retirement, as it were. My accountant said, "You are a pluralist". When I found out that he was not being offensive, he said, "You should be a company". I said, "I am an individual". He said, "You should be a company. Then you could put your expenses against your company directorship fees". I said, "What else?" He said, "You will have to do VAT—charge it and pay it. If you were to use any part of your house for your work, then that part of the house will be exempted from the capital gains exemptions of your principal residence, if you sold it". So I said, "Well, it may be nice to be a pluralist but I think I'll just remain an individual". This was because I was daunted by the duties of having to deal with VAT, to keep books, and things like that. Now I am probably paying rather more income tax than I might have been otherwise.
But there is huge scope for deregulation, without prejudice to the necessary protection of the employees, the consumers and the general public, which cannot be denied. Again, Burdens on Business identifies 10 options for change which I need not rehearse but which are very encouraging. What a shame it is that we cannot persuade large firms to stop taking normal credit against the small firms with which they do business. This is a cause of the failure of many small firms. I fear that the current multiplicity of local and central controls does not automatically suggest that our party in government is not interventionist. There has to be the political will to get rid of the overhang of years of inhibition; and entrenched mini-bureaucracies, many of them with self-perpetuating propensities, need radical re-examination now as to what useful purpose they serve.
There is a world of difference between the many enforcement agencies which now exist and agencies which might be created to advise and encourage small businesses by offering comprehensive packages of
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advice and assistance which will be readily available to (and would ease the compliance burden on) those who are starting up small businesses; in other words, guidance to self-starters. So one hopes that the words on "One Stop Shops" in Appendix 7 of Burdens on Business, recommending that the Department of Trade should take the lead in co-ordinating action, will not be regarded within the various departments as just one more administrative chore to be performed merely in the course of duty; because the small businessman is waiting for relief and I do not believe that my noble friend Lord Young would be either satisfied or inactive if they did. I believe he would want it done with the enthusiasm and the vigour which he displays himself. This is why I believe that the Secretary of State and the Government and my noble friend are to be congratulated for taking this initiative.
We must not forget that many people are now no longer in work as employees. Certainly with the mobility that the motor car allows you are getting the peripatetic hairdresser who does not have a shop; and a very good service it is, too, I may say. You do not have to wait for an hour to get your hair cut; he comes to your home. This is done for both male and female hairdressing and is a kind of enterprise which in my view should be encouraged. But this is possibly a rather irrelevant aside. I conclude by repeating that my noble friend Lord Boardman has earned our appreciation by enabling us to debate our concerns by bringing forward this Motion today.
7.38 p.m.
Lord Ezra: My Lords, we are all indebted to the noble Lord, Lord Boardman, for introducing this very important and timely subject for our debate today. I think that we would all agree with the principle that we should all forever be vigilant against obstacles, hindrances and regulations which impede our normal activities. I think that the proposal that he has put forward for a standing committee of both Houses with all parties represented and with provision in the legislative programme each year for amendment or removal of or changes to regulations is a good one, and I am delighted that the noble Lord, Lord Young, has said that this will be studied with interest.
My industrial experience suggests to me that regulations and procedures often develop a life of their own. When I was engaged in the management of a large scale enterprise—which I hesitate to name because it may lead to a tirade from the noble Lord, Lord Harris of High Cross; however, he is not in his place—one of the things that I did was to ask for a regular review of all the forms that we issued. One could ask for information on a particular occasion to met a particular need and without one knowing it this would go on being provided for years afterwards. I believe that there are many regulations and procedures which have developed this sort of life long after they are required; so I must say that the idea of a permanent and regular review finds very much favour in my case.
Having said that, however, I believe that we have to look at the other side of the coin. I was glad that the noble Lord, Lord Young, said that the fact that the Government were now examining what obstacles and regulations to remove did not mean that they were

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totally against regulations, and that some are essential, as he put it, for the basic freedoms and to safeguard the basic feature in our social and economic life.
Therefore there could be a good deal of discussion about which of these regulations and obstacles ought to be removed and which ought not to be removed. Indeed, as our society and our economy become more and more sophisticated we may well find ourselves having to introduce new regulations to deal with that new sophistication; and some of the things that may be removed may in turn lead to a necessity for introducing other regulations. For example, the noble Lord, Lord Young, referred to the impact that the deregulation of long-distance coaches has had—and that was also referred to by the noble Earl, Lord De La Warr. I am delighted to hear that this has served the long-distance coach-travelling public so well, but I happen to reside in a part of London which is suffering as a result of this. I do not know what the collective noun is for lots of coaches—perhaps a herd—but herds of coaches go thundering down Ebury Street, and those of your Lordships who live in that vicinity will be aware of the problem. I should have thought—and I hope we shall be discussing this when the Transport Bill comes up in the proper way—that we should be giving some attention to that aspect. In other words, deregulation in one respect can lead to problems in another respect; and my noble friend Lady Seear also referred to this problem.
Indeed, one could go wider than the mere question of regulations. There are many ways of dealing with our affairs which could merit examination on the basis of the Motion that has been proposed, and the noble Lord, Lord Bruce, in his characteristically vigorous manner, referred to some of those at the end of his speech. It is a very wide-ranging issue, and one which I think we must take very seriously on board. I believe that many very interesting propositions have been made today and I hope they will be fully considered as part of the inquiry which the Government have now launched as a result of the recently-issued discussion document.
If, I may, I should like to refer to one kind of obstacle which I believe has impeded us at the other end of the economy. We have tended to concentrate on small enterprises—the one-man or two-man business—and to consider the major obstacles that they have to face. But at the other end of the scale of operations, I think we may have saddled ourselves in respect of major capital projects with a very complex and expensive form of public inquiry.
I should like briefly to refer to three recent public inquiries which have raised many questions as to the way in which we deal with these matters. There was one in which I was personally involved, concerning the Vale of Belvoir. That took a long time, was very costly and aroused quite a lot of local opposition. At the end of the day the inspector found in favour of the proposal. Nevertheless, the Secretary of State, as he is wholly entitled to do, rejected it, but in my opinion he rejected it on grounds which could just as easily have been stated right at the beginning of the costly process. Therefore it seems to me that in these major inquiries we should perhaps operate in two parts. The broad principles should first of all be discussed and either agreed or disagreed before the full cost of the planning
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application is launched into. If we take the third London airport, which seems to be pretty well a never-ending saga, it is a sad commentary to think that when we started talking about a third London airport in 1968, with the Roskill Inquiry, the French did the same; but they have now had their "third Paris airport" (De Gaulle) operating for the best part of a decade and it is now one of the leading airports in the world. When will it be that we shall finally make up our minds if and where we should have such an airport?
Finally, there is the famous Sizewell Inquiry, which is about the longest-running inquiry that we have had. Indeed, during the course of its very important deliberations and the hearing of evidence, the situation changed fundamentally because the AGR system then began to work very satisfactorily and raised an issue which was not in fact part of the inquiry itself and which no doubt the Secretary of State, when he comes to consider the report, will properly evaluate. Therefore I do believe that we need to recognise that the question of obstacles, so properly raised by the noble Lord, Lord Boardman, and so properly dealt with by all the noble Lords who have spoken, also affects activities at the other end of the economic scale. I very much hope, in that connection, that, now that the broad guidelines for the cross-Channel link have been agreed between the two Governments, when the proposals come forward and one is finally selected by the two Governments, there will not be undue planning delays involved in putting it into operation, because these major projects, although few and far between, do offer massive employment opportunities, not only for those involved in the construction but also for those involved in the supply of equipment.
I should like to conclude by thanking the noble Lord, Lord Boardman, for introducing this Motion. I was very privileged, as the rest of us have been, to hear the maiden speech of the noble Lord, Lord Vinson. I was much struck by the stalwart statement that he made on behalf of manufacturing industry. We need more and more voices of that sort in this Chamber, and I hope he will frequently come back to that theme. I believe that we have had a very useful day's debate.
7.46 p.m.
Lord Stoddart of Swindon: My Lords, I, too, should like to thank the noble Lord, Lord Boardman, for introducing this debate, which has been very wide-ranging and very interesting. I should like to join with other noble Lords in congratulating the noble Lord, Lord Vinson, on a most excellent maiden speech. His background and experience in commerce and industry are of course well known and they showed through in the speech he made today. I, too, like the noble Lord, Lord Ezra, was particularly pleased at the accent he placed on the need to retain and increase our manufacturing sector, and his recognition that service industries, though important, cannot substitute for manufacturing. I enjoyed his speech, which was an excellent one, and I look forward to hearing more such speeches from him in the future.
The noble Lord, Lord Harmar-Nicholls, rose to ask my noble friend Lord Bruce of Donington whether we believed in getting rid of unnecessary legislative controls and what-have-you. Let me say straight away

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that the Labour Party is in favour of getting rid of all unnecessary administrative and legislative controls, but not if that means that people in industry are going to work in unsafe, unsure conditions at low, "coolie" wages. That is certainly no part of the Labour Party policy in getting rid of controls. Many of these regulations, let us not forget, were introduced because of the scandal of conditions in our factories and places of work. That is why they were introduced, and we should not easily get rid of them unless we are sure that those abuses will not return and give rise once more to scandal throughout the nation.
The noble Lord, Lord Boardman, in his opening remarks, said that wages councils and the employment protection Acts had been the greatest obstacle to job creation. I should therefore like to begin by dealing briefly with those two aspects. But before I do so, perhaps I may also take him up on his remarks about local authority rates, which he said are a burden on industry; and I agree. But he and the noble Lord, Lord Ellenborough, are blaming the wrong people for the increased burden of rates. I am not at all sure that it is Mr. Livingstone and Mr. Blunkett who are to blame. After all, the present Government have reduced the rate support grant in their period of office from 61 per cent. to 48 per cent. this year, taking away from local authorities no less than £12,000 million. That is why industry and commerce are paying additional rates and why the burden of rates has increased so much. I hope the noble Lord will take that on board, because with his experience and great authority he needs to tell the Government that they are responsible for placing this additional burden on industry.
The Chancellor has given an indication that the Government will be either scrapping the wages councils or modifying and amending them very seriously indeed. These councils set a legal minimum rate of pay for nearly 3 million people. They are the poorest and most vulnerable workers in shops, catering establishments, clothing, the licensed trade, laundries and hairdressing. The abolition of wages councils, or removing young workers from their scope, would require deratification of the International Labour Organisation Convention, which provides that each country shall maintain some minimum protection for the most vulnerable workers. So we should have to rewrite our international obligations in this respect if we scrapped wages councils.
Almost all the countries in the world now operate some sort of minimum wage system. None, to my knowledge, excludes young workers. So why should this country set itself up to be so different? Why is it that we alone wish to abolish the minimum wage system and to penalise young workers? The level of protection is, in any event, very low. For example, an adult shop worker gets £71 per week. I am sure that everybody in this Chamber will know how difficult it would be to live on £71 per week if we had to do so. A fully qualified hairdresser gets £65 per week and a bartender gets £70 per week, compared with the average earnings for men and women of £172 per week. That is the sort of minimum that we are trying to protect—not £100 or £120 a week.
There is no credible evidence at all that abolishing wages councils will make any significant contribution to tackling unemployment. I have seen no such
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evidence. Indeed, commissioned research, carried out for the Department of Employment, demonstrated that no new jobs would be created if wages councils were abolished. But abolition would be likely to result in falling wages and lower standards of efficiency.
I have seen one estimate from the Low Pay Unit, based on the Treasury's own economic model, that abolition would create no more than 8,000 jobs over the next five years. Good heavens, my Lords, we have lost far more jobs than that every month since the present Government came into office! The CBI is not in favour of abolition though, to be fair, it favours some reform in their operation. The Institute of Directors, in a survey of its members, seemed to be little interested, because 93.5 per cent. failed even to respond to the questionnaire.
Employers who are, in the main, pretty sensible and responsible people, are concerned that abolition will lead to a spiral of wages undercutting, leading, first, to lower standards of efficiency and instability and, secondly, to destruction of well-run businesses and jobs. When Sir Winston Churchill introduced wages councils in 1909, he recognised their worth and said that without some form of wages regulation,
"the good employer will be undercut by the bad and the bad employer will be undercut by the worst".
and that still applies.
But even if the Government's theories are correct and the abolition of wages councils would create more jobs in the trades covered by them, is that really what we want and need as a country? Do we really need more bartenders and kitchenhands on coolie wages? Is it Government policy to concentrate on low skill, low tech, low pay industries, rather than on the high skill, high tech, high pay industries of the present and future? If this country is to succeed in a highly competitive world, it is the latter course which must be followed.
Investment must take place in high technology, high skill and high pay economies. It does not take place in the backward peasant low wage areas. That is why investment is high in the United States, Japan and Germany and low in, for example, Ethiopia. Jobs are created by firms that are thrusting, forward-looking, competitive, efficient and well-managed, and from this follows the requirement of a highly skilled, well-paid work force that is reliable, adaptable and motivated. The sweatshop mentality is the last thing we need now, when our world trading position has deteriorated to its present dismal level.
Let me turn to unfair dismissal. We all talk about the need to motivate workers. We need to get better co-operation between management and workers on the shop floor. The best way of achieving that—and I speak with experience—is to give security. That is the best thing you can do to get the co-operation of workers, and that is why it is most unfortunate that the Government are now to reduce the protection given by the unfair dismissal legislation. It is unfortunate and, in any event, the two-year qualifying period is hardly likely to have much impact on the creation of wealth or on the improvement of employment opportunities.
Certainly, in the past, Employment Ministers have recognised this, and I am really sorry that the present Minister is prepared to countenance the

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weakening of employees' rights now, when there are over 3¼ million unemployed. The noble Lord, Lord Young, must know that only a tiny proportion of dismissals are contested. Only one-third go to a hearing and less than one-third of these are won by the employee. Only one case in 100 results in reinstatement and one year ought be adequate for the assessment of an employee's ability and work.
In this connection also, the University of Manchester Institute of Science and Technology, in research for the Department of Employment, found that very few small employers were deterred from employing workers for fear that they would go to tribunals. The incidence of claims was so small that employers could expect on average one every 20 years, and a successful claim once every 40 years. Hardly a deterrent, my Lords. These findings back up a previous Department of Employment study by Opinion Research Centre which was undertaken in 1979. It found that only 2 per cent. mentioned unfair dismissal legislation as one of the main difficulties, and 88 per cent. found none of the legislative restrictions troublesome at all.
But evidence even from their own commissioned research does not alter the Government's apparent determination to restrict employees' rights. As John Lloyd, the industrial correspondent of the Financial Times, wrote on 23rd March 1985:
"In short, never mind the contradictory research findings, letting small employers fire people really makes them feel good".
I would not make that accusation against noble Lords in this Chamber, nor, indeed, against the Minister, because I do not think they feel that way. But I would urge the noble Lord to ask his colleagues to have second thoughts on this item because employee protection is necessary and essential if we are to have the better relationships within industry that we so badly need.
I do not believe that legislative and administrative obstacles are the main reasons for the loss of jobs and for the failure to create wealth. It is not those burdens which have led to the loss of jobs and 3¼ million unemployed over the past five years. Indeed, the noble Lord, Lord Young, in his speech talked about creating a climate in which business can survive, but in 1984 13,600 company liquidations took place, the highest ever recorded and three times the number in 1979. Is it suggested that administrative and legislative burdens have caused such an increase? Surely not. The real obstacles to creating wealth and opportunities for employment lie elsewhere, and many of them have to do with Government economic policy.
Noble Lords on all sides of the House know perfectly well that massive cuts in public expenditure and adherence to monetarist dogma have had far more to do with restricted opportunities for the creation of wealth and the growth of unemployment than any regulations, administrative or legislative. The Government's complacency in the face of a declining manufacturing base and an ever-widening visible trade gap is frightening.
The noble Lord, Lord Ezra, will agree with me on this point—we are extremely worried about what is to happen to this country when the oil revenues run out,
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or begin to run out, if by then we have not repaired the ravages done to our manufacturing base as a result of Government policy. The last Budget, which should have been concerned with a mild expansion of purchasing power and with infrastructure creation and renewal was instead a restrictive Budget. The public sector borrowing requirement was set at £7 billion and the Chancellor added £3 billion to reserves.
What has that achieved and what will that achieve for British manufacturing industry? The immediate result has been to appreciate the pound by 20 per cent., and that will mean increasing difficulties for our manufacturers who wish to export their goods abroad. The issue that has been mentioned most of all to the Select Committee on Overseas Trade by manufacturers who wish to export is the high rate and the fluctuating rate of the pound. Yet, by the last Budget and by his restrictive policies the Chancellor has now put manufacturing industry in danger of going back on the slide.
There are all sorts of things we can do; there are all sorts of things we need to do. We are training too few engineers. The Japanese train six times as many engineers as we do. There is too little investment in industry and the investment that takes place is not necessarily of the best. The noble Lord, Lord Boardman, who is an expert in these matters, will know, and I am sure will agree, that the British financial institutions take far too short a view of investment in industry in this country. One of the reasons why we do not progress, one of the reasons why our inventions are not taken up—I say this in particular to the noble Lord, Lord Vinson—is because our financial institutions will take, are taking and have taken too short a view of investment possibilities. In other words, they want to make too much money in too short a time, whereas the Japanese, for example, take a very long view.
Lord Boardman: My Lords, I am grateful to the noble Lord for giving way. I do not want to enter into a debate at this stage but I must, in view of what the noble Lord said, refute very strongly what he said about the British financial institutions, which give loans and financial services now which are equal to those anywhere else in the world.
Lord Stoddart of Swindon: My Lords, certainly they may give good services in many respects, but all the evidence shows that it is necessary for investment to take place over a very much longer period, that a much longer view should be taken of investment and that British financial institutions are not meeting that need at the present itme.
We have had a very good and far-ranging debate. We ought perhaps on another occasion to go even wider than we have today. As I said earlier, we will welcome any measures to get rid of administrative and legislative obstacles to business, provided they are reasonable and provided they do not put working people in this country in a worse position than they already are in. I repeat that we need to deal not only with the administrative and legislative obstacles but with the whole economic policy of the Government, which has brought restriction in industry and has brought about the present level of unemployment.

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Until that economic policy is altered, until the Prime Minister realises that there is an alternative and grasps that alternative, I rather fear that our wealth creation and employment creation will be far below what it could otherwise be.
8.9 p.m.
Lord Young of Graffham: My Lords, I am indeed grateful to the noble Lord, Lord Stoddart of Swindon, for referring in his concluding remarks to the title of our debate this evening because I had begun to feel that we had strayed so far from the title itself, which is to call attention to the
"obstacles imposed by legislative and administrative actions".
I am quite happy to debate this Government's economic record at any time but I thought that this evening we should at least keep to the matter under debate.
I said earlier that I was looking forward to hearing the noble Lord, Lord Vinson; and I was not disappointed by what he had to say. In the past we have spent many hours discussing all kinds of matters. I am sure he would not take the slightest objection if I was merely to say that from my perspective, while I accept that manufacturing is of the utmost importance in the creation of wealth, it is in all probability the service sector itself in which employment will come. The vital and very valuable work which the noble Lord has performed in CoSIRA in the past few years is beginning to show that.
The debate has been wide-ranging and many of the matters discussed were only on the fringes of legislative or administrative burdens. The noble Lord, Lord Henderson of Brompton, referred to a matter with which I was very familiar in an earlier incarnation; that is, the difficult situation in respect of disabled persons in this country, and the quota of 3 per cent. I remember from my time in the Manpower Services Commission the fact that the percentage of registered disabled is but 1·9 per cent. There are very human reasons why many people do not wish to register themselves as being disabled. The code of practice is a new regulation which I for one greatly welcome. I believe it represents a great step forward in the treatment of disabled people in the workplace. It does go to show that this Government are not against regulations and that indeed they welcome regulations where they are proper and where there is a place for them.
The noble Lord, Lord Ellenborough, talked much, and correctly, about small firms—and, I fear, took a little against the Chancellor's proposals in the Budget on national insurance. Indeed, if I recall the noble Lord's words correctly, he said that we have taken three steps forward and perhaps two steps back. Even my elementary arithmetic suggests that at least that still makes one step forward. I hope that it will be seen as a step in the right direction. It is the consequence of national insurance on people entering the labour market which I believe has had the greatest deterrent effect. I hope that in October, and in the year that follows, we shall see that there is a positive effect and that there will be no disincentive on employment of those in the higher income groups.
I welcome the contribution of my noble friend Lord Thomas of Swynnerton. I perhaps listened to his
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disinterested plea for authors—perhaps. I am lost in admiration for his ability to fill in VAT forms. I must confess that in my past I did attempt to do this but I failed the course. Should the occasion arise again, I shall go to see my noble friend. Indeed, his comments did indicate what problems there are for people who wish legitimately to declare earned income, to declare other sources of income, and to become registered for VAT—and the obstacles which we put in the way of many people.
My noble friend asked me to change my title to Minister for Enterprise. I am quite proud of not having a portfolio. It is not for me to say what I am called. I chose my name when I entered this House and that is the only choosing I am allowed to do. At least my noble friend should be satisfied that I run something called the Enterprise Unit and that my initials are still DIY. I hope that will be enough for him.
I want to give my noble friend an assurance on one matter. It has been my privilege in the past year or two to visit many universities and schools. I must tell my noble friend that so far as enterprise is concerned, and so far as the desire of young people to work for themselves is concerned, I cannot help admiring the great change that has overcome many young people. I have referred before in this House to the graduate enterprise programme funded partly by the Manpower Services Commission. Indeed, not long ago I was at Stirling University to see graduates emerging fired with enthusiasm and with the ability to work for themselves. I believe that we are seeing the start of many new enterprises for the future. This is happening not only at Stirling but also at Durham, Manchester, and the London Business School. There are many of them.
My noble friend referred also to the Liverpool of two centuries ago and to the effects of today's situation on that city. I wonder how much of the blame for that we can lay on Government intervention. Liverpool was once a thriving city—a service sector city—and I suspect that Governments in the past turned it into something else; but that is another matter.
When I heard the speech of my noble friend Lady Carnegy of Lour I was taken back immediately to my days at the Manpower Services Commission because she asked a number of many penetrating questions, as was always her wont; the kind of questions I have listened to before. I undertake to give my noble friend's questions very full consideration particularly as I see my task today as being much more to listen than to say anything. After all, I am at the start of a process which I hope will lead to something sensible coming forward before the summer.
My noble friend Lady Carnegy drew attention also to the benefit regulations and—as many other noble Lords did this afternoon—to the difficulties which local authorities operating council housing can place on permitting people to work in their own homes. That difficulty may be partly to do with planning. I suspect that we may even be able to overcome it. What we may not be able to overcome so easily is the attitude of local authorities as landlords and the restrictions they impose as landlords on people's business activities. That is a point we shall have to examine. There is a perfectly proper and well

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developed law of tort and nuisance which stops people being a nuisance to their neighbours. I hope that we may rely upon that law.
I welcomed the very forward-looking speech made by my noble friend Lord Ferrers and his realisation that unemployment is not inevitable. He referred to the lack of incentive in the system that we have today. This was something that was accepted very much by Beveridge in his report, by the Webbs, and by many others who, in years past, warned us about the difficulty of setting our safety net so high that we robbed individuals of incentives. I hope that throughout this process we can look—and the Government are looking in the context of a social services review—at the very difficult balance between the desire to make sure that no one in our society should suffer, and at the same time the difficulty of not taking away too much incentive from individuals to do things for themselves.
The noble Lord, Lord Harris of High Cross, at whose feet I have sat in the past and to whom I always listen with interest, contributed a brilliant analysis of the origin of regulations. I had that rather sinking feeling which I sometimes have when I realise that what is being said to me is true. I hope he will not be disappointed by what we actually produce. I know that he will be watching me and prodding me from time to time.
The noble Earl, Lord Dundee, made some very interesting suggestions and I hope he will forgive me if I do not reply immediately but wait until the end of this process. I too have been to America; I too went to Washington. I have seen the steps which the Americans are taking and I believe there is a great deal of merit in some of them. The noble Earl also suggested that the VAT threshold should be increased to £100,000; the noble Lord, Lord Campbell of Alloway, suggested it should be £50,000. This is a matter for my right honourable friend the Chancellor of the Exchequer, but I remind your Lordships that we have the highest VAT threshold in Europe. Indeed, there are those in Europe who would like to see us lower our present threshold rather than raise it.
My noble friend Lord De La Wan has my gratitude for raising the issue of trade union elections by ballot. Although this is not a matter of primary concern to us today, I share the anxiety that has been expressed about the very serious allegations of ballot rigging in our largest union—the Transport and General Workers' Union. Events of this kind only underline the important of the legislation that we have introduced. It is not for me to comment on what has been going on; but I note that the general secretary of the union and both the main candidates in the election concerned are now talking about a new ballot. Mr. Ron Todd, the winning candidate, has been reported as saying that he would back a new ballot because union leaders require (and I quote his own words),
"the full confidence of the membership".
So far as my noble friend's other points are concerned, I shall of course draw them to the attention of my right honourable friend the Secretary of State for Employment.
I would add only that returning trade unions to their members is of course what our trade union legislation is all about. Although the provisions of the Trade
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Union Act on union election ballots do not come into force until 1st October 1985, we are already seeing the profound effect they are having on trade union attitudes and practices.
My noble friend Lord Orr-Ewing raised three important matters. He raised the question of rigidities in the rented accommodation market. I am afraid that municipal landlords have not been too good, perhaps, or too flexible in their approach to accommodation; but it is difficult to see the effect on mobility of labour of an exchange scheme working. I suspect there are many people who would desire to move to that part of the country where jobs are more plentiful. I do not necessarily see an equal number wishing to move in the opposite direction.
The noble Lord then took the Government to task about licensing. I have already said this afternoon that we must get the right balance between licence and liberty. I will include licences in that as well! It is true that there are many steps, I suspect, which we still have to take so as to see our way clear to keeping that balance and to allowing the economy and individual liberty to develop with freedom.
The noble Lord also talked, as did some other noble Lords, about graduate engineers and our problems within our educational system. This Government have done as much as (and in fact more than) any for many years about helping to improve the supply of engineers. Only in the last Budget, to which the noble Lord referred, there was some £43 million allocated towards the production of more engineers and electronic engineers. But with our present system it takes some nine years to produce a new electronic engineer. It is not the bare fact of a degree. It is the A-levels, and before that the O-levels; and we go back to the age of 12 or 13, at which point choices have to be made as to which course one is going to follow through one's career. I believe it is of the utmost importance that we develop a more flexible educational system, and one which can cater for a world which is changing faster than any of us can really contemplate.
My noble friend Lord Campbell of Alloway referred to another aspect of the same matter—the warning on skill shortage. Of course, I understand that very clearly. It was a matter of great concern through my time on the Manpower Services Commission. There are other rigidities not imposed by Government that have an effect on that; and we all know, or have heard, perhaps, of the difficulties which are experienced in some unions in regard to engineers. I hope very much that practices as far as apprenticeships may yet be able to change and that we can increase the number of apprentices so that we have the technicians and can make ourselves flexible for the future. The electricians have shown the way. I hope very much that in due course the engineers will follow.
The noble Lord, Lord Campbell of Alloway, in his trenchant manner as a lawyer, also drew attention to many matters on wages councils. All I can say is that I do not see the purpose of having a consultative tier of wages councils. I think it is a time when Ministers should listen. I have listened to everything that has been said this afternoon, and I hope that your Lordships will forgive me if I do not go too much into

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the issue of wages councils save for one or two small matters of economics. My noble friend Lord Marshall of Leeds drew attention to the effect of bureaucracy on the "black economy". I sometimes wonder whether the "black economy" is not just the plain man's answer to too much bureaucracy—if we do not actually create it ourselves.
I am sorry in many ways that the noble Lord did not become a new company himself and incorporate himself, because he could then, perhaps, have told us of many more problems which I suspect may exist. For example, is it absolutely necessary that every company in the land should have its annual accounts audited by a chartered accountant? I think that that is a question we can look at. There is a balance between the rights of a protected creditor of a company. There is also the burden of imposing this, and I know many accountants—a majority of accountants—would much rather give more profitable advice to their clients than merely auditing their accounts. That is a matter at which I hope we can look in the fullness of time.
I was greatly indebted to the noble Lord, Lord Ezra, for his support on the deregulation principle, with his vast experience in industry. He drew attention in words which I shall remember to the consequential effects of deregulation and the difficulties which that might bring to us. I think we will get this balance right. I take very seriously his remarks about planning inquiries. That is probably outside the aspect of this debate, but at times I look across the water at France and see the way that they have developed and the way it has gone there and at times I look and see where we have gone. I see how many years it took for the M.25 to come into existence, and how many years, if ever, before Archway has its bypass, and I wonder.
Changing our system would, of course, remove an enormous sport from our activities. It has become an activity which keeps many people happily engaged for many hours, but I do not really know that it contributes to the sound economic development of this country.
Then we come to the contribution made this evening by the noble Lord, Lord Stoddart of Swindon.
Lord Dean of Beswick: My Lords, I hope the noble Lord will forgive me for intervening, but may I ask him why he has neglected to reply to the comments that were made by one of the few speakers from this side of the House, the noble Lord, Lord Kagan, whose record as a successful business entrepreneur stands comparison with that of anybody in this House? Why has the noble Lord omitted to reply to him?
Lord Young of Graffham: My Lords, I accept the reproof. I apologise for that omission. I will look with interest at the noble Lord's suggestion about the ombudsman. That I will take seriously, as indeed I will look seriously at every suggestion made this afternoon. I wished to reply simply to those points to which I thought an immediate reply would be necessary.
I must also say immediately that I do not think that anybody who lives in London can actually look at the GLC and say the rate level is the effect of any variation of the rate support grant. The GLC does not get the rate support grant. It does not; and the level of
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expenditure which is incurred in London is a direct result of the many expenditures which have been incurred by authorities. I remember only too clearly, at an earlier time when I was working within the Department of Industry, the great difficulty which rate levels meant to the provision of small workshops in certain areas of London where rates were so high that it was simply impossible to get new businesses and new employment started; and that has been crucial. I would much rather that we let individuals start their own businesses and pay low rates than have excessively high rates and then have these enterprise trusts creating new businesses which often do not last very long.
I said that I would not wish to comment on the question of wages councils but there is one area where I think I am qualified to do so, and that is the effect of wages councils on young people. A noble Lord asked this evening, "Why is it that only we want to do something about wages councils for young people? No other country seems to". In fact, we are taking more energetic steps than any other of our competitor countries about the employment of young people, about the training of young people and about getting ourselves out of a difficulty which exists in almost every industrialised country in western Europe. I would remind your Lordships that America, which has unemployment down to 7.3 per cent., has youth unemployment—that is, unemployment among those between 16 and 19 years old—at 19 per cent. It is a phenomenon caused as much, I believe, by the steps the world has taken in many cases in its education systems.
I have seen jobs for young people destroyed by wages councils. I shall listen very carefully to the comments and representations that are made, but I shall require a lot of convincing. Happily for noble Lords opposite, it is not my decision, but I, for one, will require a lot of convincing that wages councils do not destroy jobs for young people.
Lord Stoddart of Swindon: My Lords, I am most obliged to the noble Lord for giving way. I believe there have not been any consultations yet with the trade unions. If that is so, can I have the noble Lord's assurance that the trade unions will be included in the consultative process?
Lord Young of Graffham: My Lords, the matter falls properly under the responsibility of my right honourable friend the Secretary of State for Employment. I seem to recall reading in the newspapers only yesterday or today that the TUC was making some comment on this matter. I am sure that they are going to respond during the period of consultation and representation, but I will certainly inquire of my right honourable friend.
The noble Lord also said that in 1909 Winston Churchill saw the great need for wages councils. Of course he did. Winston Churchill was a far-seeing man, and he was Prime Minister when Beveridge produced his report. What Beveridge said in his report and the social security system we created out of that report has in my view fundamentally changed the position. It is not that people have to work for starvation wages any more.

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I believe we should look at all aspects of this, but there is one matter which I take slightly amiss. A noble Lord opposite twice referred to "coolie wages". I have just returned from China, and I must tell your Lordships that China is a country which has in the last few years seen the supreme virtue of setting its people free and releasing the intelligence, the vigour and the entrepreneurship of its own citizens. That is the reason why today China has a surplus of grain and rice, and you have only to go there to see the enormous differences. No, I do not wish us to work for any description of wages. I want us to have good wages, but I want us to have good jobs. I must tell your Lordships that the world of tomorrow—and we are getting on to economic matters now—is not a high-tech world. It is a no-tech world; it is a low-tech world; it is a world of personal services. The high-tech will create the wealth but the employment will come elsewhere.
We have had a wide-ranging debate. I am sure that we will find that economic matters will be solved quite satisfactorily by this Government following their current economic course; but what we need to do, in addition to the vast amount of investment which is being generated, is to release the energy and the enthusiasm and the entrepreneurship of our people. I believe that one way we can do that, with safety and with propriety, is by deregulating ourselves. I hope the process will continue.
Lord Boardman: My Lords, as my noble friend said, is has been a wide-ranging debate and it has been particularly refreshing to find that in winding up the debate my noble friend Lord Young has taken on board the many points which have come from all parts of the House. I have every confidence that they will be pursued with great vigour. With that, I thank all my noble friends and noble Lords who have taken part in this debate for their contributions and ask leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

Hospital Complaints Procedure Bill
8.31 p.m.
Lord Colwyn: My Lords, I beg to move that the Bill be now read a second time. I ask your support this evening for the Hospital Complaints Procedure Bill which was taken through all its stages in the other place on 22nd February by the honourable Member for Newbury, Mr. McNair Wilson. It arose basically from his experiences as a patient within the National Health Service and consequent development of a patients' charter, and is designed to establish better contact between patients and their relatives with staff and administrators within the hospital services.
The Bill lays a duty on the Secretary of State to give directions to regional health authorities on the complaints procedures to operate in each NHS hospital and publicity to be given to the procedures. Although there are a very small number of complaints in relation to the total number of cases, there is no doubt that there are occasions when patients are unable, or are unwilling, to communicate with busy staff during hospitalisation, which nowadays involves
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much shorter periods in hospital than in previous years. This time in hospital is often so short that the opportunity for the patient to get to know the doctors and nurses is much more limited. The ever-increasing amounts of administrative work tends to take doctors away from the wards and makes an effective bedside manner a much more difficult relationship to establish.
Although this Bill refers to hospital complaints, it is much more about communication and the establishment of conditions that will lead to harmonious relationships between patient and hospital. The NHS already has a quite well-established complaints procedure in hospitals on the basis of guidance issued in 1981. This guidance covers all suggestions and complaints which patients might make in connection with health services and includes a specific procedure for dealing with complaints regarding clinical judgment by hospital medical and dental staffs
There is also a leaflet, published in 1982 by the DHSS, which is produced to help patients, or relatives and personal friends acting on their behalf, who have comments or a suggestion or complaint to make about their stay in hospital. I do not know whether this leaflet is readily available to all patients, but at present, in the vast majority of cases, the patient will be required to complain to the very person he is complaining about. I feel that this is unreasonable. Usually the patient lying ill in hospital will be extremely anxious and nervous of making a serious complaint against a nurse or member of the medical staff because of fear of reprisals or that someone may become vindictive. This Bill is designed to enable hospitals within the NHS to establish a position for a hospital ombudsman—a member of the staff who will be responsible for following up complaints for and on behalf of the complainant: someone who would not be intimidated by senior members of staff.
Looking at the Bill in detail, Clause 1(1) lays a duty on the Secretary of State to use the power he already has in Section 17 of the National Health Service Act of 1977 to give directions to health authorities for the purpose of laying down the complaints procedure to be followed in all NHS hospitals.
Clause 1(1)(a) and (b) specifies the complaints procedure to be used and the arrangements to be made by authorities and hospitals to give publicity to the scheme to ensure that the patients and their relatives are aware of the procedures available to them to lodge a complaint. Clause 1(2) ensures that the Health Service Commissioner is not precluded from carrying out investigations under Part V of the National Health Service Act 1977 into cases that have been investigated under any procedures laid down in the direction to be made by the Secretary of State.
Clause 2(2) provides for the Bill to come into force on a day to be specified in regulations. This will enable the considerable amount of work to be done and consultations held on drawing up the precise form of the complaints procedure laid down in the directions. Clause 2(3) restricts the operation of the Act to England and Wales. This will need an amendment as I am advised that it is intended to extend coverage of this Bill to Scotland and that Northern Ireland would expect to follow suit with an order in council not included in this Bill.

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There are in this Bill as it is printed some technical defects which I intend to amend at Committee stage to make it correct in its application to health authorities in England, Wales and Scotland. In its present form it is in error in the way it refers to regional health authorities alone. Regional health authorities are not responsible for the management of hospitals, and there is no regional tier in Wales. In addition, Scotland is to be included within the scope of the Bill and health boards are the relevant authorities there.
Finally, I must make a few comments on behalf of my medical and dental colleagues and others who work within the hospital services. This Bill will appear to them as yet another complaints procedure to add to the long list of procedures already in existence. With the help of the Medical Protection Society I have listed the various avenues of complaint that are available today.
They are: the civil law, with particular relevance to negligence, assault and defamation; the criminal law, with particular relevance to drugs legislation and certification; the General Medical Council and General Dental Council, concerned both with serious professional misconduct and fitness to practice; the ombudsman in matters other than clinical judgment; health circular No. (81)5, which deals with complaints regarding clinical judgments; HM(66)15, which is concerned with methods of dealing with complaints by patients; HM(61)112, which deals with matters concerning the hospital doctor's personal conduct, professional conduct and professional competence; HM(60)45, which is concerned with the prevention of harm to patients resulting from physical or mental disability of hospital staff.
We have also the service committee and tribunal procedure which is concerned with the general practitioner's terms of service and under which he can be fined or excluded from providing general medical service. Finally, there are the inquiries set up by the Secretary of State under Section 84 of the National Health Service Act 1977.
This is a long and formidable list to confront anyone and I hope that the success of this Bill before us this evening will enable the Government to take a look at these existing procedures and consider the possibility of a much needed review. There is no doubt in my mind that it will be the patients who eventually suffer if the availability of too many complaint procedures becomes a growing industry. I think that this Bill will be able to help both patients and medical staff, and I ask for your Lordships' support this evening. I beg to move.
Moved, That the Bill be now read a second time.—(Lord Colwyn.)
8.40 p.m.
Lord Ennals: My Lords, I am sure that all noble Lords will be grateful to the noble Lord, Lord Colwyn, for introducing this Bill which as he said comes to your Lordships' House from another place. I and my colleagues fully support the Bill with the amendments which he hints will be brought forward at the Committee stage.
It would have been eminently suitable had the Bill been presented, as was originally intended, by the
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noble Baroness, Lady Cox, with all her experience within the Health Service. I think that it is inappropriate at the moment to congratulate her on her appointment. I have two hopes. The first is that we shall not lose her experience and wisdom about the nursing profession in this House. The second is—and perhaps this is a little more impertinent—that the smoking habits of so many of the Government Whips will not in any way damage her health. I know that she will not be caught into taking up the habit. My concern is that she may inhale the fumes. As an aside, I think that there should be a Government health warning pinned to the lapels of Government Whips. But perhaps that is overstepping the mark.
Since I am being so personal, I think that it would be appropriate to congratulate Mr. Michael McNair-Wilson who introduced the Bill in another place and did so from his own experience. He had been seriously ill with kidney failure. He was full of praise for doctors, nurses and all others who helped him back to health. He had a great deal of good to say about the National Health Service. Perhaps I may quote two comments. In the Second Reading debate in the other place he said:
"Nurses still remain the gentle and kind angels that we want them to be".
He went on to say:
"or at least that can be said of 99.9 per cent".
I just wish I knew who the 0.1 per cent. were against whom he had a complaint. Of doctors, he said:
"Doctors, by necessity, are more awesome characters. If I had not been fortunate enough to be the son of a doctor I think that I would have been more browbeaten by them than was the case".
Nevertheless, he had this great respect for the medical profession. I assure him and your Lordships that I have, too. Perhaps I should give that assurance to the noble Lord, Lord Winstanley, who will be speaking next.
Mr. McNair-Wilson said that there were problems, and perhaps I may quote just two to which he referred when he presented the Bill in the House of Commons. He said:
"I was asked whether I was sensitive to penicillin. I replied that I was and that my GP did not usually give it to me. At that time I had an infection, and I was given a pill, which turned out to be penicillin-based. I suffered the mother and father of a drug rash which, on its own, kept me in hospital for five weeks".
I think that everyone would agree that he had reason for complaint. He gave another example. He said:
"someone left a stitch in my leg while removing something that was necessary for dialysis. The stitch went septic and I got septicaemia. I still have a wound in my chest as a result of that mistake. Again, to whom do I complain? Who will offer me compensation? Who will listen to my problem? Sadly, no one seems to want to take the blame".
Such problems do not occur only in the Health Service. I think that such complaints are pretty common in society generally. He came to the conclusion that:
"There should be guidance on how to make a complaint if such a necessity arises".—[Official Report, Commons, 22/2/85; cols. 1375 to 1377.]
I am sure that he is right, and that of course is the purpose of the Bill.
When I was Secretary of State I was worried about this situation. In April 1978 I issued a consultative document for consideration by the health professions

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and those representing patients. The outcome of that was Health Circular HN(81)5 issued in April 1981. Perhaps I may quote just the first paragraph:
"A consultation document on the initial handling of complaints was issued with Health Notice HN(78)39 in April 1978 for comment by health authorities, community health councils and a wide range of staff, professional and other organisations. From the response it appears that the consultation document was well received in the main. A great deal of comment was sent to the Department, including much of a detailed nature that is appropriate to local arrangements rather than to broad central guidance. There is general agreement that the Department should advise on simple, easily understood, basic procedures; and this Circular and accompanying Memorandum seek to provide such a framework in the light of comments received".
Of course, the circular has a weakness; it has no statutory backing. I think that that is precisely what is required, and that is what the Bill seeks to do. I have no doubt, as the noble Lord said, that where the procedures set out in the circular have been effectively carried out, they have been of great value. It was certainly my belief when I began the consultation that there would need to be some statutory provision to require health authorities to have a system that would be satisfactory to patients.
The noble Lord said that some doctors did not want the Bill—and I can state that that applies to the BMA—because they believe that the present voluntary system works well. The BMA tells me that in England alone:
"In 1982 … there was a total of 16,218 written complaints on all aspects of the hospital service; of these, 7,005 related to clinical judgment. By far the majority of these complaints were withdrawn or resolved locally",
which is the best way to do things. It went on:
"In 1982 … there were 5,720,000 discharges and deaths; the number of clinical complaints per thousand of these discharges and deaths amounted to 1/".
That does not mean that there were not other complaints which people would like to have brought had they felt able to do so. The fact that there were only a limited number of complaints does not necessarily mean that there were not some patients who felt difficulties and doubts about bringing forward complaints.
Mr. Frank Dobson, the shadow health Minister, speaking from the Labour benches in another place in the debate on February 22nd, said:
"People in hospital are ill and vulnerable. Many patients are in awe of doctors and nurses and many are affected by a sense of gratitude to all the people who are trying to make them well. As a result legitimate complaints are not voiced by patients because they feel that they would appear ungrateful or that they would be regarded as troublemakers if they drew attention to things that were not going right for them." [Official Report, Commons, 22/2/85; col. 1383.]
I think that that is the feeling of many patients. We must ensure that there is a complaints system about which everyone knows and of which everyone can make use.
I think that we recognise that it is often difficult to complain, as the noble Lord, Lord Colwyn said, directly to the person about whom one is complaining. It can be difficult if one is having a rough time with a nurse or a doctor to say that one does not like what is going on. One may fear that it is rude or that the next stage of the treatment may be worse still. A formal complaints procedure would also be to the advantage of people working in hospitals. Certainly if the hospital
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management makes proper use of the complaints procedure not only will that benefit the individual making the complaint, it will enable the hospital to provide a better service by identifying what is going wrong and putting it right.
In my view the Bill has it right. It does not try to impose a complicated system. It requires the Secretary of State to ensure that health authorities have in operation an effective system. I thought that it was well described in the Explanatory and Financial Memorandum. It:
"requires the Secretary of State to exercise his powers under section 17 of the National Health Service Act 1977, which enables him to give directions to health authorities as to the exercise of functions".
I hope that the Secretary of State will not necessarily make new provisions which will be complicated or difficult. I think that the circular that went out was roughly right but it was not a requirement. I think that the purpose of the Bill is to ensure that good practice is a requirement rather than just an advantage where it occurs.
I want very warmly to welcome this Bill, and to assure your Lordships that when we come to Committee stage we shall want to see the Bill through as rapidly as possible with the sort of amendments which the noble Lord, Lord Colwyn, has very kindly said he will introduce. If he does not, then I shall do so: but I am sure he will.
8.51 p.m.
Lord Winstanley: My Lords, I must at once join with the noble Lord, Lord Ennals, in thanking the noble Lord, Lord Colwyn, for introducing this Bill in a mood, I would think, of benevolent neutrality. I would say that on the whole I agree with almost everything the noble Lord, Lord Colwyn, has said in introducing the Bill. There are one or two points to which I might return briefly in a moment. I also agree substantially with everything that was said by the noble Lord, Lord Ennals, though perhaps I would not go all the way with him on the matter of secondary smoking which is a slightly separate matter upon which we are not now required to comment.
It seems to me to be not altogether without significance that we should have here a Private Member's Bill coming from another place; a Private Member's Bill which had a very short Second Reading debate which was very interesting—I have read it all—but then had a Committee stage, Report stage, and Third Reading on the nod. In other words, it is a Bill which went through very rapidly with virtually no scrutiny at all. We have that to deal with a subject which frankly takes up, I should think, the larger part of the postbag of the ordinary member in another place: constituency problems relating to—perhaps complaints is the wrong word—anxieties expressed in letters. The noble Lord, Lord Ennals, does not agree with me. It may be that I received these letters because I am a doctor. It may be that people thought that I being a doctor it was appropriate to write to me of their anxieties about the hospital service and the Health Service. It is a fact that there are a great many on this subject. Here is where perhaps I would take issue for a second with the noble Lord, Lord Colwyn; and I shall come to that in a moment.

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The noble Lord, Lord Ennals, told us, and rightly, that the British Medical Association on the whole regards this Bill as superfluous and says that it is not necessary. It says there are sufficient avenues for complaint already and that to add others is merely an additional complication and would be superfluous. I wonder whether that is not a little complacent. The noble Lord, Lord Colwyn, said, and rightly, that there are many avenues of complaint. He explained them at length and very clearly, and I am grateful to him for doing that.
He went through precisely what the different avenues are, even explaining that one of the avenues was the civil court which frankly is not a very satisfactory avenue. I am quite sure the noble Lord, Lord Colwyn, would accept that the law in Britain is so constructed as to make recourse to the law unpleasant, time-consuming, costly and unsatisfactory. Indeed, if every citizen was to seek justice to its uttermost through the civil courts nobody would be doing anything but working in the courts. We should all have to be solicitors. I do not think that that is an avenue which is wholly satisfactory. The other avenues exist, but this surely is the problem: they are not sufficiently signposted.
An anxiety in a patient is a potential complaint. It has been my experience over the years—and I have had a lot of experience in this field—that very often, provided the avenue for the processing of a complaint is sufficiently open and unobstructive, then the complaint itself disappears. The one thing which is certain to escalate the total number of complaints is a feeling that there is nowhere to make the complaint and that there is no one who is going to look at it. It is a fact—indeed this was referred to in the British Medical Association statistics which were sent to the noble Lord and to others—that on investigation it is found that many of the complaints are later withdrawn because once their complaints have been looked at and once they feel that they have had a proper answer, many people feel that the whole thing is answered. They are satisfied. That is the problem with so many different routes to which the noble Lord, Lord Colwyn, referred.
What does this Bill do? It places a duty on the regional health authorities to take quite specific steps, and presumably to publicise those in such a way that the public and patients know of them. It places a further duty on the Secretary of State who, it is at least implied in the Bill, will have to monitor the working of all this and give directions, should the need arise if regional health authorities or others are not taking the necessary steps. That surely can only be for the good.
I know that there will always be complaints and I know the kind of case that the noble Lord, Lord Ennals, mentioned. I would merely say that I do not myself belong to the school of thought which has arisen since 5th July 1948 when the National Health Service first started that everyone has to live forever or it is somebody's fault. Fortunately we have not quite arrived at that situation here, though they have got rather close to it, if I may say so, in the United States. I hope that we do not do so here, where civil suits for negligence and so on become almost the rule rather than the exception. I think that would be very disadvantageous indeed.
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I believe that to avoid that kind of thing we need open channels of complaint through which people's anxieties can be processed and can be examined fully. Therefore I do not go along with the British Medical Association in saying that this is superfluous. I think it is helpful. I accept that it is a very limited measure. I rather take the view of the Royal College of Midwives, who have written—as no doubt they have written to other noble Lords—saying: if it is a complaint about hospital complaints, why not patients outside hospitals? Why not indeed? It is a limited measure.
The noble Lord, Lord Colwyn, referred to the fact that it does not apply to Scotland but that later there may be amendments which will make it do so. With regard to Wales, the position at the moment is somewhat uncertain because the Bill refers to regional health authorities in Wales. Possibly to make it quite explicit that this refers to Wales there might have to be some textual amendment in the Bill with regard to health authorities in Wales which are not regional health authorities. But that is a different matter.
In general I believe that anything that clarifies the situation and makes it clearer to patients that there are avenues via which complaints can be forwarded, and that those complaints will then be looked at, is for their good and the good of the Health Service. In my experience, dealing with a number of cases to which I referred—the noble Lord, Lord Ennals, said he did not get as many, perhaps because he was a Minister and they were filtered out by Members before they reached him; but he knows that there are many—one of the principal complaints in hospitals is lack of information: the inability of patients and their relatives to actually find out precisely what is happening. When they have found out, often they are wholly satisfied; but often they are anxious and uneasy because they cannot find out.
One of my favourite stories, which is said to be true, as are all good stories—and I will repeat it even at this late hour—is of a telephone call to a hospital near Manchester. A voice said, "Is that such-and-such hospital?" The telephonist replied "Yes". "I am inquiring about a patient, Mr. Reginald Smith, in the orthopaedic ward". "One moment please," said the operator. There was a pause, and then she came back, "Yes, Mr. Smith has had his operation; his condition is satisfactory, and he is expected to be discharged on Tuesday." "Thank you very much." "Just a moment, is that a relative?" "No," he said, "it's Mr. Smith speaking. They tell you nothing in here".
There is an element of truth, if I may say so, in that. We really need to do something about making it absolutely clear that patients and their relatives are entitled to know what is happening to them. A patient plays quite an important part in his or her illness. I think the lack of information in the hospital area very often leads to a whole number of complaints which otherwise would not have arisen at all.
Therefore in general I welcome this Bill as being a limited measure. I hope we may be able to clarify its relationship to Wales and perhaps Scotland, and various other things, at the Committee stage and perhaps extend it a little further. However, for the moment I certainly welcome it and hope that it gets its Second Reading.
8.59 p.m.
Baroness Masham of Ilton: My Lords, I thank the noble Lord, Lord Colwyn, for so clearly explaining this Bill. I welcome the Bill, as I believe it will improve the quality of patient care. I have the greatest admiration for the work done in our National Health hospitals; but, as with all organisations, there are at times complaints which are far better dealt with if there is a very clear and briefly spelt out procedure which the patients are fully aware of.
Many people admitted to hospital feel worried, unsure, and even frightened. If something goes wrong and there is no clear procedure to follow, patients or their friends or relations can become aggressive, the grievance can grow out of all proportion, and they can feel that nobody cares. The quicker and the more localised the place in which the problem can be dealt with, the better it will be.
In the first stage of a complaint, there should be a recorded acknowledgment. Many complaints, I would hope, could be solved at the first stage. If a complaint goes further and there has to be a process such as a disciplinary procedure, the conclusion should not take longer than about four weeks. That seems a reasonable time. If it is complicated with legal claims, then it might take longer. The complainant should be kept informed at each stage.
This Bill materialised because a Member of another place had personal experience of hospital staff not listening to him, as explained by the noble Lord, Lord Ennals. These days, one hears much about the team approach in hospital—the team being all the professionals, leaving out the voice of the most important person, the patient. I hope that the Bill will make everyone realise that the patient is a very important feature in the hospital scene. He is a person with a heart and a soul.
Busy acute hospitals have become almost like a conveyer belt system. Some staff have an excellent approach, explaining and involving the patient and relatives. I have met consultants and nurses who have an excellent procedure. But all of us, I am sure, have examples where it has not been so good. As an acute patient myself, I was on one occasion complaining on behalf of another patient. She was a young girl from Scotland, a long way from home, with little family support. She had broken her neck and was paralysed in all four limbs. At night, she was turned, like all such patients, to prevent pressure sores. She was a prisoner in head traction and the nurse had not placed a small pillow under her neck in the correct position. The girl asked for this to be done. The nurse, who happened to be Dutch, told her to speak English and was really sarcastic. The helpless patient was so upset that she spent most of the night crying. I reported this case the next day to the ward doctor. The nurse was transferred to another ward.
Yesterday, I heard of the case of a woman who had a rare blood group. She had been admitted to hospital for the second time to have a hysterectomy. The first time there had been no supply of her special blood. She had told the hospital staff that she hoped that this time it would be there. It was not until she was in the theatre, having had her pre-med, that it was found by the surgeon that the special blood had not been
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ordered. The operation was cancelled for the second time. What a waste of everyone's time, and what extra anxiety for the patient!
I hope that this Bill, when it becomes an Act, will make all staff more efficient and receptive to the patient's requirements and requests. I feel that it should be the health districts which exercise the functions in each hospital for dealing with complaints. Maybe it should be the duty of the regions to monitor which procedure is working best and which is most efficient, so enabling them to put out guidelines to the districts. The nearer to the local level complaints are heard, the quicker they will be dealt with.
It seems to me that it should be the duty of districts to draw the procedure to the attention of patients. Some hospitals are much better than others at bringing information to all sorts of patients. We should have built into the Bill that the notice explaining the complaints procedure should contain the information that, if patients do complain, the complaint will be investigated. The patients must be reassured that they will not be victimised because they have made a complaint. I hope that the Bill will help to improve communications within hospitals. I am pleased that it is to be extended to the whole of the British Isles.
9.5 p.m.
Lord Dean of Beswick: My Lords, like previous speakers, I should like to express my appreciation to the noble Lord, Lord Colwyn, for the manner in which he introduced this important Bill. We should place on record also our appreciation of a Member of another place, Mr. Michael McNair-Wilson, for introducing the Bill in the first place. I had some practical experience of complaints procedures before the Health Service was reorganised. In fact, I was the last deputy chairman of the old Manchester Executive Council of Health. Although that body at the time did not deal with hospitals, it did deal with medical complaints. I have to say now, as I have said previously, that one of the most difficult facets of complaints against medical people is getting colleagues who work alongside them to give critical evidence. That is proved beyond doubt from my experience as chairman of a service committee at that time.
In welcoming any Bill that makes the procedure easier, I am not speaking in a frivolous sense. We do not want an avalanche of trivial complaints that will clog the machine. We are talking about genuine complaints. The noble Baroness, Lady Masham, has quoted one case. I know that the hour is late, but I should like briefly to illustrate what I consider the most serious case that I have known in the Health Service, certainly in the Leeds area. I was particularly involved because the case was brought to my attention. I shall not mention any names.
The case was finally resolved by an out-of-court payment to a man who had been widowed through the negligence of a consultant. The woman had died of a brain haemorrhage while undergoing an operation at which the consultant was not in attendance to carry out the final details of the operation. The matter was only dealt with because of the dedication of another person at the same hospital, a consultant anaesthetist who was sick and tired of anaesthetising patients who were going for neurosurgery but who were having to be

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taken back because the surgeon who was scheduled to perform the operation was not in attendance. Let me say that this matter would never have been pursued but for the diligence of the then chairman of the Community Council of Health for East Leeds, Mr. Leslie Rosen, who has since retired. It was a very serious case. At the time the husband did not know that his wife may well have lived—and I only say "may well"—but it certainly caused the Minister of Health at the time, Mr. Gerard Vaughan, a great deal of concern. If this procedure can prevent that sort of case, well and good.
When such a case comes to light, lay people, quite rightly sometimes and quite wrongly in the majority of cases, assume that it is only the tip of the iceberg. But in that particular hospital at that time there was no question but that that was not a one-off case. A code of treatment or a standard of negligence had been accepted by professional people in that hospital which was beyond belief. Now, because of the action of some diligent people who followed the case to the end of the line and obtained some form of justice, that has been corrected.
As the noble Lord, Lord Colwyn, and all subsequent speakers have said, the Bill must be gone through with a fine tooth-comb because it is only the skeleton of a Bill. At a later stage we must build into it procedures which, in my opinion, will be foolproof but easily explainable to lay people, because it is lay people about whom we are talking. There is no point in saying to the overwhelming number of people who go into National Health hospitals that there are a variety of ways in which they can complain. As Members of this House and of another place have said, the overwhelming majority of ordinary people who go into hospital instinctively do not wish to complain because they do not consider that it is in their own interests to complain about someone who is probably giving them the ultimate treatment for the condition or illness from which they suffer. I am prepared to say that if we get this Bill right at later stages, it will be of immense value in that situation.
I make one final plea. I have been asked by the trade union which will be mostly involved at the lower level, COHSE (and I have not been in any way retained by them), which has over 200,000 members who could be involved in some respects, to say that they are clearly in favour of the principles embodied in the Bill. They simply ask that, if any of their members are complained about—and they accept that, human beings being who they are, some of their members may be involved—they will be given elementary justice, and that if the complaint is to be heard they are fully notified and given ample time to prepare a defence. As people at that level are not sometimes the most articulate, they ask that such people be catered for by being represented by someone of their choice. If it is a pretty trivial complaint, they may be represented by the equivalent of what I would call the shop steward in a factory; but if the complaint is more serious, they ask that the union can and will be given the chance to make sure that the member receives the rudiments of justice which we as Britishers have come to expect.
On a personal basis, in the past, before the Health Service was reorganised, I was involved in this sort of thing. I believe that the Bill introduced by the noble
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Lord, Lord Colwyn, goes a long way towards making it much easier for ordinary rank and file folk who have a genuine complaint to pursue it. I hope that we shall find some means to keep out of the complaints procedure some of the frivolities that may creep in, because as ex-Members of another place and as Members of this House we can all find some of those. With those few remarks, I support the principle of the Bill.
9.13 p.m.
The Earl of Caithness: My Lords, I am pleased to have the opportunity to speak on this Bill so ably introduced by my noble friend Lord Colwyn, and to express the Government's support for it. Before I do so, I should like to thank the noble Lord, Lord Ennals, for his kind remarks about my noble friend Lady Cox. Personally, I am pleased that the ratio of smoke in the Chief Whip's office will be reduced. However, I would also point out that on his side of the House there is a certain Whip in the Opposition Whip's Office who also complains about the smoke.
Lord Taylor of Blackburn: My Lords, will the noble Lord give way? There are many of us who welcome the smoke in the Whip's Office, regardless of what the Front Bench has to say.
The Earl of Caithness: The noble Lord, Lord Taylor, has support from a noble friend of mine sitting not very far away.
My Lords, complaints arise from only a tiny fraction of the vast number of contacts between NHS staff and members of the public. In 1983, just over 19,000 written complaints were received—about one for every 3,000 episodes of treatment. Criticisms of the Health Service can be looked at in two ways. First, they can be seen as an indicator of levels of dissatisfaction on the service provided. Alternatively—and I believe rightly—they can be regarded more positively as providing Health Service management with the comment from patients that they must have if they are to make services more responsive to the needs of patients.
Experience suggests that the majority of complaints are not made with the idea of obtaining financial compensation but to receive an adequate explanation of why a particular action took place in a particular way and to gain some reassurance that similar misfortunes will not befall others. In this sense complaints may be seen as most useful to managers in assessing levels of satisfaction with the services provided and the way they are delivered; and a useful guide to where systems or procedures could be improved.
The Bill is concerned with enabling patients, or those acting for them, to voice their complaints, whatever the nature of those complaints. This is in line with the Government's concern to increase the responsiveness of the NHS to the needs of its consumers. One of the key components of the recent NHS management inquiry report produced by Mr. Roy Griffiths and his colleagues was the importance of assessing and ensuring consumer satisfaction with the services provided. This means the Health Serice should be trying more than ever to listen and respond to the voice of its consumers.

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Many of the problems which arise in the course of a hospital stay or a spell of treatment do not call for a formal investigation. The majority of minor difficulties can be cleared up as they arise and should be dealt with on the spot by the staff responsible. This is a vital part of any complaints procedure and requires effective communication between patients and health care staff. Patients must feel they have the right to voice their concern and should be given some encouragement to do so. But perhaps for the majority of people it is the existence of a complaints procedure and the way in which they are made aware that the procedure exists that can ensure that they feel able to express their comments.
For many years hospitals have been given guidance on the establishment of complaints procedures. The most recent guidance was issued in 1981, as the noble Lord, Lord Ennals, said. This guidance emphasises that a speedy, thorough and open response at the local level is the best approach to resolving a complaint. We expect health authorities to deal fairly and fully with complaints and to ensure that complainants receive an informative and frank explanation of what went wrong, and I know that health authorities take this role seriously.
However, we are not complacent about the procedures which exist. We recognise that there are a number of ways in which they might be improved. Perhaps one of the major areas which can be readily identified as needing improvement is the publicity given to the complaints procedure. As I have said, every hospital should operate a complaints procedure in line with the department's guidance; but despite our efforts to ensure that there is a well-publicised complaints procedure, we are aware of the variation between hospitals in this respect.
This Bill would lay a duty on my right honourable friend the Secretary of State to promulgate a complaints procedure with statutory force and with statutory requirements on the publicity to be given to the procedure. It provides a valuable opportunity to re-examine the existing procedures and the publicity given to them. It will act as a vehicle for introducing improvements. These were points raised by all noble Lords and have shown the need for this Bill. In drawing up the directions which the Bill would require, there would of course be full consultation with the medical profession, the other health professions and organisations representing patients' interests.
The noble Lord, Lord Dean, mentioned a number of amendments that he would like to move at later stages. Perhaps, with all due respect, I may suggest to him that his points will not be ignored. They will be looked into and taken note of, but perhaps the consultation that I have just mentioned is the right way of putting them into the directions rather than through Parliament in the Bill.
Lord Dean of Beswick: My Lords, may I deal with that point briefly? The Minister has kindly said that the professional bodies would be consulted regarding the measures to be included. Do I take it from that that he will also include the particular organisation I mentioned, COHSE?
The Earl of Caithness: My Lords, I believe so. We want the widest possible consultation that we can get in order to get the directions right.
Much of the guidance we already have is basic common sense and good practice. We would aim to build on that in consultation with the groups that I have identified to develop a better procedure which will make it easier for the patient's voice to be heard; which will make it easier for management to tune in to that voice; and which will encourage NHS management to act on the signals it receives. We do not wish to encourage people to complain unreasonably about the services the NHS provides, to which I am sure all noble Lords would wish to pay tribute. But we must be sure that we give patients and their relatives and friends the opportunity to voice their legitimate concerns freely and without fear or favour.
I believe that many complaints could be avoided with better communications at all levels. But it is difficult to legislate for that. Instead we must aim to promote a better exchange of information by, in the first place, demonstrating the willingness of the Health Service to take the views of patients seriously. A statutory complaints procedure and statutory requirements for the publicity to be given to that procedure provide one of the elements necessary for this. This Bill provides an opportunity for a step towards improving the responsiveness of the NHS to the consumer voice. Accordingly, the duty which the Bill would lay on my right honourable friend the Secretary of State for Social Services to introduce a statutory complaints procedure is one which the Government would welcome.
My Lords, I commend this Bill to your Lordships.
Lord Colwyn: My Lords, I am grateful to all the noble Lords and the noble Baroness who have spoken in support of the Bill. I hope we shall be able to speed its progress through the next stages. I am also grateful for the help I have been given by my noble friend Lord Caithness in the further explanation he has given. I was also pleased, for once, to agree with everything that the noble Lord, Lord Ennals, said from the Front Bench opposite. My noble friend—if I may call him that—Lord Winstanley, brought his usual logical medical experience to bear and I confirm that I intend to move an amendment to ensure that the Bill is effective in England and Wales and in Scotland. I shall look forward to further helpful contributions from the noble Baroness, Lady Masham, and from the noble Lord, Lord Dean of Beswick, at the Committee stage.
A combination of legal decisions and the piecemeal accumulation of departmental circulars has resulted in there being difficulties in very few cases. Prior to his departure from the DHSS, Dr. Gerard Vaughan took action with the full co-operation of the medical profession. I hope that this Bill will result in a new simplified structure which should separate and clarify as far as possible the safety of future patients, professional discipline and legal liability within our hospital services.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
House adjourned at twenty-two minutes past nine o'clock.