Lords Sitting of 7 December 1988

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

South Africa: Membership of IAEA
Lord Hatch of Lusby Lord Hatch of Lusby asked Her Majesty's Government:
What is their policy towards the continuation of South Africa's membership of the International Atomic Energy Agency.
The Minister of State, Foreign and Commonwealth Office (Lord Glenarthur): My Lords, we oppose moves to suspend South Africa from the rights and privileges of membership of the International Atomic Energy Agency.
Lord Hatch of Lusby: My Lords, is it not the case that, following the last meeting of the agency, the South African Foreign Minister boasted that South Africa now has the means of building atomic weapons? Is it not further the case that the South Africans have refused to sign the non-proliferation treaty? Does not their continued membership of the agency supply them with technological and scientific information which is valuable to them as regards the building of atomic weapons?
Lord Glenarthur: My Lords, yes, I am aware of the claim made by Mr. Botha. There is no firm evidence that South Africa has either conducted a nuclear test or that it possesses nuclear weapons. We welcomed President Botha's statement in September 1987 that South Africa was willing to begin negotiations on the possibility of acceding to the non-proliferation treaty. We have urged South Africa to accede to that treaty and place its nuclear facilities under the full scope of the IAEA safeguards.
Lord Cledwyn of Penrhos: My Lords, can the noble Lord say what South Africa's response has been to the pressure brought to bear by Her Majesty's Government? Is there a likelihood that South Africa will sign the nuclear non-proliferation treaty, as Her Majesty's Government have indicated that they believe South Africa should do? Does the noble Lord agree that it is an extremely serious matter? While not dissenting from the basic proposition in his initial Answer, I must ask whether he will agree that it is an extremely serious matter that South Africa refuses to do this.
Lord Glenarthur: My Lords, we hope that South Africa will sign and accede to the non-proliferation treaty. However, it is not the only country that does not accede.
Lord Cledwyn of Penrhos: My Lords, with respect, when the noble Lord says that, he implies that there
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is a large number of countries which have not signed. Is it not the case that there is only one other country apart from South Africa which has not signed the treaty?
Lord Glenarthur: My Lords, the fact is that South Africa has indicated that it may be willing to begin negotiations to that end. I cannot forecast whether or not the negotiations will be successful but we hope that South Africa will sign.
Lord Cledwyn of Penrhos: My Lords, the noble Lord has not answered my question again. Is it not the case that South Africa is only one of two countries which have not signed the nonproliferation treaty?
Lord Glenarthur: My Lords, I should have thought that one or two countries were one or two too many.
Lord Hatch of Lusby: My Lords, the Minister says that there is no firm evidence that South Africa has atomic weapons. Is he not aware that according to very widespread scientific evidence, including that at the highest level in the United States of America, the South Africans tested a nuclear weapon in 1979? Will the noble Lord answer the latter part of my first supplementary question? So long as South Africa remains a member of the agency, are not the South Africans being given technological and scientific information to assist them in building nuclear weapons?
Lord Glenarthur: My Lords, whatever the noble Lord says, there is no firm evidence about South Africa's possession of a nuclear weapon, despite the noble Lord's belief that he has such evidence. As regards the IAEA, we firmly believe in and support South Africa's membership of that agency. We do not imply by that our approval of the South African regime, nor do we believe that it gives rise to the kind of concerns which the noble Lord suggests.
Lord Hatch of Lusby: My Lords, it is not a question of my words; it is the studied research done at the highest scientific levels, including those of the Administration in the United States. That research has shown that it is at least extremely probable that the South Africans tested a nuclear weapon as long ago as 1979. Again I ask: is it not the case that the South Africans are being given important technological and scientific information to assist them to build nuclear weapons? If that is the case, why is the noble Lord saying on behalf of the Government that they approve of the continued membership? Why do they approve of it?
Lord Glenarthur: My Lords, the noble Lord used the words "extremely probable". That does not amount to firm evidence. I have said that there is no firm evidence that South Africa has nuclear weapons. As regards the application of IAEA safeguards in South Africa, the Koeberg nuclear power station is covered by the safeguards, as is Pelindaba nuclear research reactor, and any safeguarded fuel submitted for reprocessing. No agreement has yet been concluded with the agency on the application of

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safeguards to the Valindaba pilot and semicommercial uranium enrichment plants. But I stand by what I said earlier; we do not have the concerns which the noble Lord expresses.
Lord Orr-Ewing: My Lords, will the noble Lord the Leader of the House—
Noble Lords: Next Question.
Lord Orr-Ewing: My Lords, I am not speaking on this Question. I am sorry; I give way to the noble Lord.
Lord Zuckerman: My Lords, while not wishing to controvert the noble Lord, Lord Hatch of Lusby, I wish to add my support to the Minister's Answer. There was no incontrovertible evidence that tests had been carried out by South Africa. I was in close touch with the inquiries which were then being made. The answer was totally dubious. No one to this day knows what that one pulse was about. In saying that, I obviously cannot say whether or not South Africa has or has not got nuclear weapons.
Lord Glenarthur: My Lords, I am grateful to the noble Lord. He points to the difficulty of obtaining this evidence.
Lord Orr-Ewing: My Lords, will my noble friend remind the House how many supplementary questions are allowed for each Question? What sanctions are there against those Members of the House who totally disregard that generally agreed instruction?
Lord Glenarthur: My Lords, apparently there is an almost endless number of supplementaries.
Lord Elwyn-Jones: My Lords, the answer depends on the quality of the Ministerial Answer, does it not!
Lord Glenarthur: My Lords, that presupposes, of course, that those who ask the questions agree with the Answer that has been given. In this case, apparently, they do not.
Lord Nugent of Guildford: My Lords, it also depends on the quality of the questions.

Government Departments: Relocation
2.45 p.m.
Lord Dormand of Easington Lord Dormand of Easington asked Her Majesty's Government:
What progress is being made in relocating government departments in the regions.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara): My Lords, the 1979 programme is nearing completion—5,560 posts have been dispersed, and planning is in hand for more. Over 6,000 further posts have been relocated from the South-East at departmental initiative.
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Departments are now observing Treasury guidelines to review their work locations, seeking sites offering operating advantages. Locations subject to the Government's regional policy and urban programme will be considered. Relocations require careful planning and sensitive implementation, which take time. Most major departments have substantial reviews in hand and Parliament will be kept informed of progress.
Lord Dormand of Easington: My Lords, if the Government really believe in decentralisation and in bringing jobs to the regions—the Government frequently repeat those criteria—presumably the Minister would agree that movement to the regions reduces costs considerably. Why do the Government not do more of this relocation? Does the Minister not agree that the transfer of the national savings certificates division, for example, to Durham has been a resounding success?
Lord Brabazon of Tara: My Lords, I think the noble Lord is right. There have been some very successful moves. Departments will continue to look for sites which offer easier labour markets, reductions in accommodation and other costs, and increased operational efficiency.
Lord Glenamara: My Lords, can the noble Lord say how many government posts have been transferred to Northumberland, Durham and Cumbria under this Government?
Lord Brabazon of Tara: My Lords, as regards the northern region, which I think includes those areas—if it does not, I do not have the relevant figures—a substantial number of Civil Service jobs are in that region. At 1st April 1988 there were 34,000 jobs in the region. In terms of civil servants per 1,000 of population, the northern region scores almost as high as the South-East, despite the latter including the national capital and the seat of government.
The noble Lord will be interested particularly in Newcastle, where the DHSS created 600 new posts last year. In Darlington, the Department of Education and Science is now transferring work which will create 30 new jobs.
The Earl of Lauderdale: My Lords, can my noble friend give similar figures for Scotland?
Lord Brabazon of Tara: My Lords. I cannot give figures for Scotland, but I know that certain departments have transferred substantial parts of their operation to Scotland, including the Overseas Development Agency. That was a successful move.
Baroness Seear: My Lords, the noble Lord gave us the overall figures of posts that have been transferred. Can he give us the percentage of the total strength of the Civil Service that has been transferred? The global figure does not tell us very much in terms of progress.
Lord Brabazon of Tara: My Lords, I understand that in total some 45 per cent. of the Civil Service is located outside the South of England.
Lord Cledwyn of Penrhos: My Lords, I am sure the noble Lord will have anticipated my question. Will he be good enough to say how many government units have been relocated in Wales, and how many jobs have been created there during the past 10 years?
Lord Brabazon of Tara: My Lords, I am afraid that I cannot give the noble Lord details as specific as that. From my own personal experience in the Department of Transport, I know that the largest unit of all within that department, the DVLC, is located at Swansea. It is very happy there.
Lord Glenamara: My Lords, the noble Lord made no attempt to answer my question. The departments he mentioned were transferred to the North by Labour Governments. The DHSS was transferred by the post-war Labour Government and the national savings certificates branch by the Wilson Government. Will the noble Lord say how many jobs have been transferred to the North-East by this Government during their term in office?
Lord Brabazon of Tara: My Lords, the noble Lord obviously was not listening to my answer, because I quoted an example from last year.
Lord Sefton of Garston: My Lords, in 1978 the Labour Government decided to move 3,500 jobs to the North-West and that move was in progress. Can the Minister tell us whether it is now the Government's intention to restore that move?
Lord Brabazon of Tara: My Lords, the Government's policy on that subject has been announced by my right honourable friend the Paymaster General. The policy is that it is now for departments to decide in their own interests what moves to make and therefore there is no central target. However, as I have attempted to indicate, there are plans under way and a number of moves are taking place.
Lord Sefton of Garston: My Lords, does that mean that the Government are relinquishing power to make such transfers? Will the Minister tell us whether the Government intend to take powers to tell departments to move to the regions?
Lord Brabazon of Tara: No, my Lords. I am not quite sure how the noble Lord distinguishes between the Government and the departments which represent the Government.
Lord Sefton of Garston: My Lords, the Government are elected by the people of this country. The politicians are supposed to tell the civil servants what to do; the civil servants are not supposed to tell the politicians what to do.
Baroness Seear: My Lords, the Minister gave me the percentage figure for jobs in the region. What I asked for was the percentage which had been transferred. That is what we are interested in: how many are being moved out of London? We know that there are many jobs in the regions. What percentage has been transferred from the centre to the regions?
Lord Brabazon of Tara: My Lords, in my original Answer I gave the total since 1979, which was approaching 12,000 jobs. What that represents as a percentage of the total I am afraid I cannot say.
Lord Mottistone: My Lords, will my noble friend say when a government of either party will transfer some large government office to the Isle of Wight?
Lord Brabazon of Tara: My Lords, I am afraid that I know of no plans at present which would involve such a transfer.
Lord Glenamara: My Lords, the Minister did not listen to either of my questions. Is he not aware that the departments of the DES which are now based in Darlington were transferred when I was Secretary of State? Will he please tell us how many Civil Service jobs have been transferred from London to the North-East during the tenure of this Government? Will he consider transferring the whole of the DES to Sunderland to make up for the Government's wanton closure of the shipyard there?
Lord Brabazon of Tara: My Lords, I listened very carefully to the noble Lord's questions. I gave examples of further moves which have taken place: last year the DHSS moved 600 jobs to Newcastle and there was a further move by the Department of Education and Science to Darlington. Those are new moves which have occurred since this Government came to power.
Lord John-Mackie: My Lords, have the Government any plans to move private offices out of London? One of the biggest insurance companies has its headquarters in Perth in Scotland and I understand that it does very well.
Lord Brabazon of Tara: My Lords, we certainly have no plans to force people to move out of London. I am sure that the noble Lord is quite right and that there are advantages in transfer. I should point out that when the Overseas Development Administration moved a part of its operation to East Kilbride my right honourable friend the Secretary of State for Scotland confirmed that, taking account of all the quantifiable costs and benefits, the dispersal is estimated to have produced a significant saving in national resource terms of some £14.9 million. Furthermore, the overwhelming majority of the staff who transferred expressed the opinion that the quality of life was higher in East Kilbride and preferred their new location.
Lord John-Mackie: My Lords, I point out that I did not use the word "force"; I used the word "encourage".
Lord Dormand of Easington: My Lords, the original Answer given to me by the Minister seemed to consist of half promises. When can we have something firm about future policy on dispersal?
Lord Brabazon of Tara: My Lords, in my original Answer I said what the policy was, as the noble Lord will see if he cares to read what I said.

Radiation: Exposure Volunteers
2.56 p.m.
The Earl of Halsbury The Earl of Halsbury asked Her Majesty's Government:
Whether they intend to accept the offer of 100 elderly retired Fellows of the Royal Society and of the Fellowship of Engineering to volunteer for exposure to radiation hazards in the event of a nuclear emergency.
The Parliamentary Under-Secretary of State, Department of Energy (Baroness Hooper): My Lords, the Government very much appreciate the interest shown by the Royal Society and Fellowship of Engineering volunteers. However the nuclear industry is required as a condition of its operating licences to have detailed emergency plans in place and would be expected to rely on its own well-trained experts to deal with any incident. I understand that the CEGB has declined the offer on that basis.
The Earl of Halsbury: My Lords, do the Government appreciate that the offer was a well-meant morale booster? It was a gesture from the older generation, which started nuclear power, towards the safety of the younger generation, which has a greater chance of being exposed to its hazard. Does the Minister recognise that it is very disappointing to feel that the bureaucracy—and it is no more than that—is full of dismal complacency? It could perfectly well have taken the trouble to take names, addresses and telephone numbers and note the willingness of the individuals in question to go on courses and be trained as a morale booster for their juniors.
Baroness Hooper: My Lords, as I said, the Government very much appreciate the offer which was made. I have no doubt that the commitment and specialised knowledge of the volunteers could be useful in some way in the very unlikely event of an emergency. I understand that it is in that spirit that the Atomic Energy Authority has responded to the gesture.
Lord Zuckerman: My Lords, as one of the potential guinea-pigs perhaps I may ask the Minister whether she would agree that there is an enormous amount of uncertainty about the levels of radiation which are noxious. Will she also agree that the experiment which the elderly Fellows of the Royal Society and the other institutions have said that they would be prepared to undertake might provide some information which would reduce the enormous disparity which now exists between what people believe to be safe and unsafe environmental radiation?
Baroness Hooper: My Lords, I believe that our job in government is to reassure people both as to the unlikelihood of such a situation arising and as to the minimising of any effects. Our first priority must be just that: to minimise the effects of an emergency. The procedures which are in place exist to do just that. Nevertheless, as I have said, the Atomic Energy Authority has, I believe, accepted the offer in the spirit in which it was made.
Lord Grimond: My Lords, is the noble Baroness aware that to some of us this noble gesture is rather alarming? Is she aware that many so called elderly, retired Fellows of the Royal Society are well worth preserving, including at least one who is here today? Personally I would much rather have them than the Mappa Mundi. Does she agree that if elderly guinea-pigs are to be found for that purpose such rather useless guinea-pigs as myself might be more suitable than Fellows of the Royal Society?
Baroness Hooper: My Lords, I do not think that any willing volunteer will be rebuffed by the Government. I fully agree with the noble Lord that there are many Fellows of the Royal Society, both retired and present Fellows, who are well worth preserving.
Lord Molloy: My Lords, does the noble Baroness agree that what we have to try to achieve is to remove altogether any possible risk of a nuclear war and to do that we might continue exerting pressure on both the United States and the Soviet Union and encourage the co-operation which now exists between our Government, the United States Government and the Government of the Soviet Union via Mr. Gorbachev?
Baroness Hooper: My Lords, the Question does not, I believe, refer to nuclear arms or nuclear war; it relates to the civil uses of nuclear energy.
Lord Peston: My Lords, can the noble Baroness tell me whether I am right in assuming that people are made Fellows of the Royal Society because of their intellectual achievements and achievements in research and not for their ability in practical matters or because they have any common sense? Is it not likely that such people, admirable though the offer seems to be, will be much more of a nuisance than of any use in those circumstances? If we are looking for volunteers for exposure to radiation perhaps younger people—for example one or two junior Ministers—might feel able to come forward.
Baroness Hooper: My Lords, I take the last part of the noble Lord's question as an unfestive remark. Nevertheless, it is true that the first priority in the very unlikely event of such an accident would be for immediate action. That means that emergency workers would have to wear protective equipment, including self-contained breathing apparatus, and they could be subjected to extremes of heat and humidity. They might be required to undertake very active service. It is for that reason that the emergency plans that are in place concentrate on experts, in effect, in fire fighting.

London Hospitals: Proposed Merger
3 p.m.
The Earl of Halsbury The Earl of Halsbury asked Her Majesty's Government:
When they will reach a decision on the planned merger of the Westminster Hospital and St. Stephen's Hospital onto a single site in Fulham.
The noble Earl said: In asking this Question I draw your Lordships' attention to a drafting error at the end: "in Fulham" should read "facing the Fulham Road".
The Earl of Arran: My Lords, my right honourable friend the Secretary of State is currently considering the proposal to build a new teaching hospital on the site of St. Stephen's Hospital in Fulham and to close the Westminster, Westminster Children's, St. Mary Abbott's and West London Hospitals. He is examining the implications for patients and giving a thorough assessment to all aspects of the scheme, including financial issues. A decision will be announced when this consideration is complete. I regret that I cannot give a date today.
The Earl of Halsbury: My Lords, does the noble Earl realise that that was a very disappointing Answer from the standpoint of the doctors in the hospitals concerned? Quite recently I have had letters on this matter from a consultant at Westminster and a consultant at St. Stephen's. From a retired consultant from St. Mary Abbott's, I also received a Christmas card on which were written the words:
"Poor St. Stephen's! Nothing is being maintained. Nobody knows whether it is going to be pulled down tomorrow or not."
Morale is at a very low ebb. The junior hospital doctors, I am told—I hope that the Minister is aware of this—are on contract only until 31st December this year. They do not know what employment they will get. Does the Minister think that this is the way to run a National Health Service—in a state of perpetual indecision?
The Earl of Arran: My Lords, I take seriously the remarks and comments of the noble Earl, Lord Halsbury. At the same time I say unequivocally that the Department of Health is well aware of the need to make a decision as soon as possible. Any change has major implications for patients and staff. We want to keep to a minimum the uncertainty for everyone involved but this is a major scheme and it is important that it should be carefully considered.
Lord Ennals: My Lords, does the noble Earl accept that uncertainty is not a good reason for taking the wrong decision? Does he further accept that there is tremendous opposition in Westminster—and that includes a petition bearing the signatures of over 100,000 people—to this proposal for the closure of four hospitals, including the major hospitals of Westminster and Westminster Children's which are internationally famous? Moreover, does he accept that there is tremendous opposition to the proposal to move to a thoroughly unsatisfactory and indeed dangerous site for those wishing to have emergency treatment in what would be a very large hospital? Who in fact supports this unwanted, unsatisfactory and expensive project?
The Earl of Arran: My Lords, my right honourable friend the Secretary of State is considering all the views given about the proposals. Your Lordships will be aware that although the media concentrate on opposition to them, there is also very considerable support for the scheme—for example, from the
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medical executive committee of the Westminster and Westminster Children's Hospitals, from the Riverside district medical committee and from the Charing Cross and Westminster Medical School.
Baroness Strange: My Lords, is my noble friend aware how grateful I and my noble relatives were for the proximity of the Westminster Hospital casualty unit when this morning we drove a Portuguese lady there from Parliament Square, where she had been knocked down by a bus? Does he not consider that the six traffic-jam packed miles to Fulham might be very inconvenient for casualties?
The Earl of Arran: My Lords, obviously I am very pleased to take my noble friend's point, as mentioned in the first part of her question. However, I should also like to point out that there is always St. Thomas's Hospital just across the River Thames.
Lord Northfield: My Lords, will the Government be sure to bear in mind two factors that have been mentioned in this House before? First, not very long ago, in the time of the chairman of the governors, the noble Lord, Lord Reigate, Westminster Hospital spent a lot of money on a new wing which is, so to speak, hardly out of date or needing replacement. Secondly, will they bear in mind the degree of local protest in the St. Stephen's area at the congestion that this huge hospital is bound to create by undue concentration in that part of London?
The Earl of Arran: My Lords, the brief and scope of the examination that is currently being undertaken by my right honourable friend the Secretary of State are very intense and very profound. He will certainly take into account every aspect of this proposal.
Lord Auckland: My Lords, while in no way wishing to prejudge the results of the inquiry, is my noble friend aware that I know Fulham quite well and that the road journey from Westminster to Fulham, in the event of a major casualty exercise, can be very long and congested? Will his department consult with the Department of Transport as to the traffic problems between Westminster and Fulham before a decision is finally taken?
The Earl of Arran: My Lords, I rather thought that I had already given a reply to that question. I say again that although Fulham is some way off, it is the responsibility of the ambulance driver and his decision. Once again I repeat that St. Thomas's is only a minute from your Lordships' House or the Palace of Westminster.
Baroness Hylton-Foster: My Lords, in order to keep the record straight, will the noble Earl accept that although St. Stephen's Hospital is in the Fulham Road, it is in fact in the Royal Borough of Kensington and Chelsea?
The Earl of Arran: My Lords, that may be the case but once again I am sure that that is well understood and perceived by my right honourable friend the Secretary of State.
Lord Cocks of Hartcliffe: My Lords, would the noble Earl care to reflect on the remarks of his colleague in another place, the Minister for Roads and Traffic, who recently said that a small number of people sitting down on Westminster Bridge could bring traffic in the whole of central London to a standstill? Does not this negate his remarks about St. Thomas's Hospital?
The Earl of Arran: My Lords, I think we are doing a considerable disservice to St. Thomas's Hospital. Obviously it is hoped that nothing of the magnitude proposed by the noble Lord will happen at the Palace of Westminster. If so, however, there is St. Thomas's and there is also the journey to Fulham.

Business
3.7 p.m.
Viscount Davidson: My Lords, after the end of the short debate on the high level of consumer debt and before the short debate on assistance available to people with mental illness or mental handicap, my noble friend Lord Strathclyde will, with the leave of the House, repeat a Statement that is to be made in another place on British Shipbuilders,
With the leave of the House, I should like, as usual, to say a word about the two short debates standing in the names of the noble Baroness, Lady Ewart-Biggs, and the noble Lord, Lord Carter. 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 Baroness, Lady Ewart-Biggs, this means that all other speeches should be limited to a maximum of nine minutes and in that of the noble Lord, Lord Carter, to 11 minutes. If any noble Lord should speak at greater length, it would be at the expense of subsequent speakers in the debate.

Civil Aviation (Air Navigation Charges) Bill [H.L.]
Lord Brabazon of Tara: My Lords, I beg to introduce a Bill to enable charges imposed under Section 73(1)(a) of the Civil Aviation Act 1982 to be prescribed in units of account defined by reference to more than one currency. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time—(Lord Brabazon of Tara.)
On Question, Bill read a first time, and to be printed.

London Local Authorities Bill [H.L.]
The Chairman of Committees (Lord Aberdare): My Lords, I beg to move the first Motion standing in my name on the Order Paper.
Moved, That the Promoters of the Bills which originated in this House in the last Session of
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Parliament but had not received the Royal Assent shall notwithstanding anything in the Standing Orders or practice of this House have leave to introduce the said Bills in the present Session and the Petitions for the Bills shall be deemed to have been deposited and all Standing Orders applicable thereto shall be deemed to have been complied with.
Every such Bill shall be deposited in the office of the Clerk of the Parliaments not later than 5 o'clock on the 12th December next with a declaration annexed thereto signed by the Agent concerned stating that the Bill is the same in every respect as the Bill at the last stage of the proceedings thereon in this House in the last Session of Parliament.
That the proceedings on such Bills shall in the present Session be pro forma only, in regard to every stage through which the same shall have passed in the last Session of Parliament, and that no new fees be charged to such stages.
That all Standing Orders complied with in respect of any Bill which originated in the House of Commons in the last Session of Parliament shall be held to have been complied with in respect of any Bill presented in that House in the present Session provided that the Bill is the same in every respect as that which was presented in the last Session and where the Examiner has already reported that the Standing Orders have been complied with in respect of any such Bill, he shall report only whether any further Standing Orders are applicable.—(The Chairman of Committees.)
On Question, Motion agreed to, and it was ordered that a message be sent to the Commons to acquaint them therewith.

Deputy Chairmen of Committees
The Chairman of Committees: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That, as proposed by the Committee of Selection, the following Lords be appointed the panel of Lords to act as Deputy Chairmen of Committees for this Session:—

Airedale, L.

Alport, L.

Ampthill, L.

Aylestone, L.

Cathcart, E.

Cocks of Hartcliffe, L.

Cox, B.

Cullen of Ashbourne, L.

Davidson, V.

Denham, L.

Elliott of Morpeth, L.

Grantchester, L.

Hayter, L.

Listowel, E.

Llewelyn-Davies of Hastoe, B.

Murton of Lindisfarne, L.

Nugent of Guildford, L.

Ponsonby of Shulbrede, L.

Strabolgi, L.

White, B.

—(The Chairman of Committees.)
On Question, Motion agreed to.

Hybrid Instruments: Select Committee
The Chairman of Committees: My Lords, I beg to move the third Motion standing in my name on the Order Paper.
Moved, That, as proposed by the Committee of Selection, the Lords following, with the Chairman of Committees, be named of the Select Committee on Hybrid Instruments:—

Brandon of Oakbrook, L.

Cawley, L.

Cork and Orrery, E.

Dilhorne, V.

Fletcher, L.

Irvine of Lairg, L.

Lloyd of Kilgerran, L.

Prys-Davies, L.

Teviot, L.

Thurlow, L.

Wise, L.

—(The Chairman of Committees.)
On Question, Motion agreed to.

Murder and Life Imprisonment: Select Committee
The Lord Privy Seal (Lord Belstead): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That a Select Committee be appointed to consider

(a) the scope and definition of the crime of murder in England and Wales and in Scotland;

(b) the question whether imprisonment for life should remain a mandatory rather than a maximum penalty for murder; and

(c) the working of the arrangements for reaching decisions on the release of those serving life sentences for murder;

this consideration to include such matters as the sentencing judge's power to recommend a minimum period of detention and the means by which the Home Secretary and the Secretary of State for Scotland take judicial advice on individual cases where a life sentence has been imposed.—(Lord Belstead.)
On Question, Motion agreed to.

Consumer Debt
3.9 p.m.
Baroness Ewart-Biggs Baroness Ewart-Biggs rose to call attention to the high level of consumer debt; and to move for Papers.
The noble Baroness said: My Lords, while I am grateful to see so many distinguished names on the list of speakers today, nevertheless, without meaning any disrespect to the noble Lord who will reply to this Motion, I much regret that the Secretary of State for Trade and Industry has not found it possible to be here this afternoon in order to reply to a Labour Party debate. I believe that this subject before the House this afternoon is an important one. It is
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considered important both within the House and by many outside it.
For my part I should like to present the background to the debate by producing some facts and figures, first about sources of credit and, secondly, about the variety of ways in which individuals and families incur debt. Lastly, I should like to say something about the distressing social consequences of such indebtedness.
First, it is important to underline the distinction between credit use on the one hand and indebtedness on the other. Indeed, on looking at the consumer credit market in 1971, the Crowther Report said:
"Consumer credit is beneficial—it makes a useful contribution to the living standards and the economic and social well-being of the majority of the British people".
How right this was when one thinks of the many examples of people being assisted, such as children who will receive their winter coats at the beginning of the winter rather than halfway through because their parents are able to spread the payment over several months on a mail order. Alternatively, a working mother can buy a washing machine on hire purchase to help her in her dual role of paid worker and housewife. Consumer credit of this kind can be regarded only as a social good.
Since the late 1970s the level and very nature of consumer credit and debt has entirely changed. People find it quite natural to borrow but, unfortunately, often do not understand the full consequences of doing so. There is little doubt that they are increasingly encouraged to do so. By an extraordinary coincidence this morning when I was considering this debate, I opened my mail and one envelope contained a letter from Barclaycard introducing a new scheme called "Profiles". The heading stated, "Another chance to get something for nothing". This is rather the refrain that is coming from many quarters. It is attacking vulnerable people who believe that they will be able to get something for nothing.
The number of lending institutions and sources of credit have multiplied out of all recognition. An increasing proportion of aggregate household income is now accounted for by debt service payments. Establishing credit-worthiness by lenders has gone by the board as granting credit is so lucrative that a few bad risks can easily be absorbed. This has brought about a dramatic rise in the growth of personal credit. According to the president of the Chartered Institute of Bankers in a speech as recently as 7th October this year, it stood at over £39 billion. That is an average of about £1,800 per household. This means that since 1983 the amount of credit outstanding has doubled. It must be remembered that this does not include borrowing for house purchase. The amount of mortgage lending outstanding at the end of June 1988 was over £203 billion. Thus consumer debt as a proportion of consumer spending has risen from 7·4 per cent. in 1977 to 13·3 per cent. in 1986. It has just about doubled.
Unfortunately, figures on the other side of the balance sheet show that between 1977 and 1987 the saving ratio halved from 10 per cent. to 5·5 per cent.,

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and the personal sector surplus of £5 billion 10 years earlier was transformed into a deficit of £7 billion. Those are some of the very bald statistics.
Let us now consider the lending institutions and the many different sources of credit that exist. There are the building societies and banks who offer mortgages on house purchases. These loans represent as much as 80 per cent. of credit use. This explosion has occurred for a variety of reasons. First, housing now represents very important investment. Secondly, the Government's accelerated programme of council house sales has increased the demand for mortgages, and as the housing stock diminishes then many more people who otherwise would have taken rented accommodation have no alternative but to buy their home. How difficult the situation must be for first-time buyers when one considers that they now face an interest rate of 12·75 per cent. from building societies and 13 per cent. to 13·2 per cent. from banks. Figures from the National Association of Citizens' Advice Bureaux show that these owner-occupiers are in many cases facing serious problems. For instance, 59 per cent. of owner-occupiers are in arrears with mortgages, and 31 per cent. are behind with a second mortgage or secured loan. Building society repossessions show a steady upward trend with 2,530 repossessions in 1979, but in 1987 this has increased to 23,244. That is a staggering increase.
Let us look at credit cards—another source of credit. Interest rates vary. Save and Prosper charges 19.19 per cent., and Barclaycard's increased rate is 26.8 per cent. The citizens' advice bureaux report that only between 3 per cent. and 7 per cent. of debt problems coming to them were accounted for by bank credit cards. But despite this very low figure, coupled with the positive fact that banks show responsibility in the inquiries they make about applicants, credit cards are a source for incurring heavy debt because the possession of a bank credit card is taken by other lenders as a justification for extending additional credit without proper evaluation. This can certainly apply to the acquisition of a store card, of which the number in circulation has increased to 10·6 million now compared with 5 million in 1982.
On these, the interest rates are very high. Littlewoods charge 34.9 per cent. We know that the Retail Credit Group has published guidelines on the issuing of credit to stores. However, those of us who read the Sunday Times last Sunday may have wondered whether these guidelines have been accepted. Other noble Lords may have read the very scary-sounding story about a 19-year-old secretary who went to 10 high street multiple stores asking for credit for Christmas. To her surprise she was offered as much as £4,700 to spend immediately, with a promise of even more after her applications had been processed. Her only identification was a cheque guarantee card. When replying, I hope that the Minister will comment on this press report. It must have worried a great number of people.
The last source of credit that I have time to mention is the moneylenders and loan sharks who operate in the big cities. The August edition of Which? gave a staggering picture of the APRs they
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charge and of the very aggressive methods of harassment that they employ. For example, the magazine cites a case of one firm trading with a credit licence who offered a loan with an APR of 4,822 per cent. This surely points to the need to strengthen the consumer credit measure of 1984 which states that credit bargains should not be extortionate. Unfortunately, it does not put a figure on what counts as extortionate. My noble friend Lord Bruce of Donington has on many occasions asked the Government to look at this with a view to strengthening the position of the borrower, who after all was very much better protected under the 1927 Moneylenders Act.
Will the Minister also say whether he agrees that one way of weeding out unscrupulous applicants for licences would be for a better liaison between the OFT and the local trading standards officers, whereby the OFT could refer applicants to officers before granting licences? In view of the fact that some moneylenders operate illegally without licences, perhaps the Minister may tell the House how successful the police are in dealing with them and how often criminal proceedings have been brought against the utterly despicable loan sharks.
One knows full well that it is always the poorest families, already up to their ears in debt, which fall back on local moneylenders. Families such as these need all the protection that they can get. It would be hard to describe the suffering and family disruption caused by the harassment and anxiety which result from falling into the hands of moneylenders.
Lastly, I should like to comment on what the citizens' advice bureaux report about the debts which they handle. They handled 500,000 debt inquiries this year, and it would seem that they can not continue to increase their staff in sufficient numbers in order to carry on. They say that 70 per cent. of those who went to them had incomes of below £100 per week. In many cases they were in debt simply because they did not have enough money to pay the bills. But the causes of severe indebtedness, they say, come when a family, with a budget which is already very stretched, suffers a crisis such as redundancy of the breadwinner, sickness of a member of the family or marital breakdown. The fragile structure then comes tumbling down and multiple debt occurs, mainly as a result of their effort to extricate themselves from the original debt.
An increasing number of CAB applicants have problems with their fuel and water bills. Gas disconnections showed an alarming upturn in 1986, the privatisation year. They jumped from 2.9 per cent. in 1975 to 23.2 per cent. in 1986. They continued to rise in 1987 when the increase in disconnections rose to 30.3 per cent. The National Association of Citizens' Advice Bureaux is particularly worried about the figures for water supply disconnections. They have gradually risen since 1982 and showed a sharper upturn of 24 per cent. last year. The association believes that the rise is due to the increases in water charges which have been imposed on water companies prior to privatisation. It is also due to the fact that claimants must meet water rates from benefits rather than as they did prior to the April social security changes when they received

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separate allowance for those rates. The CABs are worried that there may be a repeat of the gas industry's soaring rate of disconnections following water privatisation.
That is a superficial picture of the scenario surrounding the rising level of debt in Britain. I have tried to show how the original advantages of consumer credit are, in many ways, being eroded through the emergence of indebtedness and the social consequences. The CABs have some heartrending case studies of individuals and families who have been drawn inexorably further and further into the quagmire of debt from which they have become powerless to extricate themselves.
A typical example of the spiral effect of debt is of a man in his mid-thirties who went to his CAB. He had had an accident at work and the resulting drop in his income put him into debt. His marriage broke under the strain and he became homeless, which he still is. He now suffers from extreme depression which will probably bar him from work or a home for ever.
This year the Jubilee Centre published a thoroughly-researched paper entitled Families in Debt. It shows how debt puts intolerable strains on the family structure and how those affected suffer from all kinds of problems. They range from mental problems, social withdrawal, physical ailments, marital and family problems. The paper also describes the consequences for the children who grow up under the dark cloud created by debt. It makes their parents fight, brings disruption to the home and deprives them of the things which other children have by way of Christmas and birthday presents and so forth. An American research paper suggests that there is a correlation between child abuse and the financial status of the family.
The Chancellor of the Exchequer has expressed his concern about the effect that increased interest rates will have on families during the coming year. However, that has not manifested itself in policy. He has rejected credit controls on hire purchase and credit sale agreements saying that they would be evaded. However, I cannot understand how banks and finance houses would evade them. Perhaps the Minister can explain that statement. It appears that the Chancellor would be supported by many people if he introduced some controls. The Jublilee Centre research shows that people believe that it should be harder to obtain credit and they accept the fact that restrictions should be imposed.
One can be left only with the impression that the Government disclaim social responsibility and that they are content to stand back and allow the continuing pursuit of profit from credit to continue because that is what best pleases their supporters in City circles and elsewhere
Besides bringing some order to the field of consumer credit, surely the Government should be moving away from placing their whole focus on consumerism and instead promote a philosophy which includes other values. After all, no one is asking the Government to establish a "nanny state". However, in the same way as government action reduces risks to members of society in so many fields,
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they have a responsibility to reduce the risks which so many poorer families and young people run of becoming enveloped and smothered by debt. Let us remember that letting the credit market rip may have been effective in creating competition but it has also led to the unattractive spectacle of a growth in human misery and exploitation.
I should like to end by repeating what was said by Sir Gordon Borrie, the Director General of Fair Trading, in his annual report published last month. He quoted a sixteenth-century sage who said:
"Who goeth a-borrowing, goeth a-sorrowing".
I end on that rather sombre note. My Lords, I beg to move for Papers.
3.27 p.m.
Lord Jenkin of Roding: My Lords, the House will be grateful to the noble Baroness, Lady Ewart-Biggs, for giving it the opportunity to debate a subject which has attracted a great deal of attention among commentators and the press. It gives noble Lords the opportunity not only to share the concerns which she has rightly mentioned but also to dispose of a few of the myths which appear to have grown up about the subject and which should be put right.
Many of us were brought up years ago in an atmosphere in which it was considered disreputable to accumulate debts and it is tempting to become alarmed by the increase in personal debt. I did not disagree with any of the figures which the noble Baroness quoted. I was brought up with the stern warnings about my Uncle Charlie. He had been a prominent juvenile lead on the West End stage. He had enjoyed lavish parties at Claridges and ended up being supported by his family. That spectre was hung over me throughout my youth.
When one is told that personal credit has doubled since 1983—the latest figures that I have show that it was £41 billion by the end of September and that it has risen from the June figure which the noble Baroness mentioned—it is not at all surprising that we in the older generation shake our heads, purse our lips and mutter that it will all end in tears. The noble Baroness is right because for a few people it does end in tears and I shall come on to that in a moment. However, it is important to get the facts into perspective.
I was a Minister in the Treasury when we introduced the historic document Competition and Credit Control. It was the start of a process which has blown the fresh winds of competition and innovation through our whole financial system. When one bears in mind that during the past nine years there has been added the abolition of the corset on bank lending, the ending of hire purchase controls, the ending of exchange controls, new banking legislation and building societies' legislation and the new consumer credit legislation which the noble Baroness mentioned, not to speak of the huge changes brought about by "big bang" it is hardly surprising that the older relationships between income, assets and indebtedness should have changed and should still be changing quite dramatically. Therefore, attitudes have also changed. The noble Baroness mentioned the huge expansion of mortgage lending. That has

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actually made borrowing more respectable and given it a much more favourable image. I believe that she would recognise that the high rates of inflation in the 1960s and 1970s made waiting before buying very unattractive. She quoted Sir Gordon Borrie. I shall also do so from his 1987 report. He said:
"two-figure inflation made debt both economically sensible and respectable since more and more people adopted it as a means of buying not only their homes but the increasing range of consumer products which filled them".
That process has continued. But should we be alarmed? I believe that we should not be alarmed. If one looks at the figures, particularly of the latest trends, it seems that some cries of disaster may appear to be exaggerated. In the few moments I have I shall just make five short points.
As the noble Baroness said, mortgage lending is by far the biggest element in total personal indebtedness; namely, £202 billion, which is about 83 per cent. of the total of personal debt. As the vast majority of mortgages are either repayment or endowment mortgages, that indebtedness is matched by saving on a very big scale. Obviously there are problems for some people who fail to keep up their mortgage payments, but without doubt that has been a hugely beneficial social trend. It is accompanied by some dissaving which was pointed out by the noble Lord, Lord Williams of Elvel, in his speech in the debate on the Address on 29th November. However, as he rightly recognised, higher interest rates will do a good deal to discourage that process. I entirely endorse his verdict when he said:
"I do not think that I would be especially worried".—[Official Report, 29/11/88; col. 173.]
The second point is that bank lending via credit cards has been blamed, quite wrongly, for all the problems of the consumer boom and growing indebtedness. In fact, that only accounts for some 2⅛ per cent. of all consumer borrowing. Around half of all credit card holders pay off the debt during the free credit period so that they are not borrowers at all. The banks' latest figure is that probably about 1 per cent. of borrowers have difficulty in repaying their debt. In the last 12 months the growth of bank card debt outstanding has done little more than keep pace with the growth in the number of cardholders and the rise in retail prices. In any event, they are now the subject of a Monopolies and Mergers Commission investigation, so perhaps we should await the result of that. However, I ask the question: why only bank cards and not other forms of plastic credit like store cards?
That brings me to the question of retailers' credit. That too is an even smaller part of total consumer credit—around 1 per cent. of consumer borrowing if mortgages are included, or 5 per cent. if they are excluded. That is also slackening off. Figures announced last week by the Retail Credit Group show a slowdown in the rate of growth of retail credit during the summer. Although the number of credit accounts continues to grow strongly, the average amount outstanding per account, which is now about £157, is down from a figure of £166; namely, a 5½ per cent. reduction. That tallies with the CBI's recent Distributive Trades Survey of 14th November which
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shows that the earlier strong growth in retail sales is starting to fade. That is entirely in line with my right honourable friend the Chancellor's policy of using interest rates to curb the rate of inflation.
This debate is about consumer debt. Do the banks and stores encourage irresponsible borrowing? That has certainly worried some people. Of course, that matter needs to be watched carefully. However, it is right to point out that the banks refuse some 30 per cent. of the applications made to them or their credit card companies, while the Retail Credit Group tells me that their members' rate of rejection is about 25 per cent. Clearly a good deal of care is exercised there.
The noble Baroness mentioned a report in the Sunday Times. I am sure that many noble Lords in all parts of the House will have read that. It certainly caused me some concern. Therefore, I took the opportunity to check the facts with the Retail Credit Group. The House will remember that that was a case of a young lady of 19 with an income 01111,000 who, the paper said, was allowed to run up £4,700 worth of credit in a couple of hours in a number of West End stores.
The House may take some comfort from the fact that happily, the story turns out to be wildly inaccurate. Time forbids me from giving all the details, but the simple fact is that she was offered credit facilities rather than credit, and not of £4,700 but £1,200, and even then how much use she made of those facilities was up to her. Of course, had she asked for actual credit there would have been the usual references to the credit reference agencies. None of the counter staff in any of the stores with which the young lady dealt had any authority to give her credit and nor did they. They indicated what the sort of limits might be. In fact, references are made to the credit reference agencies only when there is a substantive credit inquiry.
In the light of the facts—and there are a great many more facts—perhaps the Sunday Times owes those retailers, all of which were mentioned by name, some apology and correction.
What about the few people who become overstretched? As the noble Baroness said, it is clear that the vast majority of cases are those where family misfortune overtakes what would otherwise have been perfectly sensible borrowing—illness, unemployment, divorce, separation and events of that sort which overwhelmingly trigger the serious social problems which she described.
Perhaps I may mention to the House that there is a solution which is not widely used; namely, credit insurance. That was suggested by the president of the Chartered Institute of Bankers in the speech mentioned by the noble Baroness. It would be wrong to put limitations on credit. There needs to be a much wider use of credit insurance, and his suggestion was that this is a case where some of the attitudes to inertia selling might be a way of overcoming that. It would be totally wrong, despite all the points made by the noble Baroness, to start putting restrictions on credit. Sir Gordon Borrie has made it clear that he would be totally opposed to anything of the sort.
3.38 p.m.
Lord Ezra: My Lords, I agree with the noble Lord, Lord Jenkin of Roding, that we owe a positive debt to the noble Baroness, Lady Ewart-Biggs, for introducing this debate on the high level of consumer debt. This is an extremely timely debate. As the noble Lord, Lord Jenkin, reminded us, on 29th November we had a debate on the Government's general economic policy, but in some respects this is the social aspect of that economic policy.
There is little doubt that the level of consumer debt is now becoming a pressing social problem. Yesterday I spoke to my noble friend Lord Winstanley, who for many years presented a series of broadcasts on personal problems on Granada television. He told me that in the early years of this decade the most pressing problems were those of unemployment and housing but in the most recent months the question of indebtedness has come to the forefront. From his personal anecdotal view, this is now a very serious problem.
I am glad to note that this matter is being taken much more seriously. The Office of Fair Trading, to whose report reference has already been made, has produced a guide on debt called Debt: A Survival Guide. That is a rather awe-inspiring title. When one sees what that guide regards as the priorities for indebted families it is a bit horrifying. It mentions four priorities: rent and mortgage arrears—you could lose your home; rate arrears—you could land up in court; fuel debts, to which I could add water debts—you could be cut off; hire purchase debts—if you have paid less than one-third, the goods could be repossessed. Imagine the position of people in that situation with those problems standing over their heads.
I am glad to say that this has not only been identified as a problem but that action is being taken in an endeavour to deal with it. Since the middle of this decade there have been many money advice services operating through the citizens' advice bureaux and in other ways. The Policy Studies Institute has recently published a report on the activities of these services and the ways in which they operate. Indeed, a money advice association was founded in 1984 to co-ordinate their work.
However, what slightly alarms me is that we do not seem to know the size of the problem. We know from experience that it is an important problem, but that same institute, the Policy Studies Institute, is launching a study into the whole question of who is borrowing, how many people are in debt and what happens to them. That will take two years to find out, which worries me. Here we have an important social problem, and an independent institute, independently financed, is going to spend up to two years ascertaining the size of it.
There is not the slightest doubt that this is a serious problem. As has been pointed out, the amount of money borrowed for domestic purposes since 1980 has doubled in real terms. The reasons for that have been mentioned—the massive expansion of credit facilities and the consumer boom during the latter part of this decade which has swept many along in its slipstream who have been unable to cope for
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themselves. Without any question, the position has been made worse by the dramatic increase in interest rates.
The noble Lord, Lord Jenkin, pointed out all sorts of reasons why the increase in interest rates is a desirable remedy for the problems that we face, and that was debated by this House on 29th November, but for people who are in debt it has added enormously to their problems. We have had interest rate increases from 7½ per cent. to 13 per cent. since June of this year and that is a massive increase for people who obviously did not expect it to happen.
Therefore, I conclude—and I keep my remarks within a limited time to allow plenty of time for others—by making the following three proposals to deal with the problem. First, I urgently recommend that the Government endeavour to find out the size of the problem. It is all very well to have an independent survey over two years, but we need to find out much more quickly what is the size of the problem. Secondly, we should review the measures already taken to deal with the problem. Are they or are they not adequate? Should we be doing more? How can we identify those case which are really deserving and those cases of indebtedness which simply arise through improvidence? There must be a number of those.
Thirdly—and this comes on to economic policy—I have to say that from the point of view of those in debt, from the point of view of those in manufacturing and from the point of view of those who are trying to export, one of the most urgent priorities is to bring interest rates down. Having brought down interest rates we ought to seek to deal with the credit expansion boom in other ways, as was mentioned in our debate on 29th November. We must give positive encouragement to personal savings and build up the ratio which has fallen to such a low level.
I believe that if those three measures are taken this important and growing social problem can be effectively dealt with.
3.45 p.m.
The Lord Bishop of Guildford: My Lords, like other speakers I am grateful to the noble Baroness, Lady Ewart-Biggs, for introducing this debate because it is recognised by all that this is a matter of growing concern. As I represent an organisation which has many people working at ground level, so to speak, perhaps I may report that it is clearly becoming a widespread concern of the clergy, who are in contact with all sorts of people, that debt is an increasing social problem.
However, as the noble Lord, Lord Jenkin, said, we need to keep a sense of proportion and there is, as I see it, a sort of balance of payments in this matter of consumer credit. On the one hand, we have to acknowledge that credit facilities are of high value to those with the strength of mind and the experience in managing money; but, on the other hand, we must recognise that for those readily attracted by the glitter of advertisements and bamboozled by mysteries like the APR, credit can be a highly priced trap.

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We have lost the Victorian value of thrift. What was left of it was eaten away by the high inflation of the 1970s. It then became economically imprudent to save. Since then, although inflation has been brought under control (for which we are extremely grateful) thrift has now been replaced by credit. The trouble with credit is that interest charges can take on a life of their own. When they are small they can be comfortably suckled, but when they grow they get hungrier and hungrier. The danger point for many individuals and families is that appalling moment when they recognise that their debt charges are increasing faster than income. That is the moment of human despair.
In spite of what the noble Lord, Lord Jenkin, said, I think that it is generally recognised that instant credit is too easily obtainable. I remain to be convinced that the article in The Sunday Times can be so easily and readily dismissed as it was by the noble Lord, Lord Jenkin. Surely the fact is that many people, including young people, can walk into high street stores and obtain credit with hardly a question being asked. Certainly they are given that impression. I believe that they need to recognise that what they are obtaining is not instant credit but instant debt. If we could change the words, that might even indicate to people the direction in which they are heading.
Greatly daring, I raise the question of whether the banks are being as helpful as they should be. I understand that a number of banks are moving over to performance-related pay for their staffs. There is no doubt good and sound reason for doing that, but it seems to be the cause of a significant shift in the approach of the banks to their customers and the basis on which they offer loans. Loans were offered essentially when there was a reasonable assurance that they could be repaid. Customers were advised about the wisdom of taking out loans. However, I am told that some banks are now gratutitously offering overdraft facilities to customers who have not even asked for them. The emphasis, therefore, is shifting from not so much what is wise for the customer but more to what will get business for the banks.
I draw attention to that aspect because the Judaeo-Christian tradition has always been cautious about interest charges. It was called usury in the early centuries and it was forbidden until the 13th century. With the rise of capitalism a shift took place in moral thinking and it then became appropriate to lend money for wealth creation. But there was still great caution as regards the morality of lending money for consumption. That is not an easy distinction to maintain today but nonetheless there seems to be residual wisdom in it.
I wish to draw attention in particular to the human tragedy which results when debt begins to take its effect. It is almost an inevitable constituent part of marriage breakdown and of the other social problems that we have. One essential weapon in the battle against consumer debt is keeping inflation under control. I believe that we need to recognise our gratitude to the present Administration for achieving that. I have no doubt that we should also recognise the importance of people being encouraged to take
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responsibility for their own decisions. If they make unwise credit arrangements, in one sense they have only themselves to blame.
In my view it is not satisfactory to leave the matter there because we have a responsibility for those in the most exposed positions in our society. I hope that there are other actions which can be taken to protect the unwise from falling victim to the advances of the moneylenders and the credit companies.
3.52 p.m.
Lord Diamond: My Lords, I express my gratitude to the noble Baroness. I start by reminding your Lordships that the British people are to be distinguished from all others on this one count. Since the beginning of this century they have displayed a propensity to borrow more and to eat more of their seedcorn than any other competitive nation. That is a deeply ingrained pattern of which we should be aware. If the strength of the nation is based on investment to secure increased living standards in the future and investment supported by saving and not spending and borrowing, then what this nation needs is to be aware the whole time of its propensity to eat its seedcorn and its need to save more and more.
Ever since this Government came into office what has been happening is the encouragement of borrowing and spending. I cannot do better than quote what the Prime Minister said very recently—that too much buying is paid for by too much borrowing. This matters to the nation as well as to the individual. I am very grateful to all those who have taken part in the debate for underlining the difficulties with which certain individuals are faced. That leaves the ground clear for me—if I may put it in those terms—to concentrate rather more upon the impact on the nation. What is good for the individual in total is also good for the nation; that is, to save and not to borrow unless there is an absolute necessity.
I do not share the view that the old lady who needs a coat for the winter and cannot afford it should borrow the money at twice the rate of interest at which I can borrow. I see no reason why that old lady should borrow money at those rates in order to buy what she is entitled to. It is a matter for social security and the conscience of the nation. It is not a matter for encouraging financial institutions to spread their lending net ever wider. As we know from the figures, fortunately the amount of borrowing that is done at that level is almost minimal. It is very small indeed. The reason for the enormous increase in our consumer debt is the amount that has been borrowed by the categories that we call A1, B2, and so on. They are well above category D, which was no doubt in the mind of the noble Baroness when she referred to the difficulty of buying a warm coat.
It is very important that we should have regard to what the Prime Minister said about too much buying being paid for by too much borrowing. It has its economic impact. Excessive borrowing fuels inflation at home and produces balance of payments deficits abroad. I am absolutely clear in my own mind—I see no reason why I should not express this opinion in your Lordships' House—that it destroys moral fibre. To me, financial integrity means earning first and

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paying second; earning first and spending later. There has to be a good reason to depart from that other than in terms of buying a house, where the issue is different because one is really converting spending into rent which is the alternative available to people who want either to buy or to rent.
I take a clear view on that matter. I recognise that it is difficult, when the Joneses are setting the pace on easily borrowed money, for the Browns not to follow them although it will be against their normal instincts to do so. Therefore there is the whole time reason for discouraging credit and not encouraging it. There should be a discouraging of consumer credit which is not based on anything other than desire to spend first and earn later. That is my message.
This situation has arisen, as the noble Lord, Lord Jenkin, made clear, through the Government giving the message from the moment they came into power that the restrictions on borrowing should be removed and that full and free rein should be given to the propensity of this nation to continue to eat more and more of its seedcorn. Every instrument that came to the hand of the Government to control that propensity has been removed. I exclude foreign exchange controls because they were the subject of wise and confidence-making decisions.
I ask whether the present policy of the Government will suffice; but clearly it will not. In the past year there have been 11 variations in interest rates and that is the only policy that the Government are prepared to have regard to. Seven or eight of those variations have been upwards. Inflation has continued at exactly the same pace throughout the year, paying no regard whatever to the interest variations. It is not surprising. We are talking about the hundreds of thousands of ordinary individuals who buy things in shops. The ordinary consumer is not an economist and he does not read the details in the Financial Times leaders. The ordinary consumer gets a general message from the Government. That general message in the Budget was "Everything is fine; taxes are reduced and that means you can spend more".
The general message from these interest rate variations is nil as regards the consumer. How could it be otherwise? The variations have not been made in order to shock the consumer into a realisation of overborrowing and overspending; they have been hidden and muffled. The variations have been 0.5 per cent. most of the time, or 1 per cent. Imagine the aforesaid Mrs. Jones saying to her husband when he comes back from his office in the City, "What does this mean about the Chancellor increasing interest rates?" He explains, "Well, dear, instead of having to pay 25 per cent. on your borrowing for the costume you have just bought at the store you will now have to pay 25½ per cent." She replies, "Oh, isn't that terrible". I am bound to tell your Lordships that Mrs. Jones does not immediately commit suicide. She goes back to the store and buys the pair of Italian shoes that goes with the costume in order to make up the complete wardrobe.
That is how the public have been misled by these tiny and regular interest rate variations into believing that it just does not matter. It does matter, and there
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are various suggestions which, on another occasion I regret to say, I shall hope to put before your Lordships.
4 p.m.
Baroness Phillips: My Lords, first, I should like to say that the Government can rest content. I shall not blame them for everything. We are in danger of blaming the wrong people. I work with retailers and I am constantly amazed that they are blamed if people steal from them. They display the goods and people are tempted and they steal. It is the same with credit. We have always had credit and there is nothing wrong with it. What is wrong is when people do not pay for it.
I grew up in an age when the only way in which one could buy certain things was by credit. However, it was not called credit; it was called hire purchase and co-operative mutuality. But one borrowed before one actually paid for the goods. Nowadays people seem to have the idea that they do not have to pay. I am sorry for the people mentioned by my noble friend on the Front Bench. They get into trouble when they become unemployed. But let us face it, many people know exactly what they are doing when they obtain credit. We have to be careful that we do not support the wrong philosophy. I repeat that there is nothing wrong with credit.
I grew up in a working class street where we had simple values. First, one paid the rent and then one paid for food. If anything else was left one paid for the other things. But one never feared being turned out of one's house or flat because one had not paid the rent.
Where has the idea grown up that when one does not pay for things one can still be supported? The right reverend Prelate is right. I try to carry out my own Christian belief but we have somehow to reassert the whole Christian philosophy in our society. We have allowed it to slide.
The noble Lord, Lord Jenkin, mentioned the Retail Credit Group. It is quite true that its spending, borrowing and credit accounts for a small percentage—about 1 per cent.—of the total. I am fascinated by the ease with which people can obtain credit. I was in a House of Fraser shop one day. The little assistant said to me, "Do you have a credit card?'. I said that I did not. She asked if I would like one. I said, "Will it do you good?" She said, "Yes, I shall get a percentage if I sell it to you'. I said, "Okay, I shall have a credit card". I filled in three pages of detailed information. I had to wait six weeks before it was decided that I could have credit. It may be that the store was suspicious of Baronesses. I do not know. Perhaps I do not look the part.
I am astonished by the stories of how easily people can obtain credit, but that is not my experience. I was suspicious of the story in the Daily Mirror. I have followed it up. The shops did not offer the young lady credit in the way that she described. Why do we quote the press? For heaven's sake, every time the press have quoted me they have been wrong. Why should I believe what they say about anything else? I am astonished that noble Lords should stand up and quote something from the press.

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Credit is with us. Let us train people how to use it sensibly. I am president of the Money Advice Centre. I also helped to write a book on women and money. It may be sexist but women are really much better with money than men. We wrote the book with the support of a bank. I come back to this point. Let the banks and the retailers give more instruction and more attractive leaflets on how to use credit. Credit is with us and therefore I do not take a negative view. We need more training.
I listened to the chairman of the Consumer Council recently. She gave a good speech in which she gave examples of the kind of promotions we do not want. She said that an advertisement for a certain store said, "Up to £2,000 no fuss instant credit. Spend it today". She did not say which store it was so I cannot mention the name. She said that the sales staff could not explain it anyway, so perhaps people will not be stupid enough to take out this credit. Obviously the borrowers must understand the credit agreement and what it will cost in cash. Why is it indecent to mention cash now? Credit is the thing. If people understood the agreement when they obtained credit there would be no danger. Surely they should know exactly what they are doing.
The Money Management Council has simple aims and objects—to exercise a responsible influence on the development policies affecting the financial interests of consumers both locally and nationally. The banks and the credit card companies—we must give them due credit, if that is not a terrible faux pas—are trying to tell people what they are doing when they take out credit. That is what we want. We want information and education on how to use the system.
There is nothing wrong with credit. It is only wrong if one does not pay. Loan sharks are a different matter but the debate today refers specifically to consumer credit. The retailers, banks and credit card companies could start with the women's organisations which are always the leaders of thought. They do not get credit for it but they are always the leaders of thought and information. Let us make sure that our citizens understand how to use something that is with us. Those who get into trouble are a different kettle of fish and the noble Baroness has rightly drawn attention to the matter. However, many people know exactly what they are doing. Let us underline that and make sure that they get the best advice.
4.8 p.m.
Lord Rippon of Hexham: My Lords, we are rightly grateful to the noble Baroness, Lady Ewart-Biggs, for having raised an important topic which has social and economic consequences. On 15th July this year my noble friend Lord Beaverbrook rejected out of hand my plea that the Government should take some action to control the credit boom as part of the battle against inflation. I hope that tonight we shall see that the Government are more aware of the dangers. High interest rates cannot be the only weapon in the Government's armoury. Indeed it can be said that, at least in the short term and until they bring about
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some kind of recession, they actually fuel inflation. The Government should now take some action to stop the banks and others generally encouraging borrowing at excessive rates of interest.
It is worth noting that those countries which have the lowest rates of inflation and the lowest interest rates are countries like Germany and Japan where the people are accustomed to paying as they go. It is the failure to control credit which underlines the Chancellor's present predicament. The problem is not just house mortgage advances. Indeed it can be argued that those are wise in the sense that the borrower is making a long-term investment for himself and his family. What I believe is having such a devastating effect is the rapid rise in personal debt—day-to-day consumption—urged on by every means in their power by the banks and every other supplier of credit.
My wife, who fortunately for me is not a plastic money addict, was not impressed by a letter she received a week or so ago from the Midland Bank offering, presumably in addition to the Access card, a Midland Flexiloan. The letter, which is addressed to "Dear Customer", says:
"Imagine, the benefit of having a cash reserve available for your Christmas shopping, or the joy of taking a winter break at short notice. Flexiloan can help you with necessities or luxuries alike and even the odd emergency… You decide your limit from £500 to £3,000".
It is only fair to add that the supporting documents make it clear that the current APR is 20.9 per cent.—although they add that the figure may vary. That is a relatively modest percentage compared to some of the examples given by the noble Baroness. Is this the sort of action that the banks should be taking at present? Is it desirable that people should be urged to do their Christmas shopping by borrowing at 21 per cent. per annum?
According to this month's issue of Lloyds Bank Economic Bulletin, lending to persons has grown at almost the same pace as sterling bank lending to the economy as a whole, but that of the banks has grown faster—namely, 31 per cent. in 1981–87—and that of the building societies more slowly, at 17 per cent. Even so, the banks themselves account for no more than half of the total of consumer credit; retailers, and others, are in the business as well.
As Mr. Alistair Graham, the director of the Industrial Society, said at the annual conference last month of the Consumer Credit Trade Association:
"It has become like a bizarre religious ritual for some to collect as many cards as possible and then these are produced in the office or pub like a war veteran parading battle medals".
In the process, of course, the young are being trapped in a spiral of debt. I believe, as other noble Lords have suggested, that at the very least, much more needs to be done to explain the basic ground rules regarding the use of credit cards. As the former government Minister for consumer affairs, Mrs. Sally Oppenheim-Barnes, has said:
"Credit firms give many customers no idea at the outset what the final cost of their borrowings will be".
I commend to the Government her suggestion that there should be a full explanation of the cost added to all credit agreements.

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Credit cards are all very well for those who use their cards for payment on demand. They in effect get an interest-free loan at the expense of the poor and the young. The damage is done to those who, when they receive their account, meet only the minimum that is asked for. This is a very clever situation. You get your credit, then in comes the bill and you need only pay £5—and then you are hooked. I think that there should be a higher minimum initial payment.
The Lloyds Bank Economic Bulletin goes on to give some of the reasons for this revolution in bank loans to persons. The first reason is that personal lending is more profitable to the banks than lending to large companies. I suppose that the banks, having done their best to ruin the third world, are now starting on our children. I find it horrifying that it is estimated that one in five younger credit users are now having repayment problems.
Another reason given for the rise in personal debt is that qualitative guidance to the banks by the Bank of England was first relaxed and then finally abolished. I think that that was a mistake; I think that it should be restored. In my view a great deal could be done without legislation, or credit control; for example, by the Bank of England telling the clearing banks that they must stop lending so much money and that they must behave responsibly in the national interest and restrict credit to necessary purposes. That is the key: credit to necessary purposes.
There may be something to be said for a loan to buy a winter coat or, much more sensibly, to buy a consumer durable like a washing machine. But there is no justification, in my view, for banks at a time like this to urge people to borrow money for a winter holiday break in the sun—hopefully in the sun.
In the present circumstances I think that we must also have regard to the way in which some people are being literally conned into rates of interest well beyond those imposed upon bank credit card holders or by retail shops. I think that there are strong grounds for urging the Government to introduce a new moneylenders Bill. Indeed, it might be called a usury Bill. It is interesting to note that in Texas, in the United States, the maximum rate of interest is still 15 per cent. and anything above that figure is usury. Indeed, I think that it is still usury today.
The combination of high interest rates and the credit boom is doing great damage at present both to our economic and to our social structure. I think that the young have a right to be protected from the worst excesses of quite dreadful loan sharks. I compare them to Mafia loan sharks. Indeed, the Mafia loan sharks look like charitable institutions compared to some of the people who are acting in this field today. I do not think that it is good enough just to say that people have a choice and ought to know what they are paying for the credit which they are being induced to seek. I hope that the Minister replying to the debate will have something constructive to say about the way the Government intend to tackle this increasingly serious economic and social problem.
4.16 p.m.
Baroness Lockwood: My Lords, I share the concern of my noble friend. Her Motion refers to the high
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level of consumer debt. The problem is both a personal and a national one. It is a strange irony that the nation facing, as it does, a severe balance of payments problem can probably find the cause in the increasing credit boom which we are now experiencing.
Some distinguished economists claim that the imbalance in our trading accounts stems not from overseas investments—as others would claim—nor from a growth in the import of capital goods to re-equip our industries, but from the City borrowing from abroad in order to fund loans to British consumers to purchase consumables imported from our overseas competitors. What a world turned upside down this is!
It is a real national problem, but for many it is also a very severe personal problem. Plastic cards are a new method of exchange, but because we are not handling hard cash this method of exchange is more difficult to manage. Some of us, as the noble Lord, Lord Rippon, has indicated, take advantage of the free loan on our credit cards. But others, less fortunately placed, become burdened by high rates of interest over a long period of time. Therefore help in the form of education in money management is very seriously needed.
I should like to say at this point that I welcome the announcement I saw from the DTI a couple of days ago that it is issuing a video for the young on how to manage loans and lending. I think that such a video can play a most important role. However, the problem is wider than that: adults also need help, education and information about the whole problem.
One method of education and information could be through advertising if, as my noble friend Lady Phillips indicated, all the conditions of the loans were made known. It is this area of the problem upon which I should like to concentrate. I must declare an interest as a member of the Advertising Standards Authority. Advertising for credit is governed by the advertisements and quotations regulations under the Consumer Credit Act 1974. Enforcement of the regulations lies with the local trading standards departments and the Office of Fair Trading. Advice on the interpretation of the regulations can also be obtained from these bodies. The Advertising Standards Authority is a self-regulatory watchdog of advertising standards. It has no statutory powers; it is concerned with the content of advertisements. However, through its complaints and monitoring procedures it has been involved in credit advertising. Its experience—widely shared by those involved, I believe—is that the present regulations are exceedingly complex and difficult to police.
The ASA has been particularly concerned about advertisements for credit based on secured loans. This is especially important in view of the figures that my noble friend Lady Ewart-Biggs gave in relation to repossession of houses currently mortgaged. In a recent exercise in which the ASA monitored a selection of print credit advertisements—I must underline that print credit advertisements are not television advertisements because that is a responsibility of the IBA—the ASA found it necessary to give advice to more than half the

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advertisers. The problems encountered in the advertisements revealed that a large number of those offering secured loans used words such as "secured loan" in very small print, "sorry, no tenants", or "home owners and mortgage payers only". In the view of the ASA, these advertisements, although technically correct were not sufficiently clear. The ASA feels that, because advertisements for secured loans are concerned with such an important issue for would-be borrowers, the advertisement should state without any ambiguity that the loan is based on the property.
I understand that some steps are being taken to try to deal with this problem. Indeed, in 1987 the Department of Trade and Industry issued a consultation paper on the current regulations. In March this year it issued draft regulations and invited interested parties to comment by 20th May last. The draft regulations seemed to be a vast improvement. The explanatory memorandum states:
"The main aim … has been to simplify the Advertisements Regulations, while at the same time providing additional safeguards for consumers".
Some of the problems raised by many noble Lords are covered in the draft recommendations. I welcome them. In particular, I welcome the statement that:
"In the case of a loan to be secured on a borrower's home, a statement in the following form must be included in both intermediate and full advertisements:—
'Your home is at risk if you do not make repayments on a secured loan' ".
No one could misunderstand a statement like that if it were clearly stated in the advertisement.
Can the Minister say what has happened to the draft regulations? A recent telephone call to the DTI confirmed that the department is still examining the responses. Surely there is much urgency about the matter. I would welcome a reply from the noble Lord. Advertising is only one aspect of the problem that we are discussing this afternoon, but a firm lead from the DTI on the advertising regulations would contribute to a better informed public both on the advantages and the disadvantages of credit.
4.26 p.m.
Lord Brocket: My Lords, I am grateful to the noble Baroness, Lady Ewart-Biggs, for bringing this subject to the attention of the House. With Christmas round the corner and inflation being the prime concern at present, I think that the debate could not have been called at a more opportune moment.
The problem of consumer credit and the trail of problems that it leaves in its wake are social and economic issues that I think are not being given the attention that they deserve. The Government, quite correctly I believe, have changed the country's thinking in that it is admirable to be successful, and one's natural inclination to accumulate wealth is neither perverted nor in any way wrong; in fact, it is to be encouraged. If this success is to be reflected by purchases that would otherwise previously not have been possible, then more power to your elbow.
The down side of all this of course is that those who have not yet reached that degree of affluence, who are
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too young or quite simply less able see these outward signs of affluence, want them and are delighted to find that banks, credit card companies and stores fling money literally at them and offer them credit facilities to assist them to obtain what otherwise they would not be able to obtain. Who can blame them for accepting this? It is not a case of, You can lead a horse to water but you cannot make it drink"; it is more a case of, "You can lead a horse to water but you cannot blame the poor animal if it does drink".
Among my staff I have pathetic examples of people who have been given credit that they have no hope of financing and who are now reduced to nervous wrecks in their inability to face literally an insurmountable problem. In some cases this has led to excessive drinking and extreme resentment against the system that they see at fault for landing them in this mess in the first place. I think that we are being extremely irresponsible in allowing this state of affairs to continue unabated.
High street stores are giving credit sometimes up to £1,000. I note what was said about the article in the Sunday Times, and I know that this is a fact certainly here in London—with few or no questions being asked. The ability to pay seems of little or no interest to them. The applicant's name and proof of identity are often the only questions asked. Credit card companies give out plastic cards like Christmas cards. There is no proper check on the facts that are given on the application forms. Shops display misleading and confusing signs about credit arrangements. Such signs as "free credit" should read "absurdly ridiculously high credit". There is currently a major high street electrical chain that is offering credit advertised as "free credit" which is in fact 40 per cent. per annum. If the small print is noticed on that sign, most people would not understand it anyway.
Lastly, banks far too readily give loans in the form of mortgages to the absolute maximum that their clients can afford, so that a slight change in circumstances tips the balance and puts well-meaning but naive people and their families into appalling straits. Quite simply, we owe it to these people, especially the disadvantaged, whether from skills or living in a depressed area, to take simple measures which are well within the Government's power to lessen the consequential economic and social problems, particularly that of inflation.
It is in the area of inflation that I have to admit I have a total and utter mental block. The Chancellor tells us that it is consumer spending that is rising too fast and that is causing the dreaded curse of inflation. Bearing in mind the problems regarding credit that I have illustrated, it would appear to me that we have an even stronger reason for taking measures to curb easy credit. However, the Chancellor has elected to use the blunt weapon of general interest rates to curb spending. This means that entrepreneurial businesses, small and large, that always have large borrowing and are the lifeblood of the economy and the power behind Britain's recovery, are hit extremely hard. But it is not the businesses that are buying new machinery that are causing the inflation. It is common or garden consumer spending.

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This interest rate measure appears to me to be like going to the noble Lord, Lord Colwyn, complaining of toothache and the noble Lord hitting the patient over the head with a truncheon and knocking him unconscious. While I admit that that measure would cure the toothache for a while, as the patient would not feel a damn thing, it does not go to the source of the problem. There is no disrespect intended to the noble Lord, Lord Colwyn, as I am sure he does not advocate the use of truncheons in his surgery. Furthermore, we are repeatedly told that a strong pound will reduce inflation. This one has me competely stumped.
I have to declare an interest in that I manufacture in America and export to the United Kingdom, and a further interest in that I manufacture in the UK and export to Europe and America. It will come as no surprise to anyone in this House that it is the American company that is doing well and the UK company that has its costs rising and its exports falling. Lower corporate tax rates are of little consolation because we, like most companies, gear up as much as we can anyway.
It is possible that I am being extremely thick, but I have bluntly to admit that the logic of the Chancellor's measure seems totally to have escaped me and many others as well, including my professional advisers. I am sure that there is a good reason for his solution, but I wish that he would let me in on the secret. I am told that the Government are against controls involving consumer spending and I hear mutterings about individual freedom being infringed. Freedom of choice of goods will not be affected. The price of the goods will remain the same and all controls will achieve is the prevention of many people's misery and a great benefit to the economy.
In particular, first, I should like to see the minimum age for credit raised to 18 years and rigidly enforced by law, with stiff penalties for breaches. Secondly, credit notices in retail outlets should have the actual interest rate clearly displayed in the same size writing and not in the jargonised small print that the average buyer quite plainly does not understand because he is not a trained accountant or lawyer. Thirdly, credit facilities should be granted only when confirmation of bank liquidity, present commitments and the applicant's earnings are received. Lastly, and most important, there should be a legal minimum deposit on goods of not less than say, 30 per cent. That could be altered at the Chancellor's discretion.
I believe that this treatment, rather than the Chancellor's present treatment, would attend not only to the right area of the patient but to the right tooth. The truncheon would therefore not feature in the inventory of any dentist's surgery.
4.35 p.m.
Lord Cocks of Hartcliffe: My Lords, I, too, should like to thank my noble friend for introducing this debate and I should also like to reinforce the remark she made about how easy it is for young people, particularly when they move away from home, to sink swiftly into a morass of debt through the enticements which are offered. But we live in a borrowing society. The noble Lord, Lord Diamond,
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said that people do not relate their borrowing behaviour to such matters as interest charges. I believe they also do not relate their spending behaviour to matters like interest charges because our balance of payments problem, which has led to the recent increases in interest charges, has been largely fuelled by the purchase of imported goods.
On the radio this morning I heard that the latest figure for imported cars will be some 58 per cent. of the total purchased. If that is so, I believe that people are making a conscious decision which contributes to the economic problems facing this country.
The noble Lord, Lord Jenkin, said that happily few people became overstretched when borrowing. Would, that that were really true. The old ethos has faded where one saved before one spent and one did not fall into debt. In many working class homes it was a matter of honour that the family owed no debts and that there was always money to pay for the inevitable funerals. That ethos has unfortunately faded. I was interested in the remarks of the right reverend Prelate because, on the one hand, he said that those who take unwise decisions have only themselves to blame and, on the other hand, a little later in his remarks he said that we have a duty to protect the unwise.
One has to balance those two remarks because there are many in society who do not understand the ways of finance. I was very much at one with the noble Lord, Lord Rippon, when he spoke about the people who were preyed on by loan sharks who charge exorbitant interest rates which are quite astronomical and who use unscrupulous methods of collection. They even go so far as to impound people's benefit books so that they can go with them to the post office and collect the money which is owing as they emerge. It is a great social evil and a scandal. Much of this borrowing behaviour stems not simply from the fact that people are needy and deprived; it stems also from the fact that there is this borrowing ethos in society.
In the Bristol area much concern has been expressed about this matter. In the last two years the local Evening Post paper has taken a great interest in it. My attention was drawn to it by a former colleague of mine on the city council, Councillor Hicks, who drew my attention to inordinate pressure on council house tenants to purchase their properties. Noble Lords will be aware of the opportunities that have been opened by recent legislation, but that is being taken advantage of by the kind of people to whom the noble Lord, Lord Rippon, referred. Leaflets have been pushed through people's doors on the big council estates inviting them to purchase their homes and suggesting the following. It is easier if I were to quote words which I mentioned in another place:
"You can afford it with no cash outlay whatsoever and no obligation".
If one is foolish enough to fill in one of those leaflets and return it or to contact the telephone number, somebody will come to the door to press the matter further. Although rebuffed, he may well return later for a second and even a third call.
People in robust health can deal with such a situation without difficulty, but for the elderly living alone that kind of pressure is extremely worrying.

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Their main concern is to have a roof over their head and anything which disturbs the normal tenor of their lives is of great concern. That sort of abuse is going on. I echo what the noble Lord, Lord Brocket, said about the problems of people reading the small print and understanding fully their obligations. I should like to hear from the Minister that the Government are prepared to put much more effort into providing credit advice and debt counselling services which some progressive authorities are already getting off the ground. Those services are extremely important. Busy councillors cannot cope with the flood of queries they receive; with the best will in the world they often do not have the necessary specialised knowledge. A small amount of funding into the debt counselling services would pay very good dividends in terms of benefit to society.
In addition, since the Secretary of State for Education and Science is producing his national curriculum, surely these matters should be explained in the schools. If it can be explained in the schools just what is implied by borrowing at certain rates of interest, if the rackets going on can be exposed then the children will go home and talk about it so that there will be a fertilisation upwards. The information will spread very quickly. I urge the Government to look into these matters because the current climate of borrowing in society is having these unfortunate effects, particularly on those least able to look after themselves.
4.41 p.m.
Lord Meston: My Lords, I intend to speak only about the operation of the Consumer Credit Act 1974 and how it affects the most hard-pressed debtors. The forerunner of that Act was of course the Crowther report, which looked at the whole matter of modern consumer credit in its widest context. It echoed J. K. Galbraith when he stated what we now realise to be the obvious. He wrote that consumer demand comes to depend more and more upon the ability and willingness of consumers to incur debt. He pointed out that advertising and emulation which create demand operate both on those who can afford to incur debt and on those who cannot. That is the price we pay for a higher standard of living. However, there is also a price to be paid, for example, as a result of increasing house values. Houses cease to be seen as homes but are portrayed as a source of cash. That is a very dangerous trend.
It is not just a problem for the affluent; research shows that those on the breadline get into debt not just because of fecklessness or extravagance but as part of the struggle to meet the necessities. Health and marriages suffer and matrimonial financial litigation—with which I am familiar—can be little more than a debt clearing exercise. When a family is together, there is just enough to provide one home and provide for one household. But there is rarely, if ever, enough to provide for two homes, two households, if the family splits up. The burden falls upon the diminishing public housing sector.
The most hard-pressed are the most vulnerable to the so-called loan sharks; the people who have to borrow from Peter to try to repay Paul. Short-term
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unsecured loans become all too easily long-term secured loans. To take up a point made by the noble Lord, Lord Jenkin, it may well be right that banks and the more respectable lenders are increasingly careful about those to whom they are lending. The more careful they are, the more people will have to be attracted to the less scrupulous lenders.
The expression "loan shark" is colourful but somewhat imprecise: the range is from the backstreet lender to the high street bank, particularly if we have a sufficiently unfavourable view of our bank manager. Mine, I hasten to say, is a saint. The unlicensed lenders are outside the law. They are the people who take the social security book away to use as a form of security. In looking a t the Consumer Credit Act and how it works, one is concentrating on licensed lenders and the protection that is meant to be given by the modern legislation. However we must not overlook the point made in the article appearing in Which? in August this year, to which the noble Baroness, Lady Ewart-Biggs, referred. The point made in that article was that the present licensing system for lenders needs a careful overhaul.
I wish to take up a matter which has been mentioned on previous occasions by the noble Lord, Lord Bruce of Donington, as to the effectiveness of the Consumer Credit Act 1974. In theory the Act gives those who would otherwise be easily led into debt an opportunity for a second thought. It gives them advance information about the terms on which they are to borrow, assuming that they understand the terms "APR", "total charge for credit" and "secured debt". In fact few people really understand those concepts. Lawyers and accountants themselves have to fight through a mass of regulations and interest tables to try to discern the reality of the transaction.
Having got into debt in this way, it is not particularly easy under the scheme of the Act to get out of debt. If one wants to repay early one must grapple with the early redemption regulations, which could not be accused of simplicity. However it is the workings of Sections 137 to 140 of the Act which seem to me to be a cause of the greatest concern. This is not a particularly technical matter; those provisions enable the courts to reopen extortionate credit bargains. The old Moneylenders Act used the expressions "excessive interest" and "harsh transactions" which were quite easily understood. It provided a presumption that 48 per cent. interest was excessive. The Crowther report recommended retention of the 48 per cent. presumption, but the 1974 Act did not follow that recommendation. We have the new terminology in the 19'74 Act. Its main phrase is "extortionate credit bargain" and it does not take a great deal of thought to realise that something which might have been excessive under the old law will not necessarily be found extortionate under modern law.
However it is worse still, because there is a definition of "extortionate" in the 1974 Act. It is defined as meaning "grossly exorbitant" or "grossly contrary to the principles of fair dealing". In other words, it is not enough for the court to say that a loan is exorbitant; it must be found to be grossly exorbitant before the law can begin to intervene. It is

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not easy to persuade a judge that something which is or might be exorbitant is grossly exorbitant. Even then the court is allowed a discretion as to whether and to what extent it will intervene. Of course the high risk lender is entitled to reasonable protection, but I suggest that the law in this area is weighted too heavily in favour of the lender.
Time is not available to mention all the other abuses which are prevalent. I wish to mention some of them, such as the abuses used by the secondary lenders. These are abuses which ensure that such lenders make their money early and make that money, come what may. A borrower goes along; he wants £2,000. Before he knows where he is he has been landed with a bogus arrangement fee charged by the lender, another bogus fee charged by the broker, who is very often the lender under a different corporate hat, and he is being lent £3,000. He is too hard-pressed to resist and signs the agreement.
Another abuse is for the secondary lenders to pretend to be doing the borrower a favour by taking over his mortgage arrears or his existing mortgage itself, whether or not the mortgagee wants that to be done. When the borrower gets into trouble—as he very often does—the benevolent lender offers to reschedule the loan, recycling the whole transaction and effectively charging interest on interest. As the right reverend Prelate said, the indebtedness feeds upon itself.
Of course there is a limit to which the law can go to protect people from themselves, but I suggest that we have not reached that limit. As the noble Baroness went back to the 16th century and reference has been made to the Usury Act, I venture to give the Government a suggested precedent. In 1545 Henry VIII repealed his father's Usury Acts. The preamble to the 1545 Act had an amazing level of candour. It said that the existing laws were so:
"obscure and dark in sentences words and terms",
that the law was of little effect, and that offenders had actually been encouraged to use the law. I suggest that the Government would do well to take a leaf out of Henry VIII's statute book.
4.50 p.m.
Lord Graham of Edmonton: My Lords, I am very pleased indeed to have the opportunity of speaking in this debate, which was so ably opened by my noble friend Lady Ewart-Biggs. On reflection, I think we have had a very well balanced and well informed debate. I wish to declare an interest in the form of my association with the co-operative movement. When that movement was established about 150 years ago, one of its cardinal principles was that no credit should be given. The success of the co-operative movement in those early years was partly due to the experience of those who were pioneers of the movement who recognised that working people, poor people, unemployed people and defenceless people were the greatest victims of the use of credit.
The Truck Acts, which gave to employers the right to pay wages in the form of food, bound workers forever in the grip of landlords and shopowners in a terrible way. The co-operative movement recognized
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that credit was an evil in those times. But in 1988 the co-operative movement, like many others, has recognised the important part that credit plays in its affairs. In 1988 the co-operative movement took more than £5 billion over its counters. I imagine that a sizable proportion of that money was taken in the form of credit trading.
I liked very much the contribution of the noble Lord, Lord Rippon of Hexham, who I thought not only spoke good sense, as he always does, but who put before the Minister who is to reply some very important questions. He suggested that it was no good the Government wringing their hands about the problem of debt or credit unless they were prepared to do something about it. One of the themes that has emerged during this debate from all around the House, but especially from this side, is that there is an overwhelming demand for consumer advice and advice upon the management of money. One of the things I want to hear the Minister say is that he is prepared to help to reverse the Government's trend over the past 10 years, which has been in effect to downgrade consumer advice centres.
Ten years ago, when I was happy to serve at the Department of Prices and Consumer Protection, one of the great things that the then Labour Government did was to encourage the establishment of consumer advice centres. Many councils in the 1980s have not only had to abandon them, but through Government action, they have been given very little financial support to maintain them. I want to hear the Minister say something about the provision of centres which are non-political, which are dependent upon resources from the Government, and which, give the kind of advice to which, I believe, consumers are entitled.
Reference has been made to those individuals who by fecklessness, if not recklessness, get themselves into difficulties. The tag which comes to my mind is caveat emptor—let the buyer beware. I do not think it is an unreasonable proposition to assume that people who seek credit should at least have some idea of what they are letting themselves in for. Certainly legislation has been provided over the years which lays down responsibilities and duties upon retailers, the providers or the givers of credit, to make certain that there is an understanding about the terms and conditions and other matters involved in the giving of credit.
One of the interesting things that has emerged from this debate is that while we are looking at consumer credit, what we are really talking about is credit that is given by retailers in shops. What emerges is the stark fact that 3 per cent. of consumer credit is in the form of mortgages for housing. I want to hear the Minister address himself to how he intends to reduce the burden of consumer debt in the form of the cost of housing, which represents 83 per cent. of total consumer debt. The Government have a great responsibility, not only as regards interest rates in general, but especially as regards the high cost of borrowing in respect of housing.
I was also interested to hear of the very small amount of debt which is accounted for by retail credit accounts. I understand from the figures that it

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amounts to £157 per account. That sum is not, in the context of the current debate, chicken feed, but we must recognise that that amount is coming down. I was interested in the references that the noble Lord, Lord Jenkin of Roding, made in rebuttal of a general premise that was allowed to be given in an article in the Sunday Times last week. I shall be interested to read what the Sunday Times writes next week in the light of the information which it now has. I understand that the newspaper could quite easily have obtained that information, if it had done its homework well in advance at the time.
The young lady referred to in the article was called Helen Davis. The article stated that in Dixons:
"Davis was granted £1,500 of instant credit when she opened her Dixoncard account."
Like many people I considered that to be an irresponsible action. Yet a retail finance organisation has informed me and other people that Helen Davis:
"Filled in a postal application—not instant credit—for a credit limit of £240. The monthly sum payable was £10. Identification was provided with a cheque guarantee/debit card."
In the light of the conflict as regards, first, what happened and, secondly, what the facts are according to Dixons, we are not being very well served by some people who have a boat to push out on this issue. One must recognise that the incidence of credit is real and important, that it will not go away and that there are organisations which undoubtedly make it far too easy for the consumer to take advantage of what they have to offer.
I wonder whether the Minister will say something about the increase in the debt which is now hanging around the neck of owner occupiers who, of all classes of people, have been encouraged by the Government to trade up in respect of the houses they occupy. I hope that the Minister will say something about council tenants who are being encouraged to buy their houses. When one sees the great increase in debt that has occurred over recent years, which has, in effect, been generated by Government policies, I think the Government have a great deal to answer for.
I have an illustration from the citizen's advice bureau at Stoke-on-Trent. When it analysed the queries of 200 of its clients, 59 per cent. of the owner occupiers among them had problems as regards arrears with their mortgages. Of the council tenants who came to them, 44 per cent. had problems with rent arrears. When the figures were analysed further, 31 per cent. of the owner-occupiers were in arrears with a second mortgage or secured loan.
I know that my speaking time is almost up. I think that the Government must not be glib; they must not say that we are in a marketplace in which people are entitled to choose—although choice is the flavour of the month for this Government. I say that the Government have some responsibility to people who need protection not only from themselves but from some elements in our commercial community who are making it very easy indeed for ordinary people, who are desperate to maintain some standard of living, to get into trouble.
5 p.m.
Lord Peston: My Lords, we are indebted to my noble friend Lady Ewart-Biggs for introducing this debate. I am impressed not only by the debate in general but also by its non-partisan character. There have been a great many contributions from all parts of your Lordships' House with some or all of which I am able to agree. I expect that that is also true for other noble Lords. But that is not surprising. As noble Lords will recall, in the debate on the humble Address last week the noble Lord, Lord Vinson, said that many of your Lordships would share the universal anxiety that much money being spent is not consumers' own money but money which they have borrowed. Last week he went on to ask the Government—who after all are his friends—to examine and not to dismiss other forms of sensible control of personal credit. Similar points have been made by noble Lords this afternoon.
I am not opposed to credit or debt per se. I shall not moralise on that matter. It happens that personally I find being in debt quite horrible. I cannot cope with it, and on the whole I am not in debt. However, many of my friends seem to be perfectly happy being perpetually in debt and living on an overdraft without any other visible means of support. So I do not moralise. Credit is part of an advanced industrial society. It is a matter of degree, of control, and of its effect in terms of the behaviour of the economy.
We must not be naive about what is going on. The banks and the financial institutions find the provision of personal credit enormously profitable. They are in the business of offering personal credit. The retail firms are in the business of selling goods and services and they do it to make money. In so far as they offer credit, that is the reason why they do so. We should not be naive about that. It is perfectly clear what the forces at work are.
To be set against that we have heard suggestions that it would be better if consumers understood these things rather more; it would be better if the advertisements were clearer; it would be better if more advice were on offer. My noble friend Lady Lockwood referred to the DTI video. Of course we are in agreement with such measures; but in view of the force of sheer profitability on the other side, much as I support the suggestions, I do not believe that such measures will be other than quite minor in their effects on the problems—both economic and social—which have been mentioned.
That takes me on to the question of whether criteria or standards for the provision of credit have fallen. That is difficult to measure but we must use our common sense. I can only say that in my lifetime—in terms of the ease of obtaining a personal loan 20 years ago, 10 years ago and now—standards have certainly fallen. It was almost impossible for most people to get a personal loan 20 years ago, and for young people it was totally impossible. Again I do not moralise and I am not saying that it is altogether a change for the worse; but to suggest that there has been no change and that it is not easier is ridiculous: of course it is infinitely easier to borrow now.
It is also preposterous to suggest that the Government's financial deregulation, which has had

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many good sides to it, is not one of the underlying causes of what is going on. It is preposterous to suggest that at least some of the consumer boom that we have experienced is not credit-based. Of course it is credit-based. To the extent that financial policy is out of control—and it is—and to the extent that monetary policy is out of control with every single measure of money supply currently well beyond any targeted or desirable range, of course problems have arisen in this area for the economy. It is therefore not in the least surprising, and one does not have to be a monetarist, to note that the effect is both overheating, too high an inflation rate, and a major balance of payments deficit on current account.
None of us need doubt as the noble Lord, Lord Diamond pointed out, that because of the credit boom the structure of the system has gone wrong. I speak as someone who is not opposed to consumption per se; but there is excessive consumption and too little investment. For the Government to point to one year of investment boom as if that somehow makes up for all the earlier years of lack of investment is quite absurd. On that subject, I entirely agree with the remarks of noble Lords and in particular the noble Lord, Lord Ezra, that much more needs to be done to promote saving at this stage rather than consumption.
So the Government have created not merely the social and personal problems to which excessive credit expansion gives rise, but it has created overall a major economic problem. It has created it needlessly. We did not need to move at this pace. It was not necessary for the Government to give up all the means of intervention in financial markets which they gave up. Speaking as an economist, it was absurd of the Government to end up with just one weapon—namely, the interest rate—to deal with every economic problem confronting it. That has been referred to by noble Lords as a blunt weapon. I assume that it is the equivalent to the truncheon which was referred to.
It is a ridiculous state of affairs when there are other means, and obviously the old moral suasion of the Bank of England ought not to be forgotten. One hopes that that is being applied now. The suggestions that there might be a higher repayment fraction and—although it had not occurred to me until it was mentioned by the noble Lord, Lord Brocket—the minimum age at which one might borrow are relevant. There are a number of things that can be done.
Another point which I mention en passant, and which I often ask about, is the ease with which the use of credit cards has expanded compared with cheque guarantee cards. A cheque guarantee card, after all, is cash. One is paying with what one has. In real terms the £50 cheque card has declined enormously in the period since it was introduced. Therefore most of us are encouraged not to use cheques—cash that is guaranteed—but to use credit cards. I should have thought that the minimum intervention which might be required would be to restore the cheque guarantee card to its original real level.
I say that mischievously because I know exactly why the banks have no desire to do so. Cheque cards
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are not very profitable for them and they have no desire to do something that might help those of us who think that paying cash is better. However, the fact that the banks do not believe it is profitable should not hinder the Bank of England from saying that that is what they have to do. That is what governments are for, and that is what the Bank of England is for.
Baroness Phillips: My Lords, I hope my noble friend will forgive me. The banks do not want to increase the limit because if a cheque guarantee card is stolen they would have to honour £100 instead of £50.
Lord Peston: My Lords, that is what the banks say; but the banks are in the business of making money and not of worrying about social security. I might add that if it was right 20 years ago to have the higher real level, why is it not right now? Incidentally, one can also buy insurance against the theft of cards. I do not accept that argument at all. The answer is quite different, and it is the one that I gave.
I should like to say something about loan sharks, and add my support to those who have spoken on that subject. That criminal and evil activity is quite sickening. I simply do not understand this Government, which frequently intervenes in other areas of criminal activity, not intervening in this one. Why not this one? Why not give priority to this one? I should certainly like to see something much more reassuring on that point. However, I do not wish excessively to prolong this debate. As your Lordships will be aware from my interventions and indeed from the notes that they see in my hand, I too could say much more. I have certainly found the debate immensely interesting. However, I must end on one further pessimistic note. As an economist, it would be wrong for me not to do so.
The real point is that in the end the consumer boom although stimulated by credit, is predicated on the anticipation of higher and rising incomes and higher and rising wealth. In a sense one is saying, "Though borrowing at these ridiculous rates of interest, I shall subsequently have the income to finance that borrowing". The point is that in the way the economy works it introduces a stronger note of instability into the system because the moment that incomes are expected not to rise as rapidly and do not do so the major problem occurs of financing the existing debt. Incidentally, in terms of stimulus of demand in the economy a major problem emerges of the demand for goods and services falling and further precipitating a recession.
Having produced the boom, it is very difficult for us easily to come out of it. I simply warn noble Lords, without saying definitely, that we shall come out of this state of affairs with a crash. There are certainly dangers. The lending will be a good deal less comfortable and bumpier than would have been the case had we not let the expansion get out of hand in the first place. I repeat my thanks to my noble friend and say again how much I look forward to the Minister's answers.
5.12 p.m.
Lord Strathclyde: My Lords, I am grateful to the noble Baroness, Lady Ewart-Biggs, for raising this important matter today. We have had a most useful, wide-ranging and genuinely interesting debate on her Motion. If falls to me now to speak on behalf of Her Majesty's Government. I am sorry that in her opening remarks the noble Baroness said that she was disappointed not to see my noble friend the Secretary of State in his place. He is detained elsewhere. I hope she will not mind too much that I am here representing him today.
It appears that noble Lords have concentrated mainly on two different but related aspects of credit; namely, the level of credit in the economy as a whole and what is seen as its effect, and the problems of debt experienced by some borrowers. Perhaps I may most usefully begin by putting one or two things into perspective. The Government are fully aware of the current concern about the overall level of consumer debt—a concern which has been expressed so eloquently by a number of noble Lords this afternoon. Moreover, we appreciate the difficulties and anxieties which can be experienced by some individuals and families through over-indebtedness. I would not seek to underestimate that in any way. But in the national context I agree with many noble Lords, and with the right reverend Prelate, that the scale of the problem should not be overstated and that it should be put into perspective.
Let me deal first with the wider question of the amount of credit in the economy and with suggestions that there should be some form of credit control. As noble Lords no doubt will be aware, 80 per cent.—that figure has been mentioned throughout this debate—of borrowing by households is on mortgages. So credit control that applied only to the 15 per cent. of personal debt accounted for by consumer credit would just not work; and restrictions on mortgage lending would be neither fair nor necessarily effective.
Lord Diamond: My Lords, perhaps the noble Lord will forgive me for interrupting him, but he must make clear to the House that half of that mortgage interest leaks out into the consumption economy through some means or other.
Lord Strathclyde: My Lords, I am not sure from where the noble Lord has obtained his figure of half the mortgage spending. No doubt he has a source. As to the general part of his question, the proportion is far lower than the 50 per cent. he mentioned.
However, I should like to continue. It has been suggested, for instance, that mortgage lending could be limited to a maximum proportion of the purchase price. Such a control would be unfair, hitting first-time borrowers hardest. And those who had already had a mortgage for some time would probably have plenty of headroom to borrow more. But, as I have already said, it would also be ineffective because, especially in today's sophisticated financial markets, anyone who wished to do so could top up their mortgage loans from other sources, including,
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in the absence of exchange controls, overseas brokers and bank branches.
As other forms of consumer credit represent only 15 per cent. of personal debt, imposing restrictions on it would have a proportionately small effect, even if it worked perfectly. But the fact is that it would not work anything like perfectly. The old minimum deposit and terms controls on hire-purchase were becoming increasingly ineffective by the time they were abolished in 1982. Today, much less credit is linked to a particular transaction and, even where it is, any required deposit can easily be raised by borrowing elsewhere; for instance, on credit cards or an overdraft.
The general point about direct controls on lending is that they create inefficiencies and distortions in the market, and these act to the disadvantage of borrowers and lenders alike. They give unregulated (and often less reputable) lenders a competitive advantage and they mean that less well-placed borrowers are driven to more expensive sources of credit. The only effective mechanism for influencing the availability of credit is the price mechanism, which in this context means interest rates. That was mentioned by a number of noble Lords. I shall come to that point later.
Lord Ezra: My Lords, perhaps I may intervene. So far there is no evidence that that is working. How long does it have to take? I refer to a note in The Times yesterday showing that shop sales are at record levels. Every month we see that shops sales are at record levels. When is this measure going to bite?
Lord Strathclyde: My Lords as I said before I sat down I shall come later to the subject of interest rates. As for the specific question asked by the noble Lord, obviously we do not expect a downturn to occur immediately. It will take time. However, there is evidence to show that house prices have been slowing down considerably, which is a sign that other forms of spending will change dramatically in the future as well.
The noble Baroness, Lady Ewart-Biggs, asked some questions in particular about the borrowings and savings ratio. I feel that the noble Baroness gave a rather biased picture, as did the noble Lord, Lord Graham of Edmonton. It is necessary to consider all personal sector financial assets and liabilities. At the moment personal sector financial assets are three times greater than liabilities. They have grown by a total of £447 billion more than liabilities since 1979 despite the fall in the equity markets in late 1987.
I am not suggesting that lending to consumers is or should be unregulated. The fact is that in the Consumer Credit Act 1974 we already have comprehensive legislation which is in advance of that available in any European country. Perhaps it would be useful for me to remind your Lordships of the protection that consumers already have when borrowing money or using credit.
Before I do so I should like to reply to the noble Baroness, Lady Lockwood, who mentioned money management and the role of advertising. I am very pleased to hear that the Advertising Standards

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Authority is paying special attention to loan adverts. The proposals of the Department of Trade and Industry to require clear information about secured loans in advertisements recognise the urgency to make regulations. Indeed, revised regulations will be made as early as possible in 1989. The Consumer Credit Act ensures that consumers have full information. The noble Baroness, Lady Phillips, has mentioned this. The information must be made available to them before they enter into a commitment.
The measure provides a number of safeguards against unfair practices by lenders. It requires that the main terms of any agreement, including the annual percentage rate of charge (APR), must be set out clearly and unambiguously. Many noble Lords have criticised the APR but I believe that it is a very useful device to enable consumers to compare one form of lending with another. The legislation imposes controls on advertisements to ensure that they are not misleading, and it gives consumers the right to a cooling-off period when they sign agreements at home.
The noble Baroness, Lady Ewart-Biggs, asked why controls should not be put on lending. However, the Government feel that these are wrong in principle and ineffective in practice. In financial markets, as elsewhere, the best way to improve performance is by deregulation and the removal of artificial controls. With the increasing sophistication of the financial sector and the absence of exchange controls, such measures could not be made to work effectively.
Lord Graham of Edmonton: My Lords, the noble Lord referred to the APR being a handy reference point for consumers. Will the Minister say how the interest-free period within the first year will affect the real APR? If consumers need to understand that, is it not a powerful argument for better education on the subject?
Lord Strathclyde: My Lords, the noble Lord, Lord Graham of Edmonton, may well be correct when he refers to further education on the subject. I am not sure how he suggests that that should be done. However, his suggestions on how this kind of communication can be improved would be gratefully received by the Government.
Lord Graham of Edmonton: My Lords, I made one in my speech; namely, the encouragement and extension of consumer advice centres. No doubt he will refer to that in his speech.
Lord Strathclyde: My Lords, citizens' advice centres are only one weapon to use. I shall be coming on to that.
The noble Baroness, Lady Ewart-Biggs, referred to the story in the Sunday Times, as did many other noble Lords. I think that it has been dealt with very capably by my noble friend Lord Jenkin of Roding. I agree with him that there has been a great deal of exaggeration in the press. Like the noble Lord, Lord Graham of Edmonton, I await the response in the paper next week.
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My noble friend Lord Rippon of Hexham spoke of alternatives to interest rates, saying that the increase in interest rates only increases inflation. But inflation as measured by the retail prices index, as we know, increases. I apologise, my Lords, I think that I am muddling my arguments. But the inflation rate increases following interest rate increases, since the United Kingdom, unlike most other countries, includes mortgages in the price index. I support my right honourable friend the Chancellor of the Exchequer in the belief that, in due course inflation will come down as a result of these measures.
Lord Rippon of Hexham: My Lords, I do not quite understand the reference to putting interest rates in the retail prices index. Whether or not they are put in the retail prices index, people who have their mortgage rate increased will ask for more money.
Lord Strathclyde: My Lords, I was making a general point that the retail prices index includes the mortgage rate. But I also take the point of my noble friend. Interest rates are an effective weapon against inflation and, in an advanced and mature market economy such as that of the United Kingdom, we believe that they are the only weapon.
Lord Brocket: My Lords, will the Minister explain why he says that they are the only weapon? Why cannot we use some form of credit controls? They have been used in the past. They have been proven to work. I cannot understand why the only weapon is interest rates.
Lord Strathclyde: My Lords, I do not know whether my noble friend Lord Brocket was listening a few moments ago. I said that controls on lending do not work because they are wrong in principle and ineffective in practice. We need to deregulate and to remove these artificial barriers. Consumers who are increasingly sophisticated will quite easily find their way around any artificial controls and barriers that we put up.
Lord Rippon of Hexham: My Lords, I am sorry to interrupt my noble friend yet again. However, will he give attention to the almost criminal rates of interest which are being charged in many cases? Are the Government prepared to control what is virtually criminal behaviour, or does he wish to deregulate crime as well as everything else?
Lord Strathclyde: My Lords, I do not know why my noble friend Lord Rippon states that these rates are necessarily criminal. I regard a high inflation rate as being genuinely criminal. We are trying to reduce the steadily but slowly rising rate of inflation by using the interest rate. We feel that in the long term high interest rates will be far less damaging than the resurgence of high inflation that we saw in preceding decades.
Lord Callaghan of Cardiff: My Lords, I am interested, because the noble Lord has twice stated that the introduction of the kind of proposals that the noble Lord, Lord Brocket, puts forward offends in

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principle. I often hear that argument from the Government. Would it be possible to explain which principle it offends? I have never been able to understand it.
Lord Strathclyde: My Lords, the Government have many principles. As regards the deregulation of financial controls, since the Government came into power they have always felt that the best way forward was to bring down as many of those artificial barriers as possible that had existed for many years before. That is what they have done and that is why they are committed to a policy of using interest rates as the main weapon against inflation.
My noble friend Lord Brocket stated in his argument that interest rates were a blunt instrument which hit industry in a particularly hard way. But interest rates are effective because they are comprehensive. The household sector is now, for the first time, a substantial net payer of interest. Therefore rises in interest rates are bound to have an effect on its overall spending.
It is also quite wrong to suggest that interest rates and a strong exchange rate are having a detrimental effect on industry. A 1 per cent. rise in interest rates, even if sustained for a full year, costs industry far less than a 1 per cent. increase in wages. As has already been pointed out, investment is booming. In the first nine months of 1988 it rose at an annual rate of 10 per cent. for manufacturing and over 15 per cent. for construction, distribution and financial services.
The noble Lord, Lord Peston, mentioned that the balance of payments deficit and the consumer boom were also due to easy availability of credit. But the current account deficit is due to a variety of factors, in particular a very buoyant growth of domestic demand. But it is quite wrong to think that all of this is due to consumption fuelled by credit itself. It is important to remember that investment is still very strong and this is the start of a genuine increase.
Perhaps at this moment I could return to the subject of current legislation dealing with credit. Comprehensive though it is, the Government recognise that there are one or two aspects which could benefit from being tightened. Several important changes are therefore being proposed.
First, in relation to secured loans, the Government accept that borrowers are in particular need of protection when staking their home as security. We are aware that the concept of a secured loan is not widely understood by borrowers. Terms such as "home owners only" in advertisements do not always sufficiently alert the borrower to what is at stake. The Government are therefore proposing that the regulations governing credit advertisements should be strengthened to require a clear warning in respect of secured loans that the borrower's home may be at risk in the event of failing to keep up the repayments on the loan.
There have also been problems in relation to brokers' fees. Some credit brokers have been charging consumers disgracefully high fees for arranging loans. In some cases the first that the borrower knew about it was when he received his loan minus the fee that had been deducted. The
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Government are therefore proposing that advertisements placed by credit brokers must state clearly whether a fee is to be charged, together with the amount of the fee and its method of calculation. It is proposed that in such cases the APR must be calculated so as to include the broker's fees.
The Government also propose to strengthen the provisions of the Act which deals with extortionate credit. The Act already allows the court to re-open a credit agreement which it considers to be extortionate. However, that can be done only at the request of the debtor. We accept: the fact that borrowers who enter into potentially extortionate credit arrangements are unlikely to be aware of their legal rights and are unlikely to be legally represented in any enforcement proceedings brought by the lender.
The noble Lord, Lord Meston, will be pleased to hear that the Government are proposing to amend the Act to allow a court to re-open an extortionate credit agreement, without being asked to do so. That would best ultimately be left to the court to decide on the facts of the case. What may be extortionate in one set of circumstances may not be so under another.
Finally, the Government are proposing to make some important changes to the consumer credit licensing system. The changes would enable the Director General of Fair Trading to take more effective and immediate action in those cases where a trader's activities pose a serious threat to the public. Under those proposals those engaged in lending money to the public would be more strictly controlled than they are now because their licences would come up for renewal every three years as against 15 years as at present. Although other categories of business would be relieved of the need to be licensed automatically, the director general would have additional powers to take action against any businesses in those categories whose activities presented a threat to the public.
The noble Baroness, Lady Ewart-Biggs, mentioned loan sharks, as did a number of noble Lords including my noble friend Lord Rippon of Hexham. We are currently reviewing credit licensing. We propose to increase protection for consumers by removing the £30 small loan limit. All lenders will therefore need to be licensed. However, the law as it stands regarding loan sharks is generally adequate.
It should be pointed out that unlicensed trading is a criminal offence punishable by imprisonment. Threatening behaviour or harassment should be reported to the police, although the Government accept that there may be problems in that area and that sometimes it may be difficult to enforce the law. Generally speaking, there is already an excellent working relationship between the Office of Fair Trading and local authority trading standards departments in the administration of the licensing system.
The existing consumer credit legislation and the proposals to tighten its effectiveness even further amply demonstrate the importance which the Government place on the adequate protection of credit users. However, the Government do not accept that there is anything intrinsically wrong or harmful

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in credit. Borrowing and saving are important economic activities and we should all be worse off if they did not happen. During their lifetime most people go through periods when they want to save and times when they need to borrow. The noble Lord, Lord Diamond, echoed Polonius in saying, "Neither a borrower nor a lender be". But people benefit from the existence of the free and efficient market in savings and loans.
I heartily agree with the view held by the noble Baroness, Lady Phillips, that there is a responsibility on borrowers. No one is forced to have credit cards. I commend her comments to my noble friend Lord Brocket concerning his staff. The Government are conscious of the useful work which is carried out by the Money Management Council of which the noble Baroness is president.
It is a fact that only a small minority of credit agreements give rise to difficulty. For instance, as my noble friend Lord Jenkin of Roding said, Barclaycard has recently estimated that less than 1 per cent. of its customers have a long-term repayment problem. That figure is currently falling. Against that background must be viewed the fact that borrowing on credit cards, which is often singled out as a particular cause of consumer debt, accounts for less than 5 per cent. of total consumer borrowing. Of that credit card debt, an increasing proportion of customers are now repaying their outstanding commitments in full every month. Barclaycard has stated over the past three years the number of their customers doing so has risen from 40 per cent. to 45 per cent. Those are matters for encouragement not for despair or alarm.
The noble Lord, Lord Diamond, said that we must save more and that we have too much borrowing. Recent increases in the interest rate are good news for savers in general. The Government recognise the importance of saving and have recently taken a number of steps to encourage that. For example, the Chancellor of the Exchequer recently announced a new National Savings product, a capital bond, to attract savings in particular.
The Government firmly believe that the ready availability of credit is a good thing provided that there are the kinds of safeguards for consumers that we have in this country. Nevertheless, despite such considerable safeguards it is inevitable that some people will get into difficulties. More often than not it is caused by events which happen after the consumer has taken out a loan, used the credit or mortgaged the house. Events such as redundancy, divorce, separation, injury, serious illness, death and so forth, can seldom be planned for but they can have a devastating effect on the income of a family or an individual. Such cases are not examples of irresponsible lending or reckless borrowing but pure and simple hard luck.
The noble Baroness, Lady Ewart-Biggs, and the noble Lord, Lord Graham of Edmonton, gave statistics from the Stoke-on-Trent CAB. We believe that it not particularly helpful to analyse the statistics of CAB clients in that way. After all, people would not go to CABs for money advice if they did not
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already have a debt problem. We do not see the significance of the figure of 59 per cent. owner occupiers in this context because, nationally, less than 0·6 per cent. of mortgages are over six months in arrears.
The Government are mindful of such cases, however, and they consider it important that people who get into serious difficulties of personal debt should be able to obtain good, independent advice and help with their problems. It is in everyone's interest that someone with multiple-debt problems should be helped to rehabilitate himself. The debt counselling services provided by CABs are extremely valuable in that respect. The Government not only value most highly the advice and help provided by CABs but they support the service in a real way. It is worth reminding noble Lords that the DTI finances the cost of the association in England and Scotland by a considerable amount. I have the figures on hand. I shall not state them here but they are considerably higher than they were in real terms. In England and Wales the contribution has increased by 165 per cent. and in Scotland it has increased by 232 per cent.
Before I finish it would be remiss of me not to mention the steps which are being taken by the credit industry itself to deal with some of the concerns which have been expressed by noble Lords today. Of course, lenders have a responsibility to adopt sensible lending policies. It cannot be in the lender's interest to lend to borrowers whose ability to repay is doubtful, and lenders are adapting their methods and introducing further safeguards to avoid over-lending. I hope that the noble Lord, Lord Meston, will find that fact encouraging.
Barclaycard rejected some 36 per cent. of applications in 1987. Most lenders now inquire about borrowers before offering credit. There are moves currently to broaden the scope of the information held by credit reference agencies to include details of individuals' current commitments. That would enable lenders to identify cases of multiple debt.
The Visa credit card issuers—
Noble Lords: Order, order!
The Deputy Speaker (The Earl of Listowel): My Lords, the time allotted for this debate has now elapsed. Does the noble Baroness wish to withdraw her Motion?
Baroness Ewart-Biggs: My Lords, I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

British Shipbuilders
5.40 p.m.
Lord Strathclyde: My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Chancellor of the Duchy of Lancaster on British Shipbuilders. The Statement reads as follows:
"Mr. Speaker, with permission I wish to make a further statement about British Shipbuilders.

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"In my previous statement on 14th November, I was able to report good progress towards a successful sale of most of the remaining elements of BS, following that of Govan earlier in the year. That progress has continued. Agreement is now close for the sale of Clark Kincaid in Greenock, and of the Appledore yard in North Devon, and negotiations for the sale of the Ferguson yard at Port Glasgow are under way.
"I can additionally report today that I have accepted British Shipbuilders' advice that the preferred bidder for Marine Design Consultants should be the team led by the managing director. Depending on progress with new orders, their bid envisages work being continued both in their Sunderland and their Dundee offices. I have asked British Shipbuilders to press ahead with detailed negotiations.
"As I said on 14th November, the yards and other facilities I have mentioned account for five of the six owned by BS, and nearly two-thirds of those employed by them, when the process of seeking private sector purchasers was started by my predecessor last April.
"The remaining undertaking is of course North East Shipbuilders at Sunderland.
"On 14th November I told the House that, although none of the original bids for NESL had proved acceptable, BS had received three new expressions of interest. To allow time for these to be explored, I was therefore giving until the end of November to establish whether proposals could be developed which gave a firm basis for negotiation. This would entail a clear statement of the work envisaged for the yards, evidence of the technical and financial capacity of the bidder, and the prospect of arrangements likely to be compatible with the European Community Sixth Directive concerning state support for shipbuilding.
"In the event, two of those who had expressed interest prior to 14th November did not submit proposals. The third did so, and two other new proposals also came forward. All three have been carefully considered by British Shipbuilders and their independent financial advisers, against the criteria I set out.
"As a result of the examination, British Shipbuilders' clear advice to me is that none of these proposals could form the basis of a viable future for merchant shipbuilding in the Sunderland yards. None provides evidence of sufficient financial resources, given the major uncertainties of the shipbuilding market. None gives evidence of sufficient work for the future. All would entail levels of subsidy which, in one case in particular, could have faced difficulties under the Sixth Directive.
"Reluctantly and with great regret, I therefore have to tell the House that I see no further realistic prospect of maintaining NESL in its present form, and its shipbuilding yards will therefore progressively close as the current workload runs out. There remain possibilities, which I have asked BS to make every effort to explore, of selling
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Sunderland Forge Services, which currently employs nearly 400 people; and interest has also been expressed in one of the yards for purposes other than shipbuilding.
"Mr. Speaker, both my predecessor and I have made clear that, should it not prove possible for shipbuilding to continue on Wearside, we would bring forward a range of measures to assist those affected and to promote alternative employment in the town.
"There will be three main elements. First, we propose a new Enterprise Zone for Sunderland. As with existing zones, this would mean relief from rates for 10 years for all new developments, a simplified planning regime to help speed up such developments, and 100 per cent. capital allowances on new industrial and commercial development. My right honourable friend the Secretary of State for the Environment is urgently undertaking the necessary consultations with the European Commission, and will give details as soon as possible.
"Secondly, I have asked English Estates to start work immediately towards the early provision of over £7 million of advance factory space, over and above their existing commitments in the North-East. This will provide around 220,000 square feet of high quality factory space for new or expanding businesses.
"Thirdly, some £10 million will be made available over the next three years for a programme of measures to encourage new enterprise and employment opportunities in Sunderland. About half will be used to give financial support to new or expanding businesses. The other half will be used to assist the present employees of NESL to develop new skills and find new jobs. My right honourable friend the Secretary of State for Employment will provide services on the shipyard site to advise the workforce on opportunities for jobs and training, including help for those who wish to apply for immediate retraining.
"Taken together, the measures I have announced have a total cost of some £45 million. They will significantly reinforce what is already being done to promote economic development in the area through the Enterprise Initiative, regional assistance, and the work of the Tyne and Wear Urban Development Corporation, which will itself be announcing a number of new projects shortly as a result of the additional funding o ff 11 million for Sunderland announced on 25th November. I hope they will also further support and encourage the private sector initiatives which are under way or being considered.
"Mr. Speaker, the House will share my own regret that, despite every effort, it has not proved possible to find a way forward for NESL. But it must now be right to concentrate on securing a new industrial future for the town, and I believe we shall have the support of the House in what I have announced to that end."
5.47 p.m.
Lord Peston: My Lords, perhaps I may thank the noble Lord for repeating the Statement made in another place. I also understand that this is the first Statement which the noble Lord has read in your Lordships' House and therefore, as a matter of courtesy, I must congratulate him on that. Having said that, those are the only kind words I have to offer.
This is an extremely sad day for Sunderland and for the North-East in general. Perhaps I may ask the noble Lord whether he is aware that shipbuilding has carried on for 600 years on the Wear and that it has taken this Government to bring that to a close. Perhaps I may also ask the noble Lord whether he is aware, given the alleged concern of the Government for people in the North-East, that in that area some 60,000 jobs have been lost in the period that this Government have been in power. One wonders quite what is the nature of the Government's concern.
The Statement refers to enterprises that might have and did show an interest in taking over the shipyard. As I understand what has been said, eventually there were three possibilities; namely, one of the first three when two dropped out and then, as the noble Lord said, two new proposals. He says that they were considered against the criteria set out but they failed those criteria. I believe that the Government are obliged to say more than that simple statement that they did not meet the criteria. Perhaps the noble Lord could enlarge on the criteria employed and on the failure of the proposals to meet them. Perhaps he can explain what he means by:
"None provides evidence of sufficient financial resources, given the major uncertainties of the shipbuilding market".
What does that mean? What scale of financial resources did they fail to provide evidence of? Of course, the shipbuilding market is uncertain, but am I not right in suggesting that at the moment the uncertainty is in the upwards rather than the downwards direction?
The Statement says:
"None gives evidence of sufficient work for the future".
What kind of "evidence of sufficient work for the future" were the Government looking for? In particular the Statement refers to possible "levels of subsidy". Can we be told what those possible levels of subsidy were? Is there any particular significance to be attached to the word "could"? The Statement says:
"could have faced difficulties under the Sixth Directive."
The Statement does not say "would" have faced difficulties. Can we have elucidated for us whether the distinction between "could" and "would" is important? Am I not right in thinking that under the directive subsidy is certainly possible? Am I not also right in thinking that our partners in the EC find much more subtle ways of subsidising this and other sectors of their economies without running into these problems?
The Government referred to announcing measures at a total cost of £45 million. I asked about subsidies that might have been relevant. In that respect, how does the £45 million compare with the subsidy that
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might have been paid? How does that compare if we add to that £45 million all the unemployment benefit that no doubt will be paid out over a great many years?
The Government refer to a number of ad hoc measures that they are carrying out. However, one must ask why the Government do not plan these things. There are no problems in the North-East that are suddenly new. Why do we have the use of sticky plasters to deal with a major haemorrhage? Why do the Government lurch from one ad hoc intervention to another? Surely one could plan in such a way that one runs down the shipyard—if one has to run it down at all—exactly in line with the creation of new employment and new enterprise but no faster. That seems to me to be the minimal way to do it. Why have the Government not planned in that way?
Finally, the Statement ends with the extraordinary sentence:
"But it must now be right to concentrate on securing a new industrial future for the town".
I must ask the noble Lord this. If I were a worker of middle age in Sunderland what reason would I have for believing a word of what the Government say in that sentence? What have the Government done to suggest that the workers can have any confidence that the Government believe in the required interventions or would actually carry them out?
Lord Ezra: My Lords, I join with the noble Lord, Lord Peston, in expressing grave concern at the decision announced in the Statement and repeated in this House this afternoon. I put three specific points to the Minister.
First—and this links with what the noble Lord, Lord Peston, said—have the Government fully considered the full impact of this decision on Sunderland? There will be an immediate and direct loss of 2,400 jobs but I understand that 6,000 further jobs will be indirectly affected, with all that means to the families. The measures which the Government have enumerated will clearly take a long time to materialise. What will happen in the meantime while all that occurs? That is my first question.
Secondly, is not this closure taking place at the wrong time? There are now signs of a recovery in world shipping. It is known that the Sunderland yard is an advanced and modern yard. Why should we be closing a modern yard, strategically located, at a time when world shipping is picking up? That seems to me to be an extraordinary error in timing.
Thirdly, why is it assumed that recovery can take place only under private ownership? There have been impressive instances recently of a substantial recovery in publicly owned enterprises. I mention British Airways and British Steel, both of which were recently in the news. The chairman of British Seel has been awarded recognition as being one of the leading industrialists in the country. Until yesterday he was in public enterprise.
To sum up, therefore, I feel that this is a most unfortunate decision, the implications of which do not seem to have been fully worked out and the timing of which is wrong. I feel that those who work

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at NESL should be given an opportunity to take advantage of the recovery in world shipping.
Lord Strathclyde: My Lords, I am grateful for the words of the two noble Lords who have spoken. I have to say at the start that the Government take no pleasure in making this announcement about North-East Shipbuilders Limited. It is a great sadness after 600 years that the yards have to close, but I shall seek to justify that in the next few moments.
First, the noble Lord, Lord Peston, asked why we were closing the yards since there seemed to be an upward trend in orders. The answer is relatively simple. For years shipbuilders have been forecasting the next market peak and that it is always but a few years away. Each time those forecasts are revised downwards, pushing better days further and further away. Meanwhile, more low cost nations enter the scene. North-East Shipbuilders represents a mere fraction of world capacity and it is only significant—I say it is significant and important—in local towns, which is why we have to seek new options for the people who work in the area.
The noble Lord also asked about the Sixth Directive. Subsidies are allowed in supporting shipbuilding in European Community member states, but there are strict limits on how much subsidy can be provided. All member states, therefore, are similarly restricted and it did not appear that we, as a Government, would be able to subsidise the yards sufficiently for them to continue building ships.
As for the criteria concerning the bids from private industry, the proposals did not show evidence of a sufficient forward workload to fill the yards, nor of a sufficient financial ability to demonstrate that the yards could recover from their severe loss-making position. In the past year North-East Shipbuilders made a loss of £56 million on a turnover of only £69 million. Over the past five years it has been subsidised by the taxpayer to a total of over 50 per cent. for each contract carried out.
I was asked why the Government sought private ownership in the first place. British shipbuilders in general, and NESL in particular, have lost literally hundreds of millions of pounds—just over £1.9 billion over the past 10 years. That includes massive losses on contracts over and above the subsidy allowed. The Government felt that this could not go on for ever and that we had to look at new options not just for the taxpayer but also, genuinely, for the people of the North-East.
Reference was also made to the new packages we are to introduce in the North-East, and evidence was requested that they will actually work. That evidence is clear from similar packages introduced at the time of the steel closures. For example, Consett closed with a loss of 4,370 jobs, Corby with 6,000 jobs, Scunthorpe with 5,800 jobs and Shotton with 8,500 jobs, but the packages we introduced there have been very successful. In March 1986 unemployment in those areas stood at 17·6 per cent., 20·3 per cent., 17·5 per cent., and 19·5 per cent. respectively. Now they are down considerably, to between 8·7 per cent. and 13·1 per cent. That is what we want to do in
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Sunderland. I sincerely hope that we shall be successful. I trust that the noble Lords from across the House will join with me in hoping that these packages will help to regenerate the economy of the North-East.
6 p.m.
Lord Dormand of Easington: My Lords, is the Minister aware that this is an utterly disgraceful decision as regards Sunderland? This is a case of sheer dogma placing money before people. We on this side of the House are as concerned about economic efficiency as members of the Government and other noble Lords opposite. But there are instances where this does not apply. is he aware that unemployment for Sunderland is 27 per cent.? Does it not mean anything at all to the Government that a town like Sunderland is so affected? I live near Sunderland and have done so all my life, so I have some idea of the ethos of that town.
Can the Minister say something about the Cuban orders? What is significant is that nothing was said about them. The information that some of us have is that those orders were tied up and that they were ready to go. But we have had no reference or detail as regards that matter today. Do the Government not place any importance at all on the possible future recovery of the United Kingdom shipbuilding industry? My noble friend referred to this, as did the noble Lord, Lord Ezra. It seems that, despite the information we are getting from the Minister tonight, this is a matter that is probably more important than anything else to be said on the subject.
There is the question of alternative employment. The Government's record on this is a myth. The Minister referred to Shotton, Corby and three or four other instances, yet in this House we never get the actual figures. I can go a little further because I thought the Minister might refer to Consett in County Durham, which is near the county of Sunderland. Sunderland used to be in County Durham, as he may know. The steelworks in Consett were abolished as a result of this Government's actions, and we are constantly informed that those jobs are being replaced. I say to the Minister and to the Government that that is simply not true. It is not happening. Yet today we are presented on a plate with the measures as regards the enterprise zone which will make a minimum contribution to solving the problem that we have before us today. That and the other proposals will simply not meet the needs.
Finally I repeat the important point made both by my noble friend and by the noble Lord, Lord Ezra. Why cannot the Government have an interim period, perhaps for the Cuban orders, so that at the same time as alternative employment is increasing (if it does increase) the Sunderland shipyard may be gradually run down? I hope that these are practical and sensible suggestions and that the Government will have second thoughts.
Lord Strathclyde: My Lords, the noble Lord rightfully sounds annoyed at what has been going on in Sunderland. The government officials in the Department of Trade and Industry and the Chancellor of the Duchy of Lancaster have spent

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literally months trying to find ways to keep the shipyards open. The officials have travelled the world talking to different people and different bidders for potential orders to see whether any can find their way to the North-East. Unfortunately this has not been the case.
The noble Lord said that we were being dogmatic about this approach. Neither we nor the European Community could have tolerated British Shipbuilders' losses for much longer at NESL. As he knows well, the Danish ferry programme collapsed and there was strong reason to doubt that British Shipbuilders could have won the Cuban order, at least without further substantial losses. The North-East yards have lost more than £100 million in the past three years. Furthermore, as regards the Cuban order, the BS chairman doubts whether the order could have been secured against fierce international competition, especially given deteriorating costs over recent months.
In addition, there is still the corporation's appalling record of losses over and above the estimates to be considered. There was an average of more than 20 per cent. on costs over and above the European Commission limited assistance on ships delivered in the past three years and between 12 and 17 per cent. on costs for the ships most recently delivered to Cuba.
Finally, the noble Lord mentioned Consett. In my initial reply I mentioned Consett also but it was in percentage terms, which are sometimes difficult to grasp when they are said quickly. I point out to him that 4,500 new jobs have been created in Consett since the steel closure. That is a sign of what we can do in the rest of the North-East and it is also a sign that unemployment is going down right across the country.
Lord Elliott of Morpeth: My Lords, I suggest to the noble Lord, Lord Dormand, who shares with me a great interest in the North-East of England from which we both come, that the interim period for which he asks for northern shipbuilders is something that we have had. I assure my noble friend that to the best of my knowledge there is considerable appreciation in the region that everything possible has been done by all concerned, including the Government, to keep these yards open if humanly possible. It has been found impossible to do so. I believe that the decision now made is the right one and in the best interests of the people of that town.
There must come a moment when it is wrong to keep in being an industry which has no future. There must come a moment when it is wrong to continue to train young people in a town like Sunderland for an industry that has no future. I believe that that moment has come and that we must face facts. I heard on the radio this morning comment being made by workers in the shipyards as they were going to work. Quite a number were saying that it had to come and that at least a decision has been made. Thank goodness the decision has been made one way or the other. The period of indecision has been bad for the region.
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I suggest to my noble friend that the announcement today of the extra measures of support for Sunderland are most welcome, including the creation of a new enterprise zone. Those existing in the region are so successful and they have created much new employment. There is the suggestion that there should be new encouragement for enterprise and initiative, as there has been in other parts of the region. I very much agree with my noble friend about Consett, where unemployment after the closure of the steelworks there in September 1980 meant immediate unemployment for something like 14,000 people. The recovery of Consett is a minor miracle within our region. I am quite certain that with the right spirit on the part of Government and of those agencies set up to create new employment to assist such places as Sunderland to have a new future, and if it is engendered by government assistance, it will mean that Sunderland too has a considerable future. I certainly wish it well.
Lord Strathclyde: My Lords, I am genuinely grateful for the intervention of my noble friend. He is absolutely correct in saying that everybody who has been concerned with the issue of the North-East has worked extremely hard to get a satisfactory result from the closure of this yard. The Member of Parliament for Sunderland, North, Mr. Bob Clay, has tried particularly hard to see what could be done. Ultimately we feel that there comes a point when it is no longer credible to go on trying. We owe it to the people of Sunderland to end the uncertainty that has plagued their lives for far too long and now to offer the town a new future. The town is not short of committed business people willing to do their utmost and to make it work. I have been assured of the role that they are prepared to play. The opportunities will be there if people wish to take them and we shall be doing our utmost to make sure that the money and infrastructure are available to help to create those new jobs.
Lord Glenamara: My Lords, is the noble Lord aware that if the Government decided to pull down Westminster Abbey the noble Lord, Lord Elliott of Morpeth, would stand in the middle of Parliament Square saying, "Trust Mrs. Thatcher; this is for the good of the country"? Is he aware that most of us from the North-East are shocked, appalled and disgusted by the Government's decision to disperse for ever this magnificent labour force which is well known to many of us, as I am sure it is to the right reverend Prelate who was a dedicated curate in Sunderland.
The noble Lord has not told us the size of the problem. The noble Lord, Lord Ezra, has told us. It involves not only the 4,500 men who work in the shipyard but all the people who depend on it. This amounts to more than 10,000 people. The noble Lord, Lord Dormand, has told us that unemployment in Sunderland is currently 27 per cent. What will happen when these 10,000 people go on to the dole? The figure will not be 27 per cent. It will be 30 per cent., 37 per cent. and 40 per cent. for male unemployment. Is the noble Lord just shaking his head or is he tired? Unemployment will rise to about 40 per cent. That is quite appalling.

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The noble Lord has said that the shipyard is uneconomic. Will he tell me where there is a farm anywhere between John O'Groats and Land's End that is economic? Will the noble Lord tell me of one? There is not one. In the case of farming we do not refer to losses. We subsidise farming and rightly so. I agree with that. However, if we can subsidise every farmer in the country, why cannot we subsidise the shipyard workers in Sunderland?
The dispersal after 600 years of shipbuilding in this northern city is a tragedy. The Government ought to be thoroughly ashamed of themselves.
Lord Strathclyde: My Lords, the noble Lord says that he is shocked and disgusted by the way in which the Government have behaved. I have to remind him that £1.9 billion of taxpayers' money has gone in support of British Shipbuilders since 1979.
Lord Glenamara: How much has gone in support of British farmers?
Lord Strathclyde: My Lords, British farming is an entirely different issue. The noble Lord is quite entitled to have a separate debate on that subject. Today we are discussing North-East shipbuilding and British Shipbuilders as a whole. Enormous funds have been poured into them over the years.
Lord Glenamara: And into farming.
Lord Strathclyde: My Lords, we have explored every single avenue available to us. We have considered 13 approaches and extended the deadline twice but none can offer a secure future for NESL. That is the reality of the situation. Furthermore, as to the figures mentioned by the noble Lord concerning unemployment, they exaggerate the dependence of outside jobs on the yard. They take a wholly unjustified view of the prospects for new employment in the town. They greatly exaggerate what is needed to revitalise the economy of Sunderland. I need not go on.
We do not believe that the closure will blight the area. On the contrary, it is an opportunity to create new direction in the local economy, not a dying area which it has been in recent times—
Lord Glenamara: Rubbish!
Lord Strathclyde: We should see, for example, the recently announced major investments by Gold Star, the South Korean electronics company. It is hoped to create up to 1,000 jobs for an £8 million capital investment in the region. That is the direction to go in and I sincerely hope that it will be successful.
6.15 p.m.
Lord Greenway: My Lords, if the present trend continues we shall shortly find ourselves without a merchant shipbuilding capability. Is there not a strategic reason for keeping some of the yards in being, if only in a mothballed state, so that if ever the time came when we needed to build ships in a hurry
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we had somewhere to build them? One cannot produce a shipyard out of a hat.
Lord Strathclyde: My Lords, in reply to that point I have to say that I have never heard of ships being built in a hurry in any case. It always takes a long time. I cannot believe that the situation would arise in the future whereby we had to do exactly that and build them in a hurry.
Lord Peston: My Lords, I am sorry to intervene a second time but I asked a question of fact in my original intervention. I asked the noble Lord to give us all the relevant figures so that we could compare the costs of closing down the shipyard with the costs of keeping it going. He made a number of qualitative statements and a number of other statements with no evidence. I asked for information which would be enormously helpful to your Lordships. If the noble Lord does not have the information, I am willing to accept it subsequently. Central to this whole discussion are answers to my first questions.
Lord Strathclyde: My Lords, I do not appear to have that information at hand at the moment. I am not sure which figures the noble Lord wants. If he wants to know how the Government calculated that it would be cheaper to close the yards than to keep them open, the answer is that the disposal to any of the new parties would have cost British Shipbuilders more than closing the yards. The advice that the Chancellor has received is that none of the bids offers a commercially viable basis on which to negotiate a future for NESL. The question of quantities should be taken into account but does not necessarily arise. I suspect that the noble Lord wants hard figures.
Lord Peston: My Lords, if I may dare to interrupt the noble Lord a third time, which I do not care to do, I should like the numbers. I should like to know whether it is cheaper to close the yards down than to keep them in public ownership, with I agree a degree of subsidy. If we are to discuss this sensibly we have to look at the figures. We cannot go ahead with broad remarks like, "It was not viable". That is a meaningless statement. If the noble Lord does not have the figures I shall have to have them later. However, they are central to the issue.
Lord Strathclyde: My Lords, cost comparisons are irrelevant in themselves until one has a bid that might offer a viable future for the yards. We know the criteria we have used to define viability.
Lord Williams of Elvel: My Lords, the noble Lord has not understood my noble friend's question. It is not the comparison between the close-down costs or the sale costs; it is the comparison between the cost of keeping the yard going and the cost of the Government's programme.
Lord Strathclyde: My Lords, if I misunderstood the noble Lord, Lord Peston, 1 am sorry. I do not have the figures at hand. However, the package announced today is designed for the longest term. We have felt for a while now that the shipbuilding yards will not be viable forever.
Lord Blease: My Lords, I want to conform with the conventions of the House on Statements of this kind and so I shall put my points quickly. Concern has been expressed about the unemployment that will arise in shipbuilding in the North-East. That is a tragedy. However, the question is much wider. The Government's policy has allowed shipyard after shipyard to drift on to the rocks. It has allowed more than that. The Government are sinking them before they have had an opportunity to be saved. I cannot see how they can separate the shipbuilding industry of the United Kingdom, an island community, from the shipping industry.
The industry has experienced a complete decline. We are allowing other nations to build ships for us. The Government have no policy either for shipping or for shipbuilding. This is a wide issue. If we do not have shipping interests, we will not have shipbuilding. The Government should have a rolling programme of taxation to allow shipping interests to be promoted in the United Kingdom instead of allowing them to be taken over by other interests from Greece and Japan.
I should like to put it to the Minister, in view of the fact that this shipyard has been closed down, that other shipyards are closing and losing their link with shipping. Will he convey to his right honourable friend the Minister that two parliamentary Select Committees, representing all parties in this Parliament, have gone on record and expressed deep concern about shipping and shipbuilding? Further, will he ask him to initiate or commission an independent study of the needs of shipping and shipbuilding in the United Kingdom?
Lord Strathclyde: My Lords, I shall certainly pass on the noble Lord's suggestion to my right honourable friend the Chancellor of the Duchy of Lancaster. However, I must point out to him that as regards the link between shipping and shipbuilding, NESL has built very few, if any, ships for UK owners in recent years. Therefore it appears that there is currently no great link between the two in the North-East.
Further, it has been suggested that there has been some kind of conspiracy to wipe out merchant shipbuilding in this country. Nothing could be further from the truth. We would have been delighted to have made a different announcement this afternoon. After all, we were able to sell Govan to private industry. I hope that that example will be followed by other facilities.
There is also the shipbuilding industry in Northern Ireland, about which a question remains. We have successfully privatised many yards and this shows—indeed, I hope it proves—that the Government have no intention of letting British shipbuilding drift on to the rocks.

Business
Viscount Davidson: My Lords, I should like to make a further statement about the arrangements for the debate which is now to follow on mental illness.
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The name of the noble Lord, Lord Taylor of Gryfe, has been inadvertently left off the speakers' list. The noble Lord proposes to speak in the gap and the maximum time for each speaker is accordingly reduced from 11 to 10 minutes.

Mentally Ill and Handicapped
6.22 p.m.
Lord Carter Lord Carter rose to call attention to the level of assistance available to people with mental illness or mental handicap moved from residential care into the community; and to move for Papers.
The noble Lord said: My Lords, the debate which we are about to have concerns one of the most poignant problems in a modern society: the fact that a large number of our fellow citizens—I use the word "citizens" advisedly, because citizens have rights—do not have the same rights and level of comfort and care as the rest of society. I refer to people who are suffering from mental illness or mental handicap moving from hospital into community care—or, as some would argue, community neglect.
As the Griffiths Report on community care published in February of this year pointed out:
"At the centre, community care has been talked of for 30 years and in few areas can the gap between political rhetoric and reality on the one hand, or between policy and reality in the field on the other hand have been so great".
There is certainly no lack of evidence, reports and proposals for action in the field. The Social Services Committee in another place, reporting in 1985, pointed out that while there is,
"a general recognition that the days of the largest hospitals are over, there is no consensus about community care".
That report produced no fewer than 101 recommendations for action. The Audit Commission reported in 1986. It recommended a proper division of resources and responsibility between central government, local authorities, the private sector and the voluntary sector.
Finally, as I said, we have the Griffiths report issued in February this year. It produced a range of proposals for the organisation of community care. The response from the Government has been a deafening silence. Meanwhile long-stay hospitals are being run down or closed before proper community services are available. That has resulted in some patients experiencing a worse quality of life than they had in hospital.
There is a confusing and conflicting overlap of responsibilities and provisions involving the hospital service, the health authorities, the voluntary sector, the private sector, the central departments of government and the social service departments of local authorities. In such a situation there is bound to be a misuse of resources.
There appears to be a grave mismatch of resources to need: some 90 per cent. of the expenditure on mental health services is in the hospital services and 10 per cent. on community care. However, the demand is almost exactly the other way round; namely 90 per cent. of those requiring help are in the community, while 10 per cent. are in hospital.
For each of the psychiatric nurses working in the community there are about 25 working in hospitals. In a large mental hospital that I know of in Wiltshire, there is a nurse-patient ratio of almost one to one; there are 350 nurses for 500 patients. In the same area there are 22 psychiatric nurses in the community with a caseload of 30 to 40 patients each.
On the very important question of the closure of hospital beds, there is a deal of confusion over the number of mental health beds which have been closed, and are to be closed, and there are conflicting figures from different sources. The estimates for closures during the last 10 years range from 25,000 to 40,000 beds. I hope that when the Minister responds to the debate he can provide the most up-to-date figures from the Government for the actual number of closures over the last 10 years and for the planned closures in, say, the next five years.
However, whatever the figures for closures are, compared with the closure of the tens of thousands of hospital beds, what is clear is that only some 9,000 of day care places have been provided in the past 10 years. The problem is bedevilled by the not unusual situation of different departments of central government pulling in different directions.
The Department of Health has responsibility for encouraging and promoting the provision of care in the community. At the same time, the Department of the Environment ratecaps the local authorities which increase their expenditure on community care, while the Department of Social Security, through its system of board and lodging payments, tends to guide people towards a form of semi-institutional care in residential homes and yet at the same time administers the new Social Security Act which in some cases has resulted in substantial loss of benefit for former patients.
On the question of board and lodging payments, there is concern about the proposal from the Department of Social Security to transfer the residents who are in the voluntary sector hostels from the system of board and lodging payments on to housing benefit. It has been argued that such a change will undermine the finances of existing schemes and that many of them will be forced to close.
The schemes have been specifically developed by housing associations and voluntary agencies as a part of the Government's initiative in community care. The opportunities for people to move into the community could be seriously reduced and, indeed, it is possible that many would have to stay for an unnecessarily long time in residential institutions at an increased cost to the Exchequer. Although I welcome the recent announcement of Mr. Nicholas Scott, the Minister for Social Security, that he has deferred the proposed change beyond April of next year, there is still considerable concern that the department intends to go ahead with the change much later in the year.
Housing is an area where the problem is most acute. I think that we would all agree that every citizen has the right to a decent roof over his or her head. However, it is clear that substantial numbers of
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former hospital patients are ending up in unsuitable temporary accommodation, in hostels and in night shelters or are indeed homeless.
The Salvation Army estimates that up to three-quarters of the male inmates of its hostels may be suffering from mental illness. The St. Mungo Housing Association notes that the number of former and long-term psychiatric patients resident in its hostels has increased from 10 per cent. to nearly 50 per cent. Emanuel House in Nottingham, which is a large hostel for the homeless, has seen a substantial increase in the number of former patients from mental health hospitals who are seeking hostel accommodation.
In a recent article in the Guardian there were heartbreaking stories of former hospital patients who were literally starving and who were somehow getting themselves back to hospital, the only haven that they knew. This is just one case of many: Robert cannot think straight, let alone manage to budget on the pitiful £25 a week that he collects from social security benefits. Halfway through the week he has run out of money and is begging for food. The hospital sister has been doling out her own money to desperate outpatients. She says they tell her that they have no money left. It is found that they have not eaten for days.
Only yesterday I had a discussion with a social worker in South London, who described two of the many cases with which he had to deal. One concerns a man of 62, who is leaving hospital after 33 years. He has few skills to enable him to look after himself outside. He is very frightened of the outside world and is desperately insecure. The other case is that of a woman of 40 sufferering from severe brain damage as a result of meningitis. She has an attention span of only half an hour. Her child is in care. She has no idea of how to manage money. She relies on charity to augment her benefits of £40 a week. These are examples of two people who are utterly reliant on a good system of community care.
There is an inner city problem overlaying the other problems that I have described. I referred earlier to the mental hospital near my home in Wiltshire. This has been halved in size over the last 20 years from 1,000 to 500 patients. I discussed the situation with a senior member of the staff in preparation for this debate. He said that there are problems, although possibly fewer than in the cities and conurbations. The hospital serves a rural area which has no town with a population larger than 10,000 to 12,000 people. In that context community care gets a chance to work. The pressures on the patients, hospital and community are much less than in the inner cities.
It is not possible to do more than outline the problem in the time available. I know that other speakers will wish to cover certain aspects in more detail concerning homelessness and employment.
We must remember that this problem will grow. It is estimated that by 2000—only 12 years away—the number of people over the age of 75 will increase by 250,000. If that is so, and in the absence of the finding of a cure, each social service department may have to cope with an extra 600 people with senile dementia.
I am deliberately taking less than the time available to me to give more time to other speakers. There are two under-funded systems dealing with mental health, one in the hospital service and one in the community. The Government must produce their response to Griffiths. Any further delay will be scandalous. That response should include plans to ensure that the rundown or closure of hospitals must not take place without detailed plans for the care of each person to be discharged. New funds must be made available for allocation to community care. The health authorities and local authorities cannot be left to juggle their existing funds to buy community care. There must be some form of transitional bridging finance as hospitals run down and community care builds up. Proper information must be available so that we know what happens to patients when they leave hospital. The Audit Commission, reporting in 1986, pointed out that 37,000 patients had left hospital in the previous 10 years, but nobody knew what had happened to the great majority of those discharged.
In New York it is estimated that 30,000 former psychiatric patients are living on the streets. The Government have a direct responsibility to see that that does not happen here. The first signs that this is happening are already apparent. There is a clear responsibility on Government to provide the leadership and resources that the situation demands and to cut to the heart of the problem and help to solve it. My Lords, I beg to move for Papers.
6.35 p.m.
The Earl of Balfour: My Lords, I am grateful to the noble Lord, Lord Carter, for having initiated the debate. I honestly admit that I did not expect to follow him in the debate. All that I wish to do is to raise one or two of the difficulties involved in looking after those who are of low mental intelligence or mental ability.
One of the troubles in bringing into the community a person who may have been wonderful a few years ago but who is now mentally away with the fairies is that such people cease to think logically. The disastrous effect of their ceasing to think logically is that they distrust nearest and dearest. From that moment on, nearest and dearest have little chance of helping.
Another aspect of bringing such people into the community is that they often have a tremendous fear of being left alone, particularly in the evening when it is dark. In NHS hospitals I have discovered that they are put into wards; they may be screened off so that they cannot see each other but, if one of them falls out of bed, at least the others can ring a bell and say "Old Mrs. So-and-so has fallen out of bed". Although they may be mentally away with the fairies, they all have an inbuilt will to live.
There is also a strong need for regularity of life and care. This care needs to continue in the wee small hours between dinner time and breakfast, almost as much as at any other time of the day. When mentally deficient people are brought into the community, it is almost impossible to give them the regular, institutional type of life of hospital where breakfast,
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lunch, tea, dinner and bedtime are at set times. Perhaps I may personally say—I have a vested interest: my wife is in a home—thank God for the National Health Service!
There is another unfortunate aspect that affects those people who are mentally cracking up. Although the science of psychiatry has developed tremendously in the past 20 to 30 years in regard to people who are in the process of going round the bend, for want of a better phrase, another problem is that few psychiatrists under the age of 45 really know what questions to ask. I say this without any criticism of their work. It is purely and simply that they have not seen enough of life to know the right questions to ask. If a psychiatrist could be with the patient for, say, two to two and a half hours—in practice, of course, that is far too long a period—he or she would realise that there is something definitely wrong. Many people who are cracking up mentally play the same gramophone record again and again. It is not until they reach the end of that gramophone record and start to play it all over again, that you realise that they are absolutely away.
Equally, with doctors and gynaecologists and such people we are rapidly developing in science. People can be seriously affected by drink or drugs, but if they can receive effective treatment in hospital early enough they often can be put back into society and live as perfectly normal people. Women tend to suffer from this a little earlier than men, but equally a number of men I have known—and no doubt your Lordships have too—have suddenly gone berserk and have wanted young things of 16 or 18 years of age around them when they have reached 50. That is purely and simply because they are going through the change of life. A man can go through a worse change of life than a woman. If only they could see a good doctor, they can have hormone injections which will put them back on the right tracks again.
Lastly, we are concerned for people being in the community. In the proper mental hospitals the doctors may take advantage of the Mental Health Acts if somebody walks out and may slap on a three-day order to bring them back into hospital again. In any other walk of life, including that in ordinary hospitals, any patient has the absolute right to discharge himself. Where people are mentally away this is a danger to them and perhaps to other people.
My last appeal—and I have been speaking for rather a long time—is to the social security services. While they do a wonderful job, I beg of them not to be quite so secretive. When I, as a Member of the House of Lords, or when district or county councillors ask if those services can help they could not be more courteous or more polite, and they say "You just leave it to us. We will deal with it all." They refuse to take advice. I admire the social work dealt with by local authorities, but I ask the DHSS to accept advice from people when it is given from genuine feelings. These are a few thoughts. I have said enough.
6.43 p.m.
Lord Winstanley: My Lords, nobody could overemphasise the importance of this subject, nor could we sufficiently underline the topicality of the

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debate, and I am most grateful to the noble Lord, Lord Carter, for initiating it. I am also grateful to the noble Lord for sitting through and listening most attentively to a short debate on Thursday last on an Unstarred Question into a specific case, that of Sharon Campbell. It is quite clear that that debate has borne fruit on this side of the House. I await with hope to learn that it has done so on the Government Benches as well.
None of us could deal with the Griffiths report, which is a large document, in a 10-minute speech. I shall not attempt to do so. It is the implementation of Sir Roy's proposals, or of other things in their place, that we are debating. We know that some of his proposals are not all that acceptable. I referred to one the other day. Sir Roy Griffiths believes that community care should be vested in the hands of local government. With the Government's present attitude towards local government it seems to me to be highly unlikely that that prescription will be dispensed. But we must have some other prescription if we are not to have that. Somebody must take responsibility for community care.
The chief medical officer, Sir Donald Acheson, in a magazine called Health Trends in 1985 begged for clarification of the term "community care". He said that it had developed too many meanings and had acquired "an ethos of virtue" without any certainty of what it meant. What does it mean? Can a hospital be part of the community? Does it mean care in or by the community?
I have discovered the DHSS definition written in a document. It is:
"the provision of alternatives to long-term institutional care".
In 1984 the noble Lord, Lord Trefgarne, speaking for the Government on that occasion, put the policy aim more simply as:
"to move out of hospital those people who do not really need to be there".
As a doctor and as a Member of your Lordships' House I fully support that stated aim, but I say without hesitation that it cannot be achieved without satisfying the DHSS definition of community care too. I have just quoted that definition and I repeat it:
"the provision of alternatives to long term institutional care".
the trouble is that in many areas the alternatives are not there. I fear that some of those which are present may soon disappear.
I have been much disturbed by a letter which I received from a body called the Special Needs Housing Forum, which I am sure has been sent to other noble Lords. It says with regard to existing community services:
"This threat arose when someone in the Department of Social Security decided to *do something' about the 25,000 people who stay in these special needs hostels.
Instead of allowing them to go on receiving Board and Lodging payments plus a small personal allowance, they would be switched to Housing Benefit and Income Support.
This would cut their weekly income drastically and mean that hostels couldn't afford to go on providing a service.
It could cut half the available hostel places at a stroke. And even now, demand for such places far outstrips supply".
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It is not just hostels or even day care centres which we need, and we need them desperately if the policy is to succeed. We need financial support for those individuals and for their families. We need proper financial support for the families who have to care for mentally handicapped children or for mentally ill adults who are discharged into the community. In addition they require human support—social workers.
I was deeply impressed by a speech in your Lordships' House yesterday by the noble Baroness, Lady Faithfull, about the need for improved training of social workers, particularly when they have to deal with such very complex cases. Handling schizophrenic patients is an extremely complex business. We all remember the old days when there was a change from the so-called generic social workers. The specialised social workers all became generic social workers. In other words they all had to do everything. Yet the length of the social worker's training remained at two years. There is clearly, as the noble Baroness, Lady Faithfull, illustrated admirably yesterday, a need for improved training of social workers. I am certain that that is a prerequisite to any success for the Government's policy of closing some of the large institutions and discharging those patients into the community.
The future of community care as a concept or as a reality does not depend only on the Government—though it depends to a considerable degree on the Government. It depends on us all. It depends on many voluntary bodies which do splendid work and continue to do that work in this field. We are all aware of such bodies and many noble Lords do some of that work themselves. MIND is one such body doing splendid work particularly in relation to the Mental Health Act and the Mental Health (Amendment)Act. MENCAP does admirable work for the mentally handicapped and the Schizophrenia Fellowship focuses on a different area and on patients of a somewhat different kind. The noble Earl, Lord Balfour, in his most enlightened speech was dealing much more with the problem of looking after the mentally handicapped. But the problems of looking after the mentally disturbed or schizophrenic patients are quite different.
Perhaps I may be philosophical for a moment. I think that other noble Lords as well as myself may remember the words of Sir Isaiah Berlin a long time ago when he very perceptively differentiated between two kinds of freedom. He talked about negative freedom (freedom from) and posii:ive freedom (freedom to). I should not dream of criticising any of the voluntary bodies which I have just mentioned but, if I may say so with all possible respect to the workers in MIND, with whom I have worked very closely on the Mental Health (Amendment) Act, I believe they have tended to exert most of their influence on the freedoms from, which are very properly the patients' rights. They are paramount and we must consider them: freedom from incarceration in hospital, freedom from compulsory treatment and similar freedoms. But perhaps the voluntary bodies did not give quite enough thought to freedom to.

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In the tragic case that we discussed on Thursday we had an example of a schizophrenic patient being discharged into the community from an institution. She was given freedom to express her distress and hostility in any way she chose and she chose a way which had tragic consequences for a social worker.
We must think about these things on both sides. I know that much thought will be given to the mental handicap side of the issue. I should prefer to move for a moment to the other side about which I know a little more. I hope that this policy of community care succeeds, let me be quite clear on that. However, in order for it to succeed we must think about the other side of the equation as well. By all means include the rights of the patients, they are paramount and must be protected at all times. Nevertheless we cannot ignore the impact on communities or on families of the discharge into the community of mentally disturbed patients and in particular patients suffering from schizophrenia. They have a tendency, as part of their disease, to stop taking the treatment once they feel better, with serious effects. Having been discharged, they stop having their treatment and then their condition deteriorates and they can become a danger to themselves and to other people.
In conclusion I must say that it is a laudable aim to see that patients who do not require to be in hospital should not be in hospital. That is in jeopardy because the steps are not being taken to make absolutely certain that communities are safeguarded and that patients are safeguarded as well. Unless those steps are taken by the Government, by local government or by anybody else soon and effectively, we shall see movements and campaigns in the other direction. There will be movements from the community to suggest that we rebuild some of the large institutions and lock people away again in the manner in which we used to. That would be tragic and would be deeply regretted, but if it happens, the responsibility will lie at the door of the Government, who have failed to implement the recommendations of the Griffiths report.
6.53 p.m.
The Lord Bishop of Southwark: My Lords, last May we debated the needs and problems of the mentally handicapped, the mentally ill and their families. I think it is a measure and a reminder of how urgent and important this matter remains that under the stimulus of the Griffiths report we are debating it again. It was emphasised then by many speakers that moving people from residential care into the community should not be seen as part of an economy drive. It may even cost a little more in financial terms, although the continuing lack of research and monitoring makes this a very difficult matter to assess accurately. That is one of the points which I think we ought to be making on an occasion like this. Again, we need to distinguish between the mentally handicapped and the mentally ill. The mentally handicapped are sometimes described as those who have severe learning difficulties. They will probably require care all their lives in a fairly stable context, sometimes not that dissimilar from the physically handicapped.
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On the other hand, the mentally ill may require a lot of care at one stage and little or none at another. Certainly the pattern will vary for many patients. The public often assume that these two groups—the mentally handicapped and the mentally ill—are exactly the same. I think that they need help in understanding that people with mental handicaps are unlikely to behave in the violent and sometimes bizarre way that someone suffering from a severe onslaught of schizophrenia, for instance, might display, particularly if that person lacks suitable medication and help.
Community care at its best offers a more flexible regime than large institutions have been able to offer. However, here again we need to recognise that, as has already been pointed out, the phrase covers quite a large spectrum, from people who are living with their relatives—and this will probably remain a very large proportion—to people who are living in small, family-type houses, right in the streets with others, through to clusters of small houses on one site which may be former hospital grounds. Alongside that sort of permanent residential accommodation in the community, people will also be using and needing day centres for that individual professional help which they require all the time.
I think I can best illustrate some of the points that I want to make this evening from several stories, all of which come from my diocese of Southwark, which is South London and East Surrey. The first story concerns St. Lawrence's Hospital, Caterham, a large and well-known hospital for the mentally handicapped. This hospital, with nearly 1200 patients a few years ago, is due to close in 1994. In the last four years about 550 residents have moved to new homes of one kind or another, some to quite different parts of the country; they have gone back to the places from which they originally came, they are not near Caterham. In the gounds of the hospital itself or nearby, houses and bungalows have been built which provide residential and therefore day care for about 470 non-Croydon people. For the London Borough of Croydon itself, there will be about 160 residential places and 200 day places.
Thanks to dedicated and caring leadership of a very high quality, the whole operation so far seems to have gone smoothly. Progress of ex-residents has been monitored even in other parts of the country, and in one case some were transferred from a home where they were not being looked after properly. There is a long tradition of good cooperation with the local authority. The chaplain is one of the many staff who has been closely involved with the process, visiting ex-residents in their new homes far and near and spending time with local clergy or ministers, for instance, to alert them to the new arrivals and to help them and their congregations adjust to and accept some unfamiliar things. All that has been of a high order, I must say, and of a fairly rare order compared with most others that I know about.
So far then, one might say, so good. But sadly, even here, it looks as though the whole exercise is beginning to slow down and limp because of local authority financial restrictions. Croydon, be it noted, is not a poor borough; it is, shall we say, rate minded. So we are brought face to face even here, where there

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has been a long and positive tradition of cooperation, with the most intractable problem of all, namely, who is to decide what is an appropriate level of assistance and who then is to be responsible for finding the money, especially if partnership funding is required or regarded as the norm?
Story number two illustrates the same point much more sharply and sadly. In 1984 nine people were transferred into community care with the London Borough of Merton. This was agreed before any long-term strategy had been worked out with the Merton and Sutton health authority. When a strategy was presented, agreement could not be reached on the level of care to be provided or on the division of costs. So I understand that in Merton, a large London borough, the figure remains at nine. There, as at Banstead and other places, it seems clear that health authorities are determined to use some of the moneys saved by the closure of mental hospital wards to undergird existing or new work elsewhere. They, too, have their problems over funding. But with local authorities cutting back and health authorities diverting to urgent needs elsewhere, how can satisfactory levels of financial assistance be made available for the adequate care of women and men trying to cope with the demands of life in the ordinary community?
Wandsworth, another South London borough, badly needs a day centre for the mentally ill. The local health authority has put forward a proposal for joint funding, in line with present practice and with the Griffiths report. But noble Lords will not be surprised to hear that in a borough which is determined to keep its rates low, and especially in preparation for the change to the community charge, insufficient funds are forthcoming. Once again, the mentally ill lose out. I wish to draw the attention of noble Lords to what is, I feel, the false optimism of the Minister's reply in the debate we had in this Chamber on 18th May, when he said:
"the speed and detail of the development of services in any one area will depend primarily upon the relevant health and local authorities making the best use of resources available to them."—[Office Report, 18/5/88; col. 367.]
I am afraid that the situation is that nothing happens because they cannot agree on finding sufficient funds between them because of other, existing pressures. That, of course, brings us to the more tragic side of putting people into so-called community care without sufficient preparation and without adequate and continuing support. As I have already tried to make clear, a good level of assistance for both the mentally ill and the mentally handicapped requires not only accommodation, food and clothing, but also professional support from doctors, nurses and social workers. That is often most easily provided in a good day centre. Good neighbour support is needed from local people, local churches and many others.
One has only to think of the difficult art of filling in the forms for means-tested benefits, for example, or of managing on very small funds when one has not had to do so for years, to realise how impossible that must be for many of the people we are thinking about today. There is an enormous need for the kind of
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simple practical help—education, if you will—which a good family welfare unit might provide. But there are only very few of them.
I realise that my time is drawing to a close, but I must end by saying that in London mentally handicapped people find their way into a broken-down situation and end up on the streets. I have the recently issued annual report of the North Lambeth Day Centre, which is situated in the crypt of St. John's Church, Waterloo. The report states:
"We work with an increasing number of people who have a history of mental health problems, some have spent long periods in institutions and have been discharged to the streets or to inappropriate or unsupported accommodation in the 'community'…We, like other agencies are therefore seeing more people who have severe and often acute mental health problems, isolated and without the necessary resources to support themselves, ending up sleeping on the streets."
I am the last person to suggest that money is the only ingredient needed for good levels of community care. But there is a minimum, and it must not be pitched too low. We urgently need more evidence to test the validity of the experiences that I now hear about all over south London. Sometimes those experiences are good, but mostly, sadly, they are bad. One chaplain perceptively put the position to me thus:
"It has been taken for granted that community care will be better, rather than that it can be better. The experience of many workers and patients and relatives is that it can be, but that just as often it fails to be."
7.4 p.m.
The Countess of Mar: My Lords, I am extremely grateful to the noble Lord, Lord Carter, for bringing our attention to the predicament in which the mentally ill and the mentally handicapped who are discharged from long-stay institutions into the so-called "care of the community" find themselves. The Minister is well aware that their problems have been of concern to me for a long time.
A major problem with both groups is that they do not see themselves as being ill. Certification of their inability to work is a prerequisite to enable them to claim additional social security benefits, such as the disability premium. They, and for that matter social security officers, cannot distinguish between a medical statement of their condition and a sick note which certifies that they are suffering from an illness. Those who suffer from learning difficulties—the modern term of mental handicap—will often most vigorously deny their illness. Therefore, they do not see the need for a medical certificate, and as a result they do not receive the financial assistance appropriate to their needs. Their level of assistance is reduced to the income support personal allowance only, and they will not be able to pay their carer for the supervisory nature of the care once they leave an institution.
People with mental illness discharged from hospital frequently regard their GP, community psychiatric nurse, social worker and Department of Social Security office as officialdom, and are therefore hostile to them. They more frequently fail to keep appointments with their GP and social worker and do not receive medical certificates or medication. Many fail to claim any social security benefits at all.

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They are unable to pay for accommodation and are asked to leave by their landlord or landlady. They drop out of the system, wander the streets by day, sleep rough at night and scrounge what they can from relatives and friends. Sooner or later they will suffer a relapse of their illness and have to be re-admitted to hospital, simply because they cannot cope with the system which is designed to help them to be self-supporting.
We need to bear in mind that this is not a problem confined to those recently discharged from institutions. It is, and will increasingly become, a long-term problem. I will give the House an example which is typical of the sequence of events which arises. Len had been in a mental hospital in Birmingham for 20 years. He suffers from a psychiatric illness, has borderline learning difficulties, is blind and incontinent. About 10 years ago he was selected for discharge into the community. Under the hospital's discharge plan he was moved to another hospital in Malvern where he stayed for two years and was taught some social skills. From there he was discharged into a hospital in Worcester. While there he had various jobs, mainly washing-up in hotels. He formed friendships with people similar to himself, some of whom had severe personality problems.
A year later he was judged ready for his real move into the community. The local social services department found him accommodation in supported lodgings in Bromsgrove, about 12 miles away. He did not work but attended the town day centre. His social worker was unhappy about this arrangement, as his landlady was suspected of exploiting him. The motives of the social worker were not known, but Len developed a sense of anger with and distrust of his landlady. He was encouraged to return to Worcester and to re-establish his old friendships. His new landlady was unable to cope with his incontinence and his inadequate friends. So, on the basis of "the devil you know", he returned to his former landlady in Bromsgrove.
There his social worker reviewed the payments he made to his landlady. It had been noticed that he never had enough money to pay for day centre activities, such as outings. The landlady was accused of being paternalistic and denying him the right to make his own decisions. That provoked a social security crisis which took four months to resolve. Three months after that, Len's landlady's marriage broke down and the matrimonial home was sold. She bought another house which was large enough to accommodate Len as well as herself. She needed the money to which Len was entitled to help pay the mortgage.
The move provoked another DSS review. Benefit officers said the move was a change of circumstances and reduced Len's board and lodging payment to the lower rate, which excluded the extra element he received to pay for his care. The decision went to appeal and five months elapsed before the status quo prior to the move was ordered to be restored by the appeal tribunal. I heard today that the local social security office is still withholding Len's benefit, despite that decision, while it decides whether or not to appeal to the commissioner. That is no way to treat
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a person who is fit and in possession of all his faculties. It is an abominable way to treat Len with all his handicaps.
The need for a common policy for all the government departments concerned with the discharge of patients and their subsequent care in the community is now extremely urgent. Legislation enacted in October 1986, December 1986, April 1987, July 1987, April 1988, and that to become effective in April 1989, all affects this client group and their accommodation. Social workers, carers and community nurses simply do not know where they are going. Home finders cannot recruit landladies. Social service administrators do not know what effect the April 1989 income support changes will have upon the numbers involved. They do not know which elements of care costs housing benefit and rent officers will deem ineligible for rent purposes. They are unable to prepare realistic budgets for social services support for that client group for the next financial year. As far as they know, central government have made no provision for either direct subsidy or an increase in rate support grant.
Perhaps I may ask the Minister to ask his right honourable friend the Secretary of State for Health, who is I understand responsible for personal social services, to advise social services directors immediately—and I mean immediately—what the position will be after April 1989.
I have tried on many occasions, by being persuasive, to draw to the attention of Ministers in this House the problems being experienced by those responsible for implementing the Government's "care in the community" policy. I shall no longer mince my words. By all means let the National Health Service discharge the mentally ill and the mentally handicapped into the community, but tell them first that they will be extremely lucky if they get suitable long-term accommodation with an understanding landlord or landlady; that they may or may not get a social worker who is capable of solving their problems and who is able to see them regularly; that they will have to learn to cope with the vagaries of the social security system, which is on the whole unsympathetic towards their needs; that their GP or community psychiatric nurse will have problems in keeping up with them if they move—all because the Government will not agree on a proper, humane policy and steadfastly refuse to provide the necessary funds. Let those people have the choice but let it be informed choice.
7.11 p.m.
Lord Rea: My Lords, I think that we should regard this debate, introduced so ably by my noble friend Lord Carter, as a continuation of the debate that we had in May which was introduced by my noble friend Lord Basnett. As the right reverend Prelate the Bishop of Southwark said, the fact that we have had two debates in the same year is an indication of the importance of the topic.
I want to make a few remarks which I hope will be different from those that I made in the previous debate. However, the situation has not changed in the past six months; it may even be a little worse.

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Looking at the problem, I should like to make one or two points as seen through the eyes of a practising general practitioner rather than from a national perspective. I have with me a computer print-out with 50 names on it which is the list of schizophrenic patients in our practice. Not all of them present very difficult problems at the moment. Some are in a stable state. As the right reverend Prelate said, mental illness is a fluctuating condition.
We also have many other seriously disabled mentally ill patients who do not come into the category of schizophrenia. For example, our practice provides the visiting medical officers to a hostel for eight severely mentally ill patients who have just been discharged from Friern Hospital. Only two of those eight patients appear on my list of schizophrenics. The others have various other disorders—manic depression, severe personality disturbance, etc. That provides an indication of how as GPs we must always be aware of the problem of mental illness.
I am an admirer of Sir Roy Griffiths, and I think that his report is the best that we have had so far on what the Government should be doing about community care. He mentions the role of the general practitioner in several paragraphs in the document. I am very pleased that he recognises the crucial role of the GP in community care. That applies not only to those discharged into the community from long-stay institutions but also to all those with dependency needs even though they have never been in hospital. It is my experience that the latter are now far more numerous than those who have recently been discharged from hospitals. That is partly because of the policy of community care in which the ethos over the past decade has been not to create new longstay patients. Therefore many who would otherwise become long-stay patients are in the community and many of them are not catered for adequately.
Sir Roy says in paragraph 6.14 of his report:
"The contract between the family practitioner committee and the general medical practitioner should be amended to specify that the GP, either directly or through his practice staff, should inform the social services authority of possible community care needs of any patients registered with him who seem to have such needs which are not being met and which appear to be unknown to the social services authority. The GP should also be able to satisfy himself that the social services authority has considered the case. The social services authority should therefore confirm that it has received the referral from the GP, and tell him what action it has decided to take".
In other words, Sir Roy recognises that the general practitioner and his associated primary health care workers, as the first port of call for people in need, should ferret out the most needy people and monitor whether social services departments are responding appropriately. 1 think that that is a role which good general practitioners are already playing.
As the Royal College of General Practitioners pointed out in its response to the report, more detailed work is needed to establish exactly how general practitioners' new responsibilities are to be defined. Very good relationships between general practitioners and social workers are also required; a state of affairs I am afraid to say which sadly does not exist in many parts of the country. One reason for that is that hard-pressed social services departments
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often work with under-trained staff—as the right reverend Prelate pointed out and the noble Baroness, Lady Faithfull, said yesterday—and do not have the resources to provide what general practitioners, their patients and patients' families feel is needed.
If social services departments were augmented and funded with earmarked grants as Sir Roy suggests to provide really effective community care, I could foresee a very rapid improvement in general practice social work relationships. That would pave the way for GPs, in association with other primary care workers—district nurses, community psychiatric nurses, health advisers for the elderly—to provide the medical cover which might prevent many vulnerable people from having to be readmitted to hospital when they enter a crisis.
Fully operational and effective community care, if it could be created, would in any case help to prevent those very crises from occurring in the first place. That in turn could well lead to very large savings in hospital costs for acute admissions. That is where the big money is spent in the National Health Service. However, it is only after a substantial initial investment in community care that those savings are likely to accrue. I would suggest that that is a further case, like many others that we have seen recently, where short-termism (if your Lordships will excuse the phrase) is totally inappropriate.
I should like to say one more word about the role of the GP. We should like to be consulted before patients are discharged and be part of a team that plans the community care. Too often an unwise discharge takes place which results in an early readmission. If the general practitioner and the primary care team as a whole were involved at an early stage, in co-operation with other carers, better relationships could be built up and the care for the patient would be better so that readmission might not be needed.
Much discussion on community care centres on housing need. That is of course a basic essential. If it is well planned it will provide a good basis for total community care for the people we are discussing. Yet I feel that housing is not the most difficult part of the operation; though, as my noble friend pointed out, in the inner city situation things are a lot more difficult than they are in less built up areas. That is largely because of the very much higher prices for housing units in London. I understand that £45,000 from various sources is regarded by the DHSS as a suitable sum to provide for a living unit; but in fact my advice is that the cost in London is something like double that figure.
The hostel about which I spoke earlier, where there are eight discharged patients from Friern, has now been in operation for a year and three months. It is one of the good ones. It is a success story. Nevertheless, the total costs for that hostel including buying the house and re-equipping it, were around £240,000, which adds up to £30,000 per inhabitant. Those were costs incurred some years ago; now costs are very much greater.
Apart from housing, I consider that the most important aspect is to make mentally ill people feel welcome and part of the community into which they

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are sent out to live. Too often their housing is segregated as are their day centres. Their difference from mentally average people stands out even more in the community than it does in the safe and often nurturing, though frequently sordid, hospital environment. There is a great need to set up and equip more units where some semblance of a work environment is created; one in which mentally ill and mentally handicapped people can be made to feel useful and be allowed to earn a little money which, it is hoped, will not be immediately deducted from their social security payments.
As Sir Roy points out, there are successful examples of community care to be found scattered throughout the country. It is important that the reasons for their success are identified so that they can be repeated and high quality community care can become a reality as much (or more) for those already in the community who are too often drifting as for those who are about to be discharged from hospital. However, that cannot be done without substantial extra funding, as MIND has pointed out. Some £500 million is a suitable sum. It would be a very wise investment. I hope that the noble Earl will be able to tell the House a little more about the Government's response to Sir Roy's report, and perhaps give us some welcome news that there may be some more money on the way.
7.23 p.m.
Lady Kinloss: My Lords, the noble Lord, Lord Carter, has given us the opportunity today to discuss some aspects of care in the community for people with mental illness or mental handicap who are leaving care.
When I read of Miss Sharon Campbell's case, my husband remarked that the fate of the social worker had happened to him—almost happened to him—some 40 years earlier during the war, but as he was seated at a trestle table, he was able to shove the table top into his attacker's stomach. Perhaps very serious attention needs to be given to the conditions in which interviews by social workers take place, having regard to the fact that they may need to protect themselves. That is not to say that I do not feel the greatest sympathy with those who suffer from mental handicap or mental illness. However, due thought must be given to the protection of social workers who, in their charity, provide support for the needs of their suffering clients.
Anyone who has been in hospital, even for a short time, knows that there is a certain shock when coming out and that it takes a little time to adjust. There are about 30,000 people with mental handicaps who are still in hospital and homeless in the real sense. I mean that they have a roof over their heads but they do not have a home of their own. Moreover, there is another class of person who are living with elderly parents and are in danger of becoming homeless in an actual sense when the elderly pay, as they must, the debt of nature. There are also those with mental handicap or mental illness who sleep rough and are in temporary hostels or even, for one reason or another, find themselves in prison. However, we are committed to community care, but—and this is not in any sense a politically divisive
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question—how are we to cope with it in an ageing community?
There are large numbers of people who have been in hospital for many years. When they are sent out into the world at large, unless they are given very carefully considered support we shall see some of them ending up in cardboard boxes under the arches. Perhaps in some cases they have been sent out into the community rather too quickly. Some organisations are worried that the pace of hospital run-down and closure is outstripping the development of community services.
Anyone who is sent out into the community after a period in a psychiatric hospital requires proper preparation and help. The Royal College of Nursing is very concerned about some of these cases. They need to be shown how to shop, board a bus, and even perhaps how to cook for themselves. They really need sheltered accommodation or a hostel. In many cases board and lodging facilities are unsatisfactory, as they receive very little help.
The National Schizophrenic Fellowship is concerned about those suffering from schizophrenia moving into the community without sufficient support to look after themselves. A pilot study of 750 schizophrenics who had recently been discharged from three hospitals notes 36 per cent. with two or more discharges in three years. These people really do need hostel accommodation, group homes or some other form of sheltered home. The most important thing is for them to continue with their medication. If they are on their own they frequently forget to take it and so they return once more to hospital.
Another important issue is registration with a GP and, even more important, supervision and care from community psychiatric nurses and community mental health nurses, where they are available, who work full-time in the community and who will understand their needs. They will supervise their medication and see that they receive their benefits.
The Government have repeatedly said that extra money is going into the health service. That is very welcome indeed. But I understand that it does not go to health authorities; it goes into family practitioner committees. I am not saying that that is wrong, but investment in training and community work is essential if community care is to succeed. MIND and the Royal College of Nursing agree that manpower planning and effective training are essential to the success of community care. Community services require staff to work independently and take decisions without supervision. Perhaps I may ask the noble Earl who is to reply whether the Government are considering ways of giving extra and effective training to those who work with the mentally ill or mentally handicapped in the community and especially those who suffer from schizophrenia. As the noble Lord, Lord Winstanley, has already said, special training is needed for helping schizophrenics.
I have mentioned before in your Lordships' House that I am very concerned for the 16 to 21 year-olds who are in board and lodging and the effect that changes in board and lodging payments will have after April 1989. After the age of 19 a young person with a personality disorder who is discharged from

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local authority care into supported lodgings finds that the social services are no longer allowed to provide financial support. The young person has to rely on social security benefits, which are not sufficient for board and lodging, care and personal needs.
One case which has been brought to my notice is that of someone whom I shall call Joan, who is severely mentally handicapped. She was with foster parents from a young age but they were unaware of the way in which to claim social security benefits once she was over 19 years old. Therefore because they did not claim and are not considered as acting on a business basis, Joan only receives the personal allowance paid to 18 to 24 year-olds. She receives £39 a week instead of the £150 that she should receive. Her foster parents feel morally unable to evict her although they receive no financial recompense. I feel that she is very lucky to have such caring foster parents; otherwise she might end up, as others have done, under the arches.
I hope that the Government will look at the whole range of problems that are posed by care in the community and the supporting services for the mentally ill and mentally handicapped in our midst.
7.30 p.m.
Lord Mottistone: My Lords, I too should like to thank the noble Lord, Lord Carter, for introducing this Motion because it is necessary to make everyone continually aware of the problem both for themselves and for the carers for the mentally ill and mentally handicapped. Noble Lords will be aware that my particular interest is in the problems of schizophrenia and that I am advised in these matters by the National Schizophrenia Fellowship.
On 1st December we had an Unstarred Question on a schizophrenia matter which was raised by the noble Lord, Lord Winstanley. I shall endeavour not to duplicate the points mentioned then but there are some features of the report on the Sharon Campbell case which relate to this debate and are worth repeating.
To get the problem of the level of assistance available in the community into perspective, I should like to remind noble Lords that the idea of emptying the mental hospitals is not new. It was reflected in the 1959 Mental Health Act and is backed in principle by sensible people as well as do-gooders. Labour as well as Conservative governments have been working towards reducing beds in mental hospitals over the past 30 years. What seems to have gone wrong is that in the period leading up to the 1982 Mental Health (Amendment) Bill all the thinking in the DHSS—which led in due course to the 1983 Act—seemed to become over-biased towards keeping a check on psychiatrists, with a demand for repeated tribunal hearings for patients. The numbers of those appeal tribunals have in consequence increased enormously, and psychiatrists are strongly discouraged from sending people to hospital even when they should go there.
The case of Sharon Campbell, the subject of last week's debate, is a sad example of this. Subsequently
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it seems that the Government have been over-persuaded that the solution lay in care in the community and that this would be no more expensive than hospital care. Indeed, I remember hearing it said in this House that it would be cheaper. This attitude was adopted without any pilot schemes to find out how care in the community would work. We just went trundling into it. I am afraid we have made mistakes. The net result has been that from 1981 to 1988 the emphasis of government policy has been on shutting down hospital beds for mentally ill people. This has been carried out more quickly than it has been possible—or as we now know from practical experience even suitable—to create care in the community to match.
I refer briefly to my speech last Thursday. How do we cope with the person with whom nobody can live? All alternatives to hospital cannot cope if the schizophrenic is too ill. Sharon Campbell was asked to leave her home, her short-term hostel, her special hostel for former psychiatric patients and a bed and breakfast hotel because each time she caused disturbances, including attacking with a knife. Even less violent schizophrenics than Sharon Campbell can also be unacceptable in any little community, or may find the presently available alternatives to hospital unacceptable.
In our debate on 1st December I asked the Minister to tell us more about hospital hostels which it seemed might provide a form of care which could better cope with the person with whom nobody can live. My noble friend Lord Skelmersdale explained at cols. 967 and 968 what hospital hostels were, but he did not give any indication of how many there might be. I have heard of one at the Maudsley Hospital which has been going for 10 years. It has admitted 33 people and discharged 11 without readmission so far. That does not leave much space for new arrivals. Of the 11 people moved out, seven were put into an attached shared house with strong support from the hostel staff. It therefore does not seem that they moved far away from the conditions in which they had been living.
Reporting on their work in the hostel the Maudsley staff said that no locally available hostel or other residential facility was thought capable of adequately supporting these extremely vulnerable individuals. There is therefore a problem; and there is a problem of numbers. It will be most helpful if my noble friend Lord Arran can give some idea about how soon we might see more of these hospital hostels, and how many their might be by, shall we say, 1990. They may well fill an important gap in the community care for the mentally ill and, if so, we shall certainly want several of them.
Another suggestion I made on which ministerial comment might have been more helpful was that Recommendation 17.22 of the Sharon Campbell report should be implemented without delay. The recommendation was that health and local authorities in co-operation with relevant voluntary organisations should have a duty jointly to provide suitable after-care for former informal hospital patients who are or have been suffering from mental disorder until it was agreed by those people that it should no longer be necessary. The noble Lord, Lord

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Winstanley, nods his head because he made the same recommendation. It seems from Chapter sixteen of the report that the legislation in this area is not sufficiently comprehensive to have covered Sharon Campbell, and, by that token, many other mentally ill cases. I should perhaps remind noble Lords, who may not have read the report, that the problem with Sharon Campbell is that she murdered her social worker. It is therefore not a lightly handled business. It would be most helpful to have an undertaking from the Minister that Recommendation 17.22 is being considered as a matter of urgency.
It is clear from all speeches that a great deal more needs to be done to ensure adequate help in the community for people who have suffered, or are suffering, from mental illness. I believe that we should not shut down the beds in the hospitals so quickly. Many of these people require what used to be called asylum, in the nice sense of the word. They need to be protected from themselves and from the outside world. In some cases they need to be looked after so that they do not threaten other people. However, if we are not going to do that, we must have better facilities in the community where people with whom nobody else can live can be suitably handled.
I should like to be more confident than, sadly, I am that my noble friends in the Government are grappling seriously with this problem. I very much wish that this debate will stir them to do so more actively than they are at present.
7.39 p.m.
Lord Thurlow: My Lords, I am very glad to be able to follow the noble Lord, Lord Mottistone, because I heartily endorse every single proposition that he put forward. I should also like to confine my remarks to the subject of schizophrenics. This is a field with which I am personally familiar from sombre experience, and I regard it as the most serious and difficult part of the interlocking problems.
It is curious that tonight there has been an echo of yesterday afternoon's debate when the noble Lord, Lord Mishcon, summed up by making three pleas. There was a plea for the acceleration of action, a plea for the provision of more resources and a plea to increase and improve training. Those pleas applied to the Children Bill, but they also apply to this debate.
Noble Lords have already said that the 1959 Act laid down admirable principles which generally have been endorsed ever since. However, there has not been the opportunity to apply the principles correctly. We are now in a sombre situation of increasing gravity, as all noble Lords have pointed out this evening. We are not even holding the position; it is becoming worse.
In regard to resources local authorities continue to be in the lead position for providing aftercare, for better or for worse. No doubt they receive great support from the health service but they must provide the main means of aftercare. There is no basis of a coherent policy because there is a gap between the provision of resources and the way in which they must be spent. No doubt there are good examples. This evening I am perhaps the first noble Lord to
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mention a good example of aftercare; it is the splendid experiment at Torbay. I hope that many local authorities will repeat and follow it, but it is still an experiment.
All noble Lords who have spoken tonight agree that, in general, local authorities throughout the country are not measuring up to their responsibilities. There are perfectly understandable reasons for that, one being that they are squeezed for funds. They are not in a position to spend what they want and, with great respect to many of them, they do not understand the priority of this need.
Thirdly, there is the plea for more training. The noble Lady, Lady Kinloss, has already referred to that and I shall not duplicate her words. It is common ground that there are not nearly enough qualified psychiatric community nurses. Somehow or another the void must be filled.
I should like to turn to a particular matter which has not been covered tonight and which I know is highly controversial. During the debate on the Sharon Campbell case reference was made to the difficult problem of compulsory treatment orders and to the question of how to give power to the elbow of doctors and social workers who are unable to induce schizophrenics to take the medication and go to the day centres as they have been advised. The Spokes Committee recited some of the considerations but made no recommendations. Perhaps that is not surprising in view of the formidable practical difficulties and problems.
I have lived with a schizophrenic who refused to take his medicine, which resulted in the inevitable deterioration of his condition. There is no alternative: patients with acute schizophrenia who will not take their medication will become worse and every kind of serious sympton—for example, violence and nuisance—will follow. As the noble Lord, Lord Mottistone, has said, it becomes impossible to look after them. We are dealing with people who cannot be looked after by families in ordinary living conditions. There are more such people circulating as a direct result of the policies of closure and often they are violent. Last Thursday we heard of the sad case of Sharon Campbell, and there are a good many more. However, for each homicide there are hundreds, perhaps thousands, of cases of violence by untreated schizophrenics and there are many suicides.
I can see no way of avoiding, or at least mitigating, the growing dangers to both the community and the patients without recourse to compulsory treatment orders combined with much improved monitoring, registration and computer records. Most people who have considered the matter regard the difficulties as being too great. With respect, I doubt whether they personally have had to endure attacks from violent schizophrenics. Even if means can be found, how will nurses proceed in the face of resistance to bring the patients to a treatment centre? The Spokes Committee concluded that the only effective sanction would be to admit to hospital as a compulsory patient anyone who consistently refused to take the prescribed treatment. Difficulties would follow. There would have to be second opinions and appeal procedures. However, against all the difficulties and resource problems must be weighed the continuing

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dangers which exist and which are increasing. We cannot continue to duck those awkward decisons.
If sanctions were imposed it would probably be unnecessary to resort to them in many cases. However, the professions would have some power at their elbow to help them to induce their patients to do what they should. Every day parents, relatives, hostel staff and members of the public are having to face violence and all forms of antisocial conduct, or live under the shadow of fear of violence. Those evils must not be ignored under the banner of respect for human rights. As the noble Lord, Lord Mottistone, said, that was the fashionable cry in 1983 and 1985. In our debates everything tended to be subordinated to the rights of the patient. The dangers and interest of the patient tended to be lost sight of. It is very much to be hoped that the Royal College of Psychiatrists in its forthcoming report on aftercare will grasp the nettle.
7.50 p.m.
Lord McCluskey: My Lords, in welcoming the initiative of the noble Lord, Lord Carter, in having a short debate on this matter, I should like to declare my interest. I am Chairman of the Scottish Association for Mental Health, which is a voluntary body substantially supported by government funds. It pursues a policy of promoting care in the community and is a body which provides both sheltered residential accommodation and supported employment training for a total of more than 500 people in Scotland. Indeed, we are the largest provider of such employment training for people with disabilities and I believe that that gives me a right to speak. Both the carers and those for whom we care have given us a good deal of feedback on what are the problems.
Your Lordships will not be surprised to learn that we as a body are highly critical of the chasm—and that is the only word for it—that exists between the rhetoric of successive governments and the reality, the reality in Scotland of wholly inadequate community care, facilities, funding and resources.
I should like to begin by emphasising the distinction made by the right reverend Prelate the Bishop of Southwark between mental illness and mental handicap. Most of the recovering mentally ill need relatively short-term support, shelter, training and finance within the community. I only draw attention to one other difference which is possibly the most striking of all; perhaps one person in four of the population will at some time in their lives be afflicted by some degree of mental illness which requires treatment. Therefore, in relation to mental illness we are not talking about managing a small identifiable group whose dependency is permanent but we are talking about any one of us who may be struck down seemingly at random by mental illness and who may thereafter require outside help to return to normal life.
If I have time, and I understand that the debate is running ahead of time, I shall address myself to the problems under three headings: poverty, homelessness and neglect. I recognise that many people who experience mental illness are cared for by
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loving families or friends. I do not wish to suggest that mental illness necessarily condemns the victim to a life of deprivation, idleness and neglect; obviously it does not. However for some—and this is the prospect which is opened up unless they are helped—that is exactly what may happen. It is they who are most in need of organised community care. It is they who we fail if the levels of assistance are inadequate. It is they who have nowhere else to go and no one else to whom they can turn.
Perhaps I may first refer briefly to poverty. Most of those who are discharged from residential care and cannot return home will either find their way to some form of hostel or will have to seek private board and lodgings with a private landlord. Those in managed hostels receive £9.55 per week to spend on bus fares, hair cuts, cigarettes, shoe repairs, newspapers and all recreational and social facilities. That is a miserably inadequate pittance. Those who have to go to private landlords, and they are the majority, receive housing benefit and income support and they are, in terms of personal spending power, no better and perhaps worse off. In a few months' time in Scotland and a little later in England they will become liable to pay the community charge. Even if they qualify for the full rebate, they may still have to find in my area some £60 to £80 annually out of their meagre pocket money. People as poor as that—and their chances of employment are minimal—may be physically in, but are hardly part of, any community I know.
Some of those boarding in the private sector face another problem—of prescriptions. As your Lordships know, a prescription costs £2²60 per item. The mentally ill are often prescribed drugs in small frequent doses because doctors fear that there is a danger that they may take an overdose. They sometimes require other drugs to counteract the effects of the primary drugs which they are taking. However, mental illness is not included in the list of chronic medical conditions qualifying for free prescriptions. Therefore, unless the patient is exempt by reason of poverty he tends to do without the prescribed medicine. The problem of persuading non-residential patients to continue their medication is already severe and if they also have to pay prescription charges it becomes nigh insuperable.
The poverty that clings to those who move from residential care into unemployment and poor quality lodgings eats away at their self-esteem and prevents them from developing any structured lifestyle in which they can achieve and consolidate true mental health. I have given the Minister notice of these questions and I should like him to tell us specifically if those persons who have been discharged from residential care after treatment for acute mental illness and who have gone to live in private boarding accommodation have any prospect of being exempted from the community charge. I also ask him whether or not the Government have any plans to assist those afflicted by mental illness but not resident in managed accommodation to meet the potentially crippling costs of their prescriptions.
I should like to say a few words on homelessness. There is a vicious circle here. Homelessness tends to precipitate stress and mental illness but the very symptoms of mental illness by alienating family,

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friends, neighbours and workmates tends to precipitate homelessness. Therefore, many of those who leave hospital after treatment for mental illness end up in private boarding houses, sharing rooms with strangers often in very poor conditions in the worst areas of the town or city. As I have said, their chances of employment are almost zero. They can easily be driven into neglect of their medication, idle hopelessness and alcohol abuse or other forms of behaviour which are deemed to be antisocial or even criminal. Therefore, they can easily be trapped into the spiral of becoming down and out and of drifting hopelessly and aimlessly into homelessness.
It is not clear to me that the Government understand the desperate situation of such people. The noble Lord, Lord Winstanley, reminded us that perhaps half of the existing hostel places may be lost overnight very shortly. Such hostels are often the only refuge for those with mental health problems. Are more of those people to be driven onto the streets?
The kind of thinking that could lead to this sudden loss of perhaps hundreds or thousands of places is an example of the phenomenon experienced by all who work in the voluntary sector and concern themselves with mental health and community care. That phenomenon is the lack of coherence and consistency in central government, whatever its political colour. Too often the left hand does not seem to know what the right hand is undoing. Therefore, the voluntary agencies are constantly having to duck and weave to avoid being bludgeoned by the frequent changes of direction, pace and purpose of government departments and agencies. They alone have the funds to sponsor accommodation projects, training, counselling and the like. That is very frustrating and bewildering.
Only 5 per cent. of those who experience mental illness become hospital in-patients—a well known statistic. However, especially in Scotland, the overwhelming bulk of the funds and resources provided for mental health go into hospital care. Therefore, resources for community care are inevitably, as the noble Lord, Lord Thurlow, said, inadequate. There is little reason for optimism. At present the tragedy is that in the United Kingdom, in which vast sums of public and private money are spent on meritricious projects and pastimes, so many of the non-hospitalised mentally ill have become neglected because government and various other statutory bodies will not find the money to spend on the unglamorous field of community mental health.
In Scotland we do not have vast numbers of people impoverished on the streets. Instead of turning large numbers onto the streets, we keep in psychiatric hospitals many people who, with the necessary support, could return to the community to rebuild their lives and rediscover their independence and personalities. For in Scotland there are twice as many hospital places per head of the population as there are in England and Wales. The Scottish Office, whose education department has responsibility in this field, sent out a circular on 1st June 1988 in an attempt to avoid the scandal of patients being discharged from psychiatric hospitals when no adequate community
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facilities exist. Three times in the circular the Scottish Office refers to what we all know to be the limiting factor—the inadequacy of existing or available resources. That same unacceptable justification is put forward for the failure to bring into force Section 7 of the Disabled Persons (Services, Consultaton and Representation) Act 1986. When will those resources be found? I ask the Minister to tell us when the Government plan to implement Section 7 of that modest little Act.
I should like to mention one last matter. There is a deep reluctance among professional therapists to leave the environment of the psychiatric hospital and go into the community and offer their skills there. I believe that there is a need for health boards and health authorities to offer and to provide redeployment training for their staffs and training about the nature and principles of community care for people with mental health problems. Unless the professionals join other carers in the community and see at first hand both the opportunities and the massive shortfall in what is needed we shall never make a reality of community care.
The noble Earl is tonight in a position to offer us some comfort and hope. We trust that he will not simply add to the verbal mountain that casts a shadow over all our endeavours.
8.1 p.m.
Lord Taylor of Gryfe: My Lords, one of the advantages of a mistake in the Whips' Office is that I am following the noble and learned Lord, Lord McCluskey. He spoke of his Scottish experience in this field and I know that all of us in Scotland are indebted to him for the authority which he carries in Scottish affairs and his constant reminders of our obligations in this particular field. I hope that the noble and learned Lord will be encouraged to come to the House more frequently and deal with these matters which represent a deeply held concern in all parts of the House.
I hope that at the end of this debate the Minister will be aware of the depth of that concern and that he will respond in a positive way to some of the questions that have been raised this evening. We would particularly like to know when the Government are going to respond to the Griffiths report. I gather that the date of the Griffiths report was about last February. Surely it is time that we had some indication of the Government's attitude on the important issues raised in that report.
I express a personal interest in this matter. I am the chairman of Scottish Action on Dementia. Dementia is regarded in the Secretary of State for Scotland's report on the health service in Scotland as being the priority consideration. This is in response to the Sharpen report which he commissioned earlier. With an ageing population, inevitably dementia will have increasing importance.
In addition to the subject of care that is required in this area I have noted that the Scottish Association for Mental Health has prepared an interesting report on the position of dementia cases under the law. I am sure that the noble and learned Lord, Lord McCluskey, has much to contribute in that area for

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simplifying the legal position of guardianship and advice for people who suffer from mental illness, particularly dementia. That report states that guardianship under the Mental Health Act was designed as a method of caring for people in the community. Instead, it is being used as a method of removing sufferers from home to community care. This is an important matter.
The noble Lord, Lord Mottistone, asked about the relative costs of community care and residential care. My information is that residential care costs £230 per week as against £160 per week for care in the community. That suggests that the latter is not only desirable socially, but desirable economically.
In relation to costs I quote one other interesting statistic which has been provided by the Scottish Association for Mental Health, with which the noble and learned Lord, Lord McCluskey, is associated. At least twice as much is spent on building and improving hospitals than is spent on funding community care, yet 95 per cent. of the people with mental health problems live in the community. It costs twice as much in the maintenance of hospitals yet only 5 per cent. of the people with mental illnesses are in hospitals or residential care.
Like the noble and learned Lord, Lord McCluskey, I read these reports from government departments. I have in my hand a particularly glossy report on the priorities in the Scottish service. This identifies services for old people with dementia in hospitals and in the community as their first priority. But we are becoming a little tired of glossy documents saying "This is our concern" or "This is government policy" but with little action to support these confessions of interest. Therefore, I hope that the Minister will give us a positive response.
I am interested not only in the Government services but also deeply concerned about state support for the voluntary organisations in this field. For some years I have been involved with an organisation called Link, the Glasgow Association for Mental health. It receives some government funding but could do with more. It recognises that there is little aftercare service for people who emerge from hospital with mental health problems. Link has set up a number of clubs in which people can meet and discuss their problems in a social environment. It encourages them and helps them to feel restored to the community.
The organisation is also deeply concerned with providing employment opportunities for people with mental health problems who have come from hospitals. People who emerge from a mental institution do not readily find employment. There must be organisations which monitor that situation and which encourage employers to take on people with such difficulties. Therefore, aftercare clubs, pressure on employment opportunities are undertaken by Link.
The problem for people with mental illness is the inevitable revolving door principle. They go into mental hospital for a period and then leave for a short period but are then back in again. Therefore, we have to make them feel a part of the community and on the
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way to recovery rather than simply engaged all the time in this meaningless and hopeless practice.
I remind the Minister of the responsibilities which the Government have in relation to the Disabled Persons (Services, Consultation and Representation) Act 1986. This states:
"All parties who have been in mental illness or mental health hospitals for more than six months should, if and when they are moving into the community, have a full assessment of their needs".
That requirement has not been implemented. Another paragraph states:
"They also should have an authorised representative to speak for them and obtain appropriate services in the community".
That has not been implemented.
We debated these matters in the House. We passed the Bill. We assumed that the Government would have responsibility to carry out the legislation which we passed. I would welcome a comment from the Minister as to how and when those obligations are to be implemented.
8.10 p.m.
Lord Renton: My Lords, we have a few minutes in hand and I shall be grateful if noble Lords will bear with me while I make one point that is relevant to the debate. I apologise for my late arrival which was due to my involvement with a charity of which I am a patron. It was important that I should be there.
The point I wish to make is this. I became chairman of MENCAP in 1978. I immediately started to agitate, along with others, for getting mentally handicapped people of various ages out of long-stay hospitals where many of them had lingered for years. In 1980 the Government agreed with this, announced the policy and gave us some help. I call it pump-priming help because it was largely help with administration. It was in order to get our Homes Foundation scheme going, making it possible for mentally handicapped people to live in small groups in small places all over the country.
I was a little surprised to hear what my noble friend Lord Mottistone said as regards the policy having been a mistake. I must make it clear that in our experience of the mentally handicapped it has not been a mistake. The policy has mostly succeeded, with a few exceptional cases. We continue to welcome it and we shall continue to try and make it work.
Lord Mottistone: My Lords, before my noble friend sits down, I did not say that the policy was a mistake as regards the mentally handicapped. I was speaking entirely about the mentally ill. I believe that it has been a mistake to go so fast in their case.
8.11 p.m.
Lord Ennals: My Lords, this has been a very powerful debate. It was opened by my noble friend Lord Carter, to whom we are all grateful for his lucid case. We have also had some very moving speeches in the course of this quite short debate particularly from the right reverend Prelate the Bishop of Southwark, the noble Countess, Lady Mar, the noble and learned Lord, Lord McCluskey, and others. All the others were very thoughtful and informed speakers. One matter that was common to all was the great concern about the situation existing now in our society. I hope

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that when the Minister comes to reply he has something positive to say which matches up to the concern that has been expressed right across the Chamber.
As noble Lords probably know, I am deeply involved with the work of MIND and the services carried out by its local associations up and down the country. Earlier today I was at a meeting of the trust which tries to cope with the rising tide of homelessness and the growing army of people sleeping on park benches, under bridges, over hotel heating vents, in church porches, station concourses, empty houses, cardboard boxes and sleeping under and above newspapers in all kinds of places where they can find a position from which they are not moved.
There are two pictures of Britain today. One is yuppie and prosperous and the theme is spend, spend, spend; the other is very downtrodden, neglected, cold, forgotten and probably involves the mentally ill. Many of them are in prison and probably wrongly so. It has emerged from almost everyone who has spoken today that there is a new crisis. It is new because of the dimensions of that crisis. I hope that when the noble Earl comes to wind up this debate the Government show a similar sense of urgency.
I was very distressed when I heard a speech given by the noble Earl's friend Mrs. Currie when opening a MIND national conference last week. She was speaking about community care and she said:
"during this year and next, we will be looking closely at what we have on the ground, particularly from the point of view of the patient. I need to know more about what services we offer, and what actually faces a depressed young mother, or an alcoholic, or a disturbed offender, or a disorientated old lady, or the family of a schizophrenic when they ask for help in each region of the country. At present, I don't have a full enough picture, and sometimes suspect that not all parts of the local services do either".
She continued:
"Ministers will consider whether there are any steps it would be right and practical to take to improve the care of the mentally ill people".
I despair when I hear words like that coming from a Minister who is paid to know what the situation is in our country and in our hospitals and communities where people have been passed into them, and probably wrongly discharged, without a plan having been worked out for them and also without families to care for them. They are also without the community support that can make life tolerable, liveable and also enjoyable. For them there are none of the joys of life.
I wonder whether the Government feel a sense of responsibility about these matters. Perhaps there are some people in this House who are well qualified—the noble and learned Lord, Lord McCluskey, is one and there are plenty of others—and who feel that they know something about the local community and the challenges that have to be met. We find the Minister saying that the Government need to know a little more and then they will consider whether there is something that they can do.
Some of us know something of the situation in the old Victorian psychiatric hospitals. Over the weekend
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I quickly read through some of the recent health advisory service reports on our psychiatric hospitals. They make very grim reading and that is not just the reports made 10 years ago but this year, last year and the year before. They refer to gross overcrowding, dirty, shabby, badly repaired, smell of urine, unsuitable, drab, depressing, unsuitable, depressing and so the list continues. They are dilapidated and institutional life means that there is no place to live in dignity.
As regards treatment, there are some very fine nurses doing the job as best they can. The services were found to be deplorable, entrenched, defensive, custodial, misguided, degrading, de-personalising, negative, backward and so on. That is not a situation that we want to preserve in our society. The Government are right and it has been the policy of successive governments over the years, as the noble Lord, Lord Renton, said, that we should plan a combined operation. This would be over the years because it could not be done at once. The policy was to close not only the hospitals for the mentally handicapped but for the mentally ill as well. This would be done in parallel so that services matched. As people came out they went into a new type of service provided for them in the community.
This has been a policy that does not split us party politically and I am not certain that it does so when we look at the present situation. It is not as if the hospital closure programme has yet gone all that far. There has been a very substantial decrease in the number of beds. There have been approximately 200,000 admissions to and discharges from psychiatric hospitals each year. Fewer than 64,000 people are now resident in psychiatric hospitals. Long-stay hospital provision is being reduced at a significant rate with a drop in mental illness hospital beds of 25,000 in a decade.
When we consider the mental hospitals only two have been closed. I understand that 28 more are likely to close by 1995 with health authorities selling off the land. I hope that they will be turning the money back into the mental health services. I understand that that is not happening at present. I hope the Minister will say whether we can be absolutely certain that what is saved by the health authorities and the hospital building programme is put instantly and immediately into the services without delay. I shall later argue that the sums should be put into the community services in advance. Without the resources we cannot provide what is needed. One can look through all kinds of information that is given. One is beginning to see a decline in the provision available in the community. The expectation is that it will decline still further.
I expect that some noble Lords will have seen a brief that I received, and no doubt others will, from the Parliamentary Panel on Personal Social Services. It is a well-informed body under its all-party officers. The panel points out that the,
"Response to demand for community care i.e. new Day Centres, Group Homes etc. must be set against Government plans for gross capital expenditure by Local Authorities to fall by 5·9 per cent. in 1988–89 and by 14·7 per cent. by 1990–91".
That is a terrible situation. I am told that if I want further information I can get in touch with a Conservative Member who is chairman of the panel.

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He is a fine man and is probably better informed about the subject than anyone else in the other place.
I look at the type of services that should be provided. Reference was made by the noble Lord, Lord Taylor, and by my noble friend Lord Carter to dementia. Each district health authority will have to provide for an additional 300 dementia sufferers as the population grows older. Reference was made to the Disabled Persons (Services, Consultation and Representation) Act 1986, which provided a legal framework for advocacy, assessment of need and the provision of services. However, many sections of the Act—perhaps the most important ones—have not come into operation. Crisis intervention services are particularly necessary when there are schizophrenics in our society who have a recurrence of their condition. They need instant help and it is important that someone else as well as they themselves knows that they need instant help. Yet only four walk-in hospitals are available throughout England and Wales. This is a more important provision than the idea of a stop to the hospital closure programme.
We have talked about housing and the Government must do something about it. It is an essential component for community care. Yet since 1979 the housing investment programme has been cut by 60 per cent. in real terms. Housing subsidy has been eroded and council house starts are at an all time low. Housing Corporation allocations to housing associations have been reduced in real terms and are overstretched. The private rented sector has continued to decline. In these circumstances the availability of housing is at a minimum. As someone said earlier, psychiatric patients are at a great disadvantage in terms of housing. Many people with mental illness are caught in a Catch-22 situation. In hospital, they are not considered to be suitable for ordinary housing. Out of hospital, they are not considered to he vulnerable. Their needs are not being met.
Someone said that we have been talking too much about the rights of people who have been in psychiatric hospitals. I react against that very sharply. I want to fight for the rights of people who have had the misfortune of being incarcerated in mental illness or mental handicap hospitals. They are entitled to all the rights to which we are entitled. To think that somehow or other we can degrade them, demote them or put them into a category of people who do not deserve rights is appalling, especially when it is suggested in your Lordships' House, which over the years has been a bastion of protection of human rights. I know that it will go on being so.
The right reverend Prelate the Bishop of Southwark said that money is not available. This is the essence of the problem. MIND made a valuable proposal which was referred to by a previous speaker. It recognised that there would be a saving to the health service. It said that there was a great need for more money, especially at a time when the rate support grant is being decreased and rate capping is being imposed on local authorities. It proposed that there should be an immediate bridging grant of £500 million. It said that not only was more money per year needed but that there had to be a major injection of funds so that local authorities would be able to
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provide the services which the noble Lord, Lord Mottistone, and other noble Lords have recognised are necessary.
The noble Lord thought that the time had come to stop or to slow down the hospital closure programme. I am sure that that is the wrong answer and I was glad that the noble Lord, Lord Renton, intervened to say that. I recognise that the problems of schizophrenics and those with mental handicap are totally different. I recognise that the noble Lord, Lord Mottistone, made his proposal in regard to schizophrenia. I fear that if after all these years of bringing forward the policy of movement from the hospitals into the community we were now to slow down or stop it, it would take another decade or more before we would be able to get it moving again. Many of the hopes of people and their families that there would be something to enable them to live in the community would be shattered. It would be wrong for us to allow that to happen.
We have had many debates on this subject. Thank heavens your Lordships are wise in their choice of subjects. The Minister must say something about the Griffiths report and the vital recommendations contained in it. It is appalling that after so many months local authorities and health authorities do not know what will happen. Of course there are criticisms about the adequacy of community care when the authorities do not know where the responsibility lies. He must say something about resources. It will be no good just to turn out ancient figures showing that there are now more psychiatric nurses in the community. If one starts at a low enough level one can always produce figures to show growth. We must have from the Minister a statement to give us some confidence that the Government, unlike Mrs. Currie, understand the position, know where we are going and will lead the health authorities and the social services into providing a service which respects the human rights of the people who are now in hospital or in the community without those rights. The Government must take a lead on this crucial issue.
8.26 p.m.
The Earl of Arran: My Lords, we are truly grateful to the noble Lord, Lord Carter, for raising this important subject. It is important and will always remain so. Those are not vacuous and idle words. The title of the debate is significant because it calls attention to the level of assistance available to people with mental illness or mental handicap moved from residential care—I assume that the noble Lord, Lord Carter, is referring to hospitals—into the community. The debate, as I had suspected, has been wide-ranging and there are many important points to cover. I shall do my best to deal with as many as is possible, but perhaps at speed now and then.
The burdens imposed by both mental illness and mental handicap are heavy. They weigh on the sufferers, on their families and also on the services which provide treatment and support. But as your Lordships know, and as has been mentioned in the House on previous occasions, dramatic

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improvements have been taking place over a number of years. In the treatment of mental illness, for example, the development of a wider range of services outside hospitals altogether, with the advent of new treatment such as the major tranquillisers and the anti-depressive drugs, has led to a marked fall in the number of patients resident in hospital. The policy of providing services better suited to meeting the individual needs of mentally handicapped people has meant that the number of those destined to spend their lives in large mental handicap institutions has also fallen, and a much wider range of provision is now available for those who cannot live at home or who need, with their families, to do so.
The Government's primary aim is better provision for mentally ill and mentally handicapped people and their families. We want to see health authorities and local authorities co-operating together to develop a locally-based range of co-ordinated services. A comprehensive mental health service is the result of many partnerships between specialist psychiatric services, other medical and general practice, clinical psychology, local authority social services, housing authorities, voluntary organisations and self-help groups. But equally important is the involvement of the families and friends of people with mental disabilities and, by no means least, those people themselves suffering from mental illness or a mental handicap. As health districts develop their plans for new mental health services it will be essential for them to consider not only the span of services that they need to provide but also the extensive resources available from this range of interested bodies and individuals who can contribute to the development of a successful service.
The noble Lord, Lord Carter, asked for details of the reduction in mental illness and mental handicap staffed and available hospital beds over the past 10 years. The figures are 24,800 and 16,400 respectively for the period between 1976–86. Those figures are for England. We do not have forecasts for future closures. We expect health authorities to assess the number of beds needed based on the development of local services which can of course provide in-patient care in different forms.
I can assure noble Lords that we fully appreciate the anxieties expressed by many relatives and friends of both mentally ill and mentally handicapped people when faced with a change in the pattern of the way care has been provided over many years. However, there are benefits to be gained from having available a greater range of care provision so that those are more closely suited to the varying needs of mentally ill and mentally handicapped people.
Because the needs and problems of mentally ill and mentally handicapped people in the community are so different, I should now like to consider them in more detail. As regards mental illness, the Government's longstanding policy is that people with mental illness should have access to all the services they need as locally as possible. Our aim is to have a full range of local services, such as in-patient and day hospital facilities, day centres, residential homes, hostels, sheltered accommodation, supported lodging or special fostering schemes, group homes,
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drop-in centres, sheltered workshops, social clubs and self-help groups, as well as education training and employment services.
Some people will be able to live in ordinary housing with the support of visiting professionals. All this calls for considerable co-ordination and collaboration between the providing agencies, and also improved communication between the caring professionals, the sufferers and their families.
Collaboration still needs improvement. There are geographical, administrative and financial reasons why some health authorities and local authorities still find it difficult to plan together to provide integrated services. It can be done, as some districts have already demonstrated. I am very glad to accept the views of my noble friend Lord Balfour concerning the fact that early treatment is highly desirable. Of course the Government are anxious to promote preventive and early intervention measures.
I would now like to turn to some areas of special concern. Although an increasing proportion of mentally ill people have been discharged from hospital, it is still sadly true that some do not recover fully and may be left with severe disabilities, for which they need special help. The new style of service will be judged by how well those with special difficulties are helped. In the past too much of the care for this group was only provided in large distant hospitals. The development of locally based services does not imply any less commitment on the part of Ministers to provide proper care for this most vulnerable group of patients. Every local service must plan how best to provide that care without further adding the burden of institutionalism to the disabilities of illness.
It is also necessary to look carefully at available resources. In considering the possibility of hospital closure or run-down, we must bear in mind that at the end of 1986 there were some 10,000 beds empty in the mental illness service as well as some 8,000 vacant day hospital places. It therefore makes sense to ensure that resources are used in ways most appropriate to the patients needs.
The provision of effective continuing care for those discharged from hospital treatment is of central importance. Ministers have repeatedly emphasised the importance of professional teams' planning and agreeing individual care programmes with each patient and, where appropriate, with their families, before discharge. Once the patient is discharged, there must be proper monitoring and co-ordination of these programmes especially for those who are chronically ill or regarded as most vulnerable, to help clinical teams identify any problems as they develop and to act accordingly.
In response to the remarks made by the noble Lord, Lord Rea, we agree that the family doctor has a central role in the treatment and management of mentally ill people in the community. We are glad to read reports of much closer collaboration between general practitioners and psychiatrists, with some 20 per cent. of psychiatrists now spending some of their time working in primary care setting.
We are particularly concerned that the patient or his relatives do not lose touch with services and do

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not have to seek out for themselves what help is available. A measure of our concern is that planning guidance, issued to health and local authorities in July, requires that by 1991 each district should have developed a care programme to provide a system of co-ordinated continuing care for people chronically disabled by mental illness. We also emphasised that each district should ensure that a consultant psychiatrist has special responsibility for rehabilitation and continuing care.
As my noble friend Lord Skelmersdale reminded noble Lords in the House last week, he attended a working conference in February of this year, organised jointly by the DHSS (as it then was) and the National Unit for Psychiatric Research and Development at which people from the health and social services discussed the detailed requirements of a continuing care system. This conference built on research funded by the department in Salford, Southampton and Hackney to investigate the use of computers to assist in ensuring both that patients are less likely to "fall out of care" and that patients and carers received the information they need to ensure quality care.
A report of that conference was published by the national unit in September and the department is studying its contents very carefully as it prepares detailed guidance on the components of these care programmes. We are also, as my noble friend made clear in the House last week, taking account of relevant recommendations in the Spokes Report on the care and after-care of Miss Sharon Campbell, a concern that was underlined by the noble Lord, Lord Winstanley. As noble Lords who spoke on that occasion recognised, that report has made a very helpful contribution to thinking in this area.
The noble Lord, Lord Thurlow, raised the question of compulsory treatment in the community. That is the subject of discussions which have been taking place with such organisations as the Mental Health Act Commission, the Royal College of Psychiatrists and MIND. It is a complex area where there are strongly held views on all sides. No changes will be considered without a full consultation with all those concerned with mental health.
The noble Lord, Lord McCluskey, mentioned Section 7 of the Disabled Persons (Services, Consultation and Representation) Act 1986. As part of the discussions on implementation of the Act, officials of the department met local authority representatives on 17th November. The timetable for implementation will depend on the outcome of discussions with local authority and health authority representatives.
Although many people can cope, with professional support, in normal housing and sheltered bedsits, we accept that asylum in the sense of refuge should remain a necessary part of any comprehensive psychiatric service. The essence of the new service, even for the most severely disabled, is that it should be locally-based and hence more accessible for patients and their families.
I agree entirely with my noble friend Lord Mottistone on the importance of hospital hostels. I
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cannot, however, tell him the number presently provided by health authorities since they are not returned on statistics separately from other in-patient beds.
The Department of Health has been actively involved in research and development into ways of providing services to those who need long-term care in a health service setting. Research on high dependency hospital hostels has been completed in Manchester, London and Southampton, and in the course of the last year, the department has sponsored and contributed to five seminars presenting the clinical and economic evaluations of these projects. These seminars have been very well attended by practitioners and planners, and it is hoped that a publication summarising the findings will soon be available.
The noble Lord, Lord Winstanley, referred to the need for improved training of social workers. The Government have made extra funding available to the Central Council for Education and Training in Social Work to improve the practice content in social work training. Approved social work training of those who have statutory duties under the Mental Health Act now lasts for at least 60 days and has heightened social workers' understanding of mental illness.
The right reverend Prelate the Bishop of Southwark referred to lack of research into closure of hospitals. Research is being conducted by the Medical Research Council into the process and consequences of the run down and closure of Friern Hospital and Claybury Hospital in north-east London. The Department of Health is glad to have contributed to the funding of that research and is studying the reports of the research team with close attention.
I turn now to the provisions for mentally handicapped people and the help that they need. I am aware that many families and others involved in providing services are concerned that the community may not provide the right environment for some mentally handicapped people to give the care and protection that they require. That is why we have encouraged health and local authorities to co-operate and work together to ensure that the particular care needs of each mentally handicapped person are met through community based services that are appropriate and cost-effective, but with genuine choices for clients and the families. This also involves a need for the statutory service providers at local level, and with respective housing departments, local councillors, community groups, schools, youth groups and of course the voluntary sector, to ensure the development of good will and support of potential neighbours when selecting sites for accommodation. We appreciate that there are difficulties, but with good will they can usually be overcome.
Jointly planned development of mental handicap services has not yet been as widespread as we would like to see. But despite problems of organisational and geographical boundaries there are, as with mental illness services, some good examples where co-operation between all concerned really does

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produce the co-ordinated mental handicap service we want to see. Much depends on individual determination and good will to get together to make the machinery work effectively.
The movement to community care has made it even more essential that we recognise the importance of training and staff developments at all levels. This point was mentioned by the noble Lady, Lady Kinloss. With this in mind, we have taken steps to emphasise both the scale and urgency of the training development required to keep pace with the development of services. Bodies with statutory training responsibilities have recognised that shift in service patterns over a number of years and the effect that this must have both on professional practice and attitudes and the skills of a wide range of staff and management. Officials have been working closely with these and other bodies concerned in staff training. We want to improve training and in particular to encourage the shared training of NHS and local authority staff for work in the community, and central funding has helped in this progress.
How services can develop in any one area will primarily depend on the relevant health and local authorities making the best use of resources available to them. However, there are ways in which central government can make a direct contribution to the development of community care projects. I have already mentioned our training grants and, as many noble Lords will know, we have made a substantial financial contribution to moving mentally handicapped children out of hospital into more suitable forms of care.
Some people with a mental handicap also show very severely disturbed behaviour, or they may be mentally ill or need care in conditions of some degree of security. These people with special needs require special solutions, and officials have been studying how different authorities are meeting these needs. A guidance document for planners is being prepared which the Department of Health hopes to issue next year.
I am now some way through my speech and have highlighted a large number of central government initiatives to boost community care, all of which are currently under way. Some noble Lords—not least the noble Lords, Lord Carter, Lord Rea and Lord Taylor of Gryfe—have suggested that the Government are dragging their heels on community care, especially in relation to Sir Roy Griffiths' report. I would argue on the contrary that what I have described is a constant record of commitment, activity and progress. Of course we look to the future, and Sir Roy's report will assist Ministers in planning further action. Ministers are studying the report and the many and varied responses to it with great attention. It has moved the ongoing debate about community care forward significantly and stimulated thinking among all organisations and professions concerned with the delivery of care. I can reaffirm our commitment to bring forward our own proposals following this period of scrutiny. The views put forward in the debate will be taken into account in framing those proposals.
Lord Ennals: My Lords, can the Minister give some idea of when we are likely to have a reply?
The Earl of Arran: My Lords, I think that that would be unwise because I cannot say with absolute assurance.
I know that this response will disappoint many noble Lords who may have hoped for our intentions to be revealed tonight. The Government are aware of concern, not least in your Lordships' House, that action should not be unduly delayed. Equally, however, in such a complex and challenging area concerned with the welfare of some of the most vulnerable and needy people in society it is right that we take sufficient time to find the right answers before embarking on a major programme of action. For that we make no apologies. Precipitate action not backed up by careful thought and scrutiny would not be in anybody's interests, least of all that of the individual clients or patient, but let me emphasise again that government proposals for further improvements in community care will be forthcoming in due course.
I have spoken of the action that central government already have in hand. It is equally important for health and local authorities to continue to build on the progress made so far at the operational level. We remain firmly of the view that there is scope for progress within existing arrangements, as the many successful and imaginative projects developed locally in the past few years illustrate. Local authority resources devoted to community care increased by over 26 per cent. in real terms between 1978–79 and 1986–87 to help fuel those developments.
We acknowledge that progress has not been uniformly good and that there is a major challenge for all concerned with these services to ensure that the resources devoted to them are managed in the most efficient and effective way, but there is certainly no reason to despair of making progress within existing structures. Health and local authorities can work within them to make significant improvements in services locally and suggestions of planning blight do a disservice to all those currently involved in developing such schemes.
What else can central government do to help? There is no magic wand that we can wave, but we can encourage. The regional review system enables the NHS management board and Ministers to discuss with regional health authorities points of concern on planning or the provision of services and to set objectives for action. Good collaboration is one of the points for which we look out, and we tackle regions in the review process if there seem to be problems.
Before I conclude, noble Lords are of course aware that financial assistance is available through the income support and housing benefit schemes and community care grants under the social fund and the independent living fund. These schemes are means-tested, but all recognise the extra needs of sick and disabled people.
The noble Countess, Lady Mar, spoke of the difficulties that patients have in claiming social security. Patients will usually be receiving benefit

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while in hospital. This will normally be increased on discharge. We appreciate that some individuals may find it difficult to claim that benefit, but the new system of benefits introduced last April was intended to be easier to understand and administer.
The noble and learned Lord, Lord McCluskey, asked whether there are likely to be exemptions from payment of the community charge for persons suffering mental illness. I understand that there will be exemptions for people in residential care homes and nursing homes. Exemption for vulnerable groups in other types of accommodation is a matter receiving attention. I am unable to give further details on this occasion.
Baroness Seear: My Lords, does the Minister include in the list of exemptions people who are being looked after with great difficulty by their families in their own homes? If the Government do not give more assistance soon and if, on top of everything else, such people have to find the poll tax to pay for those whom they are looking after, they will break, and it could well be the last straw.
Lord McCluskey: My Lords, will the Minister consider the fact that the relevant government legislation is the 1988 Act, which excludes these very people? Are the Government giving consideration to amending that Act on this point?
The Earl of Arran: My Lords, I understand the noble Baroness's point. I am not certain whether the specific category of people she mentions is included in the exemptions. I undertake to find out and let her know in writing.
In conclusion, I am bound to say that the Government remain committed to the development of locally based services and are constantly reviewing how development can best be achieved. Having heard what I have said about all the ways in which we are actively improving services, care programmes for example, I hope that the noble Lord, Lord Ennals,
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will accept that needing to know more about regional services is not a smokescreen for inactivity. But there can never be room for complacency. The task of managing the resources devoted to the mental health service is a major challenge for management and professionals at all levels and we must ensure that the right services reach those who need them most.
Lord McCluskey: My Lords, the noble Earl has sat down without using up all his time. Will he respond to the third question of which I gave him written notice, about prescription costs?
The Earl of Arran: My Lords, the noble and learned Lord, Lord McCluskey, will realise that we are very short of time. I shall respond to his point but I am equally anxious that the noble Lord, Lord Carter, should also be able to speak.
Lord Carter: My Lords, I am extremely grateful to all noble Lords who have taken part in this wide-ranging debate; it has certainly revealed the size of the problem. I am grateful to the Minister for the comprehensive way in which he replied, but he will understand my disappointment with his use of such phrases as "in due course", "to move forward" and "an on-going debate". They are not much help when we had hoped to have the assurance of the Government that they were responding to the Griffiths report.
My Lords, with that in mind, I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

British Railways (Penalty Fares) Bill [H.L.]
Reported from the Unopposed Bill Committee with amendments.
House adjourned at ten minutes before nine o'clock.