Lords Sitting of 12 February 1986

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

"The Londoner"
2.37 p.m.
Lord Boyd-Carpenter: 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 free distribution of the current issue of a publication entitled The Londoner, produced at the expense of the ratepayers of London, has been referred to the District Auditor.
The Minister of State, Department of the Environment (Lord Elton): My Lords, not so far as I am aware.
Lord Boyd-Carpenter: My Lords, is it possible to invite the attention of this functionary to his duties in respect of restraining from the use of ratepayers' money for straight (if that be the correct adjective) party political propaganda?
Lord Elton: My Lords, I shall be very happy to draw my noble friend's remarks to his attention.
Lord Mellish: My Lords, does the Minister agree that this is an extraordinary situation: the cost of this publication, the £100 million or so which they have now discovered in the kitty, and a High Court injunction in the matter of how it is proposed to be spent? Would it not have been better for the rulers of the GLC to have exhibited some form of common sense, in that they could, for example, have set up a fund on which all the old people of London (who have contributed to this sum of money anyway) could have made a claim to ease the terrible expense of keeping warm in this appalling weather? Instead, we have a daft crowd which is behaving in this monstrous way, distributing a paper that most of us do not like anyway, putting themselves in the situation of having £100 million and ending up in court.
Noble Lords: Hear, hear!
Lord Elton: My Lords, at the risk of going beyond the scope of the Question that I am supposed to answer, I must say that I have a lot of sympathy with what the noble noble Lord has said. The proper way to deal with this money, of course, is to return it to the London boroughs, who represent the people from whom it came, for their decision.
Lord Orr-Ewing: My Lords, is my noble friend aware that the District Auditor does not feel that he can take action in these cases until the accounts for the previous years are submitted to him and he has examined them? This means that the money has been
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spent uselessly on the very political purposes of the extreme Left-wing. Is this the way to redistribute ratepayers' money, in this ill-considered and uneconomical manner?
Lord Elton: My Lords, my noble friend will know that this publication has been in existence for some time and that in fact earlier issues have been rather more extreme than the one which is before your Lordships at the moment. My noble friend will also know that we are seeking powers to curtail that sort of behaviour in a Bill which is at present going through this House.
Lord Underhill: My Lords, the Question deals with the current issue. Is the noble Lord the Minister satisfied that all those who said "Hear, hear" in reply to a recent supplementary question have read this publication? Is he aware that on the occasion of the Second Reading of the Local Government Bill the position of the Opposition was made absolutely clear; that it is opposed to the use of ratepayers' money for party political propaganda? Is it not also an important fact that dissemination of information about services which will be available after the abolition of the GLC is of vital importance? That is what this journal does, and should not the GLC be congratulated rather than denigrated?
Lord Elton: My Lords, I cannot answer for the reading habits of my noble friends, nor for the distribution system of the GLC. I am glad that the noble Lord supports our view that money should not be spent on promoting the party political prospects of individual parties in this country. I find myself on the margins of doubt when he says that the only object of the issue in question is to tell everybody where to look for services in the future. That is something which I would want to test very carefully against the text.
Lord Paget of Northampton: My Lords, is the noble Lord aware that they have not sent me one? Can I sue?
Lord Elton: I think, my Lords, that they have plenty of cases to contend with at the moment though I expect that the noble Lord will be sent a complimentary copy almost immediately from this inexhaustible source.
Lord Wallace of Coslany: My Lords, is the noble Lord aware that there has been a great deal of wind generated by this matter? In point of fact, in the London borough of Bexley, which was under Conservative control until very recently, we receive a similar publication. If such a publication comes from a Conservative-controlled body, it is apparently not party political propaganda: but if it comes from a GLC governed by Labour, it appears that it is party political propaganda. Is it not time that people sorted themselves out and distinguished between what is information and what is propaganda?
Lord Elton: My Lords, I do not agree that a lot of wind has been generated. We are addressing an important issue, which is whether the money which has been taken from citizens who belong to all parties should be used to promote the fortunes of one party to

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which most of them do not belong and a great many are opposed. As to the nature of these publications, they are the subject of a Bill which we shall be debating on Tuesday. I shall take the opportunity then, as I take it now, to say that the distinction has nothing whatever to do with the party of origin of the material; what matters is the intention of the material and whether it is specifically linked to political aims, as certainly were earlier copies of this publication.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that, despite the valiant whitewashing efforts of the noble Lord on the Front Bench opposite, this particular issue—although I agree with my noble friend that it is not as bad as some previous ones—is devoted to criticising the decision of Parliament and Government to abolish the GLC?
Noble Lords: What is wrong with that?
Lord Elton: My Lords, I am sure that the noble Lord opposite would wish to answer that question if he was able to. I think, however, that the opportunity to apply another coat of whitewash must be delayed.

Car Telephones
2.43 p.m.
The Earl of Kinnoull: 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 consider that motorists using car telephones while driving are exercising proper care.
The Parliamentary Under-Secretary of State, Department of Transport (The Earl of Caithness): My Lords, not if the telephone is of the kind which has a hand-held receiver. These should be used only when the vehicle is stopped. Even if the telephone is of the hands-free type, the driver should ensure that its use does not in any way impair his concentration on the road.
The Earl of Kinnoull: My Lords, while I thank my noble friend for that reply, would he agree that many telephones are used while drivers are in motion? Does he agree that if a driver is travelling at 70 miles an hour during the rush hour on a dark evening on the M25 and makes a contentious call to his wife to say that he may be late, that is quite outside the scope of the Highway Code? Are the Government considering discussing this matter of the Highway Code with the motoring organisations? Can my noble friend also say what is the number of registered telephones in cars and whether this is likely to increase?
The Earl of Caithness: My Lords, I do not know the number that are registered nor whether they have to be registered. Some are entirely portable and do not need to be registered, as I understand it. We shall be holding consultations as to the possibility of amending the Highway Code. This will be done as soon as practicable. As to what is more dangerous at 70 miles an hour—speaking on the telephone, lighting a
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cigarette, putting out a cigarette or changing the tape on a cassette—
A noble Lord: Or shaving.
The Earl of Caithness:—or shaving, as a noble Lord, from a seated position, rightly points out, I am not in a position to judge.
Lord Underhill: My Lords, while the Government say that they are considering a new issue of the Highway Code, which we welcome, cannot some arrangements be made whereby, when these instruments are supplied, they are accompanied by a warning notice? The original questioner has, I believe, put forward a point of view, with which those of us who have seen people using these instruments agree, regarding a very dangerous practice.
The Earl of Caithness: My Lords, I am aware that warning notices are issued. I have one with me which begins:
"Advice to drivers. If driving, you should first stop the vehicle".
The Earl of Kinnoull: My Lords, does my noble friend have any record of accidents which occurred while the telephone was being used?
The Earl of Caithness: My Lords, no, because the Home Office does not collect those statistics separately.

British Theatre Association: Funding
2.46 p.m.
Lord Ritchie of Dundee: 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 action they propose to take to ensure the survival of the British Theatre Association.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, it is for the Arts Council and not for my right honourable friend the Minister for the Arts to consider whether or not to continue to fund the British Theatre Association. The future of the association itself is not, I understand, in doubt. It is the association's library that is in difficulties. My right honourable friend has suggested to the BTA ways in which the collection might be preserved, and discussions continue. My right honourable friend the Secretary of State for Education and Science has agreed to provide funds for the library for a three-year period from April 1985 while the association seeks alternative funding.
Lord Ritchie of Dundee: My Lords, I thank the noble Lord the Minister for his fairly predictable reply. But may I point out that the library of the British Theatre Association is unique not only in this country but also in the world and that its research facilities are used by professional and amateur theatre companies, producers and actors from all over the world? Would he not agree that this collection must not be allowed to lapse or to be dispersed?
Lord Belstead: My Lords, I agree with the noble Lord, Lord Ritchie, that the collection is very valuable, as is the service that the BTA provides. There are, of course, a number of larger libraries that could take over the BTA collection and administer it at less cost. This is one of the suggestions that has been made by my right honourable friend.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that his reply does not really fit in with the truth of what is likely to follow if this £16,000 a year grant is withdrawn by the Arts Council? Is my noble friend aware that the theatre is one of our biggest industries both as regards employment and exports, that this library is the seed from which most of the theatre productions flow and that to allow it to be damaged or disbanded would be a real tragedy in the long term? Will he nudge the Arts Council to continue the very modest £16,000 a year to avoid this happening to an outstandingly important industry?
Lord Belstead: My Lords, this flows, of course, from a general decision applying to all specialist bodies that service the arts, the Arts Council having decided to concentrate on helping the performing companies. I shall certainly draw the attention of my right honourable friend to what has been said.
Baroness Birk: My Lords, is the noble Lord the Minister aware that I have some sympathy for him in answering this rather difficult question, as I feel that he is rather more "aggy" than arty? Nevertheless, what he has said about the Arts Council must be pressed further. Is he aware that the Arts Council has cut its £16,000 funding for the reasons that he has mentioned and that £9,000 which the BTA was getting from the GLC stops after abolition? Can he give any indication of whether the BTA will not be receiving some of the £25 million which the Arts Council was given as replacement money following abolition? Will he not agree that the £13,500 which we are delighted to hear that the DES will continue to give the BTA is really quite inadequate and that the Office of Arts and Libraries is surely the body to make a grant to this association, the value of which has already been mentioned by other noble Lords?
Lord Belstead: My Lords, no decision has yet been taken as to whether the Arts Council will make good the removal of the GLC funding. As to whether the Arts Council should draw on the large sum of £25 million post-abolition funding, that is a matter for the Arts Council. To get the record straight, the Department of Education and Science funding for this year is going to be at a level of about £10,000.
The Earl of Bessborough: My Lords, while declaring an interest as president of this association, may I thank other noble Lords for taking an interest in this matter and also my noble friend for giving us some crumbs of comfort? I am always thankful for small mercies. However, I should like to ask my noble friend whether he would remind his right honourable friends the Secretary of State for Education and Science and the Minister for the Arts of the importance of this matter, and to ask that they will watch the situation so that there is no chance of this association having to sell its very important assets.
Lord Belstead: My Lords, I understand my noble friend's interest in this matter. I shall certainly respond to my noble friend by saying that I will draw the attention of my right honourable friends to this Question in your Lordships' House today.
As I have already said, my right honourable friend the Secretary of State for Education and Science is continuing to grant aid the British Theatre Association for a further three-year period. My right honourable friend the Minister for the Arts has suggested bodies which might be approached in order to preserve the collection.
Lord Paget of Northampton: My Lords, is the noble Lord aware that if handouts are in order at the moment, British culture generally is far more represented by the association of field sports? Would he assure us that they will be treated at least on equal terms with these esoteric activities?
Lord Belstead: My Lords, I think we come to that tomorrow on the Salmon Bill.
Lord Donaldson of Kingsbridge: My Lords, does the noble Lord agree that it is rather sad that last week we should have Sadler's Wells, and this week we should have the best dramatic library in the country, under threat? Does the noble Lord remember that we were promised by the Minister for the Arts that the various contributions to the arts from the GLC would not suffer as a result of the abolition? This is most disillusioning and I hope that the noble Lord will be able to do more than he has said to preserve the present situation.
Lord Belstead: My Lords, the noble Lord is always fair and I think perhaps he has not picked up the Written Answer to a Question in another place which showed that the horizon is a good deal brighter so far as Sadler's Wells is concerned. My right honourable friend the Minister for the Arts, answering a Question on Monday of this week, said that the Arts Council have announced today—that was that day—that they will be holding a meeting on Friday with Sadler's Wells and the three companies that regularly use the theatre, the purpose being to discuss the possibility that the companies should be given additional funds to enable them to pay economic levels of rent, and that in that way the Arts Council would make a substantial contribution to keeping that theatre open. My right honourable friend said that he applauded that initiative.
So far as GLC post-abolition funding is concerned, I would simply make the point that the amount of money which the Government have made available to the Arts Councils is quite considerable. When one looks at the huge budgets which the local authorities themselves have, and the fact that no longer will they be required to pay precepts so far as arts matters are concerned, I should have thought that we could have looked for a little contribution to come in the post-abolition areas from the local authorities.
Lord McNair: My Lords, is the noble Lord aware that in addition to the library proper the BTA houses personal archives which have been bequeathed to it by people whose names read like a roll of honour of

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twentieth century British theatre?—such names as William Archer, Granville-Barker, the great Miss Horniman from the Gaiety Theatre, Manchester, Nugent Monck's prompt copies from the Maddermarket Theatre, Norwich. If London is to retain its claim to be the theatrical capital of the world with all the ensuing benefits to our balance of payments, is it not vital that these precious collections should be kept in this country?
Lord Belstead: My Lords, there is no difference between the Government and any noble Lord in this House about the value of the collection. But the one thing I have not said so far on behalf of the Government is that the problem over the BTA library was there before the Arts Council took their decision. The library is expanding because it is indeed successful. It is in an expensive part of London and there is no scope on the site, as I understand it, to enlarge the library. There was therefore—before the Arts Council said anything at all—clearly a funding problem. I have given an undertaking to the House today that I will draw the attention of my right honourable friends to these exchanges in your Lordships' House. I do not think that I can go very much further than that.
Baroness Birk: My Lords, I am sorry to have to come back, but the Minister mentioned the question of contributions from local authorities. I must put this to him. Is it not true that the association is a national one and that it is extremely difficult to ask or expect local authorities—with all the other demands on them—to contribute to that? Is the noble Lord also aware that the British Theatre Association has written to the Richmond scheme for that very purpose but has, not surprisingly, received no response? In these circumstances, will the noble Lord agree that this must be treated as a national matter, and, bearing in mind that the acting profession has about the highest unemployment of almost any other profession, that the chances of getting more contributions and even sponsorship are very low compared with other activities?
Lord Belstead: My Lords, I should like to repeat this point from this side. I know that my right honourable friend has been in touch with the British Theatre Association to try to help to identify other forms of funding. I know that my right honourable friend will continue to try to do that. In doing that, I should have thought that it would be possible and desirable to look everywhere for money, and that would include also local authority funding.

South Africa: Sanctions Policy
2.57 p.m.
Lord Hatch of Lusby: 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 attitude they took to the question of sanctions against South Africa at the meeting between the EEC Foreign Ministers and the front-line states held in Lusaka.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, we subscribed to the communiqué issued at the end of the meeting between the Foreign Ministers of the EC member states and front-line states. This commended the measures against South Africa adopted by the European Community, the Commonwealth and other governments and organisations.
Lord Hatch of Lusby: My Lords, may I ask the noble Baroness whether she will give a direct answer to the House to a direct question? All Government policy is based on assessment. Is it the assessment of this Government that the present regime of President Botha has any intention of granting full democratic rights to the 24 million black Africans in South Africa?
Baroness Young: My Lords, this is a question which is partly hypothetical. All I can say to the noble Lord is that, following upon President Botha's speech, we believe that this contained a significant statement of principles as well as positive steps for this parliamentary session; for example, the restoration of citizenship, the extension of freehold rights, and the abolition of discriminatory passbook systems.
Lord Molloy: My Lords, could the noble Baroness explain to the House just what is hypothetical about 24 million of our fellow human beings who happen to have a different skin pigmentation from the noble Baroness and myself? Would she not agree that it is an appalling reality that they are living in the sort of fascism that this nation helped so much to destroy in the last war?
Baroness Young: My Lords, so far as apartheid is concerned, I have made plain the Government's position many times in your Lordships' House. I was asked a question which was hypothetical but I gave the best answer I could to it.
Lord Gisborough: My Lords, would my noble friend the Minister say how many African countries, who have had democracy under their own rules, have been able to maintain it more than once?
Baroness Young: My Lords, that is a very large question. I think that I would require notice of it before trying to answer it.
Lord Chalfont: My Lords, would the Minister agree that there are people in South Africa, for example, Chief Gatsha Buthelezi, and Mrs. Helen Suzman, both of whom are freedom fighters of impeccable reputation, who are against the imposition of sanctions on South Africa? Is it not strange that the freedom fighters in South Africa are less extreme than some of the freedom fighters in your Lordships' House?
Baroness Young: My Lords, I would agree with what the noble Lord, Lord Chalfont, said in the first part of his question. As is well known to your Lordships, we as a Government have supported the measures taken with our Community partners in September following the meeting in Luxembourg. We have supported the agreements reached following the CHOGM meeting in the Bahamas. Of course, we support the work of the

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Emininent Persons Group, and, when they report, we shall have to consider the result of their deliberations.
Lord Brockway: My Lords, would the noble Baroness not agree that there is some inconsistency in statements against apartheid and at the same time supporting investments to maintain the system of apartheid? Is it not a case of putting profits before principle?
Baroness Young: No, my Lords. The Government's position about apartheid has been made plain. I have already indicated the steps that we have taken (and which we believe are right) with our colleagues in the Community and friends and allies in the Commonwealth. So far as investment is concerned, this is a matter for the individual firms concerned.
Lord Molloy: My Lords, would the noble Baroness be prepared at least to say that while freedom fighters sometimes can be embarrassing and sometimes get themselves into a situation which does not do them much good, on balance it is far better to be a freedom fighter than an appeaser, as we learned in 1939?
Lord Hatch of Lusby: My Lords, may I ask the noble Baroness two questions arising out of her original Answer to me?
Noble Lords: No, just one.
Lord Hatch of Lusby: Arising out of her original Answer.
Noble Lords: No, one.
Lord Hatch of Lusby: The noble Baroness stated that the Government saw a matter of principle embodied in President Botha's recent speech. Is she aware that Chief Buthelezi, who has already been quoted this afternoon, has now announced that he sees no principle and no hope in that speech? Further, when the noble Baroness—
Noble Lords: Order!
Lord Hatch of Lusby:—mentioned the communiqué, is it the case that that communiqué contained a clause in which the British Government— have agreed that—
Noble Lords: Order!
Lord Hatch of Lusby:—if the present sanctions of the EEC are not successful they will be extended? Can she tell the House how long the British Government will wait before they discover whether those sanctions have been successful in undermining apartheid?
Baroness Young: My Lords, the situation following the meeting in Lusaka is that the meeting agreed that, if all the various measures announced so far fail to achieve the desired results, further measures should be considered.

Westland plc: Share Ownership
3.3 p.m.
Lord Kennet: My Lords, I beg leave to ask the Question of which I have given private notice, which is:
"In the light of yesterday's Stock Exchange disclosure about share ownership in Westland plc, what steps the Government are taking to prevent our defence industries falling into unknown hands".
The Minister of State for Defence Support (Lord Trefgarne): My Lords, it is of the first importance to ensure that our armed forces receive the equipment they require on time, to the right specification, and at the right price. Furthermore, we need to ensure security of supply, and clearly ownership has a bearing on this. I can assure the noble Lord that the Government will consider the implications of any material change in the ownership of defence industries, and have powers to take action if this is appropriate.
Lord Kennet: My Lords, may I first express our relief on these Benches, and I expect wider in the House, at the fact that a Private Notice Question has at last been allowed after a period of two years and four months in which every one submitted was ruled out.
Those Swiss bank accounts—who do they conceal? Do they conceal Mr. Duvalier, Colonel Gaddafi, the Marcos family, or the Moscow Narodny Bank? Do the Government consider that those possibilities are alarming? Looking further afield, if the Government allow this to go forward under the cloak of anonymity, what will they do when it comes to the sale of the water industry (vulnerable indeed), the gas industry (a strategic industry), the Royal Dockyards, and Vickers shipbuilders?
Lord Trefgarne: My Lords, in addition to the powers available to the Government to which I referred just now, under the Companies Act the company can require disclosure of the ownership of shares, and I understand that Sir John Cuckney has today said that such action is in hand.
Lord Paget of Northampton: My Lords, surely it is no use to talk about the Companies Act. The defence of England is surely the responsibility of the Government of the day. Is the Prime Minister really going to hand over what are recognised as important decisions to the owners of a number of numbered Swiss bank accounts? It is really outrageous.
Lord Trefgarne: My Lords. I apologise if I did not make myself clear to the House and to the noble Lord. Once the identity of these persons is known the Government will consider what further steps need to be taken, and various powers exist for that purpose.
Lord Paget of Northampton: My Lords, the step will be taken before then.
Lord Kennet: My Lords, how are the Government going to ensure that their identity becomes known, and what are the various powers?
Lord Trefgarne: My Lords, I have referred to the powers available to the company under the Companies Act. There are in addition, for example, powers under the Industry Act 1975 to prevent a foreign interest taking control of an important manufacturing undertaking. There are other powers—for example, under the Fair Trading Act—available to the Director-General of Fair Trading.
Lord Graham of Edmonton: My Lords, does the Minister recall his announcements during the passage of the Royal Ordnance factories privatisation legislation that powers were taken to limit to a maximum of 15 per cent. the share in foreign ownership? In view of that undertaking then, and the advice that we received yesterday and today on this matter, how can the Minister square his previous announcements with his statement today?
Lord Trefgarne: My Lords, we are of course not comparing like with like, if I may say so to the noble Lord. In the circumstances to which he has referred we were of course transferring companies that were in public ownership to the private sector, and that is a very different matter.
Lord Bruce of Donington: My Lords, will the noble Lord give the House an assurance that as and when the true shareholders are known, and that if peradventure the control of the company passes into foreign hands, he will take adequate steps in order to ensure that the company remains under British control? Is the noble Lord further aware that over the last month some 60 per cent. of Westland shares have changed hands, and that now some 20 per cent. are in the hands of six unnamed people? Does he really think that that is consistent with the Government's policy of allowing the whole future of this vital company to be decided by its shareholders?
Lord Trefgarne: My Lords, I am not certain from where the noble Lord gets his information. I understand that Westland say that there are no Swiss banks registered as holders of their shares. As for what we might do in some hypothetical situation, I am afraid that I would have to stop short of giving the noble Lord the assurance for which he asks.
Lord Morris: My Lords, may I ask Her Majesty's Government how they intend to go about establishing the de jure and de facto ownership of the shares in question?
Lord Trefgarne: My Lords, by means of the procedures I referred to earlier.
Lord Hatch of Lusby: My Lords, if the noble Lord says that the Government have power to discover who owns these shares, why have they not used those powers before today's crucial meeting, which will determine the future of that company?
Lord Trefgarne: My Lords, I do not think that the noble Lord quite heard what I said. I said that there were powers available under the Companies Act for the company to ascertain the beneficial ownership of their shares, and that Sir John Cuckney had said that he is now following those procedures.
Lord Tordoff: My Lords, does that not imply that if the company, or any company in the future, does not act the Government will be powerless to find out this information?
Lord Trefgarne: My Lords, the noble Lord is again putting to me a question about what might happen in some hypothetical situation. I hope he will forgive me if I do not answer on that point.

Business
3.10 p.m.
Lord Denham: My Lords, with the leave of the House, I should like to say a word about the two short debates standing in the names of the noble Lord, Lord Rhodes, and the noble Viscount, Lord Hanworth. It is customary in short debates that the mover is allowed approximately 15 minutes and that the Minister should rise to reply not less than 20 minutes before the scheduled end of the debates. In the case of the short debate in the name of the noble Lord, Lord Rhodes, this means that all other speeches should be limited to a maximum of nine minutes. If any noble Lord should speak at greater length, that would be to the disadvantage of subsequent speakers in the debate. In the case of the short debate in the name of the noble Viscount, Lord Hanworth, even though the number of speakers is such that it is not necessary to propose any formal time limit, noble Lords may feel that if they were to keep within much the same time limits that would be in accordance with the spirit of the short debates.

Business of the House: Debate 19th February
The Lord President of the Council (Viscount Whitelaw): My Lords, I beg to move the first Motion standing in my name on the Order Paper.
Moved, That the debate on the Motion in the name of the Lord Barnett set down for 19th February shall be limited to 5 hours and that Standing Order 35 and paragraphs 10 to 13 of the Rules for the Conduct of Short Debates shall apply to the debate with the substitution of "5 hours" for "2½ hours" and "25 minutes" for "20 minutes".—(Viscount Whitelaw.)
On Question, Motion agreed to.

Business of the House: Debates 5th March
Viscount Whitelaw: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That the debates on the Motions in the names of the Lord Allen of Abbeydale and the Lord Annan set down for 5th March shall each be limited to 2½ hours and that Standing Order 35 and paragraphs 10 to 13 of the Rules for the Conduct of Short Debates shall apply to each debate.—(Viscount Whitelaw.)
On Question, Motion agreed to.

China: Economic Change and Trade Openings
3.12 p.m.
Lord Rhodes Lord Rhodes rose to call attention to the changes taking place in the economy of the People's Republic of China and to the possibilites of the expansion of international trade to the mutual advantage of the Republic and the United Kingdom; and to move for Papers.
The noble Lord said: My Lords, where I live they use a colloquialism:
"Thems as lives longest sees most".
I am qualifying for the former very rapidly, and I am fortunate in having had the chance to go to Hong Kong 16 times and to be four times leader of delegations to the People's Republic of China. I consider myself very fortunate.
This is the start of the Chinese Year of the Tiger. So many allusions have been made to the tiger. Recently the children of Britain have had the opportunity of voting on the most popular animal in the zoo: it was the tiger. I am particularly interested in the subject of our debate because in my early days my father was a finisher; he was an operative in a mill which was finishing cloth exclusively for China. I remember vividly what was current at that time: the Boxer Riots. That was a long time ago. I remember the Boxer Riots because every day my father used to come home and worry about whether his livelihood would be undermined.
This is one of the most important periods in Chinese history. In the past 20 years we have seen many changes of mood and many political upsets in China, some of them catastrophic. Take, for example, the great leap forward when peasants were exhorted to try to make steel in their own back yards. They were encouraged to melt down their agricultural implements. There was the cultural revolution which stood law and order on its head and, at the same time, gave Chairman Mao his revenge for the failure of the great leap forward. When Mao died so did the cultural revolution.
When foreign dynasties were established in China they were soon absorbed by the Chinese who imprinted a certain "Chinese-ness" on the barbarian conquerors while, at the same time, the barbarians put new blood into China. This is what is happening to Marxism in China today. Marxism in its purest form is not suitable for China, but with severe adaptation it could become so. It may be that a form of federal government will emerge at some time in the future, but I doubt whether a central government can govern 1,100 million people.
The China we see now is in the early stages of change from a feudal, agrarian nation into a modern industrial society. If these efforts succeed, the Pacific basin countries with Japan and China at their head will be the growth area of the world. But if it fails, the mind boggles at the likely consequences, and we in Britain must try to see that it does not fail.
To discuss what we in Britain should do about China is why I put my name down and I have been fortunate enough to lead this debate. I believe that it matters very much to millions of people what kind of a China emerges from this transition. It is still early
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days in the transition. The problems are enormous: 800 million peasants, a technically backward industrial sector, poor management, low productivity and, most important of all, an infrastructure 50 years behind present needs. The Chinese are without adequate port facilities such as storage, and there is a shortage of both road and rail transport, never to mention their lack of sophistication in their approach to the markets of the world.
Recently the control and allocation of foreign currency was restored to the provinces and the municipalities, so every province and municipality clamoured for a share and chaos reigned. In 1985 central government brought in control with a stringent set of priorities which lead to long-winded negotiations with foreign sellers and frustration for foreign manufacturers and buyers awaiting decisions. So some companies, both large and small, have tended to throw up their hands in horror, cut their China budget and depart for more favourable areas and climes. The present log-jam could last for another three years. If companies take the view that they can withdraw now and return later when the Chinese have sorted out their problems, they will find that they have sacrificed their early initiatives and that countries such as Japan, the United States of America, Germany and France are in front of us in the queue.
Notwithstanding that catalogue of gloom, the economic growth in China during the past five years is among the highest in the world. It is generally agreed in China that their political, social and cultural problems must give way to raising the living standards of the Chinese people. Without doubt there has been a dramatic increase in living standards. There are some discernible differences of opinion in the leadership but mainly concentrated on method and tactics in achieving their aims. High priority is given to foreign technology, management and investment.
I now come to the important part of what I wish to put over. I am making four or five points. The first is about the embassy in Peking. In recent years the commercial staff at our embassy in Peking has worked valiantly to provide assistance to our visiting companies, particularly since the advent of Sir Richard Evans, the present ambassador. But the period of service of our personnel is too short. The job requires much time, energy and practical experience to make the contacts and to become aware of the factors which affect China's policies, and then to make the thoughtful judgments that British businessmen require in such a complicated country as China. They need a period of at least five years to familiarise themselves adequately with a fast-moving and changing situation. Their present normal period of service is two to three years. They are then shifted to other areas just as their learning curve is beginning to rise.
Most important of all is the need for much more collective work by companies working in a given industrial category. Selling to China is a hard slog, costly and time consuming. It is a very complicated market. In my opinion what is needed is the ability to offer a total British package, industry by industry, or sector by sector. This means getting companies together, even competitors, collectively to construct a China strategy, and maybe appoint a joint sales force, and thus organise a wide variety of consortia

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specifically brought together to present to their Chinese counterparts the best that Britain can offer in a form the Chinese find convenient to handle, which at the same time is the best way of introducing newcomers to the market.
What I have said about that is no reflection whatever on the British companies established in China. They are absolutely first class, and so are the staffs which they employ. However, British companies working on their own are at a disadvantage compared with the Japanese, European competitors and the United States of America. Although some efforts have been made—by me, incidentally—to bring companies together, the necessary stimulation from the Government is absolutely essential.
One of China's chief problems is to find ways and means of taking more advanced technology into their factories. It is estimated that there are 200,000 enterprises in China in which a modest amount of advanced technology could be upgraded without considerable expenditure. British industry was faced with the need to do this when we inherited much obsolescence from the early days of the industrial revolution. Quite remarkable transformations were made by a modest use of technical innovation. Thus, in my opinion, the British are ideal partners for Chinese enterprises.
My next point is in relation to our overseas broadcasting from Bush House to China. At the moment we broadcast only one-and-a-half hours a day to China compared with Moscow's 17, Australia's 6, America's Voice of America, 9, and even the Tirana and Yugoslav 3. I am very glad it was announced the other day that the funding was to be for three-year periods instead of one, which enables the BBC to plan its broadcasting more effectively. While the change is welcome, it represents no real increase in the BBC external service. The Foreign Office still have the right to prescribe the language in which the BBC must broadcast, and total hours of transmission. While progress on new relay stations overseas and in the United Kingdom (as part of the Government's audibility scheme) goes well, there is no indication that the BBC will receive an injection of new money.
Meanwhile, our competitors—and time and time again I have referred to how we lag behind—the United States, France, Germany, and many other countries, are stepping up their programmes. It ought to be of great concern that the effective progressing of the new relay station for China in Hong Kong, where considerable capital has been spent, may be inhibited from operating to the full by shortage of money. I have given the Minister prior notice of all these questions except this one. I ask him: can the new station in Hong Kong be ready to be opened by her Majesty the Queen when she visits in October?
My last main point is this. What can we do to help China to consolidate?—because on that depends whether Hong Kong sinks or swims. The Chinese are keen on what they know and describe as treaties of friendship. They realise that "twinning" on the European pattern is a non-starter because of the distances involved. At the moment there are several British cities with a treaty of friendship: Sheffield, Coventry, Cardiff and, I think, Bristol. Also, after four
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years' work on it, I am delighted to be able to say that Manchester has agreed to team up with Wuhan, a big, vibrant city on the Yangtze. In Manchester we have begun with exchanges between the universities—the Manchester Institute of Science and Technology, the Director of North West Arts, and so on—and leaders of the large Chinese ethnic group in Manchester, which is very strong. In the Greater Manchester area there are estimated to be 40,000 Chinese. As a counterpart to our establishing a consul general in Shanghai, a general consulate is to be established in Manchester to serve the North of England. The Chinese Ambassador's wife is the official responsible in the Chinese Embassy for the furthering of this aim. What I am asking is, will it be possible for the Foreign Office to second a person to further it?
My last point is this. We are fortunate to have a Queen who is prepared to undertake arduous journeys on our behalf. The fact that she has agreed to visit China is a coup for the Chinese as well as for Britain. She will be well received in China because her visit has a mark of approval about it which will please them. In the days when we had the Empire we were the most extrovert nation in the world, but since the Empire we have rather lapsed into insularity. We are not quite as good as we used to be in this kind of matter, but we shall learn.
We know that the Chinese are experimenting with their economy. However, is there not a certain amount of experimenting taking place in Hong Kong on our side, as witness the elections and what came out of them last September? If we can respect each other's integrity, surely we can hammer out a solution to our differences and create a climate in which our businesses can prosper. From this House this afternoon I am sure that everybody would agree that we should say to the Chinese, "Kung Hei Fat Choy", which, notwithstanding a Yorkshire accent, is "A Happy New Year". I beg to move for Papers.
3.30 p.m.
Lord Geddes: My Lords, the vagaries, if I may call them so, of your Lordships' House are a source of real wonderment. There have been a number of instances in the past when I would have preferred to be higher in the pecking order. This is one where I would certainly have preferred to be less elevated and have even more reason to be brief. However, I shall be brief. Unlike the noble Lord the Chief Whip, I calculate it as eight minutes and not nine minutes that each of us non-main speakers has and I shall try to keep well within that limit.
I have had the very real privilege of a number of visits to the People's Republic, certainly the most notable of which was as a member of Lord Rhodes's parliamentary delegation six years ago. At that stage, in 1979, the priorities were very clearly spelled out as: number one, agriculture; number two, light industry; and, number three, heavy industry. I have no doubt, or at least I hope, that the noble Lord, Lord Mackie of Benshie, will concentrate at least partially on the subject of agriculture on which he is very well qualified to speak; but there are real worries in that respect, not least the recent serious shortfall in grain production, which is perhaps one area—and I hope to instance others—where expertise from this country can be channelled to assist the People's Republic.

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So far as light industry is concerned, here I think we home in, at least partially, on the special economic zones and on the vital necessity for those zones to be export orientated. Indeed, it has been said very recently by the authorities from the People's Republic that they, in each zone, should devote 70 per cent. of their production to export. If that can be achieved—and it will not be only in light industry but mainly so—then it augurs very well for Hong Kong when it too becomes a special economic zone on 1st July 1997.
In heavy industry, we have had a marvellous example just recently announced of the Daya Pay nuclear project: a tremendous example of co-operation between the People's Republic and this country and, indeed, other countries, particularly France. GEC, as I understand it, have £250 million-worth of investment in that project for the turbines, financed by the United Kingdom ECGD project to the extent of 85 per cent. at 9·85 per cent. interest over 15 years. This is exactly the sort of example—and I hope we shall see more—where there can he concrete and positive co-operation between our two countries.
The People's Republic, like so many other countries of the world, but surely with much better hope of future success, has a trade deficit problem. It was estimated that its trade deficit for the last calendar year, 1985, was 13·7 billion US dollars. As the noble Lord, Lord Rhodes, has rightly said, they have been going through some differences of opinion and differences of structure regarding finance. This is of concern and is, again, an example where I think that particularly businessmen in this country, and indeed governments, can be tolerant and forbearing with them.
There must be, as there are now, restrictions on foreign exchange. There are curbs on imports and if the country is to expand, as we all hope it will, this must certainly lead to an increase of trade in kind or what is more loosely described as barter trading. There is a wealth of expertise in this country alone on barter trading. Indeed. I was lunching with the managing director of a specialist firm in exactly that context today.
On transport, a subject on which I have a certain knowledge although limited, I re-read the other day the report of the 1979 delegation. It is interesting to quote just one small paragraph. It said:
"one of the biggest problems facing the People's Republic will be that of the internal movement of containers. China has at least five ports where major improvement is being made with the construction of specialised container berths. However, hinterland facilities for the movement of containers are totally non-existent, and advice was received that immediate priority was to be given to this subject, necessitating close collaboration within China between the Ministries of Communication, Railways and Foreign Affairs".
Here, certainly, is an area where the United Kingdom has a wealth of expertise in port development and construction and in railways. Here is where, to put it bluntly, we should get off our backsides and do something. There are now 73 separate shipping lines, Chinese shipping lines, allowed to trade outside the PRC. The PRC have a fleet of 620 vessels, 13 million tonnes deadweight. But their ports simply are not up to their trade. The China Ocean Shipping Company (Cosco) in Shanghai is forced to use Kobe in Japan as its outward port for the United States West
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Coast liner trade. Cosco in Shanghai and Cosco in Canton are using Hong Kong as the base port to and from Europe. This augurs well for Hong Kong but is clearly nonsensical as far as the PRC overall is concerned.
There is still heavy congestion in the ports and it can take up to 20 days to find a berth in Shanghai. The communications Minister, himself an ex-managing director of Cosco, is quoted as saying in only the last two or three weeks: "Port construction is a national priority". The 13 largest ports in the People's Republic are operating at 30 per cent. above their theoretical capacity. With Cosco alone projecting 10 per cent. growth in 1986, to 54 million tonnes, there is a distinct possibility that expansion of the People's Republic's maritime sector will grind to a halt simply because the ports cannot cope.
There is great opportunity there for companies and businesses within the United Kingdom where there is all the expertise to assist. Not for the first time I declare my affinity for and with China. I am an unashamed Sinophile. There are enormous opportunities for mutual beneficial trade—and I use that term in the widest possible sense—between our two countries. As the noble Lord, Lord Rhodes, has said, Her Majesty the Queen visits the People's Republic in October of this year. What better year could there be than this, the Year of the Tiger, in which to boost Anglo-Sino relations in commerce, culture and in personal relationships? Like the noble Lord, Lord Rhodes, and I hope in the same dialect—at least in the same Chinese dialect—I say to all our friends in China, "Kung Hei Fat Choy".
3.40 p.m.
Lord Mackie of Benshie: My Lords, like the noble Lord, Lord Geddes, who is so fluent in Chinese, I was one of the "Rhodes scholars" taken to China by the noble Lord, Lord Rhodes; and I was taken three times with him, for which I was enormously grateful. I am not sure whether it was for my expertise in agriculture, or the fact that I always knew when he needed a dram and acted as a sort of cup bearer in order to keep him going, as he did, at enormous speed.
Now I am going to talk about agriculture because, as has been said, it is the biggest industry in China. It employs—maybe under-employs—800 million people. That is a phenomenon which it is difficult to understand. It is difficult to understand that there are 1,000 million Chinese until you see them all coming towards you in Peking, or Beijing, normally mounted on bicycles. It is a great experience for an agriculturist to go to China because they are so tremendously good at agriculture. I remember walking across a bridge and taking the train for Canton the first time I went with Lord Rhodes. I looked out of the window and I could not take my eyes off the landscape: it was so beautifully cultivated. We travelled 200 miles and the whole place was like a garden. It immediately gripped my imagination as to what these people could do if they had the sort of techniques and the aids which we could give to them.
The Chinese have advanced enormously. There has been a terrific rise in production since the peasants got leave to depart from the highly-ordered Marxist-Leninist economy and were allowed to grow a

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proportion of what they wanted to grow and a proportion of what they know people wanted to eat. Prices have risen but, as always, if you raise prices and you give farmers, large or small, all over the globe, the chance to make a profit they will grow food in very large quantities—sometimes in embarrassing quantities, as in the European Community. However, rather than have embarrassing minuses it is much better to have embarrassing pluses.
As the noble Lord, Lord Geddes, said, what they have done is to grow far more vegetables although, in fact, to the detriment of the growing of grain. That is a basic factor, and it costs them money to import it. They are now having a great increase in animal production, in pigs and poultry, and are producing a great deal more milk. This is really not so much for the Chinese, although they want more animal protein, but the milk products are mainly needed for their growing tourist industry. We have an Australian firm (not a British one) in a joint venture in the production of veal, and of course you cannot have veal without having the dairy cows to produce the calves; but they are tying things together, and it is the sort of thing that perhaps we should be doing.
There are a whole lot of things which they want to grow and in which we have expertise. They want to grow fruit for export, and they want to be able to export a lot of other products. Again, we come back to the great need for more grain. The Chinese have an enormous number of pigs but they are all of rather low production, with enormous bellies so that they can eat weeds from the canals and irrigation channels and convert those instead of grain. The Chinese are prepared to increase their own production of these products both for their own population and for export. Up in a northern province, of which the capital is Harbin, they have enormous areas of virgin land which are rather like the Siberian steppes. The Chinese are fast developing that region. Massey-Ferguson are in there and doing a great deal of experimentation: they are also providing a very large amount of equipment.
We are doing something about trade with China. The British Agricultural Export Corporation, which has a new chairman, the noble Earl, Lord Ferrers, promoted a British team for the export exposition in Canton last year. It was an agricultural exposition and 32 British companies took part. That was the biggest national body there, and the show they put on was tremendously good. A number of them came home and said, "We cannot do anything here"; but at least they had tried and that must be good. Things are going on very well. Strangely enough a firm in Lincolnshire, Cherry Valley Farms (a subsidiary of Nicholson's) are the biggest exporters in the world of breeding ducks to China. That is very enterprising.They have exported British livestock to China: over 300 cattle and over 300 breeding pigs. They have exported those to China in spite of a currency shortage—and the currency shortage does make matters very difficult.
ICI are the main suppliers from this country of plant protection and they have had big export years in 1983–84; but because of the bureaucracy, again, which is so over-prevalent, the Chinese ordered rather too much in 1983–84 and their warehouses are full, so that 1985 and, so far, 1986 have been extremely poor.
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Mostly the trade has been in insecticides and fungicides. The fact is that herbicides are not so much needed because there are so many people on the land that they can keep it free of weeds by hand labour, and they do it beautifully. But they cannot catch aphids, nor can they catch fungi; so there is a need for insecticides and fungicides.
There are a number of difficulties. While we have had some success, there are a lot of difficulties to reckon with as well as the opportunities. I have already mentioned the currency shortage and the fact that you cannot have consistency; and that makes it difficult. There is also the question of the time it takes to get a decision. That can be very expensive. China is a long way away and communication costs a lot of money; if you have to wait a long time for a decision, it is very bad. Our friends the Chinese really have got to improve their bureaucracy. They have got to do something about speeding up decision-taking: otherwise they cannot expect to get from us the help and the service that they deserve.
I think that we need to do a number of things. Our firms need to use the Hong Kong Ministry of Agriculture. That is an excellent body, with very many experts and many connections inside China. The Americans try to use them a great deal, while we do not do so enough. The point made by the noble Lord, Lord Rhodes, about the commercial attaché must make total common sense. In Chinese terms, and in view of the size of that country, you cannot move after two years and expect someone to acquire the necessary expertise in that time.
Another point is that it is nonsense that we do not have an agricultural attaché there. We have a commercial attaché, and we have there the biggest industry and the biggest source of opportunity unrepresented. I should like to have the Minister's view on that. I agree with the noble Lord, Lord Geddes, that it is a country with great opportunities for British trade, but it is necessary to acknowledge the difficulties in trading therein.
3.49 p.m.
Lord MacLehose of Beoch: My Lords, I do congratulate the noble Lord, Lord Rhodes, on his speech. He certainly has a right to speak on China, and I remember with affectionate respect the way he led that series of delegations through Hong Kong to China. They were a very personal exercise in the improvement of Sino-British understanding.
I have a profound interest in our relations with China and I have been lucky enough to spend a good deal of my working life involved in them; but I am not a China analyst and I have not myself done commercial business in China, as some of your Lordships who will speak today have, so successfully. So as an observer rather than a player I shall be suitably brief and confine myself to making only three or four points.
First, there is the complexity of doing business in China, to which the noble Lords, Lord Rhodes and Lord Mackie of Benshie, both referred. Many businessmen have told me that they are daunted by the vastness of China and by the scale of the contracts they read about in the media. Well, these contracts are there, and, of course, they are well worth the time and

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trouble taken to secure them. But China offers very many markets, whether geographically in the sense of ports, economic zones, development areas or provinces, or functionally. Within this diversity of markets I have seen much small and medium business to be done that did not involve the time and expense of the headline-catching contracts, and perhaps over which foreign exchange was a little easier for the Chinese importer. I do not think, certainly in this market, that big (if you can secure it) is beautiful, and I do think that very often many small or medium contracts are much more convenient.
My second point is about the role of Hong Kong. It has given an invaluable approach to both large and small business in China. In selling to the rest of China it has proved useful to demonstrate that something—a product, a technology, a financial service—is competitive and efficient in the Hong Kong market. While I believe this is generally appreciated, I am not so sure that the converse is; namely, that failure in the Hong Kong market, or absence from it, does not help in the China market. Of course, the Hong Kong market is big in its own right, but that is not our subject today. My point simply is that attention to the Hong Kong market and promotion in it can be, and in many cases will be, a very useful element in promotion in the rest of China. Neglect of it is just the reverse. I therefore welcomed what the noble Lord the Minister said on Monday, 3rd February, about the role of Hong Kong and the role of the United Kingdom Trade Commission in it.
Then, if one considers the prospects of trade with China, one also has to consider what the political and economic prospects are there. We have noted the political and economic trends of the last eight or nine years associated with the name of Deng Xiaoping. The question on which one has to take a view is: will these trends persist? It is dangerous to look into a crystal ball anywhere, and particularly in somebody else's country, but all I can say is that the broad consensus among most analysts here and in the United States (and, for what it is worth, my view) is that yes, these trends will persist, give or take a degree or two of variation.
Because of the horror of a return to radicalism and many other positive reasons, reaction to this trend is now unlikely to deflect its general course, so, broadly speaking, I believe the trend is here to stay. This implies surely what most people in China want for themselves and for their country: a vigorous but prudent rate of economic growth with a standard of living targeted to rise by over 200 per cent. by the end of the century. The prudence in current planning and its realism are clear, and the Seventh Economic Plan clue shortly to be approved is in fact broadly in line with the recommendations the World Bank made on China last year. The prospect of a substantial growth in industry, with the emphasis on energy, transport and communications and a 40 to 50 per cent. increase in imports and exports before 1990, surely offers our exporters and our financiers a rising opportunity.
I therefore congratulate the noble Lord the Minister on the personal encouragement he has given to this trade, and also on the line of credit he has secured for
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it. The noble Lord, Lord Rhodes, referred to the possibility of the national purpose. I really think a line of soft credit is as near that as one can get.
I am sure we all agree on the importance of our relations with China. On many international problems we have similar views, and we have a common, agreed and very important interest in the future of Hong Kong. We value each other's culture, and we have a mutual interest in a wide variety of economic and technological exchange. I think that the noble Lord. Lord Rhodes is to be thanked for focusing so well on this economic aspect of our relationship.
3.55 p.m.
Lord Campbell of Croy: My Lords, I should like to congratulate most warmly the noble Lord, Lord Rhodes, on raising this subject, and on the admirable way in which he has introduced it. He has an attitude, if I may say so, built on great experience and realism in international trade. His specialist subjects are China and textiles, and I have been glad to be able to take part in proceedings in this House with him in the past 11 years, and before that in another place, when we were both Members. I am also glad to follow the distinguished former Governor of Hong Kong.
But I intend to speak myself briefly on one element of recent British-Chinese co-operation—significant and successful, I believe. That is the expansion of the news media in China. This co-operation has helped to provide a favourable climate for good relations between our two countries, and for increasing business. I refer to two developments. First, there is the British contribution to the first daily newspaper in China in the English language, the China Daily, which started about four years ago. Secondly, there is something which happened last year which was as exciting a project: a training college for journalists of the Xinhua News Agency. I have been involved (noble Lords may ask how I have come to be involved, so I must explain) because I am a trustee of the Thomson Foundation. The Foundation was approached about six years ago by the Chinese Government, evidently because the Foundation had earned a reputation for impartial help and training in journalism and broadcasting; that is to say, we have no strings attached to the aid which we give, but we try to share the costs with other countries if we know that they can afford to contribute. I would remind your Lordships that the Foundation is a charitable organisation based in this country, the United Kingdom. It was founded by the last Lord Thomson of Fleet, the noble Lord whom many of us knew as Roy. It has provided training and expertise in journalism and broadcasting in about 90 countries during the last 20 years.
The Foundation decided to respond positively to the approach from the Chinese Government. We offered advice and training for management, marketing and running of a daily newspaper in English. This operation started with a course in 1981 in Beijing with a British teaching team and a large number of Chinese journalists. In due course, the China Daily appeared on the news-stands in China. I must make it clear that we in the Foundation are not involved in editorial policies; for example, the content of leading articles. The Foundation simply has the task of transmitting the techniques required for an English language daily

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newspaper. About two to three British advisers are normally at any time working with the Chinese editorial staff in Beijing. Many of them have been granted sabbatical leave by their newspapers in this country.
What was it, one may ask, which motivated the Chinese Government to make this approach in the first place? I believe that it was originally a feeling that there was a lack of any way of informing English-speaking visitors to their country about national and international news. They could not find anything in their hotels or anywhere else which informed them in the English language of the news of the day, and this at a time when, as a result of their break with the Soviet Union, there were many more English-speaking people visiting their country to help and advise them and also to do direct business—not only British, but Americans, Australians and others. Some of them were even wanting to know the test match scores or, if they were Americans, the baseball or other sports news—though I am sure that British visitors during the past few days could have done without the cricket news from the Windward Islands and the Leeward Islands. But I can assure your Lordships that early next week there should be no British person in China who cannot find out the result of the Calcutta Cup on Saturday, and whether Scotland or England has won it.
More recently, the interest in the China Daily has also been from Chinese all over China who, apparently, want to learn or to improve their English, and as a result the paper has in the past four years been increasing in circulation and flourishing. There are now editions for Hong Kong, New York and San Francisco; and during this year it is expected that a European edition will be started. The British and the Chinese have been working together in the management and production of this newspaper. The British are not there to influence the views of the Chinese, but they have become respected members of the team, and their opinions are sought and listened to.
I come now to the latest development. No doubt arising from the success of the co-operation on the China Daily, the Chinese Government invited the Thomson Foundation to start with them a training centre for the Xinhua News Agency, which is the Chinese national and international news agency, and a British training team of four have been in China starting a course and starting this centre. The number is expected to be doubled shortly and the operation is proceeding. This centre is called the Xinhua News Agency-Thomson Foundation International Journalism Training Centre.
For both of these projects, the China Daily and the training centre, there is training for Chinese journalists in this country. Some are attached to individual British newspapers, and indeed they may have experienced some unusual events in the past few weeks if they have been with certain newspapers. Any British visitor to China nowadays is almost bound to see the China Daily. In fact, he may be dependent upon it for news of what is going on in China and in the world, unless he happens to be familiar with Mandarin or Cantonese.
As the Motion of the noble Lord, Lord Rhodes, states, changes have been taking place in the economy of China. At the same time growth and development
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have occurred in the Chinese press and international news services. I have given a brief account of the British part in this, which is continuing and increasing in an atmosphere of excellent relations. Your Lordships may agree with me that this can only be helpful to fostering good economic relations in general and trade between the two countries.
Baroness Macleod of Borve: My Lords, before the noble Lord sits down I wonder whether, because of what he said about communications, he thinks that we should ask our universities to teach Chinese in view of the close proximity that we might have through trading in the future.
Lord Campbell of Croy: My Lords, I do not think that I must trespass too much on the time. I have kept well within my limit. I am sure that anything that can be done in this respect will be helpful to the objects of this Motion, but it is much too large a subject for me to expand on now.
4.5 p.m.
Lord Greenhill of Harrow: My Lords, we must all thank the noble Lord, Lord Rhodes, for raising this matter, which in normal circumstances would have justified a full length debate. I found myself very much in agreement with his forceful speech which contained constructive suggestions. He has done this country a very great service by the characteristically dogged way in which he has maintained interest in China and kept close contact with Chinese personalities over the last decades. Long-term friendships established in this way over the years are particularly valuable now. I saw him in action in China and admired his energy. I do not know whether he drew any strength from the fact that he always wore a Lenin-type hat. He certainly drew attention to himself in China by doing so.
As to the present and future situations, some weeks ago there was an important leading article in The Times which concluded with the sentences,
"In the long term, the very long term, the omens for a prosperous, powerful and responsible China are favourable. But the greatest risk at the moment is that we treat China as a stable country. It is not."
I am inclined to think that this judgment, though it is controversial, may be correct, and I found it widely shared when I visited the Far East towards the end of last year. But I was encouraged by what the noble Lord, Lord MacLehose, with his great knowledge, said, which suggests a more optimistic view.
But the noble Lord, Lord Rhodes, is quite right to draw attention to the extent of the changes now taking place, and these changes offer new opportunities much earlier than might have been expected. We should manage our political relations and our commercial policy accordingly. But we should not delude ourselves with the mirage of huge markets and quick profits, as some of our competitors have already done.
I do not think that British industrialists are making that mistake. Some have had successes and we must thank the noble Lord, Lord Young of Graffham, for the weight that he put behind the recent industrial missions to China. But many companies have already had disappointments, and expensive disappointments. The danger is that they will be discouraged and will withdraw just when it is vitally important to persist and take a long-term view. But long-term views cost a

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great deal of money and the Government and industry—I emphasise that—both together must make it possible for our links to be maintained and increased.
We are not strangers to China—we have been doing business there for centuries—but never has the competition been fiercer, and now there are formidable industrial rivals on the doorstep of China with strong special affinities. Nor should we forget that China will increasingly compete with our own industries—and the noble Lord, Lord Geddes, has drawn attention to the power of the Chinese shipping industry. Furthermore, we must accept that changes in Hong Kong may diminish British influence in the long run, or at least make it more difficult to maintain. Certainly any British business people doing or seeking business in China should seek partners in Hong Kong.
The agreement with Hong Kong has removed one of the historic barriers to improved political and commercial relations. There are, however, other historic barriers. I refer to claims for British property seized by Communist governments and to defaulted bonds issued by former Chinese Governments. I hope that Her Majesty's Government will take a realistic view of these questions and not allow them to prejudice current and future business. We are in these matters already at a disadvantage compared with our competitors. No doubt Her Majesty's Government have studied these questions, but I should like to be assured by the Minister that they have them under constant review. China is likely to be a large borrower in the international financial markets in the coming years, and I want to be quite sure that we are not unnecessarily putting ourselves at a disadvantage.
I referred to the need to maintain and increase our links with China. Members of the House already know how immensely successful the BBC language service has been. This is distinct from the overseas service. The presenter of the programme called "Follow Me", a Miss Kathy Flower, is no doubt the best known British personality in China, far better known than the Prime Minister or even Princess Diana. Her programme had an audience of more than 100 million, and some say many more. But there was a real risk that the programme would cease through lack of money. As a result largely of the generosity of a Hong Kong charitable foundation founded by an English businessman, a new programme called "Follow Me in Science" is being made and is concentrating, I understand, on technical language. Such a programme should never have been put at risk.
Less well known, but very important, has been the work done by the Thomson Foundation, to which the noble Lord, Lord Campbell of Croy, has referred, in the training of Chinese journalists in the Far East and in sustaining the English language newspaper. How we have the nerve, looking round, to try to teach other people how to run newspapers, I do not know, but what has been done by the Thomson Foundation has produced very good results. Lastly, the House is familiar with the mistaken, but partially corrected, policy of Her Majesty's Government towards foreign students. It is essential that Chinese students should be catered for.
A prosperous and stable China is in the interests of us all. We should do what we can to contribute to it
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and to share in its increasing wealth. We must not forget that China is a nuclear power and if it achieves strength and stability it can become a valuable influence in maintaining international peace.
4.13 p.m.
Lord Nelson of Stafford: My Lords, we can all be grateful to the noble Lord, Lord Rhodes, for introducing this debate this afternoon. Unlike a number of other noble Lords, I did not have the privilege of accompanying the noble Lord, Lord Rhodes, on his visits to China, but I have been there on many other occasions as I had the privilege of being president from 1973–83 of the Sino-British Trade Council of the British Overseas Trade Board whose chairman of that time, my noble friend Lord Limerick, will be speaking later in this debate.
In that capacity I visited China many times during the processes of change to which the noble Lord, Lord Rhodes, referred, from the Cultural Revolution through the turmoil of the Gang of Four and through the period of consolidation under the powerful leadership of Deng Xiaoping. Many changes occurred during that period and I agree with the noble Lord, Lord Rhodes, that many changes are taking place today. I say to your Lordships from all my experience that changes will go on taking place in China. It has always been a country of change—changes from the top of the social structure right through to the very lowest levels.
The noble Lord, Lord MacLehose, is right in referring to the fact that progress will continue in the future. I agree with the noble Lord on that. But changes will continue to occur, and although the progress will be steadily forward there will be periods of retrenchment—wise retrenchments to prevent the overheating of the economy. The Chinese Government have shown themselves skilful in doing that at the right time. It is inconvenient to those who are developing trade but wise in the long run. Those changes will, in my opinion, continue and must be expected.
During my association with China trade I have had the opportunity of leading many delegations and of heading up a number of important exhibitions in the People's Republic of China. During those visits I have had the privilege of meeting many of the leaders of the Government of the People's Republic, both in Peking and in provincial centres. On all occasions the reception received by the delegations I was leading has been most friendly.
Consistently it has been put to us that the People's Republic of China desires to see an increase in trade with the United Kingdom. It was often referred to me in the context of seeing a balance of trade between China and Japan, China and the United States, and China and the European Economic Community. Within the EEC they have expressed the wish to see the United Kingdom taking its rightful place. I am interested to see from published reports that those same sentiments were expressed to my noble friend Lord Young during his recent visits in the past year. Things are still favourable in that respect. But the United Kingdom level of trade has not been all that good although it has been steadily increasing. Within the EEC it is on a par with France and Italy, but it is

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only approximately one-third of that done by Germany in the People's Republic of China. In my opinion we should be doing more and can do more.
Now that the shadow of uncertainty which has hung over the future of Hong Kong has been removed—and I should like to take this opportunity to express our sincere gratitude and congratulations to those on both sides who were responsible for the conclusion of that successful negotiation—I believe this can provide a valuable springboard for the further development of our trade. I impress upon your Lordships that the resources we have in Hong Kong of goodwill, experience and knowledge can be of great assistance to us in the immediate future in expanding our China trade. It is already evident that this is taking place. More and more China trade is going through Hong Kong right now as a result of these favourable developments.
My noble friend Lord Geddes referred to the Daya Pay power station with which my own company has had the privilege of being associated. My noble friend referred to the fact that this was an interesting illustration of co-operation between Britain and the People's Republic of China and the Chinese Government and the British Government. Perhaps I may also draw the noble Lord's attention to the fact that it was an illustration of co-operation between the People's Republic of China and Hong Kong, because the basis of that agreement is payment with power delivered into Hong Kong, paid for in foreign currency which itself pays off the debt; a good illustration of the importance of the Hong Kong connection.
The Motion of the noble Lord, Lord Rhodes, refers to.
"the possibilities of the expansion of international trade to the mutual advantage of the Republic and the United Kingdom".
I believe that there are great opportunities. Those of us who now have worked on the situation for a number of years have, I believe, convinced the Chinese that the United Kingdom has the products and the technology that can contribute to the needs of China in the years ahead. But we must of course go on selling that message and selling it again. We have also demonstrated that United Kingdom goods are competitive in price and performance, and can be delivered on time. At one time it was not easy to convince the Chinese of that; they took a lot of convincing, but I believe they are convinced today.
Her Majesty's Government have demonstrated their support for those of us who are trading in China, through ministerial visits, such as that of my noble friend Lord Young, last year, by other Ministers before him, and by the Prime Minister. We now have the support of Her Majesty the Queen herself, through her planned visit later this year. The Government have responded also to the need to meet the requirement for special terms of credit and soft loans, which is very important for a country such as China which is trying to do so much at the present time with the limited resources that it has at its disposal.
As an industrialist, I support the point made by the noble Lord, Lord Rhodes, in his opening speech concerning the need for strong and effective embassy support for those of us who are developing trade in China. I say not only that those who are working in the embassy should spend longer periods of time
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there, but also that we need more of them with the highest possible commercial skills that are available. China is a difficult market. There are no normal commercial avenues. There are no commercial or technical journals to consult and to help in the gathering of information. There are many difficulties in establishing exactly where decisions are taken, and this itself is changing all the time. One needs constant advice and renewed advice.
Neither is it easy to overcome the language barrier, and the size of the country is of course tremendous to anyone who goes there. We therefore need strong support from our embassy there; but I pay tribute to that which our ambassadors successively and their staff have done over the years. Is it enough? That is the question. It has taken us literally years to have a consular general appointed to Shanghai. Thank goodness that we now have one!
I have the impression that our competitor nations have recognised these problems. It would be very interesting to know, if my noble friend the Minister has such information, how the size of our embassy staff compares with that of our main commercial rivals within China. The term "embassy staff" must I believe include, with some countries, those quasi-government organisations that do a lot of the work.
The stage is set for an advancement of our trade in China but I would add one further point. It is a difficult market and one that requires patience, perseverance and much courage. We must be sure that our salesmen have the support not only of the Government but also of their own companies' managements at home. It takes a lot of persuading hard pressed managers that the time and money spent in China is worth it; and it is a very expensive operation. But at the end of the day, and as has been demonstrated on many occasions, it can pay off.
Finally, companies should take note of the fact that when the Chinese enter into commercial arrangements, they stick by them and are good payers. I would say also that they are very loyal friends. They remember those who help them in time of need, and those who establish themselves in that market now will be there in the future and for a long time to come.
4.25 p.m.
Lord Saint Brides: My Lords, by comparison which the noble Lord, Lord Rhodes, and others who have spoken so far in this debate, my own first-hand acquaintance with China is both slender and recent. But not long ago, some of us had a most interesting conversation with the Prime Minister of China in Beijing. Some of the points he then made to us and some of our reflections on what he said are, I believe, relevant to this debate. I hope that your Lordships will forgive me if I take up some time to tell the House about them.
Seven of us were in Beijing last September as a team from Stanford University, by invitation of the Chinese Institute of International Affairs. We had, quite unexpectedly, a long interview with Mr. Zhao Ziyang, who was remarkably frank in what he said. He began his account of the internal situation—of the economic and, to some extent, political and social situation—in China by telling us that the results of the economic

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reforms that had been introduced in the past few years had been highly positive, expecially in agriculture and small-scale industry. In both, he said, growth and output had been much enhanced and the workforce was now far more vigorous and productive than it had been.
Mr. Zhao Ziyang explained to us that any worker will try harder and produce more if he receives a proper share of the wealth that he produces. (I must say that as a representative of the unregenerate and capitalistic West, I found there to be a certain pleasing irony about being told this by the Prime Minister of a leading Communist country.)
Mr. Zhao stated that there has also been a negative side. Tax evasion was rearing its head, and some entrepreneurs had enriched themselves overnight by dubious means. Above all, it would take time for the Chinese authorities to learn to manage an economy in which, for example, the larger industries took their own decisions, as well as the smaller ones. He wished to draw our attention in particular to the need for the urgent creation of a whole new body of laws and regulations to govern economic and commercial activities.
I judged from those statements that the Prime Minister and his colleagues are essentially pragmatists. They are encouraged by the successes that they have secured through reintroducing the profit motive; but they are not unaware of the social and political stresses and strains that it may also produce—especially if gross financial inequalities once again become a main feature of life in China. For example, will the Communist Party secretary in a village where some of his parishioners are rapidly becoming rich be able to retain his former influence when he himself has remained poor?
And what about the military, who, like other servants of the state, are employed at a fixed salary and have no legitimate access to the means of self-enrichment? Yet it is on the party, the military, and the civilian bureaucracy generally that the Chinese Government's continuing authority must depend. Let us not forget that China is still, and is likely to remain, a highly authoritarian society. Certainly there have been some economic liberalisations; but so far as I am aware, political liberalisation is not in any way on Mr. Deng Xiaoping's programme.
So it seems to me that the intending foreign investor ought to take into account the possibility that China's present trend towards a kind of market socialism geared to rapid growth and based upon the reactivation of acquisitiveness as the main motor of reform, may be slowed or even halted if circumstances were to make that seem desirable; but not I think reversed, since so many tens of millions of Chinese have now benefited from their new freedom to make money for themselves and their families through diligent labour, and will not now lightly acquiesce in its loss.
Mr. Zhao Ziyang described China to us as the largest of all the developing countries; and he held out a bright prospect of mutually beneficial co-operation with Western countries, including our own, in modernising China, provided that the industrialised peoples were
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ready—as he put it—"to move out of the sunset industries, to move over and leave them to us". Mr. Zhao made it very clear that it is to the West that he and his colleagues are primarily looking for partners. There could be no question, he told us, of ever reviving the Sino-Soviet relationship of the 1950s. He said that this relationship had been contrary to China's national interest.
In principle, therefore, proposals by British businessmen for joint ventures with the Chinese are welcome in Beijing, as several noble Lords have already pointed out. I know from my own experience—not of China but of another large developing country, which is India—just how carefully such proposals have to be thought out, just how carefully weighed and framed, if they are to succeed, and how their sponsors have to be patient and show imagination and forbearance in the long and complex process of reaching agreement. But the opportunities are there; and I myself hope deeply that Britain will join in proper measure with other Western countries and with Japan in contributing to China's success.
Last but not least, as we all know, the presence in our country of overseas students can be a valuable lead-in to subsequent commercial opportunities. The Chinese are hungry for technical know-how, and they are sending students abroad in large numbers in search of it, notably to the United States. The figures which I was given in Beijing were of 800 Chinese students here in Britain and 30,000 in the United States. These figures seem to me to be quite disproportionate. I wonder whether the Government would agree that the number of Chinese students coming to Britain is too low and, if so, what steps can or should be taken in their view to increase it?
4.32 p.m.
Lord Oram: My Lords, I certainly join with other speakers who have complimented my noble friend Lord Rhodes on his initiative in respect of this debate, and indeed on the many other initiatives which he has taken over the years towards improving Chinese-British relations. He has done a great work and we are glad to join him in this debate.
The Motion which my noble friend has tabled has two connected parts. First, it refers to the economic changes in China; and, secondly, to the opportunities for increased trade which those changes offer. Most of the speeches have perhaps concentrated more on the international trade aspect of my noble friend's Motion; I shall give emphasis to the first part, dealing with economic changes in recent years. My claim to speak on those changes is based on a quite intensive, though short, study tour which I was able to make it the provinces of Sichuan and Hunan two years ago under the auspices of the British Council. I shall remind your Lordships that that was some seven years after the downfall of the Gang of Four, and four years after the historic third plenary session of the Central Committee of the Chinese Communist Party. It was at that session that the major policy changes in the Chinese economy were introduced under the leadership of Deng Xiaoping. By the time of my visit those changes were being actively implemented, particularly in the rural economy of Sichuan, and that was the first testing ground for the radical transformation of the huge communes which had been

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the much vaunted and much praised rural institutions during the Cultural Revolution.
I had many opportunities of discussing with the peasants what changes in the communes meant for their activities as farmers. They made it clear to me that they warmly welcomed the transfer of the political powers of the communes to the townships; and in particular they rejoiced—it was seen in their faces—in the new system of agricultural production which was being brought about. No longer were they subject to the edicts of the so-called "Revolutionary committees" at all levels in the communes and the crude egalitarianism which previously had stifled all individual incentives. Instead, they were now freely members of their agricultural production co-operatives, and under the new system, which they call the "responsibility system", they were now accepting responsibility for the results of their work—both the benefits if surpluses arose from their work and the penalties if shortfalls were the consequence of their activities.
In the past two or three years this responsibility system has been extended to industry and commerce, including export/import enterprises. This means that today throughout the Chinese economy enterprises take their own decisions on such matters as prices, sources of supply, markets, reinvestment and rewards to workers. Of course, they do this within the general framework, within the parameters of overall state planning. If they are successful in those economic decisions, they get higher incomes, which are shared among the workers, but if they fail then their incomes are lower.
All this is a very radical departure from the previous highly centralised state control of enterprises, and these changes are proving themselves in a remarkable way in practice. The Chinese have with confidence set themselves the formidable task of doubling the 1980 output by the year 1990, which is a doubling in 10 years, and they are well on course to that target. There have been striking increases in incomes both in the towns and, even more so, in the countryside, much evidence of which I was able to see personally.
Much has been written about the encouragement to peasants to get rich, and indeed much nonsense in that connection has been uttered about this being a reversion to capitalism. It is nothing of the kind. I remember particularly a talk that I had with the head of a peasant household whose income had increased dramatically under the new policies. I asked him what he would be spending his money on and the answer was full of interest to me: there was to be a bicycle for one of his sons and his family were going to have better and more varied food. I was struck, too, when he spoke of buying clothes suitable for the summer instead of one set of clothes for all seasons. Looking at the earthen floor of his cottage, I asked about possible floor covering. That was dismissed as a luxury, a dream of the future.
There are important lessons to be drawn from that conversation. Multiply that household, as one does in China, by hundreds of millions. Remember that 80 per cent. of the economy of China consists of peasant households! One can then see what a vast market will exist if the economic changes succeed, as seems likely.
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I suggest, however, that we in the West delude ourselves if we believe that this consumer market is a market that we can exploit, for the Chinese will make those consumer goods themselves. They have a planned economy, a socialist economy. They will not waste their hard-earned foreign currency on imports of consumer goods from the West.
China has opened its doors to the outside world—doors that were closed during the years of oppression under the Cultural Revolution. But they will be careful to see that what comes through those doors, be it ideology or material goods, will be such, and only such, as suits China itself—the new kind of socialist China that is their objective and the reason why they have brought about the economic changes we are discussing.
A few days ago in your Lordships' House we had a brief preview of this debate. Some noble Lords pointed to the desirability of our businessmen becoming familiar with the cultural background of the Chinese nation. That is clearly desirable. But, in my view, it is still more important that our businessmen should appreciate both the opportunities and the limitations that they face in seeking a trading relationship with a vast socialist economy. The contracts that they must seek will suit them, the businessmen, and they will suit Britain. There is no doubt about that. But there is no doubt also that the statesmen of China will ensure that those contracts are such as will suit the socialist purposes of China even more than they suit the West.
4.42 p.m.
The Earl of Limerick: My Lords, not for the first time the House should thank the noble Lord, Lord Rhodes, for giving us the opportunity to talk about the important relationships between this country and the People's Republic. I should like to start with a perspective of change between my first visit, accompanying Edmund Dell, then Secretary of State for Trade, in August 1978, and my last visit in July last year, and to deal not in facts and figures but more in impressions and aspirations. What does one notice? One notices now that 90 per cent. of the people are dressed casually but smartly in cotton shirts and trousers or skirts with welcome flashes of colour from the ladies. One sees no fewer bicycles but a vast increase in four-wheeled traffic capable of producing a traffic jam on the way to the Great Wall—a traffic jam of coaches, construction traffic and motor cars that would not disgrace any nation of the world. One sees a great increase in general activity. As for attitudes, one finds people who are friendly, intensely curious, eager to learn and sometimes disconcertingly well-informed on points of detail. As to realisation of scale, it is a country in which, every time you see a new moon, you reflect that there is a net increase of two million in the population.
In 1978 there was a rebound from the Cultural Revolution. After the Gang of Four, the four modernisations—agriculture, industry, technology and defence. China, at that moment, when we were there, was opening like a lotus flower. There was a recognition of the special place that we and the people of the PRC occupied in each other's history, culture and estimation. At that time, the expectations of trade growth that were aroused—intense both inside and outside the country—could not be fulfilled. The

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resources of planning, of management and of infrastructure, not least of finance, simply were not available. Last July, I returned as leader of a mission from the British Invisible Exports Council following an earlier mission in 1980. We proposed our programme to our friends, the Bank of China, who replied very promptly, "We like your programme. We wish to allow the maximum time for your presentations, so we have cancelled your suggestion of having Chinese speakers. Please will you avoid generalities and speak very much at a technical level".
We had a team, multi-disciplined, of 21 people. We were confronted by representatives—we had asked the Bank of China to broaden the audience—of 30 institutions, the very existence of one or two of which was barely known to us; a total audience of 300. The age profile was the mid-thirties, and about one-third were female. Many of them followed our papers closely in English. Afterwards, they launched at us some very detailed and well-informed questions. It was just the pitch that we had hoped to make, and just the audience that we had hoped to make it to.
Our approach, unlike some, was that we had no inhibitions whatever about the transfer of technology. Our technology was concerned with the use of international services, many of the best of which are centred in the City of London. We were saying that the more that we can teach you and the faster you can learn from us to our mutual advantage, the better we shall have served our purpose. In the course of the mission I was present when the news was conveyed officially to the Chinese Government, to Madam Chen Muhua, governor of the People's Bank, that the PRC was now regarded as eligible for United Kingdom capital aid. This news was received with real gratitude, and rather touchingly, although it only restored us to a position of relative competitiveness with Japan, France, Germany and the United States, to name but four.
Our trade earnings are running at a very modest level, quantitatively hardly significant to either country and far short either of their qualitative significance or of their potential. I am optimistic without being starry-eyed, that this trade can be expanded by a substantial factor. I shall give the reasons. There is, first, the potential. China is on the move. Her own exports are growing, and purchasing power is increasing rapidly, especially in the rural sector. Secondly, a basis of trust exists between us. The Chinese people see business as a partnership to be conducted for the mutual benefit of the parties: hence their preference for a two-page document spelling out the purposes of the partnership rather than a 30-page document explaining what happens if there is a problem between the partners. There is a growing number of old friends on the British side. To be an old friend is not a measure of the length of your whiskers: it is more a measure of the times you have visited the country and the depths of the connections that you have managed to make. In this, happily, we score quite well.
Next, our British exporters can now quote competitive packages against intense competition from the world to include consultancy, technology transfer, export credit, aid where required and, where
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it may be necessary, also counter trade which is destined, I am convinced, to play a much greater part in our exchanges. There is the Chinese wish, overtly expressed, to diversify away from over-dependence on Japan and the United States to Europe and, within Europe, especially to Britain.
There is the point already made by my noble friend Lord Campbell of Croy and the noble Lord, Lord Greenhill, about the growing use of the English language, with the programme of Miss Flower and "Follow me". There is the fact that I learned and verified that no fewer than 80 per cent. of the boys and girls in middle school in China—that is, aged 12 to 18 years, approximately—are learning English. Ten per cent. are learning French. That leaves 10 per cent. for the other languages of the world.
I have discussed this possibility with some of my Chinese friends and I believe that there is some prospect that the English language, given the great communication difficulties within the PRC itself, may become in China what the English language has remained in India, which is a convenient means of internal communication. Therefore it makes sense to devote a great deal of attention and resource to the development and teaching of the English language in our relations with China.
Then there are politics. First, there are the external politics. The joint declaration on the future of Hong Kong was a great landmark. The climate, as our friends tell us, has never been better. This underlies another point of great importance, which is our continuing relationship with Hong Kong, a trading partner of great importance in its own right, a partner of great significance as a gateway especially to the southern part of China, and the great adventure now embarked upon—that of two cultures, one people.
On internal politics, speaking to an on-the-record occasion at the end of his visit at Chatham House, Premier Zhao Ziyang gave us a fascinating exposé of the position of the PRC. At the end he was asked a question by the noble Lord, Lord MacLehose—and I hope I shall quote him correctly—who said, "There are some of us, Mr. Premier, of whom I am not one, who are concerned about the possibility of the return in the PRC to the conditions of the Cultural Revolution". After the question was translated Premier Zhao laughed and said, "Yes, and there are some in China, of whom I am not one, who are even more worried than you are about that prospect". He went on to explain his belief that because of the trauma that had arisen from the conditions of the Cultural Revolution this would never be allowed to happen while there were those active who remembered it.
Problems?—of course there are some. There is the weakness of the infrastructure and the slowness in negotiations. Three qualities are required, one is told: patience, patience and patience. There is overheating; some delays in payments; very rapid growth. But the opportunities far outweigh the problems and justify from us a major effort. The prospects for our visible trade are good. Behind these are the services: consultancy, banking, insurance, commodity broking, dealing, shipping, freight forwarding, law, accountancy, civil aviation and others. The prospects for our

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visible trade are good: the prospects for our invisible trade, I believe, are even better.
4.56 p.m.
Lord Chalfont: My Lords, I should like, if I may, to express my appreciation, as other noble Lords have expressed theirs, to the noble Lord, Lord Rhodes, for allowing us to debate this question briefly in your Lordships' House this afternoon. The noble Lord certainly qualifies under the rules laid down by the noble Earl, Lord Limerick, as a very old friend of China. As it seems in order to advance one's qualifications for speaking in this debate, perhaps I may say that my first visit to China took place 44 years ago as a young army officer, but as that was before the Revolution it is perhaps somewhat irrelevant to today's debate.
My next visit was as the leader of the first parliamentary delegation to go to China, in 1972, after what was known as "the thaw". Since then I have visited on a number of occasions. My interests and my contacts have always been in the field of defence and international strategy. It is on that subject that I should like to spend a few minutes this afternoon.
The People's Liberation Army, as it is known in China, is the largest standing army in the world. It covers, as your Lordships will know, not just the ground forces, the army, but all three services—the navy and the air force as well. Its strength is variously estimated as between 3.9 million and 4.2 million people in the regular forces, with perhaps another 12 million people in the militia. This is an enormous armed force, and one which I think in the context of the Motion of the noble Lord, Lord Rhodes, requires very close study by those of us in the West who are looking towards China as a partner, not only, I hope, in the field of commerce but of politics and strategy as well.
The armed forces of China—the PLA—are undergoing a considerable reorganisation at this moment. First, they are undergoing a reduction in numbers from their level of somewhere about 4 million to 3 million. As a result of this, their equipment and their doctrines—their tactical and strategic doctrines—are also undergoing very considerable re-assessment. I think that this is of very great importance to us in the West.
At the moment the People's Liberation Army is a very austere force. It is based on the doctrine of the people's war. That is, the strategy of the People's Republic of China, if it were attacked by its main potential enemy, the Soviet Union, is to give up large areas of its territory to suck in large numbers of Soviet troops, and thereupon to conduct the kind of guerrilla warfare against them which would include all kinds of techniques, some known only to the Chinese, such as tunnel warfare, to undermine, to eat away at the invading forces, and subsequently to defeat them by the doctrine of the people's war. For this purpose it has been necessary in the past for the People's Liberation Army to be equipped in a fairly austere, one might almost say primitive, way. Some people have called it the rifle and millet army; that is to say, it is an army which has very simple weapons and very simple means of living and subsistence.
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This is changing at the moment, and changing in a way which I think requires all of us in the West to take careful note of what is happening. As we have already heard in the debate this afternoon, there are four modernisations taking place in the Chinese economy: agriculture, industry, science and technology, and defence. Defence, in the concept of the Chinese Government, comes quite deliberately last. They will not devote great resources to the modernisation and improvement of their military strength until they have created the infrastructure of agriculture industry and science and technology.
At the moment the Chinese spend somewhere around 6 per cent. of their gross national product on their defence forces—somewhat more than we do, somewhat more than the average inside NATO, but considerably less than the Soviet Union. But they have taken the conscious decision that until the industrial and scientific and technological infrastructure of the country has been brought into the modern world they will not turn their attention to their armed forces. But when they begin to turn their attention to their armed forces—and the planning has already begun because the Chinese tend to plan far ahead—they are going to require from the West (at least I think they are going to ask for, or expect, from the West) some considerable help in modernising their armed forces.
The ground forces of the Chinese army are going to require such things as surface-to-air missiles to deal with the air threat which they perceive from the Soviet Union; anti-tank missiles and anti-tank systems, because of course the major perceived threat to China from the Soviet Union is from the million troops in the armoured divisions which are ranged along the frontier between the Soviet Union and China. Their air force are going to require such things as airborne early warning systems to give them warning of attack. They are going to require also such forms of equipment as—if I may use such an expression in your Lordships' House—helicopters. They are going to require in their navy target acquisition radar systems; torpedo systems; and in fact all the apparatus of modern military technology.
Some of our defence industries are already engaged with the Chinese in trying to fill some of these needs. Some of our more forward-looking industrial concerns are in close consultation with the Chinese about the kind of equipment they might need. But I should simply like to say one or two things about this kind of collaboration between us. First, it is, as I have suggested, long term. The Chinese do not place the modernisation of their armed forces very high in their list of priorities. It is some way ahead.
The Chinese of course, as your Lordships will know, have a somewhat different view of the passage of time from that which afflicts us in the West. You will possibly know of the Chinese diplomat who, at the time of the negotiations in Paris at the end of the Vietnam war, was asked what he thought had been the impact of the French Revolution on the political development of China. He thought for a moment and said, "It is too early yet to say". That underlines the kind of timescale in which the Chinese view the passage of events.
Therefore, I would simply say to those who are thinking, as I hope they are, of assisting the Chinese in

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the development of their defences not to be too impatient. Things will go very slowly. Things always go slowly in China. I hope nevertheless they will not be discouraged, because your Lordships may recall that one of our late colleagues in your Lordships' House, Lord Cameron, who was once Chief of the Defence Staff, said in the course of a visit to China that we had a common enemy; and I believe we have. I shall not go deeply into this now because time does not allow. However, I think that we should bear that in mind.
We should not think in terms of such things as military alliances. That would be over simple and would not indeed be welcome to the Chinese. But I hope that we shall bear in mind, when we look at China and at the development of its armed forces, not just the commercial advantage that may accrue to us in the West and the United Kingdom, but the fact that for us the People's Republic of China is a strategic element of enormous importance.
5.4 p.m.
The Earl of Bessborough: My Lords, it is always a pleasure to take part in a debate on China initiated by the noble Lord, Lord Rhodes, who, as we have heard, has led so many missions to that country, and is so much beloved by our Chinese friends, some of whom I see in the Gallery. As a Knight of the Garter he must be very happy to know that Her Majesty the Queen will be visiting the People's Republic in October.
My own role has been much more modest but nonetheless most interesting. I have only led two missions. The first as a member of the European Parliament in 1977 at the time of the return of Deng Xiaoping and much talk of the four modernisations, and the second in the Autumn of 1984 at the time of the signing of the Hong Kong agreement. Our mission was concerned with high technologies and included the noble Lord, Lord Kearton, and my noble friend Lady Airey of Abingdon, as well as a United Kingdom Chinese-speaking member of the European Parliament, and representatives of British high-technology industries. We were also briefed by very many well-known firms.
Our object was to show the Chinese that it was not only the Japanese and the Americans who were capable of assisting China in developing new technologies, but that Britain and the European Community could also help them. Our discussions covered energy, aviation and space technology, information technology, and the fifth generation of computers, and perhaps above all computer integrated manufacturing which, as Sir Henry Chilver said only yesterday, is now essential.
Over 10 arduous days we had numerous meetings with our Chinese friends on these subjects, when we informed them of British contributions in these fields both nationally—for example, through the Alvey programme—and internationally with the European Space Agency and the EEC's European Strategic Programme on Research in Information Technology. One highly-qualified member of our team also initiated important discussions concerning the development of fibre optics, especially in communications.
I cannot this afternoon summarise our 100-page confidential report. All I will say is that I hope those
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most interested and likely to benefit from it have read it. Certainly there have over the past year been very important follow-ups resulting from this mission.
As I have said, it so happened that we were there at the time of the signing of the agreement over Hong Kong, and there is no doubt that this agreement has produced a favourable climate for Britain, as other noble Lords have said: a favourable climate for Britain not only to continue trading with Hong Kong itself and, as the noble Lord, Lord Greenhill, said, having partners there, but also to co-operate with the Republic in high technological industrial and commercial sectors.
We must all be very happy to note, as the noble Lord, Lord Rhodes, and my noble friend Lord Limerick have done, the changes which are taking place in that country and in the economy of the Republic, and the immense possibilities in the expansion of trade to the mutual advantage of the Republic, the United Kingdom and the European Community as a whole, with whom in certain cases I believe we should co-operate.
We must remember that China's total imports are annually now in excess of 40 billion dollars, according to Chinese customs' figures. In quoting these of course I am not forgetting that with a population of over one billion perhaps these amounts may not be considered so very large. Moreover, as I understand it, since 1950 over 644 billion Yuan (the equivalent might be some £250 billion) of new fixed assets have been added to the infrastructure, thus enabling China's economy to develop to the point where the Republic now produces more grain and cotton than any other country in the world, and is second only to the United States in meat production.
I also gather that its steel and energy output have grown to make China one of the top six producers in the world. Along with increases in other industrial and agricultural items, such as modern electronic, petrochemical and defence industries, this has resulted in what I think we must admit is a considerable annual growth averaging 9·2 per cent. in the nation's gross output value over the last 35 years.
I wonder whether my noble friend Lord Young—who himself in leading two prestigious delegations has also played a most propitious role in developing our relations with China—would more or less agree with my facts and figures.
I have also noticed considerable improvements in the cultural life of the people. Since 1949 I understand that there are now more than 10 times the number of students in institutions of higher education and, incredibly, nearly 37 times as many middle school students. This brings me to the point about training which was mentioned by the noble Lord, Lord Saint Brides. I express the hope that, if the Government cannot, due to financial constraints, assist in bringing more Chinese postgraduate students over here, private firms might find it possible to sponsor more students in our own establishments. The number of Chinese students going to Japan annually is many thousands. I was given the figure of 7,000. As the noble Lord, Lord Saint Brides, said, many thousands go to the United States, whereas only a few hundred come to Britain. My noble friend Lord Young and I have had

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correspondence on this subject and I should be glad to have his latest views on it.
Anyone wishing to increase trade with China should study the proposals, as I have, in the seventh five-year plan for 1986 to 1990 which was adopted in September last.
Finally, like the noble Lord, Lord Nelson, I should be grateful to my noble friend the Secretary of State if he would give us the Government's latest views on soft loans to China. I gather that these have been initially set at £100 million sterling, and that will enable British firms to compete on more equal terms with their main competitors. I wonder whether there is any chance that this limit of £100 million may be increased. It is most distressing that Britain should be responsible only for not much more than 1 per cent. of China's imports. Anything that can be done to increase this percentage should, in my view, be applauded.
I am most grateful to the noble Lord, Lord Rhodes, for moving this highly significant Motion. I end with this: my daughter who reads, writes and speaks Chinese is at this moment flying to Beijing on her third visit. On arrival she will certainly be saying "Happy New Year" in Putongua which is the common tongue.
5.14 p.m.
Lord Bruce of Donington: My Lords, I should like to join in the tributes that have been justly paid to my noble friend Lord Rhodes for having introduced this Motion this afternoon, and for having spoken so eloquently on it. I must confess to feeling at some disadvantage in your Lordships' House this afternoon because to the best of my knowledge I am the only speaker who has never set foot in China. This places me at some considerable disadvantage since the knowledge I have learned of China is limited. My earliest association with Chinese affairs was in 1932 when I recall, as a very young man, joining in widespread demonstrations in the City of London in support of China on the occasion of the invasion of Manchuria by the Japanese. With many others I participated in campaigns to provide medical aid for China. For the rest, my information on a personal scale has been derived from the noble Lord, Lord Rhodes, with whom I have had conversations, and also with the noble Earl, Lord Bessborough, who is an expert on this subject. I have been very fortunate in having some personal contacts with embassy representatives in London.
This Motion is essentially about the expansion of the trade relationships and trade generally between the United Kingdom and those very great people of China. The problem is very considerable indeed. We talk of the export efforts that we have made, but to the best of my knowledge our exports to China now are under 0·5 per cent. of the total exports that leave this country. Our imports are under 0·4 per cent. These are very small figures. Moreover, the balance of trade between the United Kingdom and the People's Republic of China has deteriorated remarkably over the past six years. I speak to the end of 1984 only: the figures for 1985 are not yet available to me. But in the years 1982–1984 inclusive our deficit in trade with China was £169 million, which works out at about £23million
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or £24 million per annum, and again in the preceding 17 years we operated at a total surplus of some £68 million or about £4 million a year.
I am not attributing either praise or blame for these figures; but clearly if we are to make an impact on our trading relationships with the People's Republic of China we have to make a considerable effort from the United Kingdom. Our imports from China in the main consist of yarn, fibres, animal hair, bristles, finished textiles, a comparatively small amount of manufactured articles and significant amounts of food. But they do not amount to very much.
I assess the speeches that have fallen from the lips of your Lordships this afternoon as evidence of a united determination that this trade with China should increase. The exports we have so far been able to make to China have been in specialised machinery, certain items of transport, iron and steel, very occasionally of copper and we have also been supplying a considerable amount of technical control machinery and technical and scientific apparatus. This has been one of our largest exports.
It is interesting to recall that about 20 years ago we must have exported an aircraft to them. It seems, at any rate from the figures that I have been able to obtain, that we have not sent them any aircraft since. This seems to be somewhat of an omission. Nor, I am afraid, have we been very active in the shipping field.
In the very limited time available to me, I do not propose to cover ground that has been covered by other noble Lords, particularly in the light of the contribution we may confidently expect from the noble Lord, Lord Young of Graffham, whose efforts in China are, I can assure him, warmly appreciated by those of us on this side of the House. Nevertheless, I am afraid it is true that we have to reappraise the financial background within which our international trade operates, and more particularly in the case of China.
Noble Lords this afternoon have referred to the limitations of China's import capacity due to the lack of foreign currency reserves. I am well aware, and the noble Earl, Lord Bessborough, referred to this this afternoon, of the recent—I presume agreed—line of credit of some £100 million, bringing us more into line with the credit to China that has been made available by other countries. I ask the Government to give this more serious thought than perhaps they may have given it in the past.
I am well in the recollection of your Lordships' House in pointing out the virtual "squandermania", by which money and credit were poured out of the United Kingdom and other countries into South America. If we then could afford to advance these sums, many of which were spent on items far less laudable than those that the People's Republic of China have in mind, surely we can go beyond the mere £100 million. Our finances appeared to be capable of sustaining the £7,000 million spent on the Falklands War, with scarcely a ripple. The £5,200 million which, according to the Chancellor of the Exchequer was a financially sound expenditure in connection with the miners' strike, apparently occurred without undue financial restrictions.

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I am not asking and would not dream of asking for undue expenditure to be adopted. However, I am firmly of the opinion that this Government have to give their industrial base in the United Kingdom, particularly in their dealings with overseas countries, just as much financial and other co-ordinated support as the governments of Japan, the United States and Germany. There has to be a co-ordinated effort; there has to be a substantial effort, and that effort has to be made by the British Government.
I have already said that I wish to defer to the noble Lord. I wish him well. I also congratulate the noble Lord, Lord Rhodes, on initiating such a very interesting and constructive debate this afternoon.
5.24 p.m.
The Secretary of State for Employment (Lord Young of Graffham): My Lords, perhaps I may start this afternoon by joining in the congratulations to the noble Lord, Lord Rhodes. I, for one, feel, and I suspect I express a feeling on all sides of the House, that he was indeed making Rhodes scholars of us all when he gave us a panoramic view of his long association with China. Indeed, there could be few more appropriate days on which we could have a debate of this nature, for it marks not only the start of the Chinese New Year, the Year of the Tiger, but this week also marks the start of the first year of the seventh five-year plan. When I went to China in December, it was a very appropriate time to discuss the forthcoming capital and infrastructure investments which the People's Republic would then be making.
Perhaps I may take up one or two points that the noble Lord, Lord Rhodes, made. I, for one, should like to pay tribute to the work of the embassy and the work which has helped both the missions that I have had the privilege of taking to China. I think the work of our officials there is remarkable. There are those who say that the term is too short, but a tour of three years in China must be preceded by two years learning the language, and many of our people come back for a further tour. I believe that those with whom I have had o deal pay tribute to the skill in the Chinese language and the commercial skills of our embassy, though of course we can always improve and I have no doubt at all that changes that are being made at the present time will result in a better commercial service for those of our countrymen who go out to China.
The noble Lord referred to the BBC and to its new transit station in Hong Kong. It would indeed be good if Her Majesty the Queen could open the station on her visit to Hong Kong but, alas, that is impracticable since it will not be finished until the end of the year. At the present time, of course, the BBC is broadcasting some 10½ hours in Mandarin and five-and-a-quarter hours in Cantonese every week. I think it is important that that work should continue, and I hope the new transmitter will make that even easier.
My noble friend Lord Geddes referred to the size of the shipping industry. It is indeed formidable in China. I was made aware of the need for container ports in the 14 coastal cities. Some conversations which I carried on last March with members of my delegation I believe are proceeding very satisfactorily and I hope that we shall find that there will be United Kingdom
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technology very much in use in some of the new ports which are coming through.
The noble Lord, Lord Mackie, paid tribute to the skills of the Chinese in agriculture. Although our embassy does not have an agricultural attaché, as he requested, there is a member of the embassy's commercial department whose responsibilities include agriculture and who devotes much of his time to this sector. I very much agree with the noble Lord on the importance of this sector, in which there are great opportunities for United Kingdom-China cooperation. Indeed, on my mission last March one member who was involved in the food processing industry received a great deal of interest and support. He was shown a flour mill which his company had built in 1928 and which was still running in 1985 with 85 per cent. of its original parts. I am sure that your Lordships will agree that that is a great tribute to British industry—though it cannot all be good since he was told that the machines were working so well that there was no need to replace them yet!
I am very grateful indeed to the noble Lord, Lord MacLehose, for his remarks and for his attention, once again, to Hong Kong as being a gateway to China. His view of the prudent growth of the Chinese economy should be of great encouragement to our exporters. Of course, his knowledge of Hong Kong and the role which I think Hong Kong will increasingly come to play as a staging post between British industry and our potential customers in China is second to none. It is a role which more and more of us are predicting will be of increasing and invaluable help in the future.
When I am in Beijing I read each morning the English language paper, and I should like to pay tribute at this moment to the Thomson Foundation for its help: help which my noble friend Lord Campbell has pointed out. It is of great assistance to not only those of us who are visiting China but very much to the Chinese population, whom it helps to learn English. Nowhere I think is there a better example than in China of the fact that English is becoming the world's commercial language. Also, I must pay tribute to the BBC for its great work in this regard. During the recent visit last summer of the Chinese premier, the star of "Follow Me", Miss Flower, received, I think, quite as much attention from our Chinese visitors and friends as anyone else in this country. That programme of course is invaluable and I am delighted to hear that it is continuing.
The noble Lord, Lord Greenhill, pointed out very correctly the need for staying power in commercial companies going to China. Patience is a virtue but it is also a necessity in commercial negotiations. I think that the more we realise, as I believe many United Kingdom companies realise, that it is not in our interests to look for short-term profits instead of looking for longer-term involvement in a series of partnership arrangements in joint ventures, in helping Chinese technology and in helping the development of the Chinese economy, the more I think our trade will build on the signs that it has begun to show of real and serious growth.
The Government are well aware of claims, and claims for defaulted bonds, and this matter is under constant review. I can assure the noble Lord that not only is it under review but I hope that formal

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negotiations in this regard will begin in Beijing in May and I hope that they will come to a good conclusion.
I was very interested in the contribution of my noble friend Lord Nelson. I should congratulate him as a director of the company, and indeed on his company, on the efforts resulting in the signing of the contract relating to the Daya Pay nuclear plant. It took a long time but I hope that all would agree that it is worth it in the long run. I hope that it will mark but the beginning of a long series of formal arrangements and commercial contracts between United Kingdom companies and China in the field of power generation. It was pointed out to me and became self evident time and again that China has enormous demands for both thermal power stations and nuclear power stations. I hope that we shall be able to play our full part to our joint mutual advantage. Since, alas! I do not have the details of the embassy staffs of our principal competitors, I will undertake to write to the noble Lord with that information.
I hope that all noble Lords greatly enjoyed the account which the noble Lord, Lord Saint Brides, gave of his discussions with Chairman Zhao and heeded his warnings about the rapidly-changing social and economic scene. He also drew attention to a matter which has concerned me greatly and concerns the Government. Share in that concern was expressed by my noble friend Lord Bessborough. It is true that we only had 800 Chinese students to this country in the last academic year but that has increased to 1,200 and we are now having discussions and looking for ways in which we can see this increase by a further 50 per cent. Of course, it is not as many as the United States of America but the USA is far nearer to China and a very much larger country. However, it does compare with our principal European competitors. It is our earnest wish to see far more Chinese students come to this country not only at university and post-graduate level but even at that much more important technician level which is so necessary for the growth of the Chinese economy.
The noble Lord, Lord Oram, drew attention to a doubling of the output between 1980 and 1990 and to the greater potential of China as a market. No one who has had anything to do with China can be other than amazed at the enormous growth that has occurred over the last few years, a growth which shows every signs of continuing and a growth which bodes well for future trade in this country.
My noble friend Lord Limerick quite rightly said that there were no inhibitions on the transfer of technology from the City of London to China. Indeed, I think there is great potential not only for the transfer of technology but for co-operation and growth between China and the City of London, because the City of London operates on a basis of trust and indeed in many ways on an "old friends" basis. I believe there exists in China a desire to trade with the United Kingdom. The noble Lord says that the prospects for visibles are good and for invisibles better. I hope that he will come to the conclusion that the prospects for both are extremely good.
The noble Lord, Lord Chalfont, gave us a very good view of the defence opportunities in China not so
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much in the area of the defence capabilities of China itself as in the opportunities that will exist in the years to come for our defence manufactures. This requires long term planning and it requires patience and I hope that our manufacturers will be in a position to exhibit both.
Finally, may I pay tribute to my noble friend Lord Bessborough not only for his mission last year but for the opportunities for co-operation in technology which are coming out of that? He drew attention to the size of the market and the amount of imports and capital fixed investment. Once again, studying those figures and studying the rate of the growth of those figures, it brings home to us just what our opportunities are. The noble Lord, Lord Bruce, of Donington, said that our exports to China were only 4 per cent. of the exports of the United Kingdom. But of course the United Kingdom is one of the largest exporting countries in the world in proportion to its size; and 30 per cent. of our GDP is exported and always has been. Chinese imports from the United Kingdom were just under 2 per cent in the first half of 1985. They are now showing a considerable growth. Exports were up 24 per cent. for the first 11 months of 1985.
Those 10 members of my mission who came with me last March have up to now signed agreements for over £500 million-worth of contracts, which will be represented in the trade figures of the years to come. More than that, there are many other manufacturers and businessmen of ours in China today. I hope we shall, as the years go by, come back to where we were in China; we had about 5 per cent. of Chinese exports in 1970. The market is growing and we must run fast to stand still but I hope we shall be able to run with it.
The noble Lord, Lord Bruce of Donington, said that the Government should think about soft loans. I am glad to assure your Lordships that on my visit to China in December I was able to assure the Chinese Government that not only were we contemplating a soft loan facility of £100 million but that we would increase this substantially; and within the next month or two officials of the Chinese Government will be here and I hope we can take that further.
There are many opportunities in China and there are many contracts between our two countries. It is a matter which will not be settled in a day. High level visits continue and I look forward with great interest and anticipation to the visit this summer of Hu Yaobang the Chinese Communist Party leader, who will be coming here. I hope that that will further cement relationships between us but nothing will cement relationships between our two countries so much as increasing trade to our mutual advantage.
Lord Rhodes: My Lords, to wind up the proceedings, I did not mention in my speech the suggestions that I made with regard to the funding of post-doctorate graduates coming to this country, because of the delicate nature of the negotiations about it at the moment. The noble Lord will understand what I am talking about because he knows all about it.
I thank those who have taken part in the debate. I think it has been constructive and informative, and I hope that it will not be too long before there can be a

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major debate not only on this topic but on the one needed on the annual report which was promised to us about the Hong Kong settlement. I thank the Minister for his attention and for his reply. I hope it will not be too long before we have the opportunity of discussing the matter again. I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

Parliamentary and Democratic Systems of the UK
5.40 p.m.
Viscount Hanworth Viscount Hanworth rose to call attention to the case for making changes to the parliamentary and democratic systems of the United Kingdom if they are to endure; and to move for Papers.
The noble Viscount said: My Lords, the draft of this speech was made more than a fortnight ago and therefore takes no account of what has recently occurred. But these developments emphasise some of the points that I am going to make today. It is the third lime I have initiated a debate on this subject. The first one was on 22nd May 1974. On that occasion I did not get much sympathy from the Leader of the House. He maintained that any necessary changes were simply a matter of allowing the evolutionary process to take its course. That may be partly true, but the evolutionary process is brought about by people asking questions—and, unfortunately, all too often they are members of pressure groups.
It is quite clear that in many things Britain after the war sat back on its laurels and our decline is due to failure to make changes in time. Even in the late 1950s, for example, some companies still thought that Britain made the best engineering goods in the world and that it was the customers' misfortune if they did not buy them. It should have been obvious to management that they could no longer wield a big stick over blue-collar workers. But they did nothing to learn the first techniques of, in service terms, leadership. The "them and us" syndrome and the negative attitudes of some unions have been the direct result.
I am sure that today most people realise there is a need to prevent our democratic system and its institutions from being undermined. They will not be preserved by saying, "Oh, how beautiful" and sitting in the shade. It must be accepted that any system, however good it was at the start, will be diverted and exploited by people for their own purposes. I quote once again as an example the election of the American President. In essence, the idea was to elect some people who knew the candidates and would make the choice. But what is the situation today?
There have been very great changes recently in our society. As we know, the power of television is enormously important in influencing people, whereas their values are no longer greatly influenced by either the Church or the mores of a privileged hereditary class. These changes in social environment should mean that what was right yesterday must always be examined critically tomorrow. Only by doing this and
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by taking action where necessary can sudden changes, or failure, of existing institutions be avoided.
It must, however, be accepted that in this world, with the imperfections in human nature, no system can be ideal and my later criticisms must be seen in this light. The naive reformer so often seems to ignore this and believes, for example, that if only we were to move from a capitalist to a Marxist system El Dorado would result. I quote what President Kennedy used to say:
"Politics is a field where all action is second-best and the choice frequently lies between two blunders".
If we are concerned with the preservation of our so-called democratic system, we must be clear what we mean by it. Unfortunately, the word "democratic" has become almost meaningless. At one extreme it implies our existing parliamentary and other institutions without change. At the other end of the scale it means that every member of the public should be able to press a button and record often ill-informed and emotional views on every issue of importance. In fact, the only common ground is that democracy is the opposite of autocracy. In terms of this Motion, I use the word to mean a relatively free society which takes the views of the public as a whole into account.
This leads me on to criticise the doctrine of party mandates. The word means "a demand". All parties, rightly, put out their ideas of what they will do if they are elected; but of course those not in office do not have the information which is available to the government. Most of us disagree with some, at least, of each party's proposals and in effect there is only a limited choice of parties. For parties, once elected, to call their proposals a mandate is a travesty of the truth and often completely ignores the views of a very large minority. Surprisingly, the mandate is a fairly recent innovation and is clearly undemocratic in the terms in which I use the word.
I turn to local government, because it is an immediate problem. It should reflect the needs and aspirations of the purely local population. However, we all know that in some instances it has been taken over by extremists, party politicians and power seekers, who manipulate affairs solely in their own interest. Moreover, being in possession of a sometimes very small majority, they should not be entitled to ride rough-shod over, or totally ignore, other points of view. I hope that those with experience of local government can give ideas as to what should be done but I believe, and so does my party, that proportional representation is now essential. I would go even further and suggest that the abolition of the GLC by the present Government would, or could, have been avoided if that body had been elected on this basis.
The law is an essential safeguard of our freedoms and in this role it must be respected and it must function efficiently and sensibly. The introduction of legal aid was of course right but the side-effects have been most unfortunate. It used to be said that there was one law for the rich and another for the poor. Today there is one law for the rich and the poor, but the middle-income group cannot afford the cost of litigation or of obtaining a good defence. A further effect has been that cases which should have been dealt with in lower courts now go to the Crown Court and a log-jam, with excessive delays, is the result.
We are rightly concerned with the danger of convicting innocent people. Nevertheless, history shows us many examples of failing to meet and take effective measures against the challenge of undesirable tendencies in time. Thus it sometimes happens that drastic action is taken at too late a date, such action being a negation of the ideals held by a moderate government in full control. I make no further comment but I would ask your Lordships, please, in this context to think about the problems of our police force in certain circumstances.
Human rights are a vital part of our free society and because of the threats against them I believe they should be enshrined in our law. We pride ourselves on having an unwritten constitution, but I believe it is now too dangerous to leave it entirely so.
My party is in favour of reform of the House of Lords. In the opinion of most of us it is working very well, but I believe there is a danger of circumstances arising in which it might be abolished, to be followed by a single-chamber Government; and to avert this makes reform wise. However, I would first like to see any necessary reforms made in another place so that the upper chamber can be designed to be complementary and not potentially antagonistic.
I hesitate to criticise the working of another place, but to some extent I cannot avoid doing so. The country believes that it is governed by Parliament and their behaviour and speeches are often on a level wholly inappropriate to the importance and gravity of the matters under discussion. Opposition appears to be generated for its own sake, regardless of national interests. This is unacceptable. In a court of law, there is always a judge to sum up and present a balanced point of view; not so in Parliament. The media reporting is, to say the least, imperfect in this context. What worries me even more is that in the Committee stages of some important Bills perhaps as much as 80 per cent. of the time is spent in making party political points and in needlessly interrupting the speakers.
The question is: how do you alter what is almost a tradition in behaviour? I suggest a strong Alliance party representation would greatly help.
I think we are more badly placed than in the past for recruitment of Members of Parliament to another place. The nation needs men of the highest calibre in politics; at senior ministerial level the politician has to have three attributes which are combined only in persons of exceptional ability. Politicians must be good heads of department; they must be politicians in the broadest and best sense of the word. Yet all this is useless unless there is also the ability to speak convincingly. The catchment area from which such persons can be drawn is narrower than it used to be. It is now more difficult to combine politics and, say, the Bar or education, and part-time directorships are less common.
But, most importantly, there is less interchange with industry, commerce and the professions. The reason for this is almost certainly that politics no longer command the respect which they used to. Seldom indeed will a firm or an institution keep a place open for an employee who enters politics, even for a brief
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period. So it is difficult for any responsible head of family to risk his family's security.
I offer no solution, but the problem needs thinking about. So does the excessive financial dependence of the Labour Party on the unions and, to a lesser but still important extent, the Conservatives on the City. The noble Lord, Lord Houghton, chaired a committee to look into how parties might be given a reasonable proportion of their financial requirements from government funds. This was some years ago and nothing has been done; it needs looking at again very seriously today.
I should like to question whether senior Ministers can possibly represent constituencies and perform their own duties efficiently. They try to do so, but is the result that we are being governed by tired and preoccupied men who have no time to think? The argument that a senior Minister must have grass roots is to me unconvincing because a wider viewpoint than that which can be culled from parochial opinion is needed. The present German constitution allows for such appointments, but it might be reasonable to require that the Minister should have previously represented a constituency.
Referenda are a way of involving the public in important decisions and some other countries use this technique. The difficulty is to prevent its misuse for unsuitable subjects and those with a high emotional content where the public cannot be properly informed. Nevertheless, I think we should ask a committee to look into the matter, to see whether suitable safeguards against misuse can be devised. Most certainly I believe that a referendum is necessary before making major changes in our constitution. Otherwise, they could so easily be reversed by another government, to the detriment of any stability in this vital area.
Freedom of information is important in a democracy. I do not suggest that the public should be told about all matters discussed within the Civil Service, but a great deal more could be done in this direction. This Government has twice tripped up by concealing information when the full truth would have served them far better. The first instance was the sinking of the "Belgrano" and the second, of course, the Westland affair.
Before leaving Parliament and party matters, I would again like to tell the story of the man who was primarily concerned with the national interest. After much thought, he decided that party was the right choice in this respect. Later on, he realised that under our system of government a party should speak with one voice. Consequently, he never again had to consider the national interest. This is cynical, I know, but it perhaps emphasises the importance of the Cross-Benches in this House.
Social benefits are a jungle in which even those in the Civil Service who are supposed to advise the public lose their way. Here, as elsewhere, some measure of inter-party agreement is called for, but it need not prevent some differences of view.
My Lords, I have left to the last unemployment. Let us remember that not long ago many people said that if unemployment reached more than 1½ million it would destroy our society. It is now quite clear that there is a danger of it doing so.
Finally, democracy is a rather tender plant and if we do not actively look after it and prune it and give it the treatments it needs to combat the enemies which attack it, it will not survive. My Lords, I beg to move for Papers on the case for making changes to the parliamentary and democratic system of the United Kingdom if they are to endure.
5.58 p.m.
Lord Auckland: My Lords, the House will be indebted to the noble Viscount, Lord Hanworth, for having tabled this interesting Motion. It is a very wide-ranging Motion, particularly for a short debate, and the cure for the problem which the Motion sets out is clearly much more difficult for any Government to undertake than the diagnosis, which is often the case in medical science, particularly for what is frequently the simplest of ills.
I think the House will be very pleased that my noble friend the Leader of the House is replying to this debate because there are few people in politics today with a more distinguished or honourable record of service in either the other place or in this House. His knowledge of parliamentary procedure must be almost unrivalled.
I should like to begin by saying a word about the committee system, because I think the noble Viscount is probably right that the general public has a rather cynical outlook towards Parliament because of what goes on on the Floor of the House. Without in any way criticising the other place—and, never having been a Member there, It would be quite wrong for me to criticise it—it is almost simplistic to say that on the Floor of the other House proceedings sometimes get rather out of hand.
But all too little is heard of the standing committees and select committees. Very late on Sunday night on BBC Radio 4, there is an excellent programme called "Committee" where one hears really civilised debate. The Select Committee on Immigration, for example, has visited Bangladesh, Holland and Florida to discuss the terrible and tragic problem of drugs. I heard some of the proceedings on the radio and the amount of all-party assent on this matter was something to be very greatly admired.
One of the problems of not only our parliamentary system but of many parliamentary systems is that perhaps too much of what goes on on the Floor of the House is broadcast—I do not necessarily criticise that, because in a democracy that is right—and there is all too little concentration on the committee system. It was the late Lord Morrison of Lambeth who, in a debate in this House shortly before his lamented death, used the word "committee-itis" and there may be something in that.
It has been suggested, for example, that there are too many select committees. On the other hand, I submit that until recently the general public had hardly heard of select committees. It is only because of a recent incident, which has been referred to by the noble Viscount—to be more precise, the Select Committee on Defence—that select committees have taken on far more meaning. I make no comment, particularly in a short debate, on the workings of select committees, except to say that they have a very responsible part to play and perform an extremely useful service.
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My nearest experience of a select committee was eight years' service on the Joint Committee on Statutory Instruments where evidence was taken from civil servants and others. That was an example of an all-party committee concerned not at all with party politics, but with the requirement that orders were laid on time and that they made sense. And we used to see, as far as we could, that they did make sense.
One of the other problems which our parliamentary system faces is the surfeit of legislation. Government after government have suffered from this problem and those who have served in the other place—and there are a number of distinguished speakers in this debate who have served in that place—will know the anger which is caused when the guillotine falls. On the other hand, I submit that if the guillotine was abolished, bearing in mind the inordinate length of some of the Bills and of their clauses and schedules, it is highly doubtful whether legislation would get through at all. Of course it is the timing of the guillotine which counts, but on this one can never win. The managers of the Government in office have to make sure that a Bill gets through on time, so that this House gets the time to do its proper job as a revising Chamber.
That brings me on to the question of change and reform, and I would just say this about reform of your Lordships' House. Reform of this House is an ongoing thing. I have had the honour of being a Member of this House since the end of 1957. Shortly after that, we had the Life Peerages Act, and since I became a Member we have had the admission of women Peers. They were both excellent measures which have done an enormous amount to make this House deeply respected in the country. Of course, this House has its critics. Apart from Canada, I think it is the only nonelected second Chamber in the world. But slightly to misquote "Iolanthe" out of context, we
"Do nothing in particular, and do it very well".
With all the shortcomings there might be, it is done very well.
I should just like to say a word about the City of London, because I have spent all my working life there in the field of insurance. We have this extraordinary idea that all people working in Lloyds, the Stock Exchange and the commodity markets are Tory dominated and that the trade unions are Labour dominated. I submit that there are working in the City of London quite a large number of people who do not vote Tory, and that in the trade unions there are a number of people who do not support the Labour Party, even though legend and tradition have it that the trade unions go with Labour and the City goes with the Tories. This is probably an anomaly which we have to overcome, because at the moment we have to suffer it and it undoubtedly does harm.
I have also had some experience in the field of public relations. When things go wrong in Parliament, whichever party is in office, it is always public relations that are blamed, as if some very glossy PR firm can put everything right. The purpose of public relations is not to try to make very good something which is innately very inefficient. It is to present the image of a company or an organisation in its true and present form to those who wish to avail themselves of its services. There is a very clear distinction here.

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In conclusion, it is quite clear that the wide terms of the Motion are such that it is very difficult for any Government to implement them. It is wrong to suggest that nothing is being done to change Parliament, that nothing is being done to change the image of Parliament within the party system. What we have to bear in mind is that changes cannot be made as one changes a car—perhaps every two years. A change must be long-term. It is no good changing a political system every two years or every five years, because that is very unsettling, not only for Governments themselves but for our excellent Civil Service which has to administer it.
This Motion has been worthy of discussion, but I am bound to be slightly sceptical as to whether this or any other Government can, within the constraints of our constitution, really make the albeit admirable changes which it advocates.
6.10 p.m.
Lord Banks: My Lords, my noble friend Lord Hanworth has performed a valuable service this evening by drawing the attention of the House to these important matters. He has, as the noble Lord, Lord Auckland, has pointed out, covered a wide field. If there is one point that we should like to drive home from these Benches this evening it is that there is a need for a comprehensive constitutional review and reform—a look, that is, at the whole of the constitution and an attempt to reform it overall, and not merely by piecemeal methods from time to time. We have to examine how the different pieces of the constitution fit into one another. Such a reform among other things we would hope would aim at achieving reform of the electoral system, reform of the composition of your Lordships' House, decentralisation and devolution of government and the establishment of a Bill of Rights.
We want the reform of the electoral system, to which my noble friend Lord Hanworth has already referred, first and most obviously because it would mean fairer representation. Political parties would have seats in another place in proportion to the support which they had received in the country. That seems a very reasonable proposition, and we find it very difficult to see why we should go to all the trouble and turmoil of holding elections if, in the end, the Parliament which is returned bears little relation to the way in which the electorate have cast their votes.
Secondly, we want to see reform of the electoral system because we believe it would produce less confrontational and adversarial politics. The present system under- represents the point of view which is not committed to policies based on the interests either of capital or of labour. Therefore it encourages politics based on class interest.
Thirdly, we want to see reform of the electoral system because it would result, we believe, in governments based on a majority of the votes. I shall be asked if that means coalition. The answer to that is; not necessarily. If one party has 50 per cent. of the votes then there is no need for any coalition if that is represented by more than 50 per cent. of the seats in another place. But if one party does not have 50 per cent. of the votes, surely a coalition is right and proper.
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We are sometimes told that coalitions are based on agreements arrived at in smoke-filled rooms—the rooms are always smoke-filled even with the decline in smoking which is going on—and that the public knows little about them. But if the participants in such a discussion can each feel that they can sell the programme which is agreed upon to their supporters in another place and in the country as a whole, what is wrong with that? It means in the long run that a government is established with a programme which is not going to give deep offence to the majority of the population. Then, again, are there no smoke-filled rooms in the Labour and Conservative Parties? We hear a lot about the soft Left, the hard Left, the centre and the right in the Labour Party; we hear a lot about the wets and the drys in the Conservative Party. They argue enough in public. Do they not ever argue in private as well? If so, are there no compromises arrived at there? It is true, of course, that the Conservative and Labour Parties are coalitions, but they are coalitions which are not based on a majority of the electorate. Surely it is much more democratic to have a government which is a coalition based on a majority of the votes cast.
My noble friend Lord Hanworth referred to reform of the House of Lords, and he pointed out that there are those who would like to abolish your Lordships' House. But we on these Benches believe that it performs a most valuable service in our constitution. We think that the powers which it has are appropriate for a Chamber of this kind, but we realise that the present composition of the House sometimes inhibits the House from exercising those powers. So we have advocated reform and have suggested that the House might well be part nominated and part elected on a regional basis by proportional representation.
We would link those regionally elected Members of this House to our aim of decentralisation and devolution. Under that heading we are quite convinced that there is a case established for a Scottish Parliament with revenue raising power, but not the power to run a deficit. We remember that a majority voted in favour of the view which was passed in the 1970s to provide Scotland with an assembly of its own, and we believe that an improved assembly (an improvement over the one which was then devised) would command a larger majority at the present time.
For Wales we should like to see the establishment of a commission which would look at the structure of local government there and would also advise on what the structure of government at national level in Wales should be. We think it very important with regard to England that we should get at the earliest possible moment some standard regions for all the quangos, public bodies and private monopolies which we are now creating, so that they are all working under the same regional boundaries.
We would aim eventually to progress towards regional government with the elimination of one tier of local government. But we would not feel that it would be right to do that unless we were clear that there was strong support both in Wales and in the regions of England to proceed to that next step. In the meantime, we would hope that committees could be formed of the regionally elected Members of your Lordships' House which we propose, who would then

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be able to exercise oversight over these various bodies working in the regions; and in the regions we would want to see established regional development agencies of a kind similar to the agencies which exist in Scotland and Wales at the present time.
I said that we wanted to see a Bill of Rights established. The easiest way to do that is through making the European Convention on Human Rights enforceable in the United Kingdom courts, and that could be done by the passage into law of the Bill introduced into this House by the noble Lord, Lord Broxbourne.
I have given a very brief summary of some of the most important features of the constitutional settlement which we seek. I repeat again that we would want to see it comprehensive and linked together. My noble friend Lord Hanworth has dealt with some of these features and with others, but we believe that such a settlement would provide the continuity and the development of our political institutions to meet current conditions, thus obviating any threat of their overthrow or decay.
6.19 p.m.
Lord Houghton of Sowerby: My Lords, I too am grateful to the noble Viscount for giving us the opportunity of going over the ground of an important catalogue of institutional questions which I believe should receive more attention. I am sure that the noble Viscount will be gratified that remaining to hear his opening speech were two former prime ministers. We also have the honour of the presence of the noble Viscount the Leader of the House to listen to the debate. I am sure that he will be interested in some of the comments made in this debate and I look forward to whatever remarks he may make at the end of it.
Under a heading of this kind, one can do little more than just compile an agenda for a much wider debate later. The noble Viscount who introduced this debate had 15 headings and undoubtedly he could have suggested a number more had he covered all the ground that could be covered by this copious umbrella. I shall refer to three—Parliament, local government and education—because they are the three formalised systems in our institutional life that dominate many of our affairs and matter most. All are under criticism—some would say attack—and all are becoming less able to fulfil that which is expected of them. All are showing signs of strain and may crack early in the next century.
For some years now we have been groping our way through a period of economic and industrial change. In relative terms it has been a period of decline. I hope that I am not overcome with the pessimism of old age but I believe that we are not yet through it by any means and I also believe that there is worse to come. I do not believe that we have grasped fully the depth of the problems that will beset this country in the world of tomorrow. Also, I think that our attitudes do not equip us to face the future with any great confidence.
Our institutions are too slow to adjust to what is happening. That is a criticism to make of our people because in this country we appear to rely more upon our institutions than upon ourselves. We expect more from our institutions than we put into our own efforts.
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We do not make our institutions work for us as we should; we tend to work for them.
What is wrong with the control of the three institutions on my short agenda—that is, Parliament, local government, and education—is that although they are supposed to be under democratic control, that control is mostly unrepresentative. Central government are having so much trouble with the excesses of a number of local authorities that frequent legislation is being brought forward to curb what the Government feel cannot be accepted. Some of the curbs on the powers of local authorities are not attacks upon local democracy so much as attempts to correct the actions of unrepresentative local government.
If we turn to Parliament, I would say that we have a strange phenomenon in this country in that the political campaign to destroy the government of the day begins soon after they are elected, and it intensifies a little later in what is called the run-up to the general election.
The explanation is simple. Most of our governments are unrepresentative from the very start. I ask this question: what is the strength of the mandate of the present government in democratic terms and in electoral terms? One could ask precisely the same question of the last Labour Government. In fact, under our present system nearly all governments are minority governments in terms of electoral representation. Small wonder that one can begin to attack a government as soon as they take office—or after giving them a decent two or three weeks to get used to where they are—and then go for them because they are unrepresentative of the majority of the electors.
That is why, boring as it may be to some noble Lords on both sides of the Chamber, I put a change in our electoral system at the top of my list of imperative changes. That goes not only for the local authorities but for central government and Parliament as well. However, it is pretty clear that local authorities are probably more in need of such change at present than central government. I remind your Lordships that a Bill has passed through your Lordships' House calling upon Parliament to give the opportunity to local authorities at all events to change to a different system if they wish.
I do not believe that under our existing political system the concept of one nation is attainable in Britain. One can stick it at the back of any platform one likes, but it will not be realised because our whole system is divisive and is based upon the divisions in society, in education and in industry that we have fostered for the past 100 years or more. We are doing little to remove the acuteness of those divisions in our governmental system.
I know that the other day, in connection with the Local Government Bill, one noble Lord raised the question of proportional representation and the noble Lord, Lord Elton, playfully said, "PR? Ha, ha!". All right, my Lords, laugh it off; but until proportional representation is seriously considered and something is done about it, I do not believe that we shall be within sight of dealing with the problems that confront our institutional life.
I link with electoral reform a drastic change in the method of financing political parties. I ask the

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question: what have we to show to our partners in Europe that would persuade them to return to the corruption—yes, my Lords, the corruption—of the existing system here? I will not enlarge upon that point but shall draw on my very close study of the subject as chairman of a government-appoined committee on the financing of political parties. That experience was enough to convince me, especially after visits to all our European partners, that we are relying upon a bogus voluntary system, in regard to both the political levy on the one side and to political donations from citizens and companies on the other hand. They are not voluntary donations in the true sense of the word but are made under pressure. All those who subscribe to the political parties are put under some form of persuasion to do so.
I would include upon my agenda, in relation to Parliament—and I mention it in passing—the need for a Bill for human rights. I may mention also the need for the retention of a second Chamber. I believe that we are more exposed than most Western democracies to the tyranny of an elected dictatorship. We have no entrenched rights and no constitutional rights other than those it may please Parliament to bestow upon us in the statute law. We know also, because we are constantly reminded of it, that no Parliament can commit its successors.
It is a curious thing that no Member of either House of Parliament is required to promise to uphold the British constitution, whatever they like to think it is, or to protect our liberties. Is it not extraordinary that in the British Parliament all that we do is swear or affirm loyalty to the Queen and her successors—nothing else; nothing about the people, just allegiance to the Queen, and nothing else. We have to do it at each Parliament, as though we cannot be trusted to make that oath or affirmation for life. It must be renewed every time there is a new Parliament.
This House, not the monarch, is the last bastion of freedom for the citizen. We alone, crippled as we are from the results of a stroke 75 years ago, stand guard against the abuse of power of an elected Chamber, where a majority of one is enough to make the law of the land. So on my second point I say that this House, in some form and with no fewer powers than it possesses at present, is an essential part of our system of government. Let no party think that this House can be abolished on a mandate which it presumes to have received at a general election. It will take a good deal more than that to abolish the Second Chamber of our parliamentary system.
In the light of recent events, I think I must now mention the Civil Service in its relationship to Parliament. I think we shall be getting into very deep water if we go on much longer as we have been recently in relation to our civil servants. I see no way of making civil servants answerable to Parliament for what they do in the performance of their duties. They must remain accountable to Ministers and not to Select Committees. I need not dwell on this topic at any length. There is not the time, and perhaps this is not the moment to do so, especially as there is an excellent article on this subject by David Watt in the Times newspaper of Friday last, 7th February. All I need say is that if civil servants are to appear defenceless before parliamentary committees, accountable for Ministers
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as well as to them, then there will be some reaction in the Civil Service itself against such an unfair and intolerable position. Make no mistake about it: it will be a very strong reaction indeed which will go to the very roots of our traditional method of ministerial responsibility and parliamentary government supported by a neutral Civil Service.
Finally, I want to say just a word about education. I know little or nothing about education. I was presumed to know a great deal about teachers' pay. I have been reminded of late of the work I undertook on this subject in 1974. Recently I had a spell in hospital, and I was watching what was going on in the teachers' pay dispute. From the 10th floor of St. Thomas's I wondered what was meant by a slogan, "Houghton must be resurrected". Was it something to do with an experience that I had still to have after they had said, "Houghton must be nailed to the negotiating table"? But some teachers banded together and sent a wonderfully clever illuminated card to the surgeons of the hospital, which, when it was opened up, turned out to be the top of a poster which said, "Houghton must be restored". That suited me fine, and I am glad to say their hope was realised.
Noble Lords: Hear, hear!
Lord Houghton of Sowerby: My Lords, I think the weakness of the eternal triangle in our education system is becoming ever more apparent. The system is breaking apart because it is really based upon the concept of a local service provided and run by a local and elected authority, when of course in fact it is controlled by the central government. This system of dual financial control has proved unsatisfactory for many years. It is an odd situation when teachers refer to their employer, yet the employers to whom they go for their negotiations are not in control of the finances of the pay structure which they are seeking to obtain.
I think that an entirely fresh approach is needed to our education system. I hesitate to do more than make a tentative suggestion that we might look around for something else which might suit the education service rather better than the system which we have, but I would suggest that the National Health Service might be worth looking at in this connection. I believe that we have to come pretty close to a national education service, and until we have it I do not think we shall achieve the standards of recruitment to provide the quality of service that we require, and we shall not be free of the many political pressures that one finds in the education service at the local level. Here, I speak as a member of the Salmon Royal Commission on the standards of conduct in public life, when we saw much that we did not like in local administration, particularly among the elected representatives in local authorities.
I think that is an agenda for institutional change which might be looked at. If I am asked whether I think it will be tackled, my answer is, "No, I do not think it will be tackled"; and if I am asked why, then I must be forgiven my disenchantment with affairs as I see them when I say that I do not think that will happen because in British politics there seems now to be one slogan that does for all and it is, "The past is safe with us".
6.37 p.m.
Lord Grimond: My Lords, I, too, am most grateful to the noble Viscount for introducing this Motion on a matter which I think is too little discussed. I should also like to congratulate him on his excellent speech, with practically all of which I agree, so I need not go over those points again.
My only reservation about raising the point at all is that at present the British are not very good at reforming institutions, and I fear that if they set about reforming Parliament they might leave it in a worse state than it is in now. However, it may have to be done. I have chosen to speak in this debate because I have an experience which is, if not unique then unusual in that I sat for 32 years on the Back-Benches of the Commons. Many of your Lordships have had more distinguished careers and many have become Ministers, but there are few people who have sat in the Commons for 32 years without becoming a Minister. I do not regret one single day of it. My only regret is that I did not get into the House of Commons in 1945.
To my mind, the business of Parliament, and particularly of Back-Benchers, whether in the Lords or the Commons, is not to govern but to stop the government—to criticise, to thwart them and to suggest that they might do better: but essentially, to my mind, they must keep at arm's length from them for most purposes. I do not say that is their only function, but I think it is an important function. At any rate, in the Commons MPs are sent up to express the grievances of the public and to tell the Government where they are going wrong. It is not their only job, but it is an important job.
Above all, Back Benchers are there to stop the Government spending too much money. That, indeed, was the origin of parliamentary government in the House of Commons. Today, of course everything is topsy-turvy and Members of Parliament long to introduce legislation themselves. They press upon the Government the need to legislate further. They beg the Government to spend more money. Oddly enough, it is the Government that very often stand out against the demands for more taxation. I do not say that this development is wholly to be deplored. I say only that it is a curious development given the origins of Parliament. It is one that we should look at to make sure that the other object of Parliament—to control the Government—is not lost.
To my mind, there is far too much legislation. It pours out. It pours out worse, in fact, under the Conservative Government than it did under a Labour Government. As a result, Members of Parliament who take part in discussing this legislation are tied to the Benches in the House of Commons or the House of Lords by day and by night. To my mind, this deprives them of contact with the outer world. Secondly, it prevents the Government from concentrating upon and discharging their most important jobs.
My next point is that Parliament is too big. The House of Commons now has I do not know how many Members. Is it 660? No doubt, I shall be corrected. However, there are, I think I am right in saying, more than 640. It is by far the biggest legislative assembly in the world. This means that a great many of its Members are frustrated. The reason why Back—
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Benchers in the Commons get so angry is that they turn up at 3.30 p.m. day after day with marvellous speeches and go away at 9 o'clock with those speeches undelivered. That makes them very angry.
I was, of course, a Liberal Member. One of the few advantages was that one Liberal was called. At one time there were only five, so your chances were quite good. Furthermore, I was the only Privy Counsellor. But it is the frustration of Back-Benchers in the Commons that leads to bad behaviour. The only Prime Minister, at least in modern times, to be howled down and prevented from speaking was Mr. Asquith, and the leaders of the riot in the House of Commons were the Cecil family. So it is not a new phenomenon exactly. But it is perhaps getting a little out of hand.
On top of the House of Commons, we have the House of Lords. It is to my mind getting more professional. I suspect, too, that it is sitting for longer and longer. I suppose that if all your Lordships turned up there would be 800, 900, or goodness knows what. On top of that, again, we have the European Parliament. It does not seem to me that any effort has been made to rationalise this, to streamline it a little, and, possibly, to cut down the numbers.
One of the prime concerns of Parliament should be to control government expenditure. It is necessary, first, that the national accounts should be produced in a form that enables the ordinary person and the ordinary Back-Bencher to relate taxation to expenditure. It is getting better. We now have more information. But it is still, to my mind, not nearly good enough. I know that your Lordships are forbidden to interfere in matters of taxation. I wonder, however, whether this is still sensible today. If you want the national accounts examined by experts, there are far more experts in the House of Lords capable of doing it than in the House of Commons. Possibly the reasons preventing your Lordshops from touching finance are a little out of date.
I am, to some extent, an upholder of open government. There is need for the known facts on disputes, particularly disputes involving the government, to be presented in a form that can be understood. Take any great matter such as the miners' strike. It was extremely difficult to find out what exactly were the figures, what were the wages paid, what pits were being closed. I wonder whether we do not need some body that can present us with reliable statistics.
I come now to a matter that I open with some delicacy. It could become a personal matter. I do not wish to press it too far. It is, of course, apparent that modern governments inevitably are engaged with business. This opens rather difficult questions. There is, I believe, a rule by which retired civil servants cannot go into business for a limited time after they retire. As to whether that time is long enough, I am not sure. But there is no limitation, so far as I know, upon Ministers. I feel sometimes that we may be getting to a time when politics is regarded as a step towards directorships in the City.
I am wholly in favour of people in business coming into politics. There are far too few of them. By business, I mean not only managers and directors but also representatives of trade unions and so forth. But

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for members of a government to go straight into directorships in big business is a slightly different matter. I leave the matter there, but I am not altogether happy about the position in regard to them or indeed senior civil servants.
One obvious failing of our system is lack of representation of minorities. If you are told today that someone is a Socialist, a Conservative or a Liberal, you cannot deduce from that what his views will be on Europe, on nuclear disarmament or on many other subjects. There are strongly held minority, single issue opinions. On the whole, they do not get much representation in Parliament. One way out of that would be proportional representation, which I support. Another might be the holding of a referendum—about which, I must say, I am rather doubtful—on certain issues. One step, it seems to me, that could be taken now is for those opinions to be better represented in the second Chamber. I find it rather disappointing that there are so few representatives of ethnic minorities in this Chamber. And so comparatively few women, This requires no legislation. It would be very valuable, until we get the matter settled by a reform of the voting system, if we used the second Chamber as a means of representing minorities.
Lastly, I come to the vexed question of committees. I was in favour of the setting up of these committees in the House of Commons. I still am. But there are certain dangers. I sat on one of these committees myself for some years. One danger is that the committee begins to sympathise with the Minister. I reckon that I was not paid to sympathise with Ministers, not paid to produce a shoulder for Ministers to weep on in committee. I am not sure that this is altogether a healthy development.
It is also the case that Members of the House of Commons, at any rate, and possibly also Members of the House of Lords, become identified with the committee. It becomes their main work. They are no longer primarily the representatives of their constituency. They are known as men who have become experts on defence, on agriculture, or whatever it may be, and it is there that they hope to make their careers. That detracts, in my view, from proceedings on the Floor of the House. As a paid up supporter of BackBenchers on the Floor of the House, I rather deplore that.
It is apparent that committees, unless thay are very carefully guided, can become a form of Star Chamber. There is no doubt that Sir Humphrey Atkins was correct in saying that the committee determines its own terms of reference. I would not detract from that. But Mr. Brittan was, I believe, entitled to raise the question whether the Defence Committee was not straying rather far outside defence. There is need for some examination of how far committees should go.
As to civil servants, it seems to me that one of the beauties of the British system was its simplicity and direct line of responsibility. It is this, incidentally, that gives me a slight qualm about proportional representation. The Minister is responsible for his department. When the present Leader of the House was Home Secretary, I knew as a Back-Bencher that I could write to him and put down questions to him and that I would get an answer from him and from no one else,
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except his Under-Secretary. He could not say, "Go and talk to my officials or to my committee" or, "I'm only one of three". There was a clear responsibility.
I do not say that this is the whole of politics. But it is valuable. It is valuable that the responsibility should be pinned on an elected Minister. One should not, except in very drastic cases, be entitled to go behind the Minister and ask what advice he gave, or received from his civil servants. Once one does that it seems to me one brings the civil servant into the arena. One cannot stop it. The Minister could then say, "Go and talk to my civil servant, he will answer it"; or he might say, "I am not responsible for this. This is what I was advised, and here are the papers advising me".
We may have to move in that direction to some extent but I do not know that I altogether welcome it. If we are moving in that direction we are moving in the American direction. We shall require to know how the Civil Service is recruited and promoted. We may even have political appointments. Again, I am not saying that this is out of the question. It happens in Europe. The senior civil servants in Europea are political. But if it is going to happen it requires proper checks and balances and a properly thought out system, and not simply one that is drifted into. To my mind that is the danger at present.
As some noble Lords have said, all we can do is to set out a few items for an agenda. I do not pretend that these are the most important items, but I think that they are some of the items which are relevant to our present situation. I hope that they, and many other useful suggestions, will get some consideration from the Government.
6.52 p.m.
Lord Diamond: My Lords, the theme of the speech made by my noble friend Lord Hanworth, who raised this matter in the first place, was not—and it has been repeated by all other speakers—to suggest the destruction of any of our democratic systems, but their improvement through change, and in particular to suggest that that change was due now if these systems were to endure.
It is that aspect on which I want to concentrate at the outset. That is not a view which is peculiar to this side of the Chamber or these Benches. I want to remind noble Lords opposite that fairly recently there was a report from the Bow Group on the reform of the House of Lords. They said,
"Reform of the House of Lords is urgent if the second Chamber of Parliament is to be preserved".
This is very much the same sentiment as that put forward by my noble friend.
The noble Lord, Lord Home of the Hirsel, himself chaired a committee of Conservative Members on the reform of the House of Lords some time earlier. What they had to say on this topic was—and again I am quoting:
"We do not believe that leaving things just as they are should be considered a viable option".
We therefore have it on all sides that there is need for change and that it has to be considered and not left endlessly.

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Whenever this matter is raised the Government either specifically state or indicate that the way to deal with all these problems is by the gentle process of evolution. That process is far too gentle, and far too slow. It is now nearly 100 years since the first Earl Russell, shortly after he ceased to be Prime Minister, brought forward his Bill on life peerage and got that as far as Third Reading. It did not succeed at that point. It is therefore nearly 100 years ago since this House was considering life peerage.
What is the present position? I am not sure that I know what the present position is. I should be grateful if the noble Viscount, if he feels it proper to answer this, would let us know. For a very longtime it seemed that all governments had taken the view that there were to be no more hereditary Peers created. For a very long time—more or less ever since the Life Peerages Bill came in—we had only life Peers created. Of course, as everyone knows, we now enjoy the pleasure of the company of two newly created Viscounts, the noble Viscount the Leader of the House being one of them. I do not know whether he is able to tell us about this process of gentle evolution. By that process life Peers only were to be created, and therefore the problem—which everybody recognises—of the objectionable hereditary principle did not exist. I say "objectionable" because that is the one thing everybody outside this House picks on first and foremost in criticism of your Lordships' House. They do not criticise its powers or the way it goes about its business. They criticise its constitution, the fact that individual citizens' liberty should, to a certain extent, be determined by an accident of birth—something which is quite indefensible.
I refer again to the committee of the noble Lord, Lord Home of the Hirsel. I share the view, so expressed, that this principle was "virtually impossible to defend". I am asking the noble Viscount the Leader of the House, whether he is able to throw any light on the Government's view, and the view of the Prime Minister, as to whether we should now turn away from this very slow method of altering the composition of your Lordships' House by once more creating hereditary Peers.
We then have to look at ourselves—and it is a very sanguine thing to do—to see to what extent we can justify being called democratic. In this House it is very difficult to call ourselves democratic at all. I have referred to the question of composition. Of course, one of the elements of democracy is the separation of the judiciary from the legislature. I do not assert that this principle is broken every day but it is very difficult—if I might invite your Lordships to consider the position in which I used frequently to find myself—to explain the workings of the House of Lords to a group drawn from the Commonwealth of black, brown, white, interested officials, members of their various parliaments and so on, and to explain to them that a first principle in democracy is the clear division between the legislature and the judiciary. The next question one gets asked is, "Could you please throw a bit more light on the number of Law Lords sitting in your Lordships' House and the extent to which they participate and vote in debates?"
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Another pillar of democracy is the freedom of worship. We had the great pleasure very recently of the attendance of 15 bishops—I counted them—when, on the Shops Bill, we were dealing with an amendment which was close to the hearts of the bishops. There were 15—what somebody has called a beatitude of bishops. I think I prefer the phrase, a preferment of prelates. They were here and we were delighted to see them. But I looked in vain for a Catholic priest or a Jewish rabbi or representatives of any other Church. I respond immediately to what the noble Lord, Lord Grimond, said. I have looked in vain among the faces opposite ever since I have been here for a black face or a brown face, and I have never seen one. I am sure that our discussions will be greatly improved if a little more democracy was brought into our proceedings.
Another pillar of democracy is that of no discrimination, not only in terms of colour or religion, but in terms of sex. No discrimination against women? That is practised in your Lordships' House every day—or at least every day there is, unfortunately, a death in the family of a hereditary Peer. If it is a daughter followed by a younger son, the daughter, so far as the English peerage is concerned—I am no expert on this, but I understand this to be the position—is simply brushed aside. On what grounds? That she is a woman.
We have the 1975 Act against discrimination against women. We have a Bill going through this Chamber at present to strengthen that Act. I believe we have signed the convention of the United Nations which prohibits discrimination against women; and yet, as everybody in this House knows, we accept the grossest form of discrimination against women every day. I do not want to embarrass the noble Viscount the Leader of the House once more by referring to his personal position, but I understand he has three charming daughters.
Viscount Whitelaw: Four.
Lord Diamond: Four, I am delighted to say that that adds to the argument. So far as I understand, he has no manly sons. He is a hereditary Peer, and his Government choose to continue this vicious policy of excluding from the right of inheriting his hereditary peerage any female issue. Therefore, none of his daughters will succeed to the noble Viscount's viscountcy. On what grounds? That each and every one of his daughters is female, and on no other ground whatsoever. We cannot really pretend that we are very democratic in this House.
When we look at the other House, there is not much there to commend us to use the word "democratic": not if you are a member of either of the Alliance parties. We know that representation of the people means this: if you are a Labour voter then it is one man, one vote; if you are a Tory voter, then again it is roughly one man, one vote; but if you are a citizen who wants to vote for one or other of the Alliance parties, then it is ten men, one vote. Or one man, one-tenth of a vote. Or one woman, one-tenth of a vote.
We sitting on these Benches are all part of a large number of citizens who are tenth-class citizens so far as representation is concerned. I do not mind being a second-class citizen, or even a third-class citizen, but it riles that one should have to walk around all the time

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recognising that all your symapathisers, all those who share your views, know that in our parliamentary democracy ten of them have to get together to produce what one Labour voter, or one Tory voter, can produce in our present system.
Neither House justifies us in claiming that we are an active democracy; a parliamentary democracy. We claim to be, and it is true to say that this Parliament is rightly called the mother of Parliaments. The only extraordinary thing about that fertile mother to which I would draw your Lordships' attention, although you will have noticed it by now, is that not a single one of her offspring bears any likeness to her. Of course there are two Chambers on occasion. In Canada the second chamber is not an elected chamber, but there is no parliament where you have a second chamber composed as this Chamber is composed.
So much for the reality of parliamentary democracy as we practise it. I shall not waste your Lordships' time. We have already referred to the situation in the local authorities. That is another question I want to ask the noble Viscount the Leader of the House. What has happened to the Bill which gave local authorities the option to decide whether they would have proportional representation or not in their elections? What has happened to that Bill which passed through this House without a single vote, a single hand, going against it?—neminene dissentiente, as the noble and learned Lord the Lord Chancellor has frequently said.
It went through this House on the second occasion. On the first occasion it was introduced by my noble friend Lord Harris, and the second time it was introduced from that side of the House. It went through the House, and we have heard nothing more about it. Is that what the noble Viscount the Leader of the House feels is the appropriate attention to be paid to the neminene dissentiente opinion of your Lordships' House?
A great deal needs to be done before we can attempt to aspire to the title of a parliamentary democracy in practice. It needs to be done urgently by all of us, including myself, and I put myself second to none in my respect, affection, and regard for this Chamber. It needs to be done urgently.
Lord Soames: My Lords, before the noble Lord sits down, could he direct his mind to this? He has spent a lifetime really in the two Houses. I am sure he has given thought before to the question he raised today at some length about the future of this House. He was talking about the reform of this House. Many of us have looked at this. My noble friend Lord Home of the Hirsel, as he said, went into it in great detail. But generally speaking—certainly I found this when I had the honour to lead this House—there are any number of people who want to see this House reformed, but those who want to see it reformed can never agree on what sort of reform should be brought about.
Secondly, if this were to become what the noble Lord called a democratic House in the full sense of the word, then this House would require, were it an elected House, far more power than it has today. I found this to be thought by the other place not to be all that good news, with a capital G and a capital N. I think that what we have is the best second Chamber, and the best second Chamber that we are likely to have.
Lord Diamond: My Lords, as the noble Lord, Lord Soames, has asked me these questions, and if I may be forgiven because I had in fact sat down promptly on the 15 minutes which I thought was appropriate in these circumstances, may I say a word or two more. Certainly these thoughts have gone through my mind, and certainly they have gone through the minds of every single member of the Alliance Joint Commission which considered this matter with great care and has published its report, and has dealt with every one of these problems. There is not that difference in view that the noble Lord suggests.
If he will be good enough to re-read the report of the noble Lord, Lord Home of the Hirsel, and his colleagues and this commission report, he will find a great deal of common ground there. There is certainly total common ground so far as the two parties constituting the Alliance are concerned. This is the policy which we would endeavour, with the goodwill of both Chambers, to put into effect.
I cannot deal with all the arguments across the Floor in this way. I can assure the noble Lord that these are matters which deserve the most careful attention; of course, they have been given it. There are solutions to all of them, and the general themes running through most of these well-thought-out solutions are very much like one another.
7.10 p.m.
Lord Underhill: My Lords, like other noble Lords who have spoken I am grateful to the noble Viscount, Lord Hanworth, for giving us the opportunity to ventilate views on a number of subjects connected with our democratic institutions. We are grateful to the noble Viscount for letting us know in advance of the 15 items with which he proposed to deal. I do not propose to deal with all the 15 items, but shall pick out three or four. However, in having such a wide-ranging debate we are in danger of making sweeping generalities on a number of the points. As the noble Viscount said, democracy means different things to different people. Many things we all agree on.
I should add one additional point. I want to see maximum opportunity for the individual to help shape his own destiny. That is something that has not been mentioned in the debate. How can our parliamentary institutions lead us to greater industrial democracy so that the ordinary man in the street, the man at the bench, can feel that he is helping to play a part in determining his future, and that other factors will not determine what he will be for 40 or 50 years of his life?
The noble Lord, Lord Banks, thought we ought to have some kind of commission which could consider the overall workings of our parliamentary system. It may seem strange for me, who for all my life since I was a youngster of 15 have wanted to see change, to say that I believe we shall achieve a change in our parliamentary system only by gradualism, by dealing with the important issues as they arise. We shall not achieve change by sitting down and deciding on a wholesale sweeping change of all our institutions. I do not think it will happen that way.
I do not believe it is the job of this House to comment on the structure and functioning of the other

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place. An advantage of our Chamber is the fact that we can deal with amendments in Committee, at Report and on Third Reading on the Floor of the House instead of sending them to be considered by another committee. That is a great attraction and benefit to the functioning of this House. As is well known, my party seeks the abolition of the House of Lords. But I am certain that my noble friends, wherever they are, will permit me to give my own personal view and to say that I have always supported a second Chamber. It would be wrong for me to declare otherwise. From what I have seen and from my experience, the work of our own Select Committees—I sat on the Docklands Select Committee for three and a half to four months—and the work of our EC Committees plays an important part in our democratic institutions.
I want to say a word about abolition, or perhaps I should say change or reform. The last thing I want this Chamber to be (I agree with the noble Lord, Lord Soames) is an elected Chamber. I am certain that every noble Lord will take the same view as myself, that if I were elected I should want far more power than I have in this House. Secondly, I do not want to see this Chamber compete with the elected other place down the corridor. That would be wrong.
The noble Viscount referred to tired Ministers. I do not know whether the noble Viscount, Lord Whitelaw, accepts that his own Government are tired Ministers, but it would be a fatal step if we moved to having Ministers as executives not as elected representatives of the people. The fact that our Ministers have to come before the elected representatives to justify what they are doing is a vital part of our parliamentary institution. That is why there is criticism in the other place that one of the most senior Ministers in the Cabinet, the Secretary of State for Employment, is a Member of this House and not in another place, where he can be answerable to the elected representatives of the people.
By and large, we all recognise that one of the great achievements of this country is the soundness of our system of electoral law. I am glad that reference has been made, especially by the noble Lord, Lord Houghton, to his own committee, the Houghton Committee on state aid for political parties, on which I was privileged to sit. We must seriously consider this point at some time. All parties except the Conservatives are in favour of some form of financial assistance for political parties. It is not just the question of helping to maintain the organisation of the political parties, but to assist them in greater communication with the electorate. It is important that financial aid to political parties should be considered, and as the political position of trade unions has been referred to, I should remind your Lordships that every single trade union which has held a secret ballot to decide whether it wants a political fund has overwhelmingly declared that it wants a political fund because it believes it is essential for its members to play a part—not in affiliation to the Labour Party, that is a separate issue. Members voted on whether they should have a political fund so that their union could participte in political activities on behalf of the membership.
In his opening speech the noble Viscount referred to what is called adversarial politics. Frankly, I do not
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understand what "adversarial politics" really means. I have been in politics in other spheres for 56 years of my life. I believe in certain things. If the Government of the day or another political party stand for different things to those for which I stand, I shall oppose and criticise. That is not adversarial politics; that is what we are here for. What we must not have is opposition for opposition's sake. Every time we consider the allocation of finance and how it should be used, that involves a principle. Often I disagree with the views of the Government, therefore I and my colleagues wish to criticise and oppose them. That is not adversarial politics. It would be nice if the Conservative Party could come my way on public ownership and public expenditure, but they do not choose to do so.
I have often asked in debates, where are the parameters of the Government's limits on privatisation? Do they envisage stopping anywhere? I have never had an answer. If I disagree with what the Government are doing, such as privatisation of the water supply, and oppose it, that is not adversarial politics. That is a disagreement on a vital principle on how we should handle our vital public utilities. I cannot understand these new words which have come into our political life, "adversarial politics".
As I have said, we must not have opposition just for opposition's sake. One of the problems in public life is how best to improve the accountability of our various executive institutions. Under privatisation we are gradually developing more and more quangos which the Government were pledged at the outset to demolish or get rid of. We are getting more and more inspectorates. One of our problems is how Parliament can exercise accountability over these institutions. That is why some of us are so critical of the demolition of public undertakings and their transference to private monopolies. That is why I should like to see the National Health Service and water undertakings under some form of elected regional organisation, so that there can be accountability. Again I say this is not adversarial politics. This is putting forward a principle which I believe is essential for the national well-being.
One of the grave dangers which I believe face our country and our democratic institutions is one which has been repeatedly voiced from various parts of your Lordships' House over the last two or three years. That is the tendency towards centralism in regard to its attitude to local government. Local government is as much a part of a democratic institution as Parliament itself. This is where I say there is need for care. There needs to be very careful attention to and consideration of what should be our local government structure. This is where I should like to see a consensus of opinion as to what it should be.
We have seen what happens when hasty decisions are taken, as on the reorganisation of local government by the abolition proposals—hasty decisions. I hope I am not being party political in saying that. One has to look at the relationship between central government and local government. That must involve also the whole question of financing local government. Local government is where we have our closest touch with the people and we have to work out the best possible way of achieving that.
Incidentally, I am one of those who have never favoured the whole of a local authority being changed

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at one time. Personally, I believe in annual elections. This avoids wholesale swings. This endeavours to achieve balance inside an authority. One does not, because of a political situation at one time, have a complete sweep of the authority. I have always supported, often to the consternation of fellow organisers, annual elections. I believe that that could be a very important part of our local government structure.
Reference has been made by a number of noble Lords to proportional representation. Certain Members will not be surprised if I myself pay some attention to it. Emphasis is made that the first-past-the-post system leads to candidates being elected on a minority of votes, and even governments being elected on a minority of votes. However, there are other considerations that just cannot be set on one side, because arguments for electoral change mean that one also has to look at political change because that really is what any electoral change means.
I kept a cutting from The Times, in which Ronald Butt was writing just after the general election. He said:
"Under our system, the election of a party to government not only betokens a real shift of opinion but usually also registers the only way in which that opinion could be coherently expressed in all the given circumstances".
I was surprised to hear the noble Lord, Lord Banks, say that if a party has the majority of the votes then it should have the majority of the seats. I did not think that was the Alliance view, because the only strict proportional representation system one can have is the type of system which Sweden has, where in the whole of Stockholm there are, say, 18 seats and if one receives 51 per cent. of the votes one has 51 per cent. of the seats. Inevitably, that leads to a list system. One no longer votes for individuals; one just drops a party list in the box. I was in Sweden in 1976 studying their elections and saw that done. It did not matter who was on the list: it was merely dropped into the box.
As I have previously said in your Lordships' House, I was national agent for the Labour Party. What lovely power it would give bureaucracy in the political parties if we should have a list system. It would require political parties to be written into the constitution. Do we want that? As I have said, with a list system people vote for a party list; the calibre of individual candidates counts for nought. PR can also blur issues. Despite all the issues fiercely contested at elections, if there is no clear majority then one can have bargaining afterwards in which the electors play very little part. There can be blurring of programmes presented to the electors. Some of the proposals for PR really have no proportional basis at all.
The system put forward and favoured by the Alliance has been the single transferable vote. I have studied all the elections that have taken place in Ireland. It is very interesting because the Irish Times always gives the figures of all the counts and one can see exactly what has happened. It was very noticeable that in the last European elections, although eight political groups contested the three seats in Northern Ireland, each one of the groups put up only one candidate. Thus there was a situation in which the three candidates declared elected, after four counts, were the same as those who topped the poll in the first preferential vote.
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As I say, I have looked at the various elections in Eire. STV tends to encourage campaigning to receive the second preferences. That obviously must fudge issues, not put clear issues before the electors. One can have the situation—and in fact this has happened as is shown by some figures here in my folder—where a candidate who was one of the first four, there being four seats to be elected, is not elected and, after 11 or 12 counts, someone who in fact received very few votes is elected. Is that democratic? Is it justifiable?
I question whether the larger electorate required for the single transferable vote is desirable. Certain noble Lords will have knowledge of the position of European constituencies. The task of a European constituency member keeping in touch with his electorate must be impossible. What is even more impossible is the task of an elector to get in touch with a European elected member.
Lord Diamond: My Lords, will the noble Lord allow me to intervene?
Lord Underhill: Yes, my Lords.
Lord Diamond: My Lords, is this the reason why, until the last two members joined, every other single country in the European Community chose to vote on a preferential system, while we were in a minority of one?
Lord Underhill: My Lords, I sat on one of your Lordships' EC committees which went into this whole question and the views were quite clear on that and on the reason why Britain stood out. If the noble Lord wishes to quote other continental countries, most of them do not adopt the single transferable vote; they adopt the list system. That is the system of merely dropping a list in a box and if one receives 52 per cent. of the votes one has 52 per cent. of the seats. That is a system which I do not believe many Members of your Lordships' House would support.
Time is passing. This has been a useful debate. There are so many facets that require detailed consideration of changes to come as and when it is desirable to make a change, in the interests not only of Parliament itself but of the people of this country.
7.29 p.m.
Viscount Whitelaw: My Lords, I should like to start by thanking the noble Viscount, Lord Hanworth, for introducing this subject, for the way in which he introduced it, and, perhaps more than anything else, for giving me some idea of what he was going to say beforehand. For that I was extremely grateful. I had to decide how I could best help your Lordships' House in replying to this debate. It seemed to me that there were various options open to me. The first was to take some of the subjects which the noble Viscount had said that he wished to raise, to hawk them all round Whitehall and get very carefully prepared answers from many different departments on the different subjects concerned, and to come to your Lordships' House with a very carefully prepared brief which may or may not have represented my own personal views but which were very safe as far as my colleagues in government were concerned. I rejected that view.

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Secondly, I could try to reply in great detail to all the various points that were raised and point out why it was at this moment that the Government had not happened to act upon them. I rejected that option as well. What I thought would be best for me to do was to seek to reply as far as I could not only to the points made by the various noble Lords who had spoken but also individually to them, because they would have expressed their points in rather different ways. So that if I go over the same ground because two noble Lords may have spoken about it, then I think that that is better than not replying to some of the very special points that they have put forward themselves. That I should like to do.
I should like to emphasise that I am in the main expressing my own reactions from what might be described as some limited experience now in both Houses of Parliament and also some considerable time spent as a Minister of various kinds in Whitehall. In fact, when the noble Lord, Lord Grimond, said that he had been, I think, 33 years a Back-Bencher. I have to confess—I think to my shame, maybe—that I spent 24 of my 28 years in another place on one Front Bench or the other; and, indeed, since I have added to that three years (is it?) on the Front Bench in your Lordship's House, I have spent a very considerable time on a Front Bench. As many of my colleagues have often said to me, "You have been there so long that you haven't any idea at all what happens on the Back-Benches". That is not quite true, but that is what they choose to say of me.
My reactions will be personal. I will refer from my own personal angle to some of the points which have been put forward. I shall not promise action from the Government, and I cannot always be pinned down as to my reactions being exactly those uniformly taken by the whole Government. And if, on occasion, in response to some of the subjects, I decide that discretion is the better part of valour and say nothing at all, then I am sure that your Lordships will understand that, as well.
So, first of all, the noble Viscount, Lord Hanworth, was somewhat scathing about party manifestos and party mandates. I must say that I myself have some considerable reservations about the rigid adherence to the manifesto, because I have taken part in the preparation of a good many in my time. Therefore, having taken part in compiling them, I cannot say that I really think that they ought to be documents which are rigidly kept to ever afterwards. They certainly are not. I was interested, however—and the noble Viscount, Lord Hanworth, might be amused to hear this—that the last manifesto of the Conservative Party really did rather well as far as the British constitution is concerned, because it said something which was abundantly true. How long it will be true, I do not know; but what it said was:
"The British constitution has outlasted most of the alternatives which have been offered as replacements. It is because we stand firm for the supremacy of Parliament that we are determined to keep its rules and procedures in good repair".
That is a quite unexceptional statement. But at the same time I think that one has to say that a process of change, as the noble Lord, Lord Underhill, has said, is important.
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I would claim that there have been steady changes over the years. The noble Lord, Lord Diamond, thinks that they have not been nearly quick enough, and I think that the noble Lord, Lord Houghton of Sowerby, feels the same. Yet I think that change just for change's sake, and changing in a hurry, can lead to mistakes. In fact, I would say that some of the changes that I have seen in my time have, on the whole, not always been wise. After all—if I did not say it myself somebody else would—I was in the Cabinet which set up the metropolitan counties and I was a Government Whip when the GLC was set up, and I have lived long enough in your Lordships' House to see legislation for the abolition of both. One can argue which of the changes were the right ones, but they were changes which were made, and sometimes, perhaps, they have not turned out for the best. I think, therefore, that we should change where we think it is right to do so.
On that basis I want to turn to one point which the noble Viscount mentioned, and that was the question of local government. I will say just a word afterwards about what the noble Lord. Lord Houghton of Sowerby, said about it from a rather different point of view. The noble Viscount said that he wanted local government to reflect the needs and aspirations of the local population. I would suggest to him that there is a change proposed at this moment in the Government's Green Paper on rates which would, I think, whatever may be the other arguments about it, make a significant contribution to that end by promoting local accountability.
At present, many of those who vote in local government elections are not required, in fact, to contribute directly towards local government finance through the rates at all. The new proposals would certainly mean that those people would have to pay a charge, and I believe that this might well remind them of their responsibility for the policies followed by their own local authorities. I think that that is a step in the direction that the noble Viscount was considering.
He also referred to the position of the courts. I think, in fairness to my noble and learned friend the Lord Chancellor, that I ought to point out that his efforts, and I believe those of his predecessor, the noble and learned Lord, Lord Elwyn-Jones, to secure improvements in the administration of justice in this country, have in both their particular cases been considerable. I realise that they have been overtaken by the very large increase in crime, and if, after four years as Home Secretary, I did not know that, I would be a very strange person.
Nevertheless, it is fair to say that the Crown Courts are now getting through more cases each year than ever before, and the Lord Chancellor has appointed more judges than we have ever had. It is also the case that the number of courtrooms is now at a record level, and my right honourable friend is doing everything he can to make a more efficient use of court resources. I think it would be wrong not to recognise that those are some of the things which have been done in the field of the courts.
I turn now to the question raised by the noble Viscount about House of Lords reform. I will mention it, too, in the context of what some other noble Lords have said. I would reinforce what my noble friend Lord Soames said in his intervention in the speech of

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the noble Lord, Lord Diamond. There are so many ways in which this House could be reformed, so many views put forward as to how it might be reformed; but the problem is that agreement on these measures is seldom reached. I should like to utter a word of warning to all those who see an easy prospect to go forward by these means.
I had the privilege (and sometimes it was not quite that) of being the Opposition Chief Whip in the other place during the 1966–70 Parliament. The Government and Opposition leaders agreed on a scheme for the reform of your Lordships' House. When it came to the other place, the Government—and it was a Labour Government at the time—found it totally impossible to get it through. In another place it was confronted by a very powerful coalition of the right honourable gentleman Mr. Michael Foot and the right honourable gentleman Mr. Enoch Powell. A more powerful coalition, when it comes to speaking and making sure that they can spin out speeches for very long periods of time, than those two right honourable gentlemen could not be found in British politics today. They are masters of the art—and so they were!
The end of it was that one day my noble friend Lord Carrington turned to me and said, "I always thought you were hopeless, and now I know that you are. You are totally incapable of getting this thoroughly sensible reform through that ridiculous House of Commons", which he referred to as "another place", "and you must take all the blame for having failed to achieve what everyone who knows anything about it believes would be a proper reform". I may say I replied suitably to my noble friend, as I have replied suitably to him on many occasions since.
Lord Houghton of Sowerby: My Lords, I am very much obliged to the noble Viscount for giving way. He will recall that it was when the House of Lords rejected the Rhodesian sanctions order that the then Prime Minister took a very truculent view of the behaviour of the Conservative Opposition and brushed aside the co-operation of the Opposition in the House of Commons to secure the passage of the reforms of the House of Lords. He said that the Labour Government could do it off their own bat and, having lost the cooperation of the Opposition, failed to get it through his own supporters. That really is the story, and it is a very complicated one indeed. But it was not just failure to get it through. After all, the Labour Prime Minister dismissed the Official Opposition from the scene and said he could do it from his own strength, but he failed in the end to do so.
Viscount Whitelaw: My Lords, memories of history tend to be selective but of course I accept entirely what the noble Lord, Lord Houghton of Sowerby, says. My memory was that the then Prime Minister, now the noble Lord, Lord Wilson of Rievaulx, actually dismissed the Official Opposition. I have to tell him that my noble friend Lord Carrington did not dismiss me. He simply said that I should have been continuing to co-operate and had failed, despite everything else. But my point is still the same and I should like to put this to the noble Viscount: why were those great Parliamentarians, Mr. Foot and Mr. Powell, so much against this proposal?—for a very simple reason,
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which stemmed from their very great adherence to another place. They believed—and I do not think I could claim they were wrong—that if changes were made in the composition of your Lordships' House which would make it perhaps more elected, the result would be that before very long that House, made more elected than it is at present, would demand more powers. And, my Lords, that is what those Members of another place were determined not to have.
I suspect there will be those coming after them who will take almost exactly the same position and, if one is to say that they are wrong, all I can say is: let us take the example of the European Parliament. It became an elected Parliament—and what happened? It immediately started to demand ever-increasing powers and some of the member states are not so sure that they want to see it get more powers. But of course that is what it demands, and I believe that if you change the composition that is what tends to happen.
I now turn to the noble Viscount's point about Ministers without constituencies, to which the noble Lord, Lord Underhill, also referred. I have to say that I do not agree with the noble Viscount and I want to tell him why. I did represent a constituency in the North of England, very far from London. Indeed, it was one of the biggest country constituencies in acreage, even if more populated by sheep than by people. Perhaps that is the reason why I represented it for so long!
A noble Lord: It sounds like the Falkland Islands!
Viscount Whitelaw: Nevertheless, my Lords, I represented it while I was Secretary of State for Northern Ireland for two years and Secretary of State at the Home Office for four years. I do not think one could have two jobs which demanded more time away from a constituency than those two did, or two jobs that gave you more sudden preoccupations so that you had to cancel going to your constituency at the last minute. Yet throughout all that time I felt it was right to do the job and I made certain—not least because I know that in the political world the difference between, "You are so busy now that you really mustn't come", and, "The devil never turns up: he is too grand now", is a very narrow one indeed and one must take great care to keep on the right side.
Nevertheless, I do miss having a constituency as a senior Minister since I have come to your Lordships' House. I have to say in all honesty that it is the only thing I miss on having come to your Lordships' House. But I do miss that, and I miss it because I do not have the direct knowledge of what is going on in a particular part of the country. It is true that I keep out of the way in my old constituency, obviously, for my successor to have the tasks; so I do not have the same contacts there although I am there a great deal, and of course I do not have the same correspondence. That may be a great blessing in many ways but it is a fact of life that you do not quite know what is the feeling on the ground.
I think that, in a large measure, Ministers without constituencies would not be a good thing for that very special reason. I know it means they have a great deal more to do but if they get tired—and there are many reasons why Ministers get tired but not all of them are

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outside the control of the Ministers themselves—I believe there are some standing rules so that it is perfectly possible not to be tied down reading papers all the time. A Minister has to make quite clear how much he is prepared to read. Once he makes it clear to his Private Office how much he is prepared to read, it is remarkable that he does not get more than he is prepared to read; and I believe that is a very good rule indeed. I made it very clear that I was not prepared to read more than was possible, because I like sleep and I did not want to read when I ought to have been sleeping.
I turn now to my noble friend Lord Auckland. He referred to the question of Committees and Select Committees in another place. I think it would be wrong for me to spend time discussing the affairs of another place, particularly since I am not there any longer, but I would simply say that I believe that in any House the balance between what happens on the Floor of the House and what happens in various committees is very important. I would make just one observation about the other place. I did see over the years that balance going the wrong way, in my judgment. Too much time was spent in committees of various kinds by too many Members. That detracted from the work on the Floor of the House, which became that much less effective. I do not think that was a good thing for Parliament. I am for the committees but I think they should be kept in balance with the work on the Floor of the House itself.
The noble Lord, Lord Banks, referred to the need for a comprehensive review of the constitution. I am not sure how far that would get; but he referred in particular to various special features. First, on the question of proportional representation, I myself cannot and do not claim to be in any way emotionally against it—and after all I could not be, because I did introduce it in the particular circumstances of Northern Ireland and I would maintain that, in those particular circumstances, it was the right thing to have introduced there. It did have some effect, although, alas! of a very limited nature.
I therefore can see the argument in certain circumstances but I must say that having listened to the arguments of the noble Lord, Lord Underhill, who after all has had very considerable experience—far more than I have—of party politics at the grass-roots level in the country, I thought he gave a very powerful exposition against PR at the national level, and one with which I actually agree. I think the noble Lord, Lord Banks, did not seem to mind if there were coalition governments, but I personally fear coalitions for one simple reason. It is that all parties are to a certain extent coalitions and of course all governments argue among themselves—that is part of the business of politics—but if those coalitions are hamstrung by very detailed agreements set out beforehand under which the members of that government came into office, and if they cannot stay in unless they subscribe to some particular doctrine or particular proposition, I think there is a danger that that will lead to weak governments. I believe that there are examples all over the world where that is so.
I would comment on regional government which the noble Lord, Lord Banks, referred to, and I would
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simply say that I fear it would be extremely difficult to get regional government agreed when it came to the boundaries. I am prejudiced because I happen to live in a part of the country which has absolutely no intention of being in any other region except itself, and it is much too small to form a region by itself. On the whole, Cumbria could not be a region but if you tell Cumbria that it will become part of the North West region it bitterly resents it. If you tell Cumbria that it will become part of the Northern region and therefore an adjunct to Newcastle and the North East, it also resents it. I think it is not far wrong because in either event Cumbria would be a very distant and to some extent poor relation to either of the other two big conurbations in the North West and the North East.
There are other difficulties, in the Midlands particularly. Anyone who saw the problems concerned with television stations in the Midlands will know very well how difficult it is to differentiate between, for example, the East and the West Midlands when it comes to finding a boundary, and I think these are very great difficulties.
I turn now to the noble Lord, Lord Houghton of Sowerby. He said some things with which I greatly agreed and some with which I did not agree so much. First, he made some remarks about the Civil Service with which I entirely agreed. I know, having been served over many years by different civil servants, that I could never have done the work or even survived at all in the various jobs that I have had without an amazing amount of assistance from them. I believe it is part of that assistance that it is given on a confidential basis to Ministers and, if it were not, I do not believe it would work. I am very jealous of that and very nervous—I agree with the noble Lord—about some of the trends which have looked as if they might go in the opposite direction, because I do not believe that that would be in the interests of good government.
Now I turn to the question of education. I shall not go further than to say that for obvious reasons, I think there is a weakness in the present triangle of responsibilities, a very obvious weakness which has been shown in recent times. Whatever may be the reasons for that, whatever may be the faults, the fact is that the system is creaking, as the noble Lord said, and I think it should certainly be considered on that basis.
The noble Lord, Lord Grimond, suggested that there was too much legislation. That is true, but I have to say that one of the reasons that is so is because members of both Houses of Parliament are constantly urging action on governments, all of which demands legislation. Let no one be under any illusion: if noble Lords just reflect for a moment on some of the things they are pressing on the Government they will find that all require legislation and substantial time for that purpose. I do not think that is any excuse for governments; perhaps they ought to resist the pressure more than they do. But there is a responsibility on all members of both Houses of Parliament to remember that they have a part in pressing for legislation.
The noble Lord, Lord Grimond, says that the House of Commons is much too big. I do not think I shall comment on that because if anyone including the noble Lord thinks that it can suddenly be substantially reduced, he has another think coming.

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The question of government and business directorships in the City is one where I think he makes a point to which I do not wish to refer, except to say that nobody ever offered me a directorship so I am not likely to follow it up. I shall very shortly be 70 and that will be the end of that, even were I removed from the Government, which many people would consider appropriate.
The noble Lord, Lord Diamond, raised the question particularly of hereditary Peers and asked if this was going to be continued. This is a somewhat touchy subject for me personally and I shall read out part of what my right honourable friend the Prime Minister said at col. 883 of Hansard on 26th November 1979. In answer to a Question, "Will the right honourable Lady consider reintroducing hereditary peerages?", she said, "I do not wholly exclude the possibility." There is another phrase, but I do not think I shall read it; the noble Lord can read it for himself. I think it would be more appropriate.
Perhaps I should mention that in his recital he of course forgot my noble friend the Earl of Stockton, who has, after all, by his voice and recently this week by his vote made a substantial contribution to your Lordships' House.
The noble Lord, Lord Underhill, referred to PR, and I have mentioned that. He referred to the importance of all the stages in this House on the Floor of the House. Sometimes I may find that tricky and difficult, as indeed may my noble friend the Chief Whip. But I accept what the noble Lord says: I think it is a powerfully important part, certainly, for this House and I believe it to be right.
I hear what he says about the financial assistance to political parties. It has to be remembered that after the committee of the noble Lord, Lord Houghton, there has been some very minute movement in financial help to the political parties in Parliament. I think we should remember that. I realise, of course, that the proposals go much further.
As for adversarial politics, I agree with the noble Lord, Lord Underhill. I believe it is the stuff of being in political life. I think that one can perfectly well argue with people, that one should argue and that, providing one is seeking to do so—and I come back to the point made earlier—in the national interest, as I profoundly believe I have been seeking to do, however imperfectly, for a long time, that is the proper way to conduct our political system.
My Lords, I have spoken for too long but I hope I have given both the noble Viscount and your Lordships some feeling that their views have been most carefully considered and commented upon.
7.57 p.m.
Viscount Hanworth: My Lords, first of all I should like to thank all the noble Lords who have spoken, and in particular of course the Leader of the House, who, I think, has understood what I was trying to do and has given a very sympathetic consideration to my approach.
I believe an implied criticism was that I raised 15 subjects, but I could, of course, if I had tried a little
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harder, have raised 25. I thought that the advantage was first of all that I could get the experts to speak on any of the 15 subjects they chose, but had I confined it more I do not think that what I was trying to get across—the need to look at these things—would really have been as effective.
I would say that my object has been to stimulate those who can influence affairs to think about what changes may be necessary, not only on the matters I have mentioned but in other areas. We know, for example—although I did not mention this nor did anybody else—the changes which have occurred, let us say, in the Stock Exchange where so much has been taken over by foreigners and therefore there is a need for change. That is my message and I hope it has got across.
In speaking at the end of a debate, I do not believe that if one can possibly avoid it one should take up individual points and then refute them. I would only say to the noble Lord, Lord Underhill, that if he reads my speech he will see that there is nothing really between us on adversarial politics. He said exactly what I would have said about it, that it must not be opposition for opposition's sake. But I think possibly I would go just a little further and say that in this very critical time for the nation I believe we have still not stopped its decline. There must be a positive effort to see whether one can get common ground in the national interest. Sometimes one might make the criticism that it is fiddling in party politics while Rome burns.
My Lords, I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

Royal Military School of Music
8 p.m.
Earl Cathcart Earl Cathcart rose to ask Her Majesty's Government whether, in view of the very high cost of providing new buildings at Deal (11th Report from the Committee of Public Accounts, H.C. 107), they will now reconsider the decision to move the Royal Military School of Music from Kneller Hall to Deal.
The noble Earl said: My Lords, as far back as 1983 the Ministry of Defence decided to rationalise the system of training musicians in the three services by closing down the Royal Marine School of Music at Deal, the Royal Military School of Music at Kneller Hall, Twickenham, and the Royal Air Force School of Music at Uxbridge and to establish a central, unified, tri-service Defence School of Music; and my Question concerns whether or not this is a sensible plan.
To achieve the establishment of this new school, four factors needed to be satisfied. First, the capital costs of building and works connected with establishing this new school, and the disposal value of unwanted property connected with the scheme, must justify the decision and be within the bounds of economic policy. Secondly, the annual running costs of this new school must be less than those of running three separate service schools.
Thirdly, consideration must be given to locating the Defence School of Music in an area of high unemployment, not only to find staff for the school

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itself, but also to give employment needed to carry out the building and construction works which the new school would require. Fourthly, if possible, the school should be located in the Midlands, the North of England or Scotland in order to counteract the existing concentration of service units in the south.
A thorough review was taken of all available service accommodation, but it was not found possible to satisfy that last factor. The only two options worthy of consideration were found to be the Royal Marine Barracks at Deal in Kent and the Royal Marine Barracks at Eastney in Portsmouth. Deal was chosen, because it was found that Eastney Barracks had very good prospects of being well disposed to the civilian property market for development, and because unemployment in the Dover/Deal area stood at that time at 16·1 per cent. However, this unemployment factor will to some extent be overtaken, especially in the construction and building trade, because when the Minister recently announced the Channel Tunnel project he claimed that it would provide 7,000 new jobs in the Dover/Deal area.
An initial estimate of the cost of the building and works needed to be carried out at Deal produced a figure of £5·8 million, but a more detailed study later showed that to provide all the facilities which such a school of music would require would cost £10·6 million—an increase of nearly £5 million over the original estimate which the Committee of Public Accounts have described as an under-estimate of the full training facilities which such a college would require.
Deal has an old Victorian barracks with large barrack rooms. The barracks has no concert hall and no outdoor bandstand, which is essential for the training of musicians. It has an inadequate number of individual music practice rooms, all of which must be soundproofed. At page 3, paragraph 13, of the Committee of Public Accounts report, it states:
"…the financial advantages of establishing a DSM"—
that is a Defence School of Music—
"were now considerably less than originally expected although a modest saving was still indicated."
The Ministry of Defence have said that they are now looking at ways of bringing the capital estimate of £10·6 million back down to their original estimate of £5·8 million. I must ask my noble friend the Minister when he replies to give us some idea of what type of facilities he proposes to reduce in order to achieve this very dramatic cut, and what effect this is likely to have on the standard of music in the services.
A further financial factor is the disposal value of Kneller Hall. It was originally built as a country house for Sir Godfrey Kneller at the end of the 17th century, but it has been the subject of very considerable rebuilding since. However, in spite of that, it is still a Grade 2 listed building. It is difficult to see any alternative use for it by the Ministry of Defence, nor is it likely that there will be very many uses for it on the civilian property market.
In July 1985, the Minister of Defence had to confess to the Committee of Public Accounts that the ministry had over-estimated the disposal value of Kneller Hall by £2.3 million, and this is shown in the note at the
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bottom of the final page of the report. Presumably, at the time, this higher estimate which was then given influenced the decision on the capital cost and the final bill for the move from Kneller Hall to Deal. Can my noble friend the Minister say whether a new disposal value for Kneller Hall has now been arrived at. and whether it is likely to affect the decision?
A further estimate has been made that if the school of music remains at Kneller Hall, £2 million worth of repairs would need to be done. Part of this sum is accounted for by the need to maintain the Grade 2 listed building in proper repair and, in particular, by repairs needed to be done to the roof with a high scaffolding factor, and therefore high cost. But, of course, if this work is not done it will downgrade the disposal value still further.
Another big item, is the replacement of a large concert hall. About 15 years ago, the roof of the large single storey concert hall at Kneller Hall collapsed and, as happened at Jericho, the walls fell out—presumably, the result of some student musician achieving a particularly high note. The building was a total wreck and, naturally, the commandant of the day put in for a replacement concert hall. But now, with the reduction of army bands, this large concert hall is not needed and Kneller Hall already has two smaller concert halls each capable of accommodating a band of up to 60 musicians.
So far, I think I have shown that none of the four factors that I originally listed has been sufficiently satisfied to justify the total upheaval of all three service schools of music. Indeed, at page 18 of the report the Ministry of Defence wrote in a letter:
"…this has meant that we have had to revise our investment appraisal. As you will see, this shows that over ten years there is now virtually no difference between establishing a Defence School of Music at Deal and continuing with the present system and that over fifteen years the present system in very marginally cheaper."
But there are reasons other than financial for not disturbing the present satisfactory system. The musical needs of the three services vary very widely. This point cannot be over-emphasised. Under existing arrangements, the RAF Music Centre at Uxbridge, although the smallest of the three service schools of music, must be the most cost-effective. They train 30 musicians each year for the two RAF bands, one in Germany and one—the Central Band—in this country. They are administered and partly trained by the RAF Central Band with whom they are co-located. Thus they have the advantage of being trained within an RAF environment from the very start. Being near to the centre of London, they also have ample call on the many highly qualified civilian musical instructors for instruction on individual instruments. I can see very little advantage in disrupting this arrangement.
I believe that the Canadian armed forces decided some years ago to rationalise their service music and to establish a unified tri-service school of music. However, the experiment proved unsatisfactory and they have since then derationalised and returned to normal.
The Royal Military School of Music has been at Kneller Hall since it was formed 130 years ago. The excellent standards which it achieves are held in high regard not only throughout the British Army but throughout the world, where its name and reputation

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are well known. For a young musician to have been trained at Kneller Hall gives him an accolade which is highly regarded throughout the musical world. The school, with an establishment of 150 students, trains musicians and bandmasters for 69 bands in the Regular Army and also caters for 23 Territorial Army hands.
Because promotion prospects are limited if a musician remains throughout his career in one band, unlike soldiers in the rest of the army, musicians, having undergone advanced training or perhaps a bandmaster's course at Kneller Hall, will transfer to the band of another regiment on gaining promotion and musical experience. I spoke recently to two very senior directors of music. One had been rebadged four times during his career and the other seven times. Consequently, although a musician will give loyalty to the badge of the band in which he is serving at any given moment, he looks upon Kneller Hall as his army roots and he will probably return to it several times during the course of his career.
A most important course of instruction at Kneller Hall is the training of bandmasters for the 69 army bands. Apart from being musically proficient and confident not only to conduct their band but to act as a non-commissioned officer or warrant officer, potential bandmasters have to learn how to manage and administer their bands. I believe this factor applies rather less to the other two services since in the case of the Royal Marines and the Royal Air Force all musicians of all ranks serve continually in their own band and within their own service, and promotion comes therefore more naturally within that arrangement than is the case with service with 69 separate army bands. The high reputation of Kneller Hall also attracts many overseas students from the Commonwealth and from the Middle East who pay a fee for the privilege of being trained there.
Part of Kneller Hall's very great reputation derives from its ability to call on many highly qualified civilian music teachers from the music colleges and orchestras in the London area. Unlike other instruction, lessons in individual musical instruments are given by one instructor to one student at a time in a soundproof room. Kneller Hall is allowed to arrange 315 hours of such individual instruction each week by these civilian instructors, who have to be musicians well thought of in their profession and active in music. Being near the centre of London, Kneller Hall has a wide range of highly qualified teachers in all the instruments required, and all of them within easy reach of Twickenham.
The Royal Marine School of Music at Deal turns out 50 trained student musicians each year for the seven bands of the Royal Marines. It has a call on a number of civilian instructors, many of them, I believe, retired Royal Marine musicians who live at nearby Deal. When the new Defence School of Music is established at Deal, when it will have to train musicians for 80 bands, I wonder whether the Deal area will be able to find civilian instructors locally in numbers sufficient to teach all the instruments required. Conversely, does my noble friend the Minister really think that the highly qualified professors and musicians in the London colleges of music and orchestras, all active in their profession, are
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going to travel for perhaps two hours down to Deal and two hours back to give two or perhaps even three hours of instruction?
Finally, one must consider the very high regard in which the Royal Military School of Music is held by all those people who live near Kneller Hall and Twickenham. This fact has been so well and so frequently emphasised by Mr. Toby Jessel, the Member of Parliament for Twickenham, who knows full well the high regard in which Kneller Hall is held by his constituents. Nearly 19,000 local people have signed a petition confirming what a high regard they have for the school and asking that it should remain. Mr. Toby Jessel himself has done so very much to put that case across to the Ministry of Defence, and even on one occasion in an interview with the Prime Minister.
Every summer in the grounds of Kneller Hall the school arranges 12 outdoor concerts at each of which several thousand people attend. The 150 students under instruction there form three separate bands during their course, and it is an essential part of their training to gain confidence at playing in public, and perhaps even conducting or giving a solo in public, that they should have the opportunity to play to audiences. To achieve this these bands give concerts on many public occasions in schools, hospitals, old people's homes, at local civic occasions and at many other events. It is small wonder that the local population do not want to lose them. Luckily, the Twickenham, Richmond and Hounslow area is a very big catchment area and is heavily populated, with 3 million people living within 10 miles of Kneller Hall; so the three bands have no difficulty in getting many engagements and thus gaining invaluable confidence and experience. Would the much greater needs of the Defence School of Music be as well satisfied in the Deal area?
For these reasons, but mostly because of the very slight financial advantages which might—and I must repeat "might"—accrue, I ask the Minister to reconsider the decision to move the Royal Military School of Music from Kneller Hall to Deal.
8.16 p.m.
Lord Mulley: My Lords, I am sure the House is indebted to the noble Earl for raising this matter tonight, and I know, too, that it will be greatly appreciated by all members of all three services. On the face of it, it would seem a fairly unimportant and trivial issue but I think it raises two rather important questions of principle. First, to what extent is it desirable to have, in the parlance of the services, purple establishments covering all three services; and secondly, the very severe strictures about the handling and the estimating and the costs involved made by the Public Accounts Committee in its report dated 20th January last.
The noble Earl, who went into the case with great persuasiveness and detail thereby obviating the need for the rest of us to take up the very powerful reasons why Kneller Hall should stay as it is, referred to the experience of Canada. From my own contacts with Canadian Ministers and senior officers I know that they greatly regretted that they had gone into what I regarded as an excessive amount of centralisation, to the extent, as noble Lords will know, that when you meet a Canadian officer in uniform you cannot tell to

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which of the three services he belongs. The fact that they have gone back on the question of central training establishments for their musicians speaks very eloquently because there are many other features of over-centralisation and over-rationalisation that I am sure they should also like to get rid of.
When I went first into the Ministry of Defence in 1964 as deputy to the then Secretary of State I was particularly charged with trying to bring about the rationalisation, where it was appropriate, of the three services, the Act having been passed only a few months before. The three services had just come together rather reluctantly, kicking and screaming as it were, and there were hardly any tri-service arrangements of any kind at all. It seemed to me that the proper approach was to apply the tri-service principle only where it made both military and economic sense. I stress "both military and economic sense", and in the field about which we are now talking the question of tradition is of very great importance indeed.
We are almost unique in our particular army structure—the regimental system—and I believe that it is one of the elements, if not the major element, that make the British Army, and certainly the British infantry, the best infantry in the world. It is capable of undertaking such diverse jobs as, for example, Northern Ireland. Incidentally, the Royal Marines are very good soldiers. I often had to upbraid the navy for treating them as badly as they do when it comes to money. However, again for reasons of tradition, the last thing that the Marines would want would be to come under the army Vote rather than stay as they are under the navy part of the MoD Vote.
The point I want to make is that the tri-service element and the idea of centralisation should only be carried forward when it makes both military and economic sense. As to the proposal to have a Defence School of Music or, to carry it to its extremes, a Ministry of Defence purple band instead of a regimental, Royal Air Force or Royal Marine Band, then so far as I am aware, none of them want to enter into such an arrangement. Certainly the Royal Air Force do not want to do so, and I am sure that the Marines want to stay at Deal. The noble Earl has made a very persuasive case for the army remaining at Kneller Hall.
The second point of principle involved concerns how carefully defence accounting and estimating is done. In a sense the Committee of Public Accounts said that it thought it would be an extremely good idea if Ministers in the Ministry of Defence became acquainted with the costs of the proposals they were considering. I have never seen a report from the Committee of Public Accounts quite so critical as this one is of the negligent way it appears that the matter was considered.
I am bound to say that that is quite contrary to my own experience. In my day, in 1964, Mr. Healey and I introduced long-term costings and all that went with them. I can vouch for my time there that we were very concerned in all the proposals that we had about the costs involved. In my experience, too, the civil servants concerned, as well as the military officers serving in the department, were most careful in all accountancy matters.
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I find it all the most surprising—and I am sorry to say this as the person concerned is no longer in office—that this should have happened under the former Secretary of State, the right honourable Michael Heseltine. He went to very great pains because he had a passionate concern, as he put it, to cut costs in defence. I do not know how he could do that without paying rather more regard to matters than it appears from the report was paid in this particular case and possibly in other cases. Indeed, Mr. Heseltine went so far as to say that all defence procurement contracts would be put out to international tender. In fact, one of his savings was to buy a Brazilian aircraft for the Royal Air Force. I am glad to say—
Lord Trefgarne: My Lords, it comes from Northern Ireland.
Lord Mulley: Does the Minister wish to intervene?
Lord Trefgarne: My Lords, I am sorry to interrupt the noble Lord, and I am grateful to him for giving way. The aircraft concerned are of course coming from Northern Ireland and not Brazil.
Lord Mulley: My Lords, the aircraft are to be manufactured by Shorts but unless I am mistaken, they are of entirely Brazilian design. In fact, I would have thought that in the arguments that there have been about helicopters—and into which I shall not go at the moment—one could equally say that Westland would not become involved in any American helicopter production. I gather that such is not Mr. Heseltine's current view. Indeed, I rather welcomed his belated recognition of the need for British defence industries and for a European defence capability, although how he could square that view with the idea of international competition I find difficult to understand.
I feel quite sure that any tender for any helicopter that went for international contract would always be won by Sikorsky because that company would have its R & D paid for by the United States Defense Department, in the same way that the Brazilian aircraft, albeit that it is being manufactured under licence in Northern Ireland, had its R & D paid for by Brazilians and others before they put their costs in the tender that secured for them the contract against other contenders. At any rate, I hope very much that that doctrine of international tendering is now dead and buried.
Certainly I send the new Secretary of State all good wishes for what I know is a great and difficult responsibility. He has a very good background as an infantry soldier which I am sure will stand him in good stead. This is the first official opportunity I have had of saying to the noble Lord the Minister how delighted I was to learn of his promotion; and we welcome his participation in this debate. If the Minister cannot tonight say, as I hope he will, that the decision will be reconsidered on the lines proposed by the noble Earl, then I hope he will at least say that in addition to considering the views of the Public Accounts Committee, which specifically asked—very extraordinarily—that its views should be taken into account in any decision about the Defence School of

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Music, he can at least assure the House that its views, and particularly the views of the noble Earl, will also be given consideration.
8.27 p.m.
The Earl of Cork and Orrery: My Lords, many years ago when I was a military person I needed, for some reason that escapes me now, a tent peg. We were in camp at the time and so I went to the quartermaster and asked him for one. "What size?" he asked me. I replied that I did not really know: "Just tent peg size, I suppose". Military technology was a good deal less advanced then than it is now. The quartermaster called out at once to a storeman, "Give Captain Boyle, pins, wood, small, one". Without any hesitation at all, the storeman handed me—a tent peg. I thought of that perhaps not very exciting experience when first I met the words that form the substance of this Question—"Defence School of Music".
In case the link is not immediately clear, perhaps I should explain. I want a tent peg—and as it turns out, a small tent peg. I go to the source of supply and ask for one. I could have asked of course for, "pegs, tent, one", but not being a quartermaster I do not naturally think like that. However, the well-programmed and smoothly-operating computer that is a quartermaster instantly interprets my request in terms that he understands, and he produces the answer. "A small wood pin"? No, no. "A wood pin, small"? No, not at all. Not even "A pin, wood, small". That would be too simple. It has to be "pins, wood, small" in the plural, with the word "one" added just in time to prevent an unwanted shower of the things coming down.
The result to my mind, or to any mind not programmed to understand this kind of jargon, is totally, absolutely and altogether impenetrably without meaning of any kind. In my submission, so is the term "Defence School of Music". Ponder it carefully and see if your Lordships can discover any meaning in it. Break it up. Think what a defence school might be and, having decided, add the words "of music". What do you get? Nothing. Perhaps a quartermaster could help. How would he transcribe it, do you think? As "Schools, music, defence, one"? That is clearly rubbish.
Some of the more critical among your Lordships may wonder why I am insisting like this on something which is so trivial. The reason is that it is not trivial. We may not know what the "Defence School of Music" means, but we do know what it represents. It represents an amalgamation of the three Royal Schools of Music which my noble friend enumerated in his speech. By what right does the Secretary of State, in announcing this proposal in the document The Central Organisation of Defence cancel the Royal status of these honourable schools? Did he do it on purpose; and, if so, on what authority? Or did he, as I suspect, do it without thinking at all?
Did anyone think? Has anyone thought yet? Am I the first person to notice that apparently the Royal School of Music at Kneller Hall has had its royal status abolished at the stroke of a bureaucratic pen? No doubt the matter can be put right. But what would we have then? The Royal Defence School of Music? The Defence School of Royal Music? The Royal Musical
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Defence School? The Royal School of Musical Defence? The School of Royal Musical Defence? I can easily suggest better titles than these and I would do so if I thought that there was a real danger of this irresponsible project coming to fruition. I do not think it will because I think that the Committee of Public Accounts has seen to it. All the same I am worried, as I always am when I see bureaucrats laying down the law about subjects which they do not understand. This can be dangerous.
When the quartermaster talks about "pins, wood, small" he knows what it means. He is talking simply and logically on a subject and in a language which he understands perfectly. But when bureaucrats talk about combining the three music schools of the armed services as though their functions and usefulness were to be measured solely in terms of cost-effectiveness, in my submission they should be regarded with suspicion. I suspect that there were serving officers in the Ministry of Defence who put this point of view, but apparently to no avail.
If it were just a question of saving money, I suppose you could have travelling bands which would play a tune now for the squadron, now for the battalion or the ship. I suppose the massed bands of the Guards Division could take part in the Queen's Birthday Parade at Horse Guards with silent instruments, bewitching the crowds with counter-marching and spin-wheeling while their music thundered out from loudspeakers inside the drums. One could have that; but it would be silly.
Why would it be silly? It would be silly because the music of service bands, though new tunes may come to join the old, is an ancient, honourable and living thing. Music is an ingredient in the lifeblood of the loyal, the enduring and the brave; and it is different between one service and another.
To pretend that Kneller Hall, with its tradition, and its intimate and detailed knowledge and understanding of the army and its needs, can be uprooted and married to the Royal Marines at Deal, with their corresponding but different characteristics as represented in that great school, simply as an exercise in accounting, is to betray either a contempt for the true nature and significance of what is being done or a lack of understanding of it; and I believe that those two characteristics are not to be found within my noble friend the Minister.
Exactly the same arguments apply to the Royal Air Force School of Music at Uxbridge. On the Order Paper in another place there is an Early Day Motion in the name of someone who has already been mentioned—the honourable Member for Twickenham, the indefatigable Mr. Toby Jessel. The Motion is to the effect:
"That this House pays tribute to … the high standards of excellence of the bands of the Army trained at Kneller Hall, Twickenham, the Royal Marine Station at Deal, and the Royal Air Force trained at Uxbridge, all of which add splendour to royal and state occasions, promote recruiting and morale, lift the spirits of the nation".
I hope that when the Minister comes to reply to this Question he will be able to say that there is no further intention of interfering but that things shall remain as they are.
8.36 p.m.
Lord Westbury: My Lords, I wish I could be as humorous as my noble friend Lord Cork has been, but I cannot so your Lordships will have to listen almost to what has been said by my noble friend Lord Cathcart, which needs repeating anyway.
Tradition and esprit de corps are words which seem to be out of date and revived only in times of crisis. Amalgamation and economy are the hallmarks of the attitude of Her Majesty's Government toward the armed forces in peacetime, but at times such as the Falklands war the old high standards of loyalty and efficiency are immediately demanded.
Having visited Kneller Hall last Thursday on a fact-finding mission, I was immensely impressed with all that I saw. The system obviously works extremely well at minimum cost to Her Majesty's Government and though there have been heavy cuts in personnel a very high standard has been maintained. After an extensive tour I began to realise why everything worked so well. I should have thought that from their years of experience, there was no way of making the Royal Military School of Music more efficient either in relation to the musicians that it produces or the money that is spent on it. A move to Deal seems to me to be beyond all sane comprehension.
The Royal Military School of Music will be amalgamated with a different arm of the service which has equally high but different standards and utterly different requirements. The cost will be appalling. The estimate for the move is roughly £10 million if it were to happen immediately, but think of the cost in the early or mid-1990s with inflation as it is at present. I reckon that it would cost double that sum.
Apart from the cost, points against the move include the fact that the Royal Military School of Music has been at Kneller Hall for 129 years. It has its own chapel, museum and mess. It is very much home for all army musicians, not only those from Great Britain and the Commonwealth but from many other parts of the world, who have been trained there. It has wonderful professional, civilian instructors who live locally and who dedicate their lives to teaching music. They are paid only for the actual time they are teaching. In no way do they receive a travel allowance. Therefore to teach for a period of one hour at Deal would mean either a full day out or moving their home to Deal, which would be a great expense to them and which I feel they would not do. If this happened it would be a terrible loss to the Royal Military School of Music.
The other point which I thought was of great importance concerns the system whereby young musicians are brought on. They live the life of a sergeant in the atmosphere of a sergeants' mess and are allocated duties which give them confidence and generally allow their characters to form and blossom, so that by the end of a three-year course they are capable of taking their place as bandmasters with any regiment or corps. This system would not be possible if the Royal Military School of Music were moved to Deal. I gather also that the Ministry of Defence could not sell Kneller Hall and the surrounding land at a commercial value owing to planning permission not being available.
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It is a fact that the British Army has the best bands in the world. Surely it is preferable that the Royal Military School of Music should remain at Kneller Hall rather than amalgamate with the Royal Marines School of Music, which runs very well on its own completely different lines. I ask Her Majesty's Government to reconsider their decision as so many more facts have come to light since the original report came out. I believe that it would be madness to go ahead with the project. No unit can work properly with a sword of Damocles hanging over its head. Some decision ought soon to be made. The conclusions expressed in the House of Commons eleventh report from the Committee of Public Accounts headed Proposed Defence School of Music sum up the whole affair very well. The Committee is obviously against the abandonment of Kneller Hall by the Royal Military School of Music.
8.40 p.m.
Lord Graham of Edmonton: My Lords, I feel like inviting the Minister to make a statement which I am sure might put most of us out of our misery. I am sure that this is within his gift, not only having listened to the speeches but also having read the report. I wish to begin by expressing what has already been said about our indebtedness to the noble Earl of seizing this opportunity, just as his honourable friend and indeed my friend from earler days, Mr. Toby Jessel did in another place. Both have shown themselves assidouus in making sure that if the wrong decision is made this will not be due to any failure by Members in both Houses to lay before the Minister and his advisers what are the facts. The noble Earl spent his time factually, fairly and, I believe, powerfully in setting out the case. He did not weary the House with a long history of exchanges, questions and arguments. We are indebted to him. I want to underline also our indebtedness and that of the constituents of Mr. Toby Jessel at Twickenham for the tireless efforts that he has made.
I should perhaps declare an interest. The only establishment that I have visited is that at Deal. I did so as a Royal Marine in December 1943. At that time, the establishment was used for a non-commissioned officers' training course. I am proud to say that I left with two stripes, which I subsequently lost about six months later for an event with which I would not care to bore the House. I recollect vaguely the buildings described by the noble Earl. I am not therefore qualified to speak, as the previous speaker was, about Kneller Hall. I have never visited Kneller Hall. I come to the affair with the normal prejudice of an Opposition spokesman looking at what the Government have done. I am bound to say, however, that if one rested on the evidence of an impartial adjudicator—that is, the Public Accounts Committee—I fail to see how the Minister and his advisers can neglect this opportunity to reflect upon the matter. That is all that we are asking them to do although we certainly want them to reverse their decision.
We are in the presence of two very old and familiar friends—rationalisation and privatisation. Perhaps, in this case, there is the added one of economy. That is the raison d'être of the whole matter. What we have

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here, as my noble friend Lord Mulley has stated fairly, is an example of the cost-cutting zeal and efficiency drive of the former Secretary of State. We acknowledge that as the basis. What we have at the end of the exercise is the report and the evidence proving that, however it started, this is not the solution.
I have been intrigued by the moderate language used by Members in describing the condemnation of those who have advised the Minister and the Minister's responsibility for decisions portrayed in this report. It is, I believe, a record of unmitigated incompetence, nothing more or less. This is apparent on page after page. I intend to draw the attention of the House to one or two examples. We are talking in terms of the decision, subject to consultation, to take the school to Deal. Paragraph 7 states:
"Deal was omitted because there were likely to be insufficient married quarters in the area".
At one time, Deal was not on the cards. But the very next paragraph states:
"Later, Deal was included as a possible location following representations by the MP for Dover, Mr. Peter Rees".
I know Mr. Peter Rees. I would call him a parliamentary friend too. Like Mr. Jessel and other Members who serve in another place, he was wearing his constituency hat. He was rightly seized of the possibility that whatever the other considerations—some of them should have been his because he was a Treasury Minister—he was concerned with this matter from the point of view of doing the best for his constituents, as all of us would expect. He was doing that very well.
We want to be clear, however, about what the report says. The report does not, in fact, say where the school should go. It questions whether there should be a school of this kind at all. It is not merely saying that there are options. It is really saying, "Forget all about it". I should like to quote from the report some intriguing exchanges. In the committee on 4th December, Sir Clive Whitmore was engaged in conversation with Mr. Shersby, a member of the Committee. Mr. Shersby said in paragraph 531:
"Would you agree with the words used by Mr. Hamilton in his adjournment debate on 29 March 1985 when he said that the main purpose was to cut out waste and get value for money?
Sir Clive Whitmore: The main purpose of the original proposal to create a Defence School of Music?
Mr. Shersby: Yes.
Sir Clive Whitmore: That was indeed the original purpose. It remains our intention to achieve it".
I am sure that the Minister intends to be as helpful as possible. He has to contrast that with Appendix 2 which is the letter from the Ministry of Defence dated 19th December. Paragraph 3 begins:
"I am afraid that it reveals that an error was made when we did the investment appraisal which was summarised in Table 3. … In preparing the note which Mr. Latham asked for we of course checked what we proposed to say with the Property Services Agency, who are our advisers on the disposal value of the Department's properties, and this led to the discovery that when they gave us this summer a revised estimate for the disposal value of Kneller Hall, they mistakenly told us that the new figure excluded married quarters. They have now told us that the valuation included married quarters".
This reveals, in my view, a shocking state of affairs in respect either of arithmetical accuracy or an ability to misunderstand or confuse; or perhaps to have conversations on the telephone, the two parties
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coming away with different ideas of what telephone conversation took place. Against the background of what Sir Clive Whitmore said was the original purpose of the exercise, the letter from the Ministry of Defence says:
"this shows that over ten years there is now virtually no difference between establishing a Defence School of Music at Deal and continuing with the present system and that over fifteen years the present system is very marginally cheaper".
The same source now says—I am bound to say that I suspect the accuracy of the source now or in the future, a matter to which we shall come in a moment—that the purpose for which we originally began this exercise is now aborted because we have done, or re-done, our sums and we find that we cannot have savings. I wish also to draw the Minister's attention to part of a letter from the Secretary of State for Defence to Mr. Toby Jessel. This letter states in pargraph (b) on page 17:
"the running costs of a single Defence School of Music are estimated to be of the order of £1 million per annum less than the combined running costs of the present three schools".
Therefore, within the same building, within a comparatively short space of time, in spite of the hope that we can save money we come up with the figures to indicate that we cannot save money. But before that we have the letter to Mr. Jessel. I make no stronger query than asking the Minister to explain statements of that kind which are confusing.
I ask the Minister how one reduces £10·6 million to £5·8 million? We do not want any massaging of the figures. We do not want figures plucked out of the air. I ask the Minister this question: if it is possible to reduce £10·6 million to £5·8 million, as the noble Earl said earlier, what will be cut out? If one can literally cut out half the cost, what is the value of the product at the end of the day? We know that we look for savings, for trimmings, and other matters.
I have to say that the raison d'être ought to be to retain the morale, the esprit de corps, the national pride that exists whenever one hears the name of Kneller Hall, and recognises that someone is a Kneller Hall trained musician. There are the questions of convenience, and disparity of need between the services. I cannot believe that, given this opportunity, we shall not receive some satisfactory news from the Minister.
I should also like the Minister to deal with what the committee says in paragraph 25. I want to know when the decision was taken with regard to Deal. The paragraph says:
"We were told that no irrevocable decision would be made until we had made this Report. We were therefore surprised to see the reply given by the Parliamentary Under-Secretary of State for Defence Procurement on 14th January"—
that is only last month—
"that 'there is no change in our fundamental decision to go on a tri-service basis to Deal' "
How does one reconcile the statement that no irrevocable decision would be made with a confirmation of a decision made as recently as last month?
I made some inquiries in preparation for the debate. I went to the Institute of Professional Civil Servants to get some background on employment. I can appreciate that we are talking about either money or

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style and pride. But what about employment? Some of the figures have already been given and therefore I shall not repeat them. But in the documentation I received there is what I would call powerful evidence to make the Minister and his colleagues rethink. These are the views of eminent musicians. Robert Farnon says:
"I shall promptly write to Mr. Heseltine expressing strong objections to the scheme and will remind him of the fact that musicians and devotees throughout the Commonwealth, Europe and America regard Kneller Hall as a unique home of military music".
That is Kneller Hall per se, not the quality of training but the place itself.
Then we have the opinion of Sir Harry Secombe, whose views are entitled to be listened to with great respect. He says:
"I have done all I can to let the powers that be know how I react to the idea that the School should just vanish. All I can do now is hope that the messages I have sent and the petition I have signed have some effect".
Colonel Beat, Director of Music at Kneller Hall, says:
"We all train our musicians for different purposes, and for different lengths of time. I see no advantages in bringing us together and I am still hoping that it is not going to happen".
We then have, to me, a surprise ally, in the noble Lord, Lord Chalfont, who is assiduous in defence matters. I am certain that it is in that capacity that his views were canvassed. He says:
"I agree with Colonel Beat that the closure of the Royal Military School of Music at Kneller Hall will be a pointless move and I would be deeply sorry to see such a world famous insititution disappear. You may rely on me to do all I can to oppose the present plans".
I simply want to say to the Minister that the DSM is unpopular. It is not financially advantageous. There is nothing to suggest that this change can do anything but harm to the training of musicians. The Government must pay attention to the views of the committee and have the grace to accept that a mistake has been made. We do not want any accountancy tricks, no subterfuge. We have a legitimate second chance—a new Secretary of State, a new report, and a new opportunity to reflect and to reverse policy. I hope that we shall hear tonight that that is exactly what we are going to get.
8.55 p.m.
Lord Trefgarne: My Lords, your Lordships will be grateful to my noble friend Lord Cathcart for giving us the opportunity this evening to discuss the Government's decision, announced in July 1984, to establish a Defence School of Music at Deal. This is, I think, the first time that this subject has been raised in your Lordships' House and I should like therefore to set out briefly the background to that decision.
The services, justifiably, have an international reputation for the quality and musical skill of their bands and bandsmen, and I am happy to be able to pay my own tribute to all the bands of the Royal Marines, the Army and the Royal Air Force for the excellence of their music. Their musical skills are learnt at the Royal Marines School of Music at Deal, the Royal Military School of Music at Kneller Hall and the Royal Air Force School of Music at Uxbridge. I know that the other services will not object if I say that Kneller Hall has a particularly honoured place in
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the history of service music and generations of pupil bandsmen and student bandmasters for army bands have been trained there since 1857.
As part of the efforts being made to reduce expenditure on support activities in order to concentrate resources on our front line capabilities, the Government decided in 1981 that reductions had to be made in the number of service bands. Royal Marine bands are being reduced from 10 to seven and army bands from 78 to 69. There has been no change in the number of RAF bands, which stand at six. At the same time, the numbers of personnel in the remaining bands have also been reduced. This decision had inevitable consequences for the three musical training establishments.
We therefore examined the scope for achieving economies in the services' musical training organisation. It soon became clear that the accommodation and musical training facilities at Deal and Kneller Hall would be substantially under-utilised. Clearly, we could not allow this situation to continue without seeking a more cost-effective way of training service musicians, and we therefore examined the possibility of combining all three establishments into one Defence School of Music.
In 1982, we appointed an independent consultant to assess musician training for the services and the facilities required. He recommended that a Defence School of Music should be established. A number of possible locations were subsequently considered, including Deal, Kneller Hall, Eastney near Portsmouth, Woolwich and at a later stage Redford Infantry Barracks in Edinburgh. Woolwich was quickly ruled out because it would not be available in time and there would be difficulty in adapting the site for use for this purpose. Kneller Hall was found to be unsuitable because it is too small. As I saw for myself when I visited the Hall last week, it is a listed building, difficult to modify, and the site would require an extensive new build and major refurbishment to provide the musical and barrack accommodation that would be necessary for a Defence School of Music. Even if planning permission were granted, which we were advised was unlikely, the result would be to occupy about 80 per cent. of the site with buildings, thereby removing the sports facilities. In addition, there is a shortage of married quarters in the area. In the end, therefore, the choice was narrowed down to Deal, Eastney and Redford Infantry Barracks, Edinburgh.
In July 1984, my right honourable friend the then Secretary of State for Defence announced that he had decided to locate the Defence School of Music at Deal. In reaching this decision, he took into account not only cost comparisons, which at that time pointed in favour of Eastney, but also wider issues, including for example, the levels of unemployment in the three areas and potential redundancies, both of which were more serious at Deal.
Following this decision, we set work in hand to plan the establishment of a Defence School of Music at Deal. In consultation with the principal directors of music of the three services, we carried out further, more detailed assessments of the training requirement and of the instructional staff and facilities that would

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be needed. This further work recommended that all army bandsmen should adopt the present Royal Marine system of training musicians on more than one instrument, which would lead to an increase in the number of music professors and instructors required. They also proposed some additional training facilities, such as extra practice rooms and teaching rooms, a larger rehearsal studio and a new concert hall, bandstand and drillshed. These measures resulted in an increase in the estimated capital cost from £5·8 million to £10·6 million and meant that running costs would be slightly higher than under the present system.
These proposals were looked at very carefully during the course of last year. In November I decided that, despite the attraction of standardising the musical training of all three services on the model used by the Royal Marines, which involves instruction on more than one instrument, the extra costs that would be incurred in enhancing training in this way for the very much greater numbers of musicians at the Defence School of Music would be very difficult to justify. We have consistently stated that the standards of musical training now achieved at the three existing schools of music would be maintained under the new arrangements, and I wish to repeat that assurance to your Lordships this evening. But it is quite another matter to suggest that the standard of musical training for all service musicians should be considerably increased in this way, at substantial extra cost. Musical training for the Royal Marines is geared to providing an orchestral capability for the Royal Yacht "Britannia" and other ships, where musical flexibility in the smaller number of bandsmen carried is an essential requirement. Such a limitation is not present for either the army or the RAF bands. I therefore directed that the Defence School of Music should be set up on the basis of existing standards of training without adding to the numbers of those trained on a second instrument.
Lord Graham of Edmonton: My Lords, would the Minister care to say whether any account was taken of the dual role of Royal Marine trained bandsmen? For instance, in the recent Falklands war they provided a valuable service of first aid and ambulance facilities, etc. Surely that is a factor that needs to be taken into account when looking at the cost of Deal?
Lord Trefgarne: My Lords, it has always been the case that service bandsmen in whatever services have other roles, and that was to continue.
As I was saying, I therefore directed that the Defence School of Music should be set up on the basis of existing standards of training without adding to the numbers of those trained on a second instrument. I further asked that the requirement for accommodation and musical training facilities, including teaching and practice rooms, should also be closely re-examined with a view to bringing the capital costs as near as possible to the original figure. This reappraisal of costs has not yet been completed but I shall return to this in a moment.
Last week, as your Lordships have observed, the Public Accounts Committee reported on our decision to establish a Defence School of Music at Deal. We are studying the committee's conclusions and recommendations very carefully and will reply formally in due
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course in a Treasury Minute. Although I would not wish to pre-empt our formal response, we do take the committee's observations very seriously and we have therefore decided to widen the reappraisal of the costs of establishing a Defence School of Music at Deal, which I had already set in hand, into a full and thorough review of all the options for training service musicians in the future. This review will look once again at the costs of siting the school at Deal. Eastney and Redford Barracks, Edinburgh, and will include a thorough assessment of the costs of retaining the existing three separate schools of music. We shall invite outside consultants to assist us in this review, which is likely to take some months.
A major factor in the costings, and one which remains an area of uncertainty, is the disposal value to be placed on sites that would be surplus if a Defence School of Music were to be set up. We shall give careful consideration to the PAC's comments on this point. When all the revised cost information is available to us, we will carry out a comprehensive investment appraisal before coming to a final decision whether or not to proceed with a Defence School of Music, and if so where. In reaching that decision, we will, of course, wish to satisfy ourselves that we have taken full account of the committee's criticisms and of the many other representations we have received, including those of your Lordships this evening.
My Lords, it is already clear that the original date of 1988 for establishing a Defence School of Music can no longer be met, and I can tell your Lordships, therefore, that there is now no prospect of Kneller Hall or the RAF School of Music at Uxbridge being closed then. I should, however, emphasise that this does not mean that they will not close at a later date should the further examination now in train point clearly to savings that would accrue through establishment of a Defence School of Music at Deal or elsewhere.
Perhaps I may briefly touch on one or two points that have been raised this evening. My noble friend Lord Cathcart referred to the difficulty, as he saw it, in recruiting Professors of Music for a Defence School. The Royal Marines School of Music at Deal has experienced no difficulty in attracting music teachers. I am confident that the standing of the Defence School of Music would be such that suitable academic and instrument Professors of Music would continue to wish to work there. Indeed, many professors currently in post at Kneller Hall have registered their interest in being considered for employment at a Defence School of Music.
The noble Lord, Lord Mulley, spoke from his position of experience about the work with which he was involved in the 1960s on the rationalisation of service training. I can assure the noble Lord that there is no question of establishing a purple band service. Throughout our studies we have been concerned to ensure that the unique traditions and ceremonies of each of the services is preserved. I am satisfied that the creation of a Defence School of Music would not affect the standards of service music.
Lord Mulley: My Lords, would the noble Lord give way? He kindly said that the reappraisal is taking place over all aspects of costs, and independent people are

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being consulted. I would hope that as well as a purely costing exercise some evidence will be taken about the military impact of a Defence School of Music, because I cannot share his view that it will not have some impact on the regimental and other traditions which are so important to our services.
Lord Trefgarne: My Lords, I can assure the noble Lord that all relevant views, including those to which he has referred, will be taken into account.
May I also in passing apologise to my noble friend Lord Westbury for disappearing briefly during the course of his speech? Happily, he said at the outset that he would make the same speech as my noble friend Lord Cathcart so I dare say I had heard it before anyway.
In conclusion, I should say that the Government remain determined to secure whatever savings we can from cutting out unnecessary duplication in the support for the front line. This involves many forms of cost savings which together make up the Ministry's efficiency programme. A central feature of this programme is a drive to get a higher proportion of servicemen into the front line. The joint aims of our programme of overhauling the support and training activities of the three services are to strengthen the front line and achieve for the taxpayer better value for money.
Rationalisation measures achieved in the last year or two include the centralisation of the policy aspects of the Defence Medical Services, and the formation of a single Quality Assurance Directorate. In the training field, we have set up a Defence School of Languages at Beaconsfield; we have co-located Service cookery training at Aldershot and we are now studying the possibility of establishing a single Defence School of Catering. Your Lordships will be interested to hear that I have also approved the rationalisation of all service dog training at RAF Newton, and a number of other training rationalisation studies are in hand.
I mention these to demonstrate that the proposal to establish a Defence School of Music must be seen in the context of the department's overall drive for greater efficiency and economy. However popular Kneller Hall may be, and I recognise that it is seen as a local amenity much valued for its summer concerts, the primary purpose of the establishment must be the musical training of Army bandsmen. If, as a result of the reduction in the number of Service bands and bandsmen, that training could be carried out more cost effectively and without any loss of standards in a single Defence School of Music elsewhere, then the Government have a duty to pursue this objective. But, as I have said, we shall give most serious consideration to the Public Accounts Committee's observations and recommendations and we shall only press on with the establishment of a Defence School of Music in the light of this latest thorough review if we are satisfied that this will achieve worthwhile and demonstrable economies without reducing the standards of musical training now achieved.
Lord Graham of Edmonton: My Lords, may I press the Minister for information on the statistics that were provided by his own statisticians which were at such
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variance? I refer to the errors that were contained on the final page of the report which were admitted and the allegation in the letter to Mr. Toby Jessel that there would be savings of £1 million. Does the Minister tell us that the internal review will be undertaken by the same set of people? In that case, I should have little confidence in the outcome of such a review.
Lord Trefgarne: My Lords, I made it clear that although I had every confidence in the officials who have done this work in the past, we shall be taking the advice of outside consultants, which I hope will set the noble Lord's mind at rest.

Atomic Energy Authority Bill [H.L.]
Returned from the Commons agreed to with amendments; the amendments ordered to be printed.
House adjourned at eleven minutes past nine o'clock.