Lords Sitting of 17 January 1990

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

Common Land Forum Report
Baroness Nicol Baroness Nicol asked Her Majesty's Government:
When they expect to introduce legislation for the further protection of common lands on the basis of the Common Land Forum Report.
Lord Reay: My Lords, it remains the Government's aim to introduce comprehensive legislation based broadly on the forum recommendations at a suitable opportunity when parliamentary time permits.
Baroness Nicol: My Lords, I thank the Minister, but is he aware that I have had a similar reply about twice a year for the last four years? Is he aware that over three-quarters of our commons, which are very precious to most of us, are at risk under the present legislation? I understand that agreement with the Moorlands Association on the last outstanding argument was reached at the end of last summer. Will the Minister say why more priority cannot now be given to this important subject?
Lord Reay: My Lords, as I said, it is still our intention to bring in legislation. But we should like to see consensus reached between the various interested parties. Unfortunately, that is not yet the case. On the question of the common lands under threat, the evidence we have available indicates that only a small number of commons have been deregistered in the past few years.
Lord Gisborough: My Lords, is my noble friend aware that to the best of my knowledge the Moorlands Association agrees that there should be a certain number of miles of footpath per thousand hectares of moorland and that that would be the ideal and satisfactory solution for all those, including myself, who enjoy walking?
Lord Reay: My Lords, we have received further representations from the Moorlands Association which we are now considering together with representations from other interested bodies.
Lord Williams of Elvel: My Lords, in declaring my interest as president of the Council for the Protection of Rural Wales, perhaps I may ask the Minister to confirm that agreement was reached between all bodies concerned with common land in the Common Land Forum, which was in itself a remarkable feat; that afterwards the Moorlands Association alone stood out against legislation although, as the noble Lord said, it has now come into line; and that there is therefore no reason why legislation should not be introduced to deal with an urgent matter. In order
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to help the Government—I always like to help the Government—perhaps I may suggest that the passages concerned with the merger of the Nature Conservancy Council and the Countryside Commission should be omitted from the Environment Protection Bill and a measure for the governance of common land substituted.
Lord Reay: My Lords, I am sure that the noble Lord will have an opportunity to debate the question of the Nature Conservancy Council when we debate the Environment Protection Bill. On the noble Lord's first question, I understand that the Moorlands Association and the other interested bodies are not yet in agreement. We consider it desirable that there should be a great degree of agreement on this important matter. We consider that the effective operation of any future legislation will be much better assured if the legislation has the support of all interested groups.
Baroness David: My Lords, is the Minister aware that the evidence from the Countryside Commission is that large areas are being lost and are at risk, that applications are being submitted for areas as large as 1,000 acres to be deregulated, and that there might be development? Who are the other interested parties causing the hold-up?
Lord Reay: My Lords, I understand the anxiety of the noble Baroness with regard to registered common lands and her wish, and the wish of other noble Lords, that they remain so. That would be one of the aims of any legislation.
Lord Moran: My Lords, is the Minister aware that in many parts of the United Kingdom, especially Wales, the wildlife interest of common land is damaged by the use of the open hill by motorcycles, particularly motorcycle clubs, and four-wheel drive vehicles? Will he ensure that, when legislation is introduced, it covers the use of vehicles and prevents vehicles being used, except in special circumstances, off the road on common land?
Lord Reay: My Lords, I should be happy to consider the noble Lord's point. A great number of different interests must be reconciled. There are the graziers, the local authorities, those concerned with conservation, those concerned with public access and, last but not least, the owners themselves.
Lord Gisborough: My Lords, is my noble friend aware that demand for access is not from walkers? They want only footpaths. The demand is purely for political reasons. Is he further aware that full access by people in pressurised areas would greatly damage the wildlife and would be contrary to the rules laid down by the EC for the preservation of wildlife?
Lord Reay: My Lords, there are different views and we continue to receive representations from different interested bodies. As long as we continue to do so, we have not abandoned hope that a greater measure of agreement may be possible.
Baroness White: My Lords, does the Minister recognise that if the Government want 100 per cent. agreement when there are obvious conflicts of interest we shall never have legislation on common land? Is it not therefore the path of statesmanship to recognise that one must obtain the best agreement possible? Most of us are now of the opinion that we have obtained the best possible with the remarkable co-operation of people who recognise that their interests are not always consonant one with another but who are prepared to give way to a certain extent. The Government should show a little statesmanship for a change.
Lord Reay: My Lords, I take the point made by the noble Baroness. But we should like to see a greater measure of agreement than now exists.
Baroness David: My Lords, the noble Lord did not answer part of my question. Who are the people who are holding up this legislation by not agreeing?
Lord Reay: My Lords, I just gave the noble Baroness a list of the various bodies that we consider to be interested in this matter.
Lord Williams of Elvel: My Lords, is the noble Lord prepared to report this exchange to his right honourable friend to make sure that my noble friend Lady Nicol does not have to ask exactly the same Question in six months' time?
Lord Reay: My Lords, I shall be quite happy to give the assurance that I shall report this exchange to my right honourable friend.

Romania: Human Rights
2.44 p.m.
Lord St. John of Fawsley Lord St. John of Fawsley asked Her Majesty's Government:
What steps they have taken, or intend to take, to persuade all member states of the European Community to take a united stand against infringement of human rights in Romania.
The Minister of State, Foreign and Commonwealth Office (Lord Brabazon of Tara): My Lords, until the fall of the Ceausescu regime on 22nd December we took every appropriate opportunity to discuss with our partners ways of putting pressure on the then Romanian Government to end their abuses of human rights. Fortunately events since then have taken an encouraging turn. The new National Salvation Front Government have made wide-ranging commitments concerning respect for human rights. We shall, however, be watching closely to see that these commitments are implemented.
Lord St. John of Fawsley: My Lords, I thank my noble friend for that helpful reply to my Question, which has not so much been superseded by events as placed in a new context. Can he say what international action is being taken to provide food for Romania, particularly in the rural areas where
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many people are near starvation? Secondly, since man does not live by bread alone, does he consider that it would be suitable for this country, which was hailed by Bright as the mother of parliaments, to take the lead in helping the Romanians in the extremely difficult task of passing from dictatorship to parliamentary government and democracy, keeping a wary eye on the National Salvation Front at the same time?
Lord Brabazon of Tara: With regard to my noble friend's first point, the EC Commission has sent a mission to Romania to look at the requirements for food aid. In fact it is there today. We expect a report back later this week.
In answer to the noble Lord's second point, my right honourable friend the Minister of State, Mr. Waldegrave, was in Romania yesterday and the day before. He met members of the new parties, including critics of the National Salvation Front. We shall continue to maintain those links. We foresee the possibility of extending the know-how fund, which now operates in Poland and Hungary, to other countries including Romania. It would include provision of technical training, organisational assistance to democratic political parties and so on.
The Earl of Lauderdale: My Lords, can my noble friend say whether as yet there is anything to suggest that food and other aid sent to Romania is being properly distributed and not hogged by the pretended government in office now?
Lord Brabazon of Tara: My Lords, the situation in Romania is confused at the moment to say the least, but we have no evidence that the aid consigned by Her Majesty's Government, namely medical supplies, has been misdirected.
Lord Molloy: My Lords, can the Minister say whether there is a determined EC plan to provide economic help to Romania and those other East European states that have freed themselves from the grip of totalitarian communism?
Lord Brabazon of Tara: Yes, my Lords, and I have just referred to the visit of the EC Commission to look into the matter of food aid which is taking place this very day. In the longer term, in partnership with the rest of the EC, we hope to help Romania move toward democracy and a market economy. Obviously we shall be discussing those matters with our partners.
Lord Hooson: My Lords, have the Government sent any food to Romania and if so how much?
Lord Brabazon of Tara: My Lords, I do not think that any food has yet been sent. It is the purpose of the visit by the EC Commission to see what is needed. We have already received from the Romanian Government a kind of shopping list and that is being discussed at the moment.
Lord Kennet: My Lords, in helping the Romanians to set up a multi-party democracy (which seems an extremely good idea), will the Government be careful

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not to steer them toward our own system of electoral law which is outdated and unjust and on the other hand take care to point out the advantages of the more up-to-date and juster systems of representation which obtain elsewhere in the EC?
Lord Brabazon of Tara: My Lords, I compliment the noble Lord on being able to raise the subject of proportional representation in the context of this Question. The whole object of the exercise is for the Romanians to decide for themselves the form of government and the form of elections that will take place in future.
Lord Ross of Newport: My Lords, pursuing the subject of food, it has been reported today that in Romania there is a vast shortage of meat. There is also a report that the French in particular are sending very large quantities of food from the marshalling yards in Paris. Are we playing some role in helping them in that respect?
Lord Brabazon of Tara: My Lords, we shall play a role through our membership of the European Community. So far as I understand, the aid that is being and will be sent will come from the EC. We shall be contributing our 20 per cent. share of that.
Lord St. John of Fawsley: My Lords, I apologise for pressing my noble friend on this point but can he give some guarantee that action will be taken this week? There are many people in Romania at starvation point and unless aid reaches them soon it will be too late.
Lord Brabazon of Tara: My Lords, I hope that the EC team which is there today will report back very quickly and we shall be able to take action as soon as possible.

The THORP Project
2.50 p.m.
Lord Hatch of Lusby Lord Hatch of Lusby asked Her Majesty's Government:
What is their justification for proceeding with the thermal oxide reprocessing plant (THORP) project.
Viscount Ullswater: My Lords, I understand that British Nuclear Fuels' thermal oxide reprocessing plant is now nearing completion. The fuel receipt and storage facility is already operational, and commercial reprocessing is expected to begin in late 1992. The company already has contracts valued at up to £5 billion and has covered its investment in the plant. THORP will be a major export earner for the UK.
Lord Hatch of Lusby: My Lords, is the noble Viscount aware that following the Government's decision to cancel the threee PWRs there would seem to be less necessity for THORP than previously? Yet THORP is being extended. Is this solely because British Nuclear Fuels intends to obtain foreign
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contracts? If so, is nuclear waste to be transported from around the world and reprocessed at THORP? There would seem to be great danger in transporting such waste.
Viscount Ullswater: My Lords, the decision to retain nuclear power in the public sector does not affect the viability of THORP. BNFL has a full order book for the first 10 years of THORP"s operation. Two-thirds of these contracts are with overseas customers. The successor companies will take over responsibility for the home bought share of THORP.
On wastes, the contracts that are being signed include the options for the return of waste. The Government have made clear our intention that those options should be exercised and the waste returned.
The Earl of Lauderdale: My Lords, does my noble friend agree that the existing nuclear power stations —there are more than 15 and some will be with us for at least another 10 years—continue to have a need for reprocessing their spent fuel?
Viscount Ullswater: My Lords, there is a reprocessing facility at Sellafield for the fuel from the Magnox reactors. However, THORP is required for the reprocessing of fuel from the thermal oxide reactors.
Lord Dean of Beswick: My Lords, can the Minister confirm that the two-thirds of overseas contracts to which he referred were won by British Nuclear Fuels in the face of severe competition from the French industry? Can he also confirm that further negotiations are taking place with the German industry in order to commence their contracts at the turn of the century? If the industry were to close down would not over 15,000 jobs be lost? Would we not be handing over a thriving industry with a very rosy future to the French industry and lengthening our own dole queues?
Viscount Ullswater: My Lords, yes. I can confirm that 4,000 million tonnes of the 6,000 million tonnes due to be reprocessed over the next 10 years are from overseas. Half of that amount comes from Japan and the other half from West European countries. In addition, discussions are taking place with a number of customers which should guarantee the plant's future well into the next century. I can confirm that it is expected to sign additional reprocessing contracts with a number of German utilities very shortly.
I should also like to confirm the last supplementary question of the noble Lord. The THORP project is currently providing 5,000 jobs directly in the United Kingdom. BNFL estimates that it will sustain a further 10,000 jobs a year in supply companies during the final phases of construction.
Lord Jenkins of Putney: My Lords, is the noble Viscount aware that what he has just told us is not regarded by all of us as a matter for rejoicing? Not all of us are content that this country should become the nuclear waste dump of the world. We would be

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happier for France to be that. Indeed, there is a widely held view among scientific people that each country should be responsible for its own nuclear waste. Does the noble Viscount agree that that would be the ideal solution?
Viscount Ullswater: My Lords, no. I have sought to explain that this country will not be the waste dump for the future. The Government feel that reprocessing is a proven and safe technology that keeps open the possibility of recycling the uranium for the future. It puts waste into a better form for storage and ultimate disposal and avoids leaving spent fuel as a problem to be tackled by future generations.
The Earl of Lauderdale: My Lords, does the noble Viscount agree that no country is an island? We have a part to play in the world pollution problem. Sellafield has a great record in reducing the menace of highly dangerous radioactive waste.
Viscount Ullswater: My Lords, yes. As I said in a previous answer, it has a reputation for being able to deal with waste products from the Magnox reactors. I am certain that its reputation will continue.
Baroness Nicol: My Lords, has there been a change of policy on the return of waste? My understanding is that although the option to return it has been in existence on contracts for reprocessing carried out until now, that option has not been exercised. Will the noble Viscount please confirm that there is a change of policy?
Viscount Ullswater: My Lords, I cannot confirm that there has been a change of policy. Until now the spent fuel has not been reprocessed because THORP has not been commissioned. Therefore none of the waste has been capable of being returned. I confirm that it is the intention to return the waste.
Lord Stoddart of Swindon: My Lords, may I ask the noble Viscount to check his figure of 4,000 million tonnes of waste products to be reprocessed? Is he aware that that would account for the total output of British mines for 20 years? I find it very difficult to believe that THORP will be able to deal with such an amount of matter.
Viscount Ullswater: My Lords, I am extremely grateful to the noble Lord. The word "million" seems to have crept in. I apologise to the House. It is such a large error that I feel that the House would forgive me on this occasion.
Lord Williams of Elvel: My Lords, the House is very sympathetic to noble Lords in Waiting who get their millions wrong. I am sure that we shall be very happy to accept the explanation of the noble Viscount.
Perhaps I may ask him to concentrate for a moment on the finances of THORP. THORP is now two years behind schedule. It will cost £1·8 billion. That compares with the 1978 estimate of £300
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million. The noble Viscount rightly said that it would be much more dependent in the future on foreign contracts. Can he give the House an estimate of the return on investment that BNFL is expecting?
Viscount Ullswater: My Lords, the increase in costs has occurred from the last estimate which was revised in 1988 by a figure of some £200 million. At the same time there was a technical estimate that another 1,000 tonnes of base load capacity would be available over the next 10 years, half of which has already been committed. I am not in a position to give the figures for which the noble Lord has asked. I shall see whether I can discover them and write to him.
Lord Mackie of Benshie: My Lords, does the noble Viscount care to answer the inference in the question of the noble Lord, Lord Hatch, that the transport of waste and of the finished product is dangerous?
Viscount Ullswater: My Lords, there is an inherent danger in the transport of any radioactive waste.
Lord Cocks of Hartcliffe: My Lords, I am sure that the noble Lord, Lord Hatch, must have thought out the implications on employment should THORP close. Will the Minister write to the noble Lord asking him for his alternative proposals for the employment of those people who would be displaced if THORP were to close?
Viscount Ullswater: My Lords, the noble Lord has made a good point. I was glad to see that the noble Lord, Lord Hatch, remained in his place and was also able to hear the comment.
Baroness Nicol: My Lords, I should like to clear up a small misunderstanding. I am perfectly well aware that THORP is not yet in operation. However, my earlier question referred to BNFL, which has been reprocessing spent fuel for 30 years. Am I correct in my understanding that when it had foreign contracts it did not return the waste? I asked about a change of policy for that reason.
Viscount Ullswater: My Lords, I do not believe that there has been a change of policy concerning THORP. All the contracts that have been signed for the operation of THORP include the return of the waste.
The Earl of Lauderdale: My Lords, does my noble friend agree that while the option for a fast reactor remains open it is important to be able to reprocess spent fuel in order to obtain plutonium from it?
Viscount Ullswater: My Lords, yes, I agree that being able to take out the plutonium will provide fuel for a fast reactor. There is also a certain amount of interest in mixing the plutonium with the uranium for a mixed oxide fuel.
Lord Hatch of Lusby: My Lords, I look forward to receiving the letter from the Minister, but I can give him the answer now. There is a great need for labour in the field of renewable resources which could

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certainly take up the loss at THORP. Can the Minister clarify his comments about what is called the "take-back" clause in the 1976 Act and the return of the reprocessed fuel? As I understand it, the vitrified substance —that is plutonium —is returned. Can he tell the House what will happen and what is now happening in other BNFL stations to the medium and low-range waste? Will it remain here? Will it be dumped? Will it be returned? What will happen to it.
Viscount Ullswater: My Lords, I agree that it is difficult to identify entirely which piece of waste comes from which piece of reprocessed fuel. However, it is part of the contract that the waste will be returned. It may not be in the same mix in which it arrived; and it may be that the high-grade waste will be returned and low-grade waste will be stored ready for disposal in this country, as happens at the moment.

School Governing Bodies
3.2 p.m.
Lord Peston Lord Peston asked Her Majesty's Government:
Whether they will amend the Education Reform Act 1988 to ensure fair representation of local opinion on school governing bodies.
Viscount Davidson: My Lords, we have no plans to do so.
Lord Peston: My Lords, I thank the Minister for his Answer, albeit not one that pleases me very much. Does the Minister recall that I raised the matter in July, 1988, in connection with the Education Bill? Is he aware that noble Lords who debated the subject thought that the problem was serious but minor? Is he aware that the unattractive practice, to say the least, is now growing and may soon become widespread? Can he advise the House whether the business of local authorities appointing only governors of their own political persuasion is legal?
Viscount Davidson: My Lords, I am aware of the noble Lord's participation in the debate when the subject was fully discussed. We remain opposed to legislation which will introduce political affiliation as an essential consideration in all local authority appointments to governing bodies.
Baroness David: My Lords, can the Minister say whether the Local Government and Housing Act 1989, which in Sections 15 to 17 and Schedule 1 provides for a political balance on local authority committees and other bodies, will apply to the governing bodies of schools?
Viscount Davidson: My Lords, without notice I believe that the answer is no.
Lord Jenkins of Putney: My Lords, is the Minister aware that it has been considered to apply generally and that one of the few local authorities which has behaved in a contrary fashion is the Thatcherite
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Wandsworth Borough Council which in future proposes to appoint to educational bodies only people of its own political colour?
Viscount Davidson: My Lords, LEAs appoint only a minority of governors and so cart no longer dominate governing bodies. I hope that authorities will see that their first priority must be to appoint the best governors for the good of their schools.
Viscount Hanworth: My Lords, will the Minister bear in mind the problem that we raised on Second Reading of finding people who have the time and are willing to serve as governors, and of the danger of appointing extremists and power seekers to a governing body? Does he agree that that is an ever present danger?
Viscount Davidson: My Lords, yes, I agree that it is. I hope that local authorities will ensure that it does not happen.
Baroness Seear: My Lords, since the Minister has said that the Government are opposed to political bias in such appointments perhaps I may ask this question. Does it not cause him grave anxiety when he learns that some authorities are apparently exercising political bias because the only appointments they are making come from one party? If he has that anxiety, what does he propose to do about it?
Viscount Davidson: My Lords, I do not have that anxiety.
Lord Dormand of Easington: My Lords, the Minister has said that the Government will not amend the Education Reform Act to ensure fair representation. Assuming—and it must be a correct assumption —that the Government are anxious that there should be fair representation on governing bodies, what other action are they prepared to take to ensure that?
Viscount Davidson: My Lords, we believe that there is fair representation now.
Lord Peston: My Lords, I am completely puzzled by the Minister's answers to the questions. I should like to read from Hansard of 8th July, 1988. His noble friend Lady Hooper said:
"the Government will take every opportunity to encourage local authorities in making appointments, and governing bodies themselves in making co-options, to follow the principle that governing bodies should consist of people who have the best interests of their school very much at heart". —[I Official Report, 8/7/88; col. 544.]
Does the Minister agree that the very least he ought to be doing, or advising his right honourable friend the Secretary of State to do, is to issue a public statement? I do not make a party political point because I can think of at least one Labour authority which is behaving in exactly the same way. I regret to say that I am informed that one SLD authority is proposing to behave in that way. Would it not be at least a good idea for the Government to issue a public statement saying that this is a deplorable state of affairs?
Viscount Davidson: My Lords, I assure the noble Lord that I shall draw his comments to the attention of my right honourable friend. Whether he will take my advice or that of the noble Lord is quite a different matter. There is a big difference between a general exhortation and effective law. For the balance to be enforceable appointees would have to be limited to those willing to declare their party political affiliations. Alternatively, all minorities on the council might be given the right to appoint governors with no control over their suitability. Neither of those approaches is acceptable. If the requirement is to be general and not enforceable there is no point in putting it into law.
Lord Stoddart of Swindon: My Lords, is the Minister aware that in relation to the appointment of magistrates, the instruction from the noble and learned Lord the Lord Chancellor is that a political balance should be maintained? If that is true, and if it is desirable in the case of the administration of justice, is it not equally desirable in the case of children's education?
Viscount Davidson: My Lords, I do not believe that the two are comparable.

Business of the House
3.8 p.m.
Lord Denham: My Lords, after the short debate on German unification and before the short debate on private health care insurance schemes, my noble friend Lord Brabazon of Tara will, with the leave of the House, repeat a Statement that is to be made in another place on the Foreign Secretary's visit to Hong Kong.
With the leave of the House, I should like to make the customary statement about the length of speeches in the two short debates standing in the names of the noble Lord, Lord Callaghan of Cardiff, and my noble friend Lord Bruce-Gardyne. In the case of the debate tabled by the noble Lord, Lord Callaghan of Cardiff, going on the principle that the opening speaker is allowed 15 minutes, and that my noble friend Lord Brabazon of Tara, rises to reply 20 minutes before the scheduled end of the debate, all speeches should be limited to a maximum of five minutes. In the case of my noble friend's debate, the number of speakers is such that it is not necessary to impose a standard but I know that your Lordships will confidently expect speeches to be kept within limits compatible with the spirit of these short debates.
Lord Taylor of Gryfe: My Lords, I wish to ask the Leader of the House a question. What is the method by which a two-and-a-half-hour debate is allocated? Could it not have been anticipated that the matter raised by the noble Lord, Lord Callaghan, would be of great interest and therefore worthy of a five-hour debate?
The Lord Privy Seal (Lord Belstead): My Lords, these debates are drawn by ballot.

Business of the House: Debates, 24th January
Lord Belstead: My Lords, I beg to move the first Motion standing in my name on the Order Paper.
Moved, That the debates on the Motions in the names of the Lord Tordoff and the Lord Bonham-Carter set down for 24th January shall each be limited to 2½ hours and that Standing Order 35 and paragraphs 10 to 13 of the Rules for the Conduct of Short Debates shall apply to each debate. —(Lord Belstead.)
On Question, Motion agreed to.

Business of the House: Debate, 31st January
Lord Belstead: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That the debate on the Motion in the name of the Lord Peston set down for 31st January shall be limited to 5 hours and that Standing Order 35 and paragraphs 10 to 13 of the Rules for the Conduct of Short Debates shall apply to the debate with the substitution of "5 hours" for "2½ hours" and "25 minutes" for "20 minutes". —(Lord Belstead.)
On Question, Motion agreed to.

Coal Industry Bill
Brought from the Commons; read a first time, and to be printed.

Germany: Unification Prospect
3.10 p.m.
Lord Callaghan of Cardiff Lord Callaghan of Cardiff rose to call attention to the prospect of German unification; and to move for Papers.
The noble Lord said: My Lords, I beg to call attention to the prospect of German unification and to move for Papers. I have chosen this subject not only because of its great significance to the German people but because the ending of any division of Germany will set off a chain reaction which will radically affect the other nations of Europe.
The extraordinary events of recent months have already overturned a political structure in Europe which has been settled for almost the past half century. I submit that 1989 will go down in history with the revolutions for 1789 and 1848 as a momentous year of hope, when men and women demanded freedom and seized democracy. Communism is discredited and the post-war Europe shaped by Potsdam and Yalta is in the process of dying. For the moment the people and not governments are making the running.
How will their revolutions go? In the short time which has elapsed we can see already that there are dangers as well as hope if nationalism, latent at the moment, runs wild and dangers too when people

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find that a revolution by itself is not enough to fill the shops.
As to divided Germany, the cold war between East and West has, for over 40 years, enabled us to put on one side any serious discussion about the shape and size of Germany or about reunification and also to close our eyes to its consequences. German leaders themselves have consistently told us that they could see no prospect of unification within their lifetime. However, today, as with so many other of the seemingly impossible changes which took place during 1989, the distant vision has suddenly become tomorrow's reality. Indeed, in practical terms, the process of melding the two Germanys has already begun and will soon be in full swing.
Already at the recent meeting between Chancellor Kohl and Prime Minister Modrow in Dresden, the two governments agreed to establish no fewer than 11 joint commissions to co-ordinate their interest in practically every aspect of their national life; namely, economic, social, cultural, environmental, energy, transport and so on. They are to have another meeting in a fortnight's time at which I have no doubt those matters will progress further. We cannot yet see how much further they are likely to go. Chancellor Kohl has given us 10 steps to reunification. In fact he has proposed the setting up of a confederation between the two states which will lead in due course, he says or hopes, to a federation. Other ideas may emerge. However, whatever is adopted in the end, there is no doubt that the momentum for unification in some form is now irreversible and the rest of Europe as well as the Soviet Union must adjust to that fact.
It goes without saying that, if a unified Germany is to have a heathy long-term future, it can only be brought into existence by the full consent of the German people expressed through the democratic process in both parts of Germany. Free elections with proper access to all the media and the opportunity for the opposition parties in East Germany to put their case are vital necessities. However, with that as a basis, if that is a basis and if the people of both Germanys decide that they wish to come together, not only will the coming together be inevitable but Germany will be the most powerful economic and political state in Europe.
Now that Western Europe is faced with that as a practical matter, instead of merely giving approval to a distant possibility as it has done in the past, there is some hesitation and nervousness, which is not surprising. However, in my view, Western Europe cannot step back at this late stage. Our task is not to thwart or delay the process. That is a course which would, in any event, be ineffective if the German people want unification. Our task is to ensure that the new constellation which takes its place will be an element for stability and security in the new Europe —a new Europe which is emerging now from the Atlantic to the Soviet borders.
German leaders of all parties there have shown themselves to be sensitive to that concern. They understand that a united Germany would have implications far beyond the new borders. However cautious the approach may be, neither they nor the
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rest of Europe can avoid providing answers to some overlapping questions of the highest importance.
Perhaps I may mention just two of those: the first is how to settle the eastern borders Of a united Germany and the second how to satisfy the Soviet Union and Poland that their future security will be assured. I take it for granted that we are concerned about our own. As to the first, I recently summarised the problem as it was originally seen by Konrad Adenauer in an article in The Times newspaper on 5th January and I need not repeat the arguments here today. However, I submit to your Lordships that the answer is clear. It is imperative that the two Germanys unequivocally and formally renounce any claim to recover their lost territories in the East and accept without reservation the existing border between East Germany and Poland. That must be enshrined in a treaty. Even with that essential step completed, the security implications for the Soviet Union are vast. That empire has never made any bones about regarding East Germany and Poland as buffers against attack from the West.
Recently however Mr. Gorbachev has seemed to regard the risk as so diminishing, while the economic and political pressures on him are so great, that he appears to be resigned to relinquishing his grip on the other Warsaw Pact members. We have reached a point where senior Soviet officials have declared their country's intention to withdraw all their troops from East Germany and today we learn that Czechoslovakia seeks the complete withdrawal of the 75,000 troops at present stationed on its territory. If those steps are carried out, it follows that the future military alliances of those and other Warsaw Pact countries will be of the greatest significance to the security of the Soviet Union. I would have no hesitation in insisting upon that issue as being one which should be of concern to us, if we are concerned about the future peace of our continent.
Chancellor Kohl has defined the new relationship with East Germany as a "contractual community". If that were to take the form of a federation with two separate states, two military commands and two separate armies, then the border between East and West Germany, on which NATO's front line stands, would continue to provide a buffer. On the other hand, a fully unified Germany with a single government, one military command and its border extended to the Oder/Neisse line would not.
I suppose it is just possible to believe that two states in a confederal Germany might belong and could continue perhaps to belong to two different alliances, but I believe that before very long such an arrangement would prove to be quite unrealistic and would be abandoned. Nor is it conceivable that a totally united Germany —the most powerful, military, economic and political country in Europe as it would be —could be either neutral or unallied. If it were, it would be likely at some time in the future to feel hemmed in, and Europe has already had previous experience of where that sentiment can lead.
We are uncovering awkward questions, but there are more. The next stage in what I regard as an unstoppable and inevitable "contractual

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Community", to use Chancellor Kohl's phrase again, would set in train changes in the military doctrines of both blocs. As a leading member of NATO the West German Government have long stated their clear objective of removing battlefield and short-range nuclear weapons from the front line between East and West Germany. How much stronger that pressure will become if it comes from a confederal Germany —not a united Germany; the situation would be different —whose two countries would continue to be separated by the front lines of NATO and the Warsaw Pact.
Such pressure would be irresistible, and with their removal would go much of the remaining credibility of the NATO doctrine of flexible response. Truly it would be inoperable. For the present NATO must remain a shield for the West, with the essential presence of the United States; yet logic compels the conclusion that the political and other changes just around the corner require us to seek a better and more relevant security system for Europe as a whole that will reflect the new realities. However, I repeat the old lines that until we have it, we must cling to nurse for fear of finding something worse.
For myself there is no doubt that on the political plane the European Community has a central role to play, but it must get away from so much of its fussy bureaucracy if it is to have a real role. It should be ready to open its doors to East Germany, to Poland and to others if these states become fully democratic and wish it. The Community has already, I remind your Lordships, proved its political worth as a solvent of the old enmity between France and Germany. It can play a role again in settling the relations between the states as they emerge now from what has been a cold war for too long.
I repeat once more also —I am trying to condense my remarks because I regret that everyone else has only five minutes; it is quite clear we must return to this again —that the CSCE (the Helsinki process) should be an acceptable forum in the search for a security system that will meet the needs of tomorrow's Europe. I ask the Minister, who I am grateful to see here and who will reply to this debate, to give me an assurance that there is no hesitation or reluctance on the part of Her Majesty's Government to use that forum. Having discussed the idea of a peace treaty with one or two others, I believe the time is coming for negotiation to begin between the wartime allies and the two Germanys. This I believe could best begin under the auspices of the Conference for Security and Co-operation in Europe.
There are many problems which I have not touched on but which I am sure your Lordships will pick up during the debate; but it is surely beyond question that Europe faces both a challenge and an opportunity of historic proportions as great as any in the past. It appears to me that Mr. Gorbachev wishes to conduct a serious negotiation in order to reach a new equilibrium in Europe. We must test to the utmost whether that is so. Rarely has the situation been as fluid as it is today with all the possibilities of shaping a new course. We shall need
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to work very hard if we are to prevent the rise of narrow and destructive nationalisms or centuries old animosities from dividing and weakening us and indeed from diverting us from the very important new problems that will lie ahead of our continent in the 21st century. However, with vision and with vigour, the leaders of Europe have a rare opportunity —something that occurs only once in a lifetime —to establish a framework of understandings and agreements that could ensure for the people of Europe security and peaceful progress within a democratic society. I beg to move for Papers.
3.26 p.m.
Lord Dacre of Glanton: My Lords, we have heard a very distinguished speech, for which we are all grateful, but the noble Lord, Lord Callaghan, will forgive me if I am brief on compliments in view of the brevity of the time which is allowed to all of us. I must also be brief on qualifications which might otherwise be introduced. Such brevity simply requires one to be more summary than one would like to be.
I cannot help reflecting when I think of this subject on the several ironies implicit in it. There is the irony that for 45 years we have managed our international affairs without a treaty and that this non-treaty has not only preserved the international peace in Europe but has also lasted longer than any treaty in history which has followed an international war in Europe. That is surely a very remarkable fact and suggests that treaties are perhaps not the necessary way of securing settlement in Europe, as indeed we know from the experience of the Treaty of Versailles.
Moreover, it seems ironical to me that many of those who in the past have advocated the revolt of the enslaved nations of Eastern Europe against their masters have now reversed their position and are lamenting the disappearance of the stabilising force of the Pax Sovietica in the East. Even Mr. Genscher, the German Foreign Minister, who had a reputation for being in favour of unity and neutralism, is now stating publicly that the Warsaw Pact and NATO are necessary stabilising forces to be retained.
It is said that we should seize this opportunity in order to create a formal treaty and a final settlement with Germany and that this should include a formal renunciation of the eastern frontier of the Oder/Neisse line; but I wonder whether that will really achieve the result that we seek. The Federal Republic is on record as accepting these eastern frontiers. East Germany is not. We know very little about East Germany. East Germany, the only country in which views were suppressed, is the only part of Germany in which to any significant extent we still hear echoes of Nazism.
I therefore feel that the situation in central Europe is so confused and in such a state of flux that to attempt to formalise it now in a treaty is premature. Bismarck once wrote that the clause Rebus sic stantibus (things being as they are) is implicit in every treaty. We know from the experience of Versailles how impossible it is through a mere treaty to secure the guarantees that may be written into it.

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History is sometimes a better guarantee of preserving an existing situation than formal documents.
Anything can happen in the present circumstances. The process that has begun is by no means over. Revolutionary euphoria in Russia could end, as it has done elsewhere, in Bonapartist adventure. We are only at the beginning of a very long process and we should not try to freeze it too soon in documents. Anyway, some subjects are immune to freezing and it is best to leave them liquid. We have managed very well so far by diplomacy of detail on the basis of a provisional settlement which has lasted longer than anyone could have expected in 1945. For my part I would prefer to rely on continuing vigilance rather than to attempt at this particular moment to secure a final settlement at a time when the whole of eastern and central Europe is in convulsion and also when two of the major powers who will have to be party to the treaty are themselves in convulsion.
3.32 p.m.
Lord Bonham-Carter: My Lords, I wish to join with the noble Lord, Lord Dacre, in thanking the noble Lord, Lord Callaghan, for giving us the opportunity to discuss this extremely important and topical subject today. It reflects on the flexibility of our procedures that when a man of the eminence of the noble Lord, Lord Callaghan, introduces a topic of this importance and when 20 of your Lordships wish to speak to that topic it is impossible to extend the time. The only device for dealing with the situation is to limit each speaker to five minutes apiece.
I propose to be as brief as possible. I wish to put three propositions to your Lordships, all of which, broadly speaking, appear to be self-evident. The first is that German reunification is on the agenda whatever the Prime Minister may or may not say. It is on the agenda because of history and because of the will of the German people which was shown in a demonstration in Leipzig attended by over 100,000 people a couple of days ago. The proposition is also on the agenda because of what Chancellor Kohl has said. Hence it is on the agenda of your Lordships' House this afternoon.
We may not welcome that because different people take different views of the matter. Writers as distinguished as President Havel and Gunther Grass take absolutely opposite views. I wholly agree with the noble Lord, Lord Callaghan, that this is a matter for the people of the two republics and there is no good reason that I can see why they, uniquely in Europe, should be deprived of the right of self-determination. As allies in NATO, as colleagues in the EC and as one of the nations that will sign the peace treaty we have the right and the duty to talk with the two German republics about how and on what terms that reunification takes place both as regards the frontiers and the timing.
But even if all our conditions are met I have a second proposition with which I believe the noble Lord, Lord Callaghan, would agree. A reunified Germany will cause anxieties in both the East and the West. It is in this respect that the anxieties and the interests of France and the United Kingdom are
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identical. The fear is of the political and economic domination of Germany. The nightmare is of a Germany which is a shifting cargo in the centre of Europe and which is a permanent source and cause of instability. That nightmare and those fears were the source of the European idea. The cargo had to be fixed firmly in western Europe, the economic power balanced by that of the United Kingdom, France, Italy and Benelux.
My third proposition is that that idea is now more than ever true and that the more united and politically intergrated the EC becomes, the better it will be able to offer a proper framework for the political reunion of the German people. For the countries of Eastern Europe to escape from the hug of the bear and to fall into the lap of German economic and political domination would indeed be an ironical fate. Their fears need to be assuaged not only by a renunciation of any change in the eastern frontiers of Germany but also by other means.
In response to the comments made by the noble Lord, Lord Dacre, concerning the adequacy of the renunciation of frontiers, it may well be the case that to renounce frontiers will not solve all the problems, but not to renounce them will create problems. I believe that a politically and economically integrated EC should be able to accommodate those who wish to be associated with it and in due course perhaps they may be able to join that organisation.
In the face of increasing instability in the USSR and of political incoherence in Eastern Europe it seems more than ever important that the United Kingdom plays its full part in the EC. It is necessary to have an element of stability, of growing economic and political influence at the exciting and unpredictable time in which we live. It is sad and I hope that we will abandon the position in which we have found ourselves, isolated on the EMS, monetary union, the central bank, the European social charter and the European investment bank. That isolated position is not conducive to playing a full part in the changes which will occur.
3.37 p.m.
Lord Carver: My Lords, the House must be extremely grateful to the noble Lord, Lord Callaghan of Cardiff, for raising this issue. I find myself in almost total agreement with all that he said.
There is one important point that tends to be lost sight of when this subject is discussed. It is that the situation that has prevailed in the centre of Europe for over 40 years was brought about by disagreement between, on the one hand, the Soviet Union and, on the other, ourselves, the Americans and the French about the future of Germany. It is because the negotiations about that broke down in 1947 and have never been resumed that the four powers are still in Berlin. It is because the Western three feared that the Soviet Union intended to impose its solution on Germany by force that the North Atlantic Alliance was founded and its military organisation, NATO, established. The Soviet Union's reaction to that was to form the Warsaw Pact.
If the four powers now agree about the future of Germany and both Germanys are in agreement with

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them, whether that agreement is for one Germany or two, an entirely new political situation would be created. There would no longer be a justification for a four-power presence in Berlin and the existence of two opposing military alliances glaring at each other across the inner-German border would be inappropriate whether that border were abolished or turned into a recognised international frontier. Neither would it be appropriate for those two alliances to continue to station large bodies of foreign troops on German soil whether that soil were divided into two or not.
As the noble Lord has said, there will undoubtedly be a need for a security organisation. If there are two Germanys they will each need some guarantee of security in their mutual relations. If there is one Germany her neighbours on all sides will certainly need some -method of ensuring that a united Germany could not threaten their security. The countries of Eastern Europe will need assurance of security also against any threat from the Soviet Union; and they will also need some form of security to guarantee their frontiers and to counter the potential threat posed by the existence of other nationalities within them. There are many examples of that in Central and Eastern Europe, as we are being reminded every day, and we must be sure that they do not lead to the kind of instability which was the basic cause of both the First and the Second World Wars.
All this is on the assumption that Europe is going to evolve peacefully into a collection of democratic states which will then live peacefully together, however much they may compete in the economic field. It would be surprising if that happened smoothly and without setbacks. Anyone who based his assumptions about what the result of the French Revolution, 200 years ago, would be on an extrapolation from its first six months would have been very much mistaken. It would therefore be folly to do anything to undermine NATO and the stability the alliance provides until there is some other security organisation which can take its place if political events move in such a way that that becomes appropriate.
But while keeping tight hold of nurse, as nanny of course advises us, we must begin to think about what should take the place of NATO and the Warsaw Pact in that eventuality. We must start discussing its possible framework and a possible programme of how, step by step, we might move from the present situation to a radically different one. Whatever form that might take, whether or not it included the stationing of foreign forces on German or on anybody else's soil, I am sure that both superpowers should participate in any such security system. The implications for our own armed forces would be profound; and it would be folly to initiate major changes in them until we can see the future more clearly.
In what forum should such a new security system be developed? Professor Sir Michael Howard has suggested that we shall need something like the Congress of Vienna which followed the Napoleonic
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wars. I believe that we have an organisation, however weak and fragile it may be, which would be appropriate, and that is the CSCE —the Conference on Security and Co-operation in Europe —which started off at Helsinki in 1975. It needs strengthening and it needs leadership. Whatever solution is agreed to the future of Germany, we need the combination of imaginary vision and down to earth realism which Ernest Bevin showed in December 1947, when he took the initiative which led to the North Atlantic Alliance and has given us 42 years of peace in Europe.
3.43 p.m.
Lord Taylor of Gryfe: My Lords, I lived in Germany in the last days of the Weimar Republic when I was an active member of the Social Democratic youth movement. I was in Vienna on the day of the Anschluss. I was in Prague when the Russian tanks came into that city. Noble Lords will therefore understand my elation and joy at the turn of events in the past few months. We are indebted to the noble Lord, Lord Callaghan, not only for his introduction of this subject today but for his excellent article in The Times on the subject, from which I quote:
"There must be no foot dragging by Western powers to oppose reunification if it becomes clear that both parts of Germany want it"
David Owen as leader of the SDP has written similarly in the House Magazine and in the Sunday Times. He said:
"For the West to oppose reunification is to, in effect, pass a no confidence vote in West German democracy".
I do not subscribe to the view expressed by Gunter Grass in The Times, speaking to the SPD conference, when he said that East and West must stay apart. I prefer the statesmanship of Chancellor Kohl and his 10-point approach to what was said by Gunter Grass. I hope that the view of Gunter Grass will not become the official policy of the SPD of which he is a member.
Noble Lords will have witnessed the demonstrations in Leipzig by people who were not only demanding democracy and freedom but who were also carrying the banners and flags of West Germany. Those people were emphasising their desire for unification not on nationalist grounds but on the ground that unification with West Germany would guarantee their democratic freedom. They are rather suspicious of the transitional government which is operating at present in East Germany.
There are a variety of political reasons but probably the strongest reasons for integration are to be found in the economic field. The noble Lord, Lord Callaghan, said in his article that,
"technology will be more important than territory".
If there is one thing the West Germans can contribute to the Eastern bloc it is their technology. They can break through the bureaucratic system, the lack of investment and the wasteful use of manpower which is a feature of the East Germany economy and supply the dynamism, the inventiveness and the investment capacity of West Germany. To achieve that there will need to be restructuring of the entire East German

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economy including the convertability of the East German currency. In this situation there are strong arguments for unification. I appreciate that Russia and Poland are nervous of these developments, but a powerful, dynamic economy in Europe can also help to contribute to solving some of the problems besetting Mr. Gorbachev in his broken-down economy in the Soviet Union. It could help him rather than threaten him.
I wish to make only two final points in connection with the debate. One was referred to by the noble Lord, Lord Bonham-Carter. All these momentous changes are taking place in Europe. The map is being redrawn and new political alliances are emerging. Is it not rather a pity that Britain takes a more isolationist attitude than most towards the EC? Our influence and authority in that organisation could contribute to a statesmanlike solution of the problems we are discussing.
Secondly, I believe that in many quarters, particularly among the military, the scale of the changes that have taken place has not been grasped. It has not been realised that the cold war no longer exists. The fact that this country is committed over the next three years to spending an extra £2 billion per annum on armaments indicates that those to whom I referred have not taken on board the new opportunities for positive approaches to disarmament which should be a feature of our policy.
3.47 p.m.
Baroness Blackstone: My Lords, the question facing us is not whether German unification will happen, but when and how. The political and economic pressures for unification within East and West Germany seem likely to grow rather than diminish and to make the process inevitable. The two Germanys, not Britain or any other power, will have the decisive influence on the pace of change and the extent to which it is staged through loose confederation to tight federation and into complete unification. What Britain and the rest of Europe must avoid is taking any actions which make the process more difficult and disruptive. Instead, with the United States and the Soviet Union, they must ease the process so that it can take place as painlessly as possible. Above all, the Western powers will need to create the conditions which minimise fears in the Soviet Union and other eastern European countries, notably Poland, that a reunited Germany will pose a military threat.
In western Europe there are fears not so much about the military threat a united Germany might pose but about its economic dominance. The coming together of the two Germany's will certainly create a very powerful economic entity in the centre of Europe. However, we must not forget that West Germany already has the largest population in western Europe and is already by far the most successful economy. The Federal Republic's share of EC economic output in GDP terms is already as high as 24 per cent. Predicting by how much that figure would increase is difficult but initially at least it is unlikely to add more than 2 per cent. or 3 per cent. to its share of the Community's output if unification takes place.
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Britain and the other countries of the EC need in any case to face up to the issues raised by the strength of the West German economy. Whether, for example we are concerned about trade imbalances between the Federal Republic and other members of the Community or about the dominance of the Bundesbank in the formation of the monetary policy, we shall need to find collective solutions.
German unification will not change the nature of these economic issues. However, it may add greater import to them. Unlike the appalling short-termism that dominates the economic thinking of the British Government, the West Germans have already outlined an approach on long-term investment to rebuilding the East German economy with great attention to its infrastructure. Rather than using East German factories as suppliers for the more advanced and sophisticated West German industry, the intention is to bring East German industry to the level of that of West Germany, with similar levels of research and development and an equally skilled workforce. The willingness to invest will of course pay off in the long term just as the failure to do so in the UK is already costing us so dear.
Whether we are able to learn from the FRG's approach to economic development in the East, it is vital that there should be no divergence between European integration and Germany unity. Whether we look forward to reaching full economic union rapidly or whether we favour a more cautious and evolutionary approach, it is vital that Germany —a Germany in whatever form the combining of East and West may take—should be a central player in the building of a community of economic interests in Europe. It would be disastrous if the West European powers, by resisting the coming together of the two Germanys, were to drive Germany into a new isolationist position.
I turn now to security matters. We must surely aim for a major reduction in weapons and in military personnel in both East and West Germany. The Soviet Union now seems likely to remove a substantial part of its army from the GDR. Should there not, therefore, be rapid agreement between Britain, France and the USA, with their NATO partners, to remove the remaining station forces from the Federal Republic? Some have suggested that the Warsaw Pact can crumble without change to NATO. That view hardly seems realistic. Moreover, the scenario creates serious problems for the Soviet Union, as would any suggestion that the GDR could leave the Warsaw Pact yet the FRG remain in NATO.
The most important goal of all for the West in these matters is to ensure that Mr. Gorbachev's domestic difficulties are not increased by new external problems. Russian fears about Germany are long-standing and deep-seated. They could be exploited within the Soviet Union by those forces which wish to discredit Mr. Gorbachev. All that suggests that the two Germanys will have to begin to cut their armies and that the Western powers may have to advance the timetable for discussions about the formation of a new system of European security, whether in the CSCE or elsewhere. It is to be hoped

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that Mrs. Thatcher will not play her usual foot-dragging role.
As my noble friend Lord Callaghan of Cardiff said, reassurance must be provided by the German Government that there is no intention to push for a return to the 1937 frontiers in the East. The Oder-Neisse line must be reaffirmed as the frontier between Germany and Poland. I hope that the UK Government will put pressure on Chancellor Kohl to make a clear statement on the matter in the near future.
A divided Germany was bequeathed to us by the old Europe. The first steps in building the new Europe have been taken on the streets of Gdansk, of Prague, of Dresden and of Leipzig. We now need the imagination to take the next steps towards a hopeful new era in Europe which must include the coming together of the German people.
3.55 p.m.
Lord Thomas of Swynnerton: My Lords, I am convinced that our first reaction to the prospects of German reunification made possible by the collapse of communism in Eastern Germany and the opening of the Berlin Wall should be one of rejoicing and celebration. Of course it is true that not all East Germans may wish to have renunification upon any terms. It is also true, as has been pointed out, that there will be many legal difficulties which will have to be resolved.
The unification of two states, even if they are in a single nation, is obviously much more difficult to achieve if they are democratic states (as we must assume them both to be by the critical time) than if it is a question of conquest. Of course there will be economic difficulties which will stretch over a period of many years. Moreover, the institutions of the past 40 years which have served us well, such as NATO, will have to adapt to new circumstances. I am sure that that will have to happen in any event if it turns out to be true, as the United States Secretary of State for Defence has said, that the Soviet threat has almost evaporated. The question of the Eastern frontier will also have to be investigated, as the noble Lord, Lord Callaghan, pointed out to us very appropriately.
Nevertheless, our first reaction should surely be one of great satisfaction that a major aim of the cold war, which indeed was the unification of Germany in freedom, is now possible. Listening to some people speaking about the prospect of German unification, it seems as if it had been the aim of World War II to achieve a divided Germany. Of course that was contemplated, as some noble Lords in this House will remember. However, that idea was rejected, as was the idea of achieving a pastoral Germany by the so-called Morgenthau Plan. But the policy was the contrary.
The desires of the Western allies were that Germany would after the war be reunited in freedom. Moreover, what happened to prevent this immediately after the war was the fact that German communists—not by any means all East German communists, many being West German communists,
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and others simply flew in from Moscow along with, it is fair to say, German communists who were released from concentration camps —imposed upon the Eastern zone of Germany, as it then was, the Soviet puppet state which basically East Germany, despite its activities in Angola and other parts of the world, has always remained until last year.
To those who nevertheless feel a real sense of anxiety about the prospects of German reunification I should like to point out two or three considerations. First, it is worth while recording that a Germany of 1990, even if reunited, will still only be a country of approximately three-quarters of the size of the Germany of 1938 and only two-thirds the size of the Germany of 1913. It is also true that the German birth rate on both sides of the dividing line between the two Germanys has been falling and is still falling. Therefore any anxiety about lebensraum, or restlessness about room to live, should surely not be a factor for the future. Secondly, I do not understand why we in Britain, with our 58 million, should be especially worried about a country which has increased in size to, say, 80 million. After all, when our population was half the size of France, as it was in the 18th century, we did not feel any particular anxiety on that score; nor, in my experience, do the Spanish, with their 40 million, feel any anxiety about us today with our 58 million.
It is also fair to say that the rational mood which exists in Germany at present, as all current visitors to Germany know, is one which is likely to have absorbed the cost of the two colossal defeats that united Germany experienced in the past. Therefore, extravagant diplomacy of the future is improbable, although we must expect, I suppose, the reassertion of some kind of positive German diplomacy in the future once the generation born after 1945 comes to power.
If all those things are not satisfying to those who fear a united Germany, I think it is fair to say that the noble Lord, Lord Callaghan, and other speakers, including the noble Baroness, Lady Blackstone, did well to point out that the great chance at present is that a united Germany can be fitted successfully into a united Europe so ensuring therefore that the Germans are not only Europeans in the future but that they are also the Germans of Goethe rather than of Hitler.
4 p.m.
Lord Moore of Wolvercote: My Lords, like other noble Lords, I am grateful to the noble Lord, Lord Callaghan, for having initiated this debate with such distinction and wisdom. I venture to speak in the debate not just because the reunification of Germany is the most important issue facing us in Europe, but because I was present when the victorious Russian armies began the process which led to the division of Germany into two parts; for, in January 1945, in a prisoner of war camp in Silesia, we watched with fascination and excitement the advance of the Russian armies, accurately recorded on our home-made maps with the help of the BBC and our secret wireless receiver.
The Russians came within 25 kilometres of our camp. The Yaks were flying overhead and we

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thought that we were going to be freed. Then suddenly at two in the morning the Germans marched us out of camp and over to the other side of Germany.
But even in those dramatic days one had to look ahead and wonder how the countries we had gone to war to liberate—Poland and Czechoslovakia —would be able to realise their freedom. We used to discuss that endlessly with our RAF Polish and Czech friends who were prisoners with us. Little did we think that the Russian armies, whose progress we were cheering every day, would keep them in subjection for a further 44 years.
Now at last Poland and Czechoslovakia are becoming free, and Hungary, Romania and Bulgaria with them. They will have to find their own ways of fashioning and operating democracy; but ultimately their future as independent countries will depend on a modus vivendi being found between the two great powers on either side—the Soviet Union and a unified Germany; for Germany surely will become united.
Just before Christmas I was at a conference on Eastern Europe at Cumberland Lodge, which was attended by some 30 post graduate students from all over Eastern Europe, the Soviet Union, West and East Germany, Poland, Czechoslovakia, Hungary, Romania and Bulgaria. I was fascinated to find among them a tacit assumption that Germany would be reunited.
The process of reunification will have to be conducted with great skill and diplomacy if it is to be achieved peacefully. The gut feeling in both Germanys is already assuming reunification; but the Soviet Union is wary. It has reason to remember the power of Germany and the devastation caused to its country. Britain, the United States and France, apart from their international treaty obligations, have a responsibility to play as constructive and helpful a role as possible. The countries of central Europe in between can only hope that they will be allowed to work out their own destinies without foreign intervention.
In many ways, as noble Lords have said, the most difficult problems will be presented by the future of NATO and the Warsaw Pact. None of the major powers will be prepared lightly to lower its defensive shield, and it will be vital for the West not to throw away the security which NATO has given it for so long.
Not just the reunification of Germany, but all those challenges will call for much wisdom and patience. No one at this stage can say whether Europe will be able to solve the many problems involved. Perhaps however, ironically, the greatest hope for the future lies in the fact that the nuclear bomb makes a major conflict unthinkable, and for the first time in its history Europe will have to work out its salvation without recourse to war.
4.4 p.m.
Lord Hatch of Lusby: My Lords, I spent the Christmas Recess in Austria, which is one of the best places to listen to what is happening in Eastern Europe today. Day by day there were Czechs,
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Hungarians, Romanians and Germans coming to Vienna. The Austrian Socialist Party has been in active touch with the opposition movements in all Eastern European countries, not just for the past few days or weeks but for many years, and has given them active and valuable support.
I found one irritation in Austria, at times bordering upon anger, which was occasioned by the boasts of certain quarters in the West that it was they who had effected the revolutions in Eastern Europe. It was not. It was the people of Romania, Czechoslovakia, Eastern Germany and Hungary. It was the people. It was the people's revolution.
It would be tragic if we in the West were to allow ourselves to be alienated from the new democratic forces in the East because of the false claim that socialism in Eastern Europe has been defeated. That is not what is seen in Eastern Europe. Stalinism has been defeated, and Stalinism has been defeated by the people of the Eastern European countries. It is not forgotten in Austria or Eastern Europe that in 1931 it was the Stalinists and the Nazis who crushed the centre, mainly the Social Democratic Party.
I found a fear in Austria that there will be a violent backlash to the overthrow of Stalinism; that Eastern European countries will go wildly to the right; and that fear is an echo from the history of the relationships between the authoritarians of the Right and the authoritarians of Stalin, the authoritarianism which is a natural alliance. It is feared that it may recur.
Those who have overthrown the Stalinists —we democratic Socialists have been fighting the Stalinists for 50 years —have no intention of adopting the casino-type economies of the West. They have found that, although they have been crushed politically, there are certain social and economic values which are worth preserving. In Eastern Germany they are trying to work out a new synthesis between the democratic economy of democratic Socialism and the democratic political system which is still to be invented. It would be a tragedy if we were to interfere in that process.
The future depends upon us. It depends upon the libertarian democrats in this country. It does not depend upon the Conservative Council for Eastern Europe now meeting in Prague. It is not our task to sell the private enterprise economy to the East. They have to develop their own economic and political systems. We have to help them to develop them, to root them deeply and to build them, not just against Stalinism but against all forms of authoritarianism.
4.9 p.m.
Lord Beloff: My Lords, in congratulating the noble Lord, Lord Callaghan, on his choice of subject for debate, perhaps I may also congratulate him on his unquenchable optimism. I find the situation far less cheerful than do some noble Lords. The noble Lord, Lord Callaghan, mentioned 1789, a year which was a prelude to 25 of the worst years of war that Europe had hitherto known. More relevantly and more disquietingly, he mentioned what happened in 1848. The old regimes which were challenged by the revolution of the intellectuals, as the late Sir Lewis

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Namier called it, got back into the saddle in most countries. Where they did not —in France —there was another spell of Bonapartism.
We are only at the beginning of these movements in Eastern Europe. People who talk as though a revolution had already taken place seem to me to overlook some of the arguments. I do not accept the presentation of them by the noble Lord, Lord Hatch of Lusby. However, people overlook some of the arguments for believing that there is a long way to go before East Germany itself is ready for unification with a West Germany whose economy —one can call it a casino economy or an economy which puts things in the shops —is different from its own.
We do not know to what extent we are witnessing a regime in East Germany —and the same is true, to a limited extent, in most of the other East European countries —which is fighting to maintain, under new labels, fundamentally the same principle of single party rule and the command economy which has brought those countries to their present pass and has created the popular uprisings to which the noble Lord, Lord Hatch, referred. Is this simply an effort towards a rearguard action by what I think we can still call the ancien régime, to which, for instance, Herr Modrow belonged? Or do they represent a genuine wish on the part of these countries to have a social and economic system which would be so different not only from that of West Germany but of the EC countries that the talk of a single European system in the economic sense becomes somewhat unreal? I believe that that is one worry.
We ought to wait and see. East Germany, after all, is a totally artificial creation which corresponds to nothing except the line of demarcation between the armies. I entirely agree, as I think all noble Lords do, that, if all sections of the German people as a whole wish to form part of a confederation, federation or a single state, it would be wrong and incompatible with our own beliefs to stand in their way, whatever precautions their neighbours —particularly their eastern neighbours —might wish to take. However, we do not know that we have reached that stage yet.
Nor am I as confident as some people about the future of Germany's eastern frontiers. I think it is highly improbable —and here I agree with my noble friend Lord Thomas —that there might be a recrudescence of a German military threat. Rather, the thought of a possible reorganisation of Eastern Europe under German leadership, which I think is almost inevitable, will raise anxieties because these are also artificial countries. What is present-day Poland? It consists largely of lands from which the Red Army chased the German inhabitants so that the Poles would in future depend upon Soviet protection. Will the Germans for ever refer to the great philosopher Kant, the author of a project for universal peace, as being a professor in Kaliningrad?
These are serious problems which are bound to arise. Nations do not forget their history. We only have to look across the Irish Sea to be aware of that. We are faced with the most disquieting and dangerous situation that Europe has known for some
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years. It will take all the resources of statesmanship in all our countries to make sure that the changes which I believe are only just beginning are in the end changes to everyone's benefit.
4.14 p.m.
Lord Gladwyn: My Lords, no one can deny that if the DDR becomes genuinely democratic and changes over to a free market system, it will be able to join up with the Federal Republic. But these are big "ifs" and in any case the process, if it takes place, will take some time. Nor is reunification invevitable. Here I venture to disagree with the noble Lord, Lord Callaghan, and other noble Lords. It may happen but it is not inevitable.
Is it also desirable? Many argue that it is because they say that it is obvious that the bulk of the German people want it and that if it comes about the reunified Germany will also be democratic and continue happily as a member also of the European Economic Community. However, on the other hand, it is certain that a reunified Germany, however democratic, would by the force of events and whatever the Federal Republic may say now raise the question of the eastern frontiers.
It is also quite on the cards that a larger and potentially nationalistic Germany would be an impossible member of the Community as at present organised. It is finally likely, I am afraid, that the Americans would withdraw their troops, thus ending the NATO alliance. Such are the obvious possible disadvantages and it is hard to deny that they are real.
Be that as it may, the idea that the Federal Republic should have increasingly good relations with an eastern German state conducted on rather different lines is not a stupid or reactionary idea. East Germany has always had a rather different Weltanschauung from the more liberal and catholic West. There is already a special relationship between the two countries and there is no reason why this should not be further developed. After all, the Federal Republic has perfectly good relations with another contiguous and independent German state, namely Austria.
What is important is that if we have any doubts about German reunification —and it is evident that whatever their governments may say in public, most French, Poles, Russians, Danes, Dutch, Belgians and, I would myself add, British, have such doubts —we should in no way suggest that it is the result of simple anti-German prejudice.
For centuries our country has resisted any attempt by any other country to dominate the continent or to be in a position to be able to do so. We were right in so doing. The only trouble was that when the necessary wars for that purpose were won, the ensuing settlement was not permanent. The Treaty of Vienna, the balance of power, the Versailles Settlement, including the League of Nations, all collapsed owing to competing nationalistic emotions. Appalling wars ensued. After the last holocaust we thought we had found a solution: the four major European powers would come together in a new form of union which would be so organised

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as to make it impossible for any of them to pursue a totally independent policy.
The essential basis for such an organisation was, and is, an agreed, though limited, measure of supranationality and basic equality among its four major members. If one of them should ever become nearly twice as important as the others, it is likely, I am afraid, that the Community would collapse. If one of them —and we know which one—should decline to accept an increasing degree of supranationality, there would be much the same result. The nation state would emerge victorious and nationalism would take its inevitable course. I suggest that it is therefore from this angle that we ought to consider the immense problem posed by the possibility of a single German state or even some form of confederation.
But whatever the result, or suspected result, we for our part should press on with enthusiasm and not in a reluctant way for the accomplishment of the original European idea, which is co-operation and not contest among the major European powers and adequate democratic machinery for assuring that end. That would be the best and perhaps the only way to make sure that Germany remains in the West and pursues a common Community policy in the face of what appears to be the end of Soviet influence in Eastern Europe and possibly the break-up of the Soviet Union itself.
4.20 p.m.
Lord Greenhill of Harrow: My Lords, fears of unification, privately or publicly expressed, as the French among others have already found out, produce a reaction in Germany which is the reverse of what is hoped for. My first point is that no one should be so foolish as to believe that a unified Germany can be neutralised, nor can it be anchored —that is the word used by journalists —to the Community against its will. But the movement towards unification is, I believe we all agree, irreversible. The split of the country was never intended but, as the noble Baroness, Lady Blackstone, said, the situation is rather like the entry of the British into the ERM. It is not a question of whether, but when. However, the pace and form of unification have yet to be discerned.
Secondly, however unification comes about, as the noble Lord, Lord Callaghan said, it must be the result of an indisputably democratic process. If the East German election promised for May takes place, it must be undeniably free and fair. It is reasonable to ask whether a plebiscite rather than an election is the right way to proceed. To an outsider it seems to me that the opposition in East Germany has neither the resources nor the organisation to fight a tough election and the Communists have a tradition of manipulating results. If an election does nevertheless take place, the result may well be a compromise like the situation of the present Polish Government. But whatever happens in May and December of this year in the East German election and the West German election, the likelihood is that the beginning of 1991 will be a critical time. The move towards unification will be assured but the pace of it will not be clear. However, it will be at the centre of European affairs.
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At that stage, that is the beginning of 1991, would it not be prudent to set aside existing Allied rights and seek a new and novel treaty? I do not mean a peace treaty in the traditional sense, such as the peace treaty that ended World War 2, and not a treaty between victors and vanquished, but a treaty involving at its centre the war-time Allies and a Germany poised for reunification. I should like to think of that as a treaty for the pacification of Europe.
The treaty should also include as many other European participants as possible. It should seek to be specific on potentially disputed frontiers, including of course the Polish/German frontier. As the noble Lord, Lord Callaghan, suggested, it would draw heavily upon the Helsinki Final Act. It would remove the outdated Allied rights in Germany. Associated with the main treaty or integrated in it would be disarmament agreements including troop withdrawals and a definition of a new relationship between NATO and the Warsaw Pact countries. That would be essential. Whether the two pacts should continue or be merged in some way is a question that is far too early to decide. However, in my view, preliminary consultations between those concerned in such a treaty should begin in 1991. That need not, I suggest, displace or distract from the intergovernmental conference of the Community members being planned during this current year. However, it would be appropriate for that conference to take this problem into consideration. Ultimately a new treaty of the kind I suggest would be of greater significance than the decisions of the Community.
Is it too much to ask to work for a solution like this? It would require a diplomatic effort over many months. However, we appear to have a critical chance now to make plans for what could be a decisive move towards the pacification of the European continent.
4.25 p.m.
Baroness Ewart-Biggs: My Lords, I wish to contribute three short points to the important debate which my noble friend Lord Callaghan has brought before the House this afternoon. My first point concerns our reaction to what has happened in East Germany and elsewhere. Secondly, I wish to mention the need for a vision of the shape that a restructured Europe might take. Thirdly, I wish to mention the role this country should play to bring that vision into effect.
On the first point, what else can one say other than that we rejoice that millions of our fellow Europeans now have the chance to enjoy the same kind of freedom that we take for granted. At the same time, we recognise that for the present there is no direct action that Britain can or should take. But while recognising that we cannot interfere, we should accept that we can help. First, we can help from an economic viewpoint. If these countries are to become trading and political partners of the West, the West has a self-interested obligation to take active steps to assist in their economic regeneration.
A second way we can assist is by helping to formulate a vision of what kind of European

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framework is needed to deal with the fundamental changes which have taken place so rapidly. We have to accept that Germany is and has been central to Europe, both geographically and economically. If one looks back as far as the early 1970s, one recollects that the economic prominence of Germany became evident then and that France needed Britain as a counterbalance to Germany's emerging power. That brought about the first enlargement of the European Community. Now we have two Germanys which may or may not wish to become reunited, but whose two peoples certainly wish to co-exist within the same system. So, once again, a wider European Community is needed to contain and provide balance either for one Germany or a loose confederation of two.
As we know so well, there are many candidates to make up this larger Community. Once again the European Community can be used as a catalyst. In 1973 the enlargement of the European Community enabled Britain and Ireland to use its framework as a catalyst to deal with their common problem in Northern Ireland. I believe that the intervening years have proved that to be the case. Now we could use an even wider framework for another purpose; namely, to assist in resolving the German question.
What is Britain's role in this matter? Here, I am convinced that we must look towards Europe in a true sense. We must genuinely think of ourselves as European instead of sometimes continuing to regard the Continent with some suspicion. Britain has always had a special relationship with the United States. However, important as our relations with America are, they should not cloud our vision of Europe. Our role now must be to co-operate fully with our neighbours to restructure Europe. It sometimes appears as if 1945 remains too important a date in our Government's calendar. However, the majority of Britons were not even born in 1945. I believe that the process of restructuring Europe must be pragmatic. However, I equally believe that in order to avoid a dangerous vacuum there must also be a constant will to move forward. There must be a dynamic sense involved here.
A more positive role for the Community was never more essential than concerning its response to the dramatic developments in Eastern Europe. There has never been a greater need for Her Majesty's Government to commit themselves unequivocally to working with their partners in this regard. There is little doubt that in recent years Britain has on many occasions been seen as an isolated and sometimes semi-detached member of the Community. If this continues to be seen to be so, I very much fear that this country may be seen as entirely irrelevant to the historic changes which lie ahead of us in Europe.
4.30 p.m.
Lord Pym: My Lords, the revolutions in Europe in 1989 show very clearly that the consequences of the two great wars of this century have far from played themselves out. The fact that those revolutions have happened much earlier than expected is due to Mr. Gorbachev. Our immediate
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reaction is naturally one of relief and joy, but we shall be making a big mistake if we do not comprehend the scale of the problems that must now be faced.
The landscape is moving as we look at it, and we must ensure that when it stabilises again it does so in a mould that is genuinely beneficial to the millions of individuals affected, and that it is based on democratic principles and freedom.
The first result of the revolutions to attract attention is the possible unification of Germany. There are many dimensions to that. From the point of view of the German people, it would surely be extraordinary if they did not want to be united. With elections in both West and East Germany this year, we shall hear a great deal about that from all sides of the political spectrum. There will be widely differing opinions, but we must work on the assumption that unification will happen. The process has begun already, as the noble Lord, Lord Callaghan, has said.
That means that the settlement —if one can call it that —reached at the end of the Second World War must be reopened, as has already been said, with the wartime allies agreeing a basis of discussion with the two Germanys so that a new settlement can be reached. But many other countries are affected too, as are millions of people, many of whose interests conflict. The surrounding circumstances are also wholly different, so the process will be controversial and complicated. The issues raised are fundamental —I will not list them because there is not time —and millions of individuals are going to feel very strongly about them, so one of the first major tasks of diplomacy will be to tackle them adequately and in the timescale that may be required.
The second dimension of the unification question is one that makes unification highly desirable, if not a necessity. That is the economic state of Eastern Europe, as well as that of the Soviet Union. The economies of all countries in Eastern Europe are in a ghastly state. The unhappy truth is that, with the best will in the world, they cannot be rectified and modernised quickly. The greatest challenge facing the whole of the West is to understand the scale of the economic need of Eastern Europe and to put in place as a minimum an updated equivalent of the Marshall Plan. We must make the maximum possible provision for their needs. That is not only an economic but political necessity, because the great hardship that those countries will face will cause some of them to question whether they were not better off under the old regime. In that situation I believe that the process of unifying the two Germanys will of itself facilitate the transition of the East German economy and make that process quicker than it could otherwise be.
Because of its geographical position and economic strength as well as the skill of its people, West Germany is a crucially important source of economic support for all Eastern Europe. This concerns not only Germany: it is essential for all Western countries immediately to organise an investment programme for Eastern Europe involving private industry and commerce as well as governments. Japan is already playing a prominent part, and so

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will the United States, without doubt; but every other country has a responsibility.
That leads to the third dimension: the changing balances within Europe. Already the balance in Eastern Europe and in Europe as a whole has changed dramatically. In Western Europe the balance remains stable, although unification will call that into question. The way in which all this settles down in the end matters a great deal because of the changing balance in the world as a whole. The world balance is moving steadily to the Pacific Rim, and, if Europe is to have the influence and clout in the next century which it will need and ought to have, it is essential that it acts in a concerted and cohesive way.
That is why the development of the European Community is so vital. It is at a turning point now following the revolutions of 1989. No longer is it concerned only with its own development; it is the catalyst that can enable Europe as a whole to recover from the wounds of Yalta.
So far as the balance in the West is concerned, it is entirely within the power of Britain, France and Italy together to be more than an adequate counterweight to a unified Germany, if that comes about. It was not possible for that to be the case earlier in the century, but it is possible now.
We are moving into a new and different world. It is perfectly true that we shall see old rivalries and hatreds re-emerging. We are seeing that already. The next few years are going to be very difficult. We shall see many conflicts and perhaps bloodshed, but we must combine an ever-present awareness of the lessons of the past with new thinking and imagination about the future, which in many respects will be very different from anything known before.
4.35 p.m.
Lord Kennet: My Lords, in opening the debate, the noble Lord, Lord Callaghan, spoke of the absurdity of a frontier between two halves of a German confederal state which would have short-range nuclear weapons on either side of it. That would indeed be a great absurdity. Perhaps we should also remember the project for a Lance replacement system, of longer range and greater explosive power. Would the Government not be well advised, before entering into the extremely difficult period of constructing a new Europe which is beginning now, to cut loose that ball and chain from its foot in its relations with West Germany? No politician in NATO wants that except the Prime Minister, so I am glad that it has not been mentioned today, and I hope that it will not be mentioned from now on.
The problem in the revival of a single Germany is susceptible of solution very largely in legal terms. If we get the treaty structure right there should be little danger of military expansionism. The present two Germanys are equally successor states of the Third Reich. But because of the absence of a peace treaty they have never been able to replace in international law the territorial claims and other revendications of the Third Reich. We all know that
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they are not going to try and exert them —they never have —but a peace treaty will be required to put an end to those boundaries.
A reunited Germany is going to be a successor state both to the present two Germanys and to the Third Reich. There is a conflict there because the present East Germany has an eastern frontier which is of crucual reality and importance at the moment. But it is in conflict, as has often been pointed out, with the eastern frontier of the Third Reich. I see no way of that being settled satisfactorily without there being a peace treaty at some stage, though not necessarily immediately. I think the noble Lord, Lord Dacre, feared there might be a move for it next week, but I believe there must be one within a year or two, as part of a general movement. Unfortunately, Chancellor Kohl has been a little cloudy when pressed to state his position on the eastern frontier of a reunited Germany. Perhaps we should worry about that; perhaps not. Both East and West Germany are bound by the CSCE Treaty structure as it exists now, which states fairly and squarely that no frontier in Europe shall be changed except with the consent of both parties concerned. That binds West Germany as clearly as it binds East Germany now. To my mind, that is sufficient reason to accept the CSCE as a proper framework for laying out a new Europe in the next five or 10 years. Nowhere else do we find that. It is there and must be built upon for German as well as European reasons.
Having said that, what else should be done? We shall be lucky to get a reunited Germany in to the European Community without convulsions which might rob the European Community of some of its present value. If possible —but it will be extremely difficult and hard work —we should perhaps aim at three concentric circles: a European Community with a reunited Germany in it; EFTA, as now defined, in the closest relations with that; and, as a third circle, whatever Eastern Europe appears. I include Russia in Eastern Europe, because we must face the fact that the days of the Russian Empire are now clearly numbered. In 1914 there were 11 European empires; there is now only one. We shall face an Eastern Europe in which at least the three Baltic states will have come out from under Russian rule, and which will include Russia, which is a European country. Then there remains the problem of Greater Russia. What about Russia-in-Asia, which is part of the Russian SFSR and, presumably, not divisible?
An agenda and a half awaits us. I hope that our Government can play a constructive role in it and that they will get rid of the out-dated impediments which may prevent them from doing so.
4.41 p.m.
Lord Monkswell: My Lords, I too should like to thank my noble friend Lord Callaghan for introducing the debate. I rise to speak because I am probably one of the few Members of the House who was born after the last war. Most noble Lords will have experienced the last war and some will have experienced the Great War. Those experiences will therefore colour their vision of the situation today.

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I should like to make the point that people born since the last war have a different vision. We have seen the new tasks with which a much smaller world presents us. Going back into history, we can see the inevitability of the unification of Germany. Given that both Russia and the United States are no longer prepared to use their armies to keep Germany divided —that is the reality of the situation —it is inevitable that the two halves of Germany will unite.
So how do we face that situation? How do we react to it? We can only react positively by working with the people of Germany, with their undoubted talents, to tackle the tasks that face humanity. Perhaps I may point out two of the tasks. The first is to enable all humankind to have a decent standard of living, to eat, to be clothed and to be housed. The other task is to protect our environment. How can we best help the German people to do that?
We must try to allay the fears of those European countries which, from a historical point of view, are justified in being fearful of Germany. The immense economic power of Germany may be a threat to those European countries around Germany. One of the ways in which we can attempt to alleviate those fears—not only the fears of Germany's immediate neighbours, but our fears and those of Russia and other European countries—is to include not only a united Germany in the EC, which is the easiest mechanism, but to include Poland, Hungary, Romania, Czechoslovakia and Austria and, to allay the fears of the Russian people, to include Russia and, almost inevitably thereafter, Latvia, Estonia and Lithuania. So the task ahead of us is immense if we think in terms of enlarging the European Community to include all those countries, as is essential.
It may be as a result of the enthusiasm of my comparative views and my feeling that we need to do something quickly that I suspect that the time-scale for those changes will be far more rapid than we have envisaged. Apart from the fears of the nation states in Europe and around Germany, we must also consider the fears of people living in Germany. One of the problems that developed with the emergence of the German state over the past 150 years was the concept of its supposed superiority with, as the corollary of that, the concept of members of the human race who were a sub-class of humanity.
We can still see the relics of that philosophy in both East and West Germany. We must do everything we can to ensure that that philosophical point of view is reduced. One of the ways in which we can do that is to consider such matters as the EC social charter. It is interesting that the first draft of the social charter included guest workers, while later drafts did not. I hope that the Government will use the social charter as a means of ensuring positive development within Germany and ensure that guest workers are included. Time prevents me from enlarging on those themes at great length.
4.47 p.m.
The Earl of Selkirk: My Lords, I should like to apologise to the noble Lord, Lord Callaghan, for not
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being here when he spoke. I was prevented from being here for reasons which I could not wholly escape.
Unlike the noble Lord, Lord Monkswell, I venture to speak to noble Lords on quite different ground. As a student in Germany in the mid-1920s I saw the embryology of the Nazi movement. I could not believe my eyes or the speeches that I heard. I believed that the people were going mad, and they were going mad, but I did not realise that adequately at the time.
One must remember four factors. The Germans had been defeated in war. That meant a great deal to a militant body of people such as they were. They had had inflation. The meaning of money simply disappeared in their minds; it became utterly useless. There were 6 million people unemployed. They were a proud race, but were viewed with contempt by practically all other countries. Those factors constituted the splendid background from which Hitler was able to build up his ultimate position.
I did not doubt that the two Germanys would unite. It never occurred to me that that would not happen. It was only a matter of time. Perhaps I take a less pessimistic view today than do other people. We have now got out of the tangle into which two peace treaties put us, first at Versailles and then at Yalta. Both those treaties led the country into a thorough mess. Anyone who observed it closely saw that Europe was in a mess at that time.
We therefore have a great and perhaps unique opportunity which will depend almost entirely on the quality and determination of the people who come to the top. The ambitions of people in Poland, Italy or anywhere are all the same. People are not so different. But their leaders can be different and the people can be drawn in the wrong direction. Can we exert enough influence to keep them going right?
The noble Lord, Lord Kennet, said that he hoped that East Germany would not be drawn into the Common Market. I should have thought that that would be an immense opportunity to draw together in a market in which we could compete with one another —not compete politically because I hope that such a common market would not turn into a political arena, which would not work. But it would be of great advantage and help to us all to draw the countries of Europe into competition in trade —into competition for money, if one wants to put it so bluntly. I think that we have a considerable part to play in that.
The Germans wrote their Weimar Constitution in the early 'twenties. It was an astonishing document, with every modern device. But the constitution lasted no time at all because there was not the determination nor the personnel to keep it going. There is now a massive desire for democracy. An alternative phrase for democracy might be the attainment of human ambition. We can help. We have had years of experience of democracy. We have, I think, a little falsely celebrated the 700th anniversary of Parliament. It was perhaps rather gratuitous, but we celebrated it. We have a lot of experience in these matters. We must try to get the

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countries of Europe to understand the nature and quality of the problems involved.
Yesterday afternoon this House discussed what is called the Henry VIII clause, which most people dislike. People in government rather like it, but that is another matter altogether. However, there are problems in making a democracy work. I believe that we can contribute to help solve those difficulties. We can help and I believe that we will do so. This is a moment of unique opportunity in the whole history of Europe. We may or may not take advantage of it. I am inclined to believe that we will not do so, but the opportunity is there.
4.52 p.m.
Lord Hankey: My Lords, I start by saying that it is a pity that with such experts in this House on every hand we should limit ourselves to speaking for five minutes each on a subject of such enormous importance to this country and to Europe. It is quite ridiculous.
I agree with those noble Lords who said that we must regard the reunification of the two Germanys as inevitable. It may not come as soon as some people expect, but in my view the destruction of the Berlin Wall has raised the whole question to an emotional level which no German politician will be able to resist. I have much the same background as my noble friend who has just spoken, having studied in Germany and attended a German university. I agree with a great deal of what he said. All the same, we live in a time of political avalanches. Avalanches and landslides are horribly dangerous. We have to be very careful about where we are going. We must work out our path.
We do not want a neutral Germany. That would be a dangerous illusion. The Germans are not built to be neutrals. They are altogether too purposeful—in German, zielbewusst. Sooner or later there may be another Russo-German pact, which would be fatal. There have been two in our lifetime. it would certainly be very dangerous for Poland. Moreover, the new European Community without Germany, which is its main industrial powerhouse, would not make all that much sense.
We cannot foresee what will happen in Russia. Therefore for the foreseeable future we should make every possible effort to preserve NATO. Personally I am very impressed with Herr Woerner, the new Secretary General. He is a tremendously impressive person with very good ideas. One of them is that there may be some kind of semi-political approach between NATO and the Warsaw Pact, if indeed the Warsaw Pact continues to exist. We cannot foresee what will happen.
I thought that the idea of my noble friend Lord Callaghan of using the Stockholm CSCE arrangements as a further springboard was intensely interesting and forward-looking. I hope that that idea will be carefully examined. The noble Lord, Lord Greenhill, also produced a most interesting series of ideas about how there might be a new treaty background.
There are colossal uncertainties in Eastern Europe which bring the whole Continent into a state of flux.
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It would be dangerous now to miss the opportunity to develop the European Community into something more real, more convincing, more solid, more effective and more potent —something around which the other states of Europe can crystallise. It would be something which the reunited German people, our own people, the French and other peoples could regard as holding out a valuable, cohesive future which offers prosperity as well as a cleaner environment to us all. It would be something that we could all work towards with enthusiasm. The Americans have been pressing it on us for two generations. This is not a new idea.
I have come to the serious conclusion that we ought to work towards a European confederation. I say "confederation" because that means that the component states allocate to the central confederal government only certain powers and retain all the others themselves. I am not at all taken with the centralising ideas of the French. I believe that they would lead to intense frustration and irritation. However, a confederation in which we contributed only certain things to the centre would be possible.
I have every realisation of how difficult that would be. There would have to be a written constitution. I hear noble Lords say, "How very un-British". Of course it would be, but without that the system would never work. There would have to be a proper European Parliament. It would have to be moved from Strasbourg to Brussels. The French have done a wonderful job at Strasbourg but they messed everything up by separating the European Parliament from the EC's administration and committees.
Remembering the OEEC, I think that we need something similar for the states of Eastern Europe so that the help that they receive is conditional upon their combining together to have more free movement of trade and slowly more convertible currencies.
I do not think that I can say more within the time-limits that have been set, but we should try to look forward to something of that nature which can offer a cohesive future for Europe as a whole. Without it, I believe that we may be in danger.
4.58 p.m.
Lord Kagan: My Lords, the noble Lord, Lord Callaghan, is right to tell us that unification is a fact and that its formalisation is only a question of time but also that at the end of the day we may see a Napoleonic solution in the Soviet Union. Mr. Gorbachev's stated aim is a common European home. We are now seeing the development of a German-led, German-Russian alliance. That is the only way in which Russia can survive as a European power.
German organisational ability and technology combined with Russian space technology, Russian manpower and Russian resources are absolutely unbeatable. Such development has been planned ever since Bismarck's days. Hitler would have succeeded had he not indulged in his paranoia. He tried rape. West Germany is offering seduction and will succeed.

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When East Germany joins West Germany there will be 17 million highly educated specialists, skilled people whose second language for 44 years has been Russian. We shall see an economic blitzkrieg in the East. West Germany is the only nation that can offer mass management and mass understanding of the Russian mind. It will have available 17 million people whose second language at school from seven years on is Russian. The rest of the world could not match that.
Central and Eastern Europe were always dominated culturally and industrially by Germany. In undermining Communism the price to Mr. Gorbachev is cheap because, first, he is a Russian, and, secondly, a communist —if anyone can define Communism. By abandoning Bolshevism or dismantling Communism, he is making himself acceptable to West Germany. We are now seeing a second attempt, a voluntary Ribbentrop-Molotov pact. In other words, the approach has changed from a military to an economic one.
The end result will be a superpower from the Rhine to the Japanese frontiers with the greatest amount of raw material resources, skill, labour and technology. It will be the superpower of Europe. It will not be hostile to the Economic Community. It will for the most part ignore it.
That will be the unified Germany. It restores the pride of the Germans by at last counting in world affairs as they feel they should according to their economic power, dedication and work philosophy. It is being blessed by the USA, which welcomes a strong power at the back of Japan. I believe that we shall see the statues to Stalin restored. He will be honoured like Pasteur because what Pasteur did for medicine Stalin has done for politics. He has made the world immune to Communism.
5.4 p.m.
Lord Mayhew: My Lords, we all seem to agree that a new, secure system is necessary to replace the present system, which is crumbling. However, even if we were to start work on it now, the negotiations for the treaties (there will be several of them), the erection of the institutions (there will be several of them) and the arrangements for peace-keeping, perhaps involving military decisions, will take many years. Before then NATO will be faced with very difficult problems in connection with the reunification of Germany about which I should like to speak.
The noble Lord, Lord Callaghan, quite rightly said that the unified Germany for which the Germans will ask will have only one armed force. Naturally that armed force will be deployed on both sides of what is now the frontier between the Warsaw Pact and the NATO forces. What then will be the position of those forces? They have no frontier to defend. They are deployed side by side with units of the same German army. Their position on defence is not only superfluous; it is ridiculous. A reunified Germany cannot co-exist with the continued presence of the forces of the Warsaw Pact and NATO.
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Some speakers in the debate have said, "All right, but Germany must stay in NATO". The noble Lord, Lord Callaghan, said that United States troops must stay in Europe. But that is surely subject to many serious objections. First, on the attitude of the Russians, it is a lot to ask of them. They have made it clear that if both sides withdrew from Germany they might consider it but they will bitterly oppose any agreement which suggests that they should withdraw while the Americans stay.
It could be argued that the Russians are in such a weak position today that such a settlement could be imposed on them, unbalanced as it is. That may well be true. But if we are looking for the new system of security dependent on superpower agreement and on East-West co-operation, to suggest that Germany should belong to NATO or that NATO troops should belong in Germany while the Russians go is a sure means of undermining the position and indeed of renewing the cold war.
I have not heard the point mentioned in the debate: it may be an esoteric view. However, I am driven to the view that in the meantime, while we wait for the new security system, there must be a disengagement both of the Warsaw Pact countries and the NATO forces from the unified Germany. I speak for myself on that. It is not a new idea. It was supported by Hugh Gaitskell and the Labour Party 30 years ago.
Five years ago, before we reconciled our policies with the SDP in order to form the Alliance, the idea was well regarded in the Liberal Party. The Liberal Assembly of 1984 resolved unanimously as follows:
"Concerned at the growing conflict between the demand for self-determination in Eastern Europe and Germany and the Soviet Union's perception of its security interests, Assembly believes that initiatives should be investigated for overcoming this problem, including the mutual and balanced disengagement of Soviet and American forces".
I believe that the logic of what has happened since Mr. Gobachev's reforms began leads inevitably in that direction.
The main objections made five years ago to the idea —namely, that the Russians would not accept it; that it would unbalance the military balance —no longer hold good. I hope very much that the idea will be seriously considered in the context of the new security system about which many noble Lords have spoken. There must be many noble Lords who feel as I do, that after over 40 years of trying to strengthen NATO, of confronting Soviet Communism, it is very hard to adjust to what is now an entirely new ball game. That is what we have to do. I hope that we have the courage to do it.
5.8 p.m.
Lord Cledwyn of Penrhos: My Lords, we are all very grateful to my noble friend Lord Callaghan for initiating this important debate on German reunification and for his thoughtful and stimulating speech. We have had a balanced and informed debate with important contributions from all sides and a full appreciation that the problems that arise from our discussions are difficult and complex.
The history of the last century and more has made them so and Britain has been and remains

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inextricably involved in the events following the two great wars of this century. From 1945 onwards the cold war made an agreed peace settlement impossible and the Federal Republic of Germany and the German Democratic Republic emerged from that sad failure. They were born out of hostility, suspicion, fear and the sharply contrasting ideologies of the Soviet Union under Stalin on the one hand and the Western world on the other which were later reflected in NATO and the Warsaw Pact.
We remember the bitter arguments about German rearmament and other issues. West Germany joined NATO in 1955 and that led to the creation of the Warsaw Pact. The continuing hostility seemed to be symbolised permanently by the erection of the Berlin Wall in-1961. Since then most of us have lived through 25 years of suspicion and uncertainty in Europe. If we look back we must recognise that, remembering the repression of freedom in Hungary and Czechoslovakia by the Soviet army, NATO has served us well as a bulwark against potential aggression. As far as we can see at present, it must remain so into the future, although I take careful note of the proposals of the noble Lord, Lord Mayhew, for a new security system in Europe.
At this point however, it is worth recalling that the British Government expressed a basic view in 1945 after the war in Europe had ended. They said:
"it is Utopian to think of a West Germany which is not in the long term united with East Germany".
That general principle has been held to by successive governments in Britain and its allies ever since.
That view was reaffirmed last month at the European Summit, although, as noble Lords will have noted, with some qualifications. The statement referred to the democratic process and the principles of the Helsinki Final Act. I agree entirely with the comments made by my noble friend Lord Callaghan about the central importance of the CSCE. But it accepts the inevitability of reunification if the people of East and West Germany are determined to achieve it. Is that really the case? Is it inevitable? Looking at it today it seems to be so and we shall be interested to hear the Minister's reaction to that. There are of course other considerations which have been mentioned by my noble friend and other noble Lords but of primary importance is the Soviet viewpoint.
It must be conceded that Mr. Gorbachev is responsible, if not entirely then to a very large extent, for the historic revolution taking place in Eastern Europe. His speeches and his policies and their consequences both in and out of the Soviet Union make that abundantly plain. There has been a remarkable change in attitude and action.
As regards East Germany, while giving his blessing to rapid reform Mr. Gorbachev has also warned against forcing developments there. We must note what he said last month:
"We firmly declare that we will see to it that no harm comes to the GDR. It is our strategic ally and a member of the Warsaw Pact".
He went on to say:
"Departure from this threatens the destabilisation of Europe".
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The new East German Prime Minister, Mr. Modrow, has reflected that in his talks with Chancellor Kohl, but he has also talked about further co-operation with West Germany. And so, as the scene unfolds, we hear differing views from differing sources. President Havel of Czechoslovakia —and how warmly we congratulate him and welcome him to his new office —said during his visit to both West and East Germany that Europe had nothing to fear from a united Germany. But he went on to say that:
"Democratic awareness and democratic structures in Germany are much more important than the question of German unity".
The fact remains that there are people throughout Europe who for understandable reasons are uncertain or downright afraid of a united economically powerful Germany of 80 million people. We know that among those who are uneasy about a powerful reunited Germany are the people of the Soviet Union itself. Mr. Shevardnadze made that plain in his speech in Brussels last month.
Therefore, it seems that we in his country should move patiently and realistically and seek peaceful and stable solutions in concert with our partners in the Community. Noble Lords have referred to certain essential elements. First, elections are pending in West and East Germany and in the latter there will be a political vacuum until the elections planned for May. There is little doubt that reunification will be the central theme of both elections in both Germanys.
Secondly, if the Community is to co-operate in a movement towards some form of reunification then it will need to be satisfied that a constitution which is clearly democratic is established in East Germany. Nothing less than that is acceptable. It will not happen tomorrow; it will take time. Thirdly, at this stage it is impossible to predict the kind of unification that will take place. My noble friend and other noble Lords have referred to that. Will it be federation, confederation or some other form of relationship? In its formulation account must be taken of existing national treaties and in this we are vitally concerned, as I am sure the Minister will confirm. Can he say how the Government view the function of the four-power machinery in Berlin in the context of the changing scene? Once again, I stress the importance of the reference made by my noble friend Lord Callaghan to the CSCE, which should have a central role in the development.
I believe that Germany's continuing membership of the European Community is of first importance in terms of European stability and economic wellbeing. That is especially so in the case of East Germany and the neighbouring countries. It is through the Community, assisted by the United States and Japan, that practical democracy in Eastern Europe will best be sustained. I see no other solution.
Finally, the acceptance of the present eastern borders of the GDR, as my noble friend Lord Callaghan has emphasised, is essential to permanent stability. There are other matters which time will not permit me to discuss; for example, the implications of change for the huge Soviet military presence in East Germany and for the disarmament process. Furthermore, stability —which implies

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peace —can be achieved in East Germany and in Eastern Europe generally only if the Soviet Union accepts and abides by the final settlement and if the West's financial and economic aid is adequate and efficiently spent. The future of world peace depends on that and we urge the Government to play their full part in achieving these essential objectives.
5.17 p.m.
Lord Brabazon of Tara: My Lords, I join with other noble Lords in gratitude to the noble Lord, Lord Callaghan, for giving the House the opportunity of debating this important subject.
We have witnessed dramatic changes in eastern Europe. Even six months ago we had little inkling of what was in store. In October the GDR's communist rulers organised an extravaganza of self-congratulation to mark their 40 years of power. Economically more successful than its communist neighbours, the GDR seemed set to continue on its hard-line course. Perestroika was regarded with deep suspicion —so much so that access to some Soviet publications was restricted or denied. It was widely assumed that when Honecker finally stepped down he would be followed by a leader in the same mould. German unification seemed a virtual impossibility or at least a prospect so remote that there was little point in devoting much time to it.
As we have all seen, the reality was very different. The tyranny of the old regimes in eastern Europe had suppressed but had never eradicated the passionate desire for freedom among their peoples. They were held down by fear. However, once the fear was gone and the people dared to speak out the whole structure collapsed with extraordinary speed. The people who made these revolutions are now striving to rebuild their ravaged countries in a new, truly democratic way.
Another important factor in recent developments has been the way in which events in one East European country have dramatically affected one another. It is being said that Poland's transformation took 10 years, Hungary's 10 months, Bulgaria's and the GDR's 10 weeks and Czechoslovakia's 10 days. In Romania events have moved faster still. The domino theory has worked in reverse. Hungary's willingness, for example, to respond to the desperate human plight of those who were trying to escape the GDR to the West opened the way for thousands to vote with their feet and so exposed the hollow lie which lay at the heart of the GDR's claim to be the people's state. People in Czechoslovakia clearly took heart from the events in the GDR. And so on.
In all these countries the process of reform is now under way. Their people, and the new democratic leaderships which many will elect over the next few months, face a lengthy and demanding period of transition to, and familiarisation with, free political and economic systems. The years ahead will not be easy, as many noble Lords have said. Learning the rules of the democratic political game may be difficult for some. Economic reform will require sacrifices of the kind the Polish people are now making.
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As my noble friend Lord Pym said, Western help and encouragement will therefore be important. As many of your Lordships have shown during this debate, you are aware how much is already being done and how important is the role emerging for the European Community. We must show ourselves ready to remain open to our Eastern neighbours in future, as we have done with our neighbours in EFTA. The European Community has consolidated in western Europe a stable order of peace, democracy, prosperity and co-operation. Our goal now must be to work to establish a similar order in the continent of Europe as a whole.
I totally reject the suggestion made by some noble Lords that this Government are in any way adopting an isolationist approach in the European Community. We are playing and shall continue to play a full part in the Community's internal developments and in its expanding relations with other countries.
Yet at the heart of this broad vision of a Europe at peace with itself and integrated as never before in mutual security, there lies a question. The German question has returned, with unexpected speed, to a place of prominence in our day-to-day discussion of European affairs.
It has never left our agenda as a matter of principle. For over 40 years the division of Germany has been a central feature of the division of Europe, and the division of Berlin had symbolised both for over a quarter of a century. Since the 1950s successive British governments have been committed to support the achievement, by peaceful means, of the aim of a reunified Germany enjoying a liberal-democratic constitution and integrated within the European community of nations. Now the opportunity for the German people to exercise self-determination in that cause may be coming closer. That can only be welcome to all of us who believe in the principle of democracy as self-determination.
The implications of German unity, in whatever form, would of course be profound for the continent as a whole. Strategically, it would be necessary to reconcile a unified Germany with the need to preserve a stable balance of security in Europe. That balance has hitherto been assured through the existence of NATO and the Warsaw Pact, incorporating West and East Germany respectively, with allied forces deployed on German soil. The two alliances have not been equivalent. NATO has been a free association of equals, the Warsaw Pact little more than an extension of the Soviet politico-military establishment and an instrument of repression under the Brezhnev doctrine. NATO has served collective Western security interests, the Warsaw Pact primarily Soviet ones. But within each alliance, western European countries and Soviet Union have been able to feel secure. The Federal Republic has repeatedly stressed its commitment to NATO. The two alliances are negotiating arms control agreements but there is still considerable uncertainty about the future and NATO remains the basis for our security. While we recognise and respect the change in Soviet attitudes thanks to Gorbachev

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and Shevardnadze, a significant Soviet capability remains.
The future of the Warsaw Pact is now less certain. It may start to reform itself; it may shed some of its members. But, as many noble Lords have said, nothing that may happen to the Warsaw Pact will alter NATO's importance as a security framework for its members on a continent which has to accommodate the geographic and military reality of the Soviet Union. And the Federal Republic of Germany is a strong, committed and highly valued ally in NATO.
Is it realistic to suppose that West Germany would wish to turn its back on this historic alliance and all it stands for to achieve unity with the GDR? I do not believe so. For its part, the GDR's membership of the Warsaw Pact remains an issue of strong concern to the Soviet Union as noble Lords and particularly the noble Lord, Lord Cledwyn, reminded us. Can we suppose this will not remain the case in future? So here, my Lords, is a strategic conundrum to be resolved. I am not saying it would be incapable of resolution, although I have no solutions to propose today. I merely refer to it to illustrate the complex issues which arise in the context of German unity.
Economically, too, the achievement of German unity would be significant for Europe. As the noble Baroness, Lady Blackstone, said, West Germany is already the strongest economy in Europe. It achieved growth of up to 4 per cent. last year and is likely to continue to grow strongly through the domestic stimulus provided by inward German migration. Some estimates put East German GDP per head at less than a quarter of that of the FRG, yet it is still the highest in eastern Europe. With a skilled workforce, properly motivated, and substantial investment from West Germany, East Germany is likely to grow fast over the coming years.
A Germany which fully integrated the economies of its eastern and western halves would be a formidable economic force—competitor, but also a market and strong partner, one would expect, for the European Community and eastern Europe alike. But economic power and influence may pose challenges for a country's fellow traders too, as Europeans have often found in their dealings with the US and Japan.
Self-determination will be an important element in the process of German unification, but for that to be possible there must first be full democracy in the GDR. Political and economic reform in that country is, however, desirable in itself, irrespective of the implications for German unity. The process of reform is moving forward, albeit slowly. As the noble Lord, Lord Greenhill of Harrow, said, it is of course vital that free and fair elections take place as planned. Reform must be consolidated and made irreversible.
We wish the people in the GDR well. We wish them a democratic, prosperous future. My right honourable friend the Secretary of State for Foreign and Commonwealth Affairs will visit the GDR next week. He plans to meet representatives of all the leading forces in the country to discuss the prospects for reform.
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Beyond successful reform, however, one cannot ignore the fact that a question mark hangs over the future of the GDR as separate state. Already there are people in the GDR calling for unity with the Federal Republic. It is however hard to judge the scale of this support; different opinion polls give different results. Nor is it clear whether all regard unity in the same way. There are various possible models; for example, a confederation of two separate states with full freedom of movement between them and many common bodies, or a full confederation in one country with one capital and one government. It is not for the British Government to pronounce upon the course which Germans should adopt. The future of Germany must be decided, democratically, by the German people.
I have mentioned a process involving both Germans and Europeans. Events in Germany do not take place in a vacuum as the noble Lord, Lord Callaghan, made clear in his speech. The Federal Government have themselves clearly acknowledged this. Chancellor Kohl and Herr Genscher have rightly emphasised the links between overcoming the division of Germany and developments in the rest of Europe, where the interests and concerns must also be recognised.
The leaders of the Federal Republic have responded to these concerns in a statesmanlike way. They have made clear repeatedly that their aim is not to press ahead in isolation. They have stressed in particular that they will not be tempted into neutrality. They recognise that their freedom and prosperity is founded on their place in the West, on their membership of NATO and the European Community within a stable Europe. They acknowledge that the future architecture of Germany will need to fit into the future architecture of Europe as a whole.
For their part, the EC and NATO have responded as friends and partners to the Germans' clear desire for support and understanding. In Strasbourg and Brussels last month EC and NATO countries made clear their support for the aim of achieving a "state of peace in Europe in which the German people will regain its unity through self-determination". With the Federal Republic, we agreed that this process "should take place peacefully and democratically in full respect of the relevant agreements and treaties and of all the principles defined by the Helsinki Final Act, in a context of dialogue and East-West co-operation". We also agreed that it has to be placed in the perspective of European integration.
I fully agree with the noble Lord, Lord Callaghan, on the importance of the CSCE process. We have played a full part in it from the outset, recognising that it provides a valuable forum for discussion between East and West. We shall continue to do so.
As the noble Lord, Lord Kennet, said, it is perhaps relevant that the Helsinki Final Act provides the guarantees on Poland's borders which the noble Lord, Lord Callaghan, and others, were seeking, since the Federal Government is a signatory and so has unambiguously accepted its key principles on the inviolability of frontiers in respect of the territorial integrity of participating states. The Federal

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Republic has also emphasised its continuing commitment to the 1970 treaty between Poland and the FRG which makes its position clear.
The noble Lord, Lord Greenhill, proposed an imaginative scheme for a treaty in 1991. I take note of this proposal, but the people of the two German states have yet to express their views on the question of possible unity. That, of course, must come first.
The noble Lord, Lord Cledwyn, referred to the four-power talks. We had useful discussions with the Russians at their suggestion on 11th December. These showed that the Russians are now more positive about the allies' ideas for improving conditions in Berlin and we are considering a follow-up meeting if necessary.
We cannot tell how the situation in the GDR will develop. As one of the four powers we retain certain legal responsibilities for the future of Germany; but the main determinant of events in the coming months will be the wishes of the people in the two Germanys. The people of the GDR will take the first major decision on the future of their country when they go to the polls on 6th May.
Against this background Britain's role is to work to develop our contracts at all levels with the two Germanys and to seek to ensure, with our allies and partners, that progress towards unification is achieved —if that is what the Germans want —in a way that sustains and indeed strengthens the security and stability in Europe for which we have worked so hard over the past 40 years.
5.32 p.m.
Lord Callaghan of Cardiff: My Lords, I think everyone will agree that this has been a most interesting and, I trust, useful debate. There have been many shades of difference of opinion, but if one had to point to the basic difference it has been between optimists and pessimists.
I have been accused of unquenchable optimism. I am delighted that at my extreme, advanced age I can still be an optimist about the affairs of this world. On the whole, I think the optimists had rather the better of the day and if there were to be a Division I fancy they would win. Indeed, when I heard the distinguished historians who sit behind the Bishops' Bench —they told us about the difficulties of the fluidity of the situation and how it would be impossible for us to make up our minds at such an early stage while the situation was still developing —I was reminded of Alexander Herzen's remark (I am sure they know this and probably agree with it) that,
"History is no more than a tale of improvisation without a libretto".
My aim is to secure that this time there is a libretto. It seems to me that the historic changes on which we are engaged are of such a tremendous character that we should be thinking ahead. I trust and believe that the Government will do this; not in order to make up our minds now —that would be foolish —but in order to ensure that there are various proposals and ideas that have been thought out as alternatives for the future when we see how it develops. It is along that line that I was delighted to
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hear the Minister, whom I thank for his attendance and his speech, say that the Government were ready to make the CSCE an important part of their consideration in that matter. I was also glad to hear him say that he was ready to take up what I thought was a most constructive proposal made by the noble Lord, Lord Greenhill. It was the first time that I had heard of it and I must say that I think it is worthy of a great deal of attention in the Foreign Office. I hope that it will get it.
I thank all who were good enough to take part in this debate. We shall return to this topic. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Hong Kong: Foreign Secretary's Visit
5.35 p.m.
Lord Brabazon of Tara: My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs on his visit to Hong Kong. The Statement is as follows.
"With permission, Mr. Speaker, I shall make a statement on my visit to Hong Kong from 13th to 16th January.
"I went to show this country's continuing commitment to Hong Kong; to meet a representative cross-section of the community and to discuss the issues of prime importance to Hong Kong in the period before 1997. These are the operation of the nationality package which I proposed to the House on 20th December and the pace and extent of democratisation in Hong Kong. I also discussed the problem of the Vietnamese boat people and visited a refugee camp and a camp at which boat people are screened for refugee status.
"Hong Kong has become the world's eleventh largest trading entity because of the unique combination of British administration and justice and the talent and energy of its people. The immediate sense of fear caused by the events in China last June has lifted but these events did deal a substantial blow to Hong Kong's self-confidence and the exodus of the talent which is needed to keep Hong Kong prosperous has continued. We believe it is vital that these people should stay.
"Everyone to whom I spoke (in the Executive and Legislative Councils, one of the district boards, the business community, public servants and other groups) had hoped that the package which I proposed on 20th December would have made provision for more people. But they welcomed what we had proposed as a measure which would give key people the confidence to remain in Hong Kong. They recognise that it was not an easy step to take, and they are following carefully the discussion in this country. They all hoped that it will be possible for Parliament to give its approval and for the scheme to begin to operate. I assured them that the Government were fully committed to the proposal.

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"The second issue which we discussed was the repatriation of Vietnamese boat people. No one in Hong Kong involved in the repatriation takes satisfaction in what had to be done, but the result achieved was necessary. Having seen the camps for myself, I am more than ever convinced that return to Vietnam in carefully controlled conditions is preferable to camp life with no hope of resettlement elsewhere. Hong Kong has paid a heavy price for its principled policy of first asylum. We cannot expect them to receive this year the same number of boat people —over 30,000 —whom they received last year. There is nowhere for these boat people who are not refugees to go. The policy of repatriation is therefore the right one, and I hope that this may soon be endorsed by the international community. I am grateful to my right honourable friend the Member for Aylesbury and the noble Lord, Lord Ennals, for their thorough and expert report on the first 51 who were repatriated before Christmas. I would welcome monitoring by the UNHCR and other agencies for all future returnees.
"No one in Hong Kong seriously disputes the validity of the joint declaration as the basis for Hong Kong's future after 1997. But confidence in the concept of one country, two systems was undermined by the events of last June. Since then, the Chinese Government have reaffirmed their commitment to the joint declaration and I believe we must make it work. An important element in that is the extent and pace of movement to democracy in Hong Kong before and after 1997. This is a subject, as I found, of intense concern and debate in Hong Kong and we are discussing it with the Chinese Government. Those discussions are continuing and I would prefer not to go into detail today. Our goal is to set in place a system, beginning with elections to the Legislative Council in 1991, which will satisfy Hong Kong's aspiration for democracy and which will endure after 1997. I hope, after further discussion, to be able to announce a decision within the next few weeks.
"Hong Kong, as everyone who knows it will agree, is the economic success story of a region which does actually boast several economic miracles. As you look across the border into China you see that the economic success has spread to the neighbouring province of the mainland. China is Hong Kong's largest trading partner and Hong Kong is also one of Britain's biggest markets in the region.
"All that could continue after 1997 —and the plans are dramatic —or it could be lost. The future of 5·7 million people after 1997 depends on three things: first, the talent and energy of Hong Kong's own people, and they are not in doubt; secondly, the attitude of the Chinese Government: there is much more which they need to do to reassure Hong Kong; but dialogue has been re-established and we must do our best to maintain it. Thirdly, Hong Kong's future success depends on Britain, the responsible sovereign power until 1997.
"After last June, this House rightly voiced its support for Hong Kong, and that of course has to
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mean more than words. The people of Hong Kong are realists. For example, they accept (though reluctantly) that we cannot give passports to all. They look to us over the coming years to take the necessary decisions as the sovereign power and to follow an active and understanding policy towards Hong Kong. I hope I convinced them that we would do so".
My Lords, that concludes the Statement.
5.41 p.m.
Lord Cledwyn of Penrhos: My Lords, we are grateful to the Minister for repeating the Statement. Since this House is due to debate the current situation in Hong Kong next Wednesday, I should like to confine my response to three brief questions and not to enlarge on the Statement itself. Can the noble Lord indicate what proposals he intends making with regard to extending democracy in Hong Kong? Will he say what assurances, if any, he has received from the Chinese Government with respect to the long-term future of democracy in the territory?
On this side of the House we would also be grateful if the noble Lord could clarify the latest position with regard to the discussions on the Basic Law. Are these now resumed and can he say whether they are proceeding satisfactorily? Can the Minister further say whether the Foreign Secretary had discussions with the Office of the Members of the Legislative and Executive Council (OMELCO) and other organisations in Hong Kong in relation to the Government's proposal to give British passports to 50,000 Hong Kong heads of households?
We are grateful to the right honourable gentleman the Foreign Secretary for his generous tribute to my noble friend Lord Ennals and to Mr. Timothy Raison for their mission and their excellent report. Can the Minister say whether the Government intend to proceed with the repatriation of the Vietnamese boat people? What are the Government's immediate plans on that subject? Can the Minister further say whether there is any evidence that there will be more volunteers, especially in the light of the report compiled by my noble friend and Mr. Raison? As the Minister well knows, there are criticisms that serious flaws exist within the screening process used to assess which boat people qualify as refugees. Can he say what weight the Government give to these allegations? Further, are they making inquiries into them so that we and others may be quite clear as to what is taking place? Lastly, we shall return to these and other matters in the course of the debate next week.
Lord Bonham-Carter: My Lords, I wish to associate myself with the noble Lord, Lord Cledwyn, in thanking the Minister for repeating the Statement of his right honourable friend made in another place concerning Hong Kong and the Vietnamese refugees. I too propose to speak only very briefly on this occasion in the light of the debate that we are having next week on the situation. Then we shall have more time to discuss the subject and I hope that we shall also have more information.

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I look forward very much to the answers which the Minister will give to the questions put to him by the noble Lord, Lord Cledwyn. I wish to add one other point which I do not see referred to in the Statement. There is no reference to a Bill of Rights. What has happened to that? It is an absolutely crucial measure of reassurance for the people of Hong Kong. Can the Minister say whether it is the case, as has been reported, that during conversation in Hong Kong it was indicated that the Government had abandoned the idea of having a Bill of Rights entrenched in the Basic Law? I shall be grateful if the Minister can help me concerning that matter.
Lord Brabazon of Tara: My Lords, I thank the noble Lords, Lord Cledwyn and Lord Bonham-Carter, for their reception of the Statement. Both noble Lords said that the House will have a greater opportunity to discuss this matter a week today. I shall try to deal briefly with the questions that they have put to me. As regards democracy, my right honourable friend will wish to consider carefully the views expressed to him in Hong Kong. It must be clear that this is a complex issue. We wish to be absolutely sure that the decision we make is in the best long-term interests of Hong Kong.
As the Statement said, we would rather not speak about specific numbers of seats at this point because we are in negotiation with the Chinese on that matter. We can do whatever we like right now, but we wish to produce a solution which is acceptable to the Chinese in so far as it is maintained in 1997 and beyond that time.
On the whole we are satisfied with the draft Basic Law. We have made representations to the Chinese authorities about various parts of it and we shall continue to do so. We have agreed that these representations should be made in private. In order to make our representations effective we must respect that confidentiality. Our aim remains to ensure as far as we can that the Basic Law fully reflects the spirit and letter of the joint declaration and that it meets the aspirations of the Hong Kong people.
Dealing with discussions on nationality to which the noble Lord, Lord Cledwyn, referred, that was one of the main subjects that my right honourable friend discussed with all the people whom he met in Hong Kong including the Legislative and Executive Council. As regards the Vietnamese boat people, I wish to repeat my thanks to the noble Lord, Lord Ennals, and my right honourable friend Mr. Raison for their excellent report, which I have read. As the Statement said, my right honourable friend is also extremely grateful to them. We shall have to look into the situation of more returnees, but there will certainly be no more until after the next meeting in Geneva which I believe is scheduled in two or three weeks' time.
We are aware of the Amnesty International report to which the noble Lord, Lord Cledwyn, referred. We have received a copy and are studying it carefully. We are seeking the views of the Hong Kong Government on a number of specific points arising from the report. We are confident that the screening
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procedure is fair and thorough and that genuine refugees will not be returned to Vietnam. I believe that the report prepared by the noble Lord, Lord Ennals, and my right honourable friend Mr. Raison confirmed that no genuine refugees have been returned.
The noble Lord, Lord Bonham-Carter, referred to the Bill of Rights. Work is currently proceeding in Hong Kong on the exact form that it will take. We expect an announcement soon but at this stage I cannot prejudge the progress of that work. The drafting of that Bill is a matter for the Hong Kong Government; the Chinese have not made any representations to us about the matter. If they wish to comment on the draft Bill once it is published for public consultation we shall be willing to listen to their views through the appropriate channels. I hope that that covers the main points raised, but we can go into further detail next week.
Lord Kennet: My Lords, as regards democratisation, I am happy to tell the Government how pleased we are that they appear to be taking the advice that we have been extending to them over the past five years; namely, that it would be both possible and desirable to go further than they originally intended. The noble Lord is obviously right when he says that it is up to us to decide what to do now. During their negotiations in Beijing, will the Government bear in mind that the Chinese Government have really forfeited any right to lay down the law in the light of the events of last June? That is a question of common morality.
In terms of political prudence, is it not the case that if the situation gets worse between now and 1997, the more democracy that the Hong Kong people have, the better they will be able to defend themselves morally and politically against the worst that the Chinese can do, but if the attitude of the Chinese Government improves between now and 1997 they will not mind how much democracy they find in Hong Kong when they take over?
Secondly, on the question of Hong Kong immigration into this country, the Chinese have accused the Government of breaking a memorandum annexed to the basic agreement. I hope that the Government are being more explicit with the Chinese Government about their reasons for saying that we have not broken it than they have been with Parliament and the people of this country. The Government's defence against the Chinese charge has been a little woolly.
Lord Brabazon of Tara: My Lords, I covered the question of democratisation to some extent in my reply to the noble Lord, Lord Cledwyn. My right honourable friend will be considering carefully the views expressed to him in Hong Kong.
On the question of nationality and the Chinese reaction to it, I make it quite clear that the package is not aimed against China and will not damage Chinese interests. We believe that our intentions are entirely consistent with the joint declaration and the associated United Kingdom memorandum, which does not preclude the grant of citizenship before 1st

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July 1997. We remain fully committed to the joint declaration and to its full and faithful implementation. We have explained this to the Chinese authorities and I hope that the Chinese will come to recognise the package as a positive contribution to the stability and prosperity of Hong Kong.

Health Care Subscriptions for the Elderly
5.51 p.m.
Lord Bruce-Gardyne Lord Bruce-Gardyne rose to call attention to the case for extending the entitlement of those of 65 years and above to offset the cost of their subscriptions to private health care insurance schemes, created by the Finance Act 1989, to include payments direct to medical practitioners and hospitals for private health care at the customer's choice; and to move for Papers.
The noble Lord said: My Lords, I feel that I should begin by apologising to the House for, as one might say, lowering the horizons of our discussions this afternoon. The noble Lord, Lord Callaghan, expatiated with great eloquence on the whole future of central Europe. Since then noble Lords have been considering the future of Hong Kong. The subject to which I want to draw the attention of the House for a few minutes is considerably more parochial. I want to call attention to the manner in which private health care schemes appear to cater, or fail to cater, for the requirements of their subscribers.
As some noble Lords may be aware, I do from time to time contribute to the popular press. I have done so for many years. But never in all my years of scribbling have I ever written anything which attracted such a mass response as an article I wrote in the Daily Telegraph in August of last year. It suggested that BUPA, the scheme of which I have experience and by far the biggest of the private health care schemes, was gravely disappointing and letting down its subscribers. The response was monstrous. For weeks and weeks I was inundated with piles of letters from retired folk who told of their woes and of the troubles they had had, particularly with BUPA but also with some of the other schemes. Time does not permit me tonight to attempt even a précis of all those letters—it is probably just as well that it does not —but I think it would be fair to say that one or two common themes emerged.
One theme is that when they reach retirement our senior citizens find themselves confronted with very rapidly escalating charges for private health care schemes and at the same time with very rapidly shrinking exclusion clauses. When they put in their claims they find that they have already exhausted the benefit on a particular line of their contract and that they are not covered for an illness, especially one with which they have already been afflicted. These are people who will have been members of BUPA or of other schemes for the whole of their adult lives and whose claims record on the whole will have been marvellous from the point of view of the schemes. Yet when they reach retirement and the time when their claims will possibly start to multiply, they find that the schemes are not very interested.
This is a dangerous situation but dangerous for a particular reason. That is frankly the only reason why I have ventured to bring the subject before the House today. In last year's Finance Act the Government in their wisdom —I would say their "unwisdom" —saw fit to give a tax break for subscriptions to private health care schemes. I am very much against tax breaks in general and this one in particular. Leaving that aside, the trouble is that the tax break functions only if one joins a scheme; therefore, retired folk are more or less herded or corralled into membership of the schemes in order to get the tax break. Unfortunately, when they have done so they are liable to find that the schemes fail to live up to expectations.
For example, BUPA says in its main publicity material:
"Once you are in the hands of your specialist BUPA will take care of your costs".
Will it indeed? As the immortal Lord Copper once said: "Up to a point". My own experience and that of the thousands of people who have written to me is that in next to no time one receives a little note saying that one's claim exhausts one's entitlement under the relevant section of the contract. For that reason the retired folk feel that they are being let down.
Secondly, they find that the contracts given them by the private health care schemes are extremely difficult to follow and to understand and that when they have queries it takes a long time to get answers. Quite often when they get answers they are subsequently revised —quite often in their favour, I do not deny that —but it is all deeply confusing for them, particularly when they are elderly and perhaps not all that fit, either physically or mentally. The result is that they feel they have been had. So long as no tax break was involved it was none of the Government's business and there would be no case for a discussion of this kind. However, once the tax break had been given it meant that the Government were committed to supervising the matter and ensuring that private health care schemes delivered the goods expected of them.
I should especially like to refer to a letter I received in August from a Mr. Rushton of Chester. I do so because in my view he had rather an interesting suggestion to make. Essentially his point was that if the Government were going to give a tax break for private health care cover, then they should go for the level of paying fees. In other words, they should say, "This tax concession will apply to any expenditure of the individual citizen's choosing" —that is, whether it be for participation in one of the health care schemes, a direct payment to a specialist, to a hospital or for a private ambulance, and so on —"made out of the individual's taxed income". He pointed out that in that way there would be no question of pushing people into health care schemes. They would be able to make an unimpeded judgment in the light of arrangements which suited them. I found that argument most convincing. Mr. Rushton also pointed out, quite fairly, that such an arrangement would be far more in conformity with the

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Government's general philosophy than a narrow specialised concession restricted to schemes.
Therefore, in September I forwarded the above suggestion to the Financial Secretary to the Treasury, Mr. Peter Lilley. He was kind enough to reply to me on the matter. Basically he said that, unfortunately, to extend the concession to cover all forms of expenditure by individuals on private medicine would be expensive and that it would also involve much more additional bureacuracy in order to check claims to ensure that they qualified. He said that the department would need convincing that the proposal would not increase bureaucracy gratuitously.
Mr. Lilley's essential theme was that because there were watchdogs in the area, the way in which organisers of schemes tended to the needs of their clients would be carefully supervised. I do not honestly think that it amounts to careful supervision when we have BUPA telling potential subscribers in its "come hither" material that, "Once you are in the hands of a specialist, BUPA will take care of you". In my experience, and that of others, this has demonstrably not been the case; indeed, it is quite untrue.
Mr. Lilley also suggested that thanks to the tax concession, the market for private health care insurance would expand enormously and that that would provide greater choice. He said that retired citizens could, as he put it, "shop around". Quite honestly, I am not sure how you can shop around in the matter of private health care schemes. If you are in a scheme you cannot rush around investigating other schemes to see whether there is one which would suit you better. In my view that is a somewhat unrealistic situation.
I shall conclude on a political note. It relates to a matter about which I am most concerned. I think that by giving this concession exclusively to health care schemes and thus assuming responsibility, —tangentially, at any rate —for the performance of the schemes, the Government are taking the risk of leaving many senior citizens with the feeling that they, not the schemes, have led people up the garden path.
I hope that my noble friend when he replies will be able to offer some hope that the firm rejection which I received from my honourable friend Mr. Lilley, which was a masterpiece of Inland Revenue drafting, is not the end of the matter and that the Government will be prepared to look again into the subject. I should say that I am most grateful to my noble friend the Minister for coming to the House today in order to reply to the debate. I beg to move for Papers.
6.6 p.m.
Lord Rea: My Lords, I was only stung into putting my name down for this debate yesterday when I saw that no other health professional was speaking. I am not a health economist but I think that a view from within the National Health Sevice is appropriate.
When the Chancellor of the Exchequer allowed health insurance premiums of older people to be claimed as a tax allowance, many people felt that
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this was the thin edge of the wedge and that soon tax exemption for all private medical expenses would be allowed. The noble Lord, Lord Bruce-Gardyne, now invites the Government to drive the wedge in just a little further—for the over 65s only. One reason for that, as he clearly pointed out —in fact this has been the whole tenor of his argument —is that health insurance premiums for elderly people are very expensive or impossible to obtain for those having reached that age and nearly as expensive and very limited in cover even for those who were insured before reaching the age of 65 years.
In fact the great majority of medical health care, especially expensive care, is received by those over 65 years. Therefore, we are talking about a group of the population which actually consumes most of the medical care in this country, although only a small part of that group would be able to pay for private medical care or indeed contemplate paying privately for complex medical care or for surgery. However, it could be that younger members of their family might help out financially and boost the number considerably if there was a tax spin-off as suggested by the noble Lord.
It is true that the National Health service has difficulty in caring for this increasingly large age group, the members of which have increasing expectations of good health. That is inevitable in our present demographic situation. I expected the noble Lord to suggest that a shift to private medicine —which such concessions may encourage —would be a relief for the poor old hard-pressed National Health Service, freeing NHS resources to look after NHS patients on waiting lists and so on who cannot afford private care. In my view we should look at that argument, even though the noble Lord did not put it forward. I think that he would agree that the cost of most private medical care item for item is rather higher than that for the same procedures carried out in the National Health Service; that is, those that have been costed. As an aside I might mention that the costing of most NHS procedures is not available despite the fact that the NHS changes contained in the Bill that is now in Committee in another place depend upon it.
If private medicine is encouraged to expand, a greater proportion of the GNP will go into health expenditure, which would constitute a drain on the economy. That could possibly be justified if the additional expenditure on private medical care was the choice of the patient paying the bill and if it left the NHS revenue intact, as it does now. I have argued in the Chamber and elsewhere that private practice as such, even without tax allowances, can harm the NHS; but I accept that in the present state of under-funding of the NHS some people will seek more time with the doctor, better facilities and more comfort and convenience and are willing to pay for them.
However, the noble Lord's affluent pensioner, while buying his private care and receiving tax rebate, will subtract revenue from the Consolidated Fund (out of which the NHS is financed) while having, for example, his coronary artery bypass graft (or "cabbage" as the operation is known in the trade).

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The operation, which costs about £12,000 privately, would attract a tax rebate of £3,000 with a standard rate of tax of 25 per cent. It would cost the NHS more than that to do the operation. I have been given the figure of £6,000 for a coronary artery bypass graft as the NHS cost of the operation, so one could say that there will be a net saving to the NHS. That would be a faulty way of looking at the calculation. If, for instance, a cardiothoracic unit is functioning, the main cost is in buying and maintaining the equipment and paying staff salaries. They have to be paid for whether one or 1,000 operations are carried out. To divide the total cost of running the unit, which, let us say, is £2 million, by the number of operations (say, 330) makes each operation cost £6,000, as I said; but the marginal cost of each operation when the unit is operational will be much less and probably less than £1,000.
A further squeezing of the NHS, which the noble Lord's plan would involve, would make it become less efficient. The NHS needs core funding, however many operations are carried out. Would the noble Lord's well-off pensioner arrange for a private ambulance if he has a heart attack while awaiting his coronary artery bypass operation which is meant to avert it? Of course he would not. He or his wife would dial 999 and a NHS ambulance crew would take him to the nearest accident and emergency department. (In the present situation the ambulance crew would probably be doing it without pay. That often happens when I ask for an emergency ambulance to take one of my patients to hospital.)
There is a serious shortage of units to carry out bypass operations in the United Kingdom. That was pointed out critically by the Public Accounts Committee of another place last year. The noble Lord's suggestions would make if more difficult for the NHS to bring those facilities up to the proper numbers so that we could compare, for instance, with Spain, which has a better provision for coronary artery bypass operations under its health service than we do.
I am sure that the noble Lord realises that only a small proportion of the population would be able to take advantage of the scheme that he suggests. While I am sure that there are Members of the House who have had a hip replaced privately and are pleased with it, there are others who have had treatment under the NHS completely free which would have been prohibitively expensive privately. They have been pleased with the skill and dedication of those who work in the NHS, often at present under great difficulties. The noble Lord's suggestions would make those difficulties worse.
Those remarks come from one who has spent a professional lifetime working in the NHS. I shall therefore be interested to hear (I put in my notes "the reply of the noble Baroness" but I see that as this is a matter of finance we are to hear the Paymaster General, about which I am very pleased) what the noble Earl says. I do not believe that he will go down the noble Lord's path, much as I feel that his party's free enterprise principles might direct him. I hope that his reply will allow me to feel that on this issue at least the NHS is safe in his hands.
6.15 p.m.
The Lord Bishop of Manchester: My Lords, I do not normally regard your Lordships' House as being a place of surprises, but I must admit that I have been surprised on two counts this afternoon: first, to arrive here from Manchester and to find that so few noble Lords had put their names down to speak in a debate which raises some fairly important issues, and, secondly, the pleasant surprise of hearing the noble Lord, Lord Bruce-Gardyne, introduce his Motion by saying that he is opposed to tax breaks in general. I was surprised and glad to hear that stated.
I do not propose to go down the path that the noble Lord outlined for us, despite the fact that many of us will have great sympathy with the correspondents whom he described as writing to him in large numbers about the difficulties in which they find themselves. I shall outline my reasons for that by taking the discussion a little wider, although the noble Lord, Lord Rea, has already mentioned the basic principles of the NHS, which is a point at which I would start. We want to look at the place of private health care in general in a society such as ours and then ask some fundamental questions about the role of government, especially in relation to taxation.
In regard to the principles of the NHS, we need to remind ourselves (do we not?) that the service, when set up, was set up for all those living in the United Kingdom. It is not meant to be a service for those who cannot afford to go private or who do not receive private health care as a company perk. Secondly, it is a service which is free at the point of need and of use. Any charges for the NHS —for example, for prescriptions —should be seen as aimed at reducing waste rather than raising money, or perhaps for comfort and privacy and those things which are additional to basic health care. Basic health care should be free at the point of need and of use. Thirdly, it is a service which is funded by taxation from the public purse, or by universal health insurance; and, finally, it is a service upon which decisions are made within a democractic, political framework. Those seem to me to be the fundamental principles upon which the NHS was se up and which all parties have stated they are prepared to defend.
A point which has frequently been made in debates in the House is that many of us would feel that the Christian attitude to the community in our society has been something which has had a profound influence on the shaping of the NHS in years gone past.
If we turn to matters of private insurance and health care we see that the principles upon which they are set out are fundamentally different, and inevitably they can form a challenge to the principles behind the NHS. That is not to say that they are bad principles. The idea that people should be prepared to provide for their own health care, and that of their families, as best they can is not necessarily a principle to be criticised, though I regard it as morally inferior to the principles underlying the NHS.

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Inevitably private health care will flourish where there are deficiencies and inadequacies in public provision. People who have the means to do so will take advantage of private health care where they can. The inadequacies are seen in, for example, long waiting lists and the urgent needs of people to have operations done without waiting the long time which is demanded in the public service. It is a matter of great distress and shame to us all that there are long waiting lists in the NHS for certain types of operations, which encourages people more and more to go private.
There is always the danger of the emergence of two-tier health care: those who can afford to go private and do; and those who cannot. Private health care can of course be justified also in areas of health for which the NHS is not provided and which it does not pretend to cover. I think that we appreciate that there may be a place for it there.
However, private health insurance is undertaken by what is still a minority in this country —a minority of the comparatively affluent. The noble Lord, Lord Bruce-Gardyne, referred to a mass response which he received to an article he wrote —a great flood of letters. He mentioned the difficulties which our senior citizens face. By that I am sure that he meant a small minority, even today, of our senior citizens who face the difficulties that he outlined.
In a mixed society such as ours we value some freedom of choice. This is an important right for individuals to exercise on behalf of themselves and their families. But such freedom should never be at the expense of the community as a whole or of others. It should especially not damage the great basic principles behind the National Health Service. The argument is sometimes heard that if we increase the use of private health insurance it will relieve pressure on the NHS. I believe that that is a completely bogus and misleading argument. It ought to be thrown right out of court. Far from relieving pressure on the NHS, it tends to draw attention away from the fundamental needs of the NHS for proper resourcing and for remedying its inadequacies.
The growth of private health care which we have seen in recent years is already, I believe, damaging the NHS in many ways. It draws us away from the great principle of universal provision and of doing things together as a community. It means that those who legislate in this whole field are drawn from the minority of people who can afford private health care. I have no doubt that that affects their judgment in the field. A basic issue, particularly to many of us in the Churches, is that those who are the poorest in our society are damaged when the general provision of the NHS is affected in damaging ways.
What about the role of governments of any party, especially in relation to taxation: Their fundamental duty is to improve the NHS and not to give tax breaks and not to care for the private sector in this way. All the efforts of taxation should surely always be devoted to that purpose. We constantly hear that there are budgetary limits to the NHS. It has emerged, particularly in the present ambulance dispute, that there are cash limits which must not
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be broached. Well and good; but if that is really so it is fundamental for government to collect all the money that they can in taxation and use it in the wisest possible way, especially in the field of health provision for our whole community. I was delighted to hear the noble Lord, Lord Bruce-Gardyne, criticise tax breaks in general. I am glad that he made that point and I hope that it is heard in government circles.
While the private sector should be recognised as a part of the life of this country. I believe that it is not the task of government to give it encouragement. It is quite naive to suppose that private health care can flourish and increase in this country without damaging the National Health Service. If I may make a personal reference on that point, I believe that the present Secretary of State has perhaps seen this. He has made the most of the fact that he and his family use the NHS. There is a story widely circulated —I have never heard it denied —that the Prime Minister has criticised the Secretary of State for Health for saying that he is using public facilities when he can afford to go private. That is a very dangerous argument indeed because it should surely be the duty of politicians in those positions to set an example in the use of the NHS, to show that they believe in it and that all the resources we can raise should be devoted to its improvement. It is a sad fact that the Government have encouraged private health care in recent years, and undoubtedly it has increased.
The Finance Act 1989 made provision for those on pensions, giving the equivalent of tax relief at the basic rate and reimbursing people over the age of 60 who take out health insurance. I believe that that was not merely a mistake but a very dangerous move. If it increased it could blow the whole NHS apart. I do not believe that that is extravagant language because we can see the principle being steadily eroded. The more this goes on, the more people in the community will say, "If I pay for private health insurance, why should I continue to pay for the NHS?" I hope that this will be reversed by this or a future government.
As regards the Motion of the noble Lord, Lord Bruce-Gardyne, I think he is inconsistent in, on the one hand, criticising tax breaks and, on the other, at the same time asking the Government to go still further. The noble Lord, Lord Rea, quite correctly said that this was simply pushing the wedge in a little further. It involves the Government yet more in the provision of private health care. I hope that when the Minister comes to reply he will be quite specific on the point and say that the Government are not prepared to go down the road.
6.27 p.m.
Lord Monson: My Lords, I start by congratulating my noble friend —as in the literal sense he is —on his initiative in putting this interesting proposal before your Lordships' House so powerfully. As he reminded us, the whole idea of giving tax relief for the private medical expenses of the over-65s is controversial. We have had reminders of this several times this afternoon already. I for one certainly share those misgivings. On balance I concluded that they

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are probably just about justified on the purely pragmatic grounds that they will take some of the pressure off the National Health Service over the next few decades during a period when the elderly, particularly the over-80s, will form a larger and larger percentage of the population.
The noble Lord, Lord Rea, may well be right in claiming that it will not take as much pressure off the NHS as the optimists imagine —I have to defer to his expertise in the matter —but he will surely conclude that it must take a little pressure off it, come what may. In any case, in consequence of the Finance Act 1989 these tax breaks are a fait accompli. There is nothing that I, the right reverend Prelate or anybody else can do about it.
I was delighted to hear the right reverend Prelate suggest something that I had not realised, I must admit. It was that the reliefs are to be limited to the basic rate of tax. I hope that when he comes to wind up the noble Earl will confirm that this is so. If that is the case, what a pity that tax relief on mortgage interest cannot also be limited to the basic rate of tax. That reform is long overdue.
The Lord Bishop of Manchester: My Lords, I thank the noble Lord for giving way. As a point of information, those paying tax at the higher rate must claim relief in the same way as on mortgage repayments. So I take it that it is not completely limited to that.
Lord Monson: My Lords, my optimism in that respect has to be dashed then. I hope that there will be time for the Government to think again about it and to limit this tax rate to the basic rate of tax. To do otherwise would be quite without merit.
Given that, willy-nilly, tax relief will be granted to the over 65s, whether it be at a top rate of 25 per cent. or 40 per cent., the question is, should it extend to direct payments to medical practitioners, as the noble Lord, Lord Bruce-Gardyne, has urged? In theory at any rate I should have thought that the answer was almost certainly yes. This Government have always been philosophically committed, in theory at any rate, to what has been described as "a level playing field" and to putting more decision-making into the hands of individuals. They are right to be so committed because the undesirable consequence of fiscal policies such as tax relief for pension contributions which concentrates too much power into the hands of institutions is already widely recognised.
Personal equity plans, for example, that were initiated by the previous Chancellor have been a great disappointment: I believe that that would be generally acknowledged. Most of them have failed to beat the various indices, mainly because of the high level of charges and commission deducted from both capital and accumulated income. If individuals had been allowed to set up and manage their own personal equity plans things might have been different and PEPs might have become much more popular and successful and had a favourable effect upon this country's balance of payments as more money would have been saved and less spent on consumer goods.
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The same principle surely applies in the matter of providing for medical treatment, although I do not pretend that this has anything to do with the balance of payments. That is why the proposal of the noble Lord, Lord Bruce-Gardyne, deserves serious consideration. There is a further reason which has not been mentioned, which is that people who do not join a private medical insurance scheme until the age of 65 or over, either because they could not afford to until that point or because they have spent the whole of their working lives abroad, perhaps performing a valuable job in a Commonwealth country before returning to this country, find it extremely difficult to get any medical cover. As far as I know, there is only one private insurance scheme which covers entrants at the age of 65 or above.
A further reason still is that conventional medical insurance does not cover osteopathic treatment. As anyone with the slightest personal experience of the matter knows, on 80 or 90 per cent. of occasions when conventional medical treatment fails, whether combined with physiotherapy or not, osteopathy does the trick. Therefore it must be to the benefit of the nation as a whole and to the NHS in particular, as well as to the suffering individuals concerned, to permit any such scheme to cover osteopathic treatment.
The undoubted snag, which I believe was mentioned by the noble Lord, Lord Rea, is the extra costs that would be involved, as instead of a single insurance premium to be paid once a year every individual hospital or nursing home bill and every individual consultant's account would have to be carefully scrutinised. A host of additional civil servants would be required to perform such a scrutiny.
However, if some way could be found to overcome this undoubtedly difficult problem —there are always ways of overcoming problems if one tries hard enough —the proposal of the noble Lord, Lord Bruce-Gardyne, has a great deal to commend it, not least because it epitomises the individualistic "stand on your own feet" philosophy espoused by the party to which he belongs.
Lord Rea: My Lords, before the noble Lord sits down I should like to ask him a question. If I heard him correctly he said that if medical treatment fails, 70 or 80 per cent. of patients can have their condition put right by an osteopath. I should like him to give me the address of his osteopath as a number of my patients would be extremely grateful for that.
Lord Monson: My Lords, perhaps I did not make myself clear enough. I obviously did not mean that all medical conditions could be cured by an osteopath. However, I must say that in my experience and in the experience of a great many of my friends and acquaintances, where injuries to the back, limbs and joints have occurred, ordinary medical treatment, usually combined with physiotherapy, has not worked on more than half of those occasions. However, whenever we have seen an osteopath he has generally within a short time cleared up the condition in question.
6.34 p.m.
Lord Wigoder: My Lords, it appears to me highly desirable that as chairman of BUPA, and after listening to the noble Lord, Lord Bruce-Gardyne, I should declare an interest in this matter. I make it clear that my position as chairman is one that I hold with pride. I view with pride the fact that among the 3·25 million people that BUPA covers, we can count the noble Lord, Lord Bruce-Gardyne, as a subscriber. However, I must say that we have other subscribers who occasionally bestow rather more praise upon us than the noble Lord.
In the course of the debate this afternoon it was apparently relevant —it must have been, otherwise the noble Lord, Lord Bruce-Gardyne, would not have said so —for the noble Lord to indulge in a series of criticisms of BUPA. As that is relevant to him, it must be relevant for me to reply briefly to those criticisms. The noble Lord said that he wrote an article in the Daily Telegraph which aroused a great response. I am not in the least surprised as that is a reputable newspaper. However, the article contained more misstatements and inaccuracies than any other article I have ever seen on the subject. It is hardly surprising that a large number of people felt themselves misled by what was contained in the article. They felt their position to be imperilled and they proceeded to write to the noble Lord.
I shall give three examples from his speech today of the kind of misstatements the noble Lord made. The noble Lord said that senior citizens faced not only escalating charges but additional exclusions. That is totally false. There are no additional exclusions of any kind applied to elderly subscribers. That is proved by the simple fact that among our millions of insured people we have a large number of elderly subscribers. Overall somewhere between 96 to 97 per cent. of the hospital and surgical claims that we receive are paid in full. Therefore any suggestion that there are exclusions and that as people get older they are not being covered in some way is quite inaccurate.
Further, the noble Lord repeated the expression which he has been touting around the countryside and which he used on Manchester radio this morning that in BUPA's brochure is a misleading statement which states that as soon as one sees a specialist BUPA will cover the costs. Out of a 20-page document the noble Lord selects one sentence. He ignores a previous observation in the document which states that,
"all the hospitals within your chosen scale will be covered in full by BUPA".
The noble Lord ignores the fact that the sentence which he has extracted is not a sentence but only part of a sentence. The sentence reads:
"For instance, you are not covered for seeing a GP privately, but as soon as you have seen a specialist, BUPA will cover your costs".
That only applies obviously if one is on the appropriate scale. The noble Lord ignores the fact that the very sentence he quotes comes from a paragraph headed:
"What BUPACare does not cover".
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The noble Lord ignores the next sentence following the one he quotes which states:
"You'll find a full list of costs not covered on page 19".
To suggest that that statement is in some way misleading is merely to take a few words out of their context.
The noble Lord said that the document from which I have been quoting is difficult to understand. It is a complicated document as this is a complex subject. However, I claim with perhaps a little satisfaction that this very document received the plain English award from the National Consumer Council. I am happy to say that most people appear to have found very little difficulty in understanding its provisions. I shall leave that matter there because I am sure that the noble Lord and I would agree that it is not a matter of great relevance or of interest to your Lordships that we should exchange observations of this kind across the Floor of the House in a debate of this nature.
Perhaps I may come to the point which was raised —if I may say so, not entirely to my surprise —in particular by the noble Lord, Lord Rea, and the right reverend Prelate the Bishop of Manchester, questioning the value of a private sector in medicine. It may be —I do not know —that the noble Lord, Lord Bruce of Donington, may also have an observation of that nature to deliver.
The function of the private sector is two-fold. There is the philosophical function. It offers the citizen freedom of choice in an area where exercising that freedom will not damage other people's freedom of choice. Secondly, and much more importantly in a way, it provides a very real contribution to the health care of the community.
The fundamental problem with having a National Health Service which the private sector entirely supports is that it is impossible to have a centrally-funded tax-based system of health care which will provide completely for everybody's needs. Whether the provision of the present Government be adequate or whether the provision that the Opposition would propose be adequate, I do not believe there is any politician in any party who could put his hand on his heart and say that there is the remotest possibility in the foreseeable future of the NHS providing first class treatment, in reasonable conditions with the latest equipment, to every member of the community as soon as he or she needs it. It is simply not possible, partly because of the vast increase in technological costs, partly because of the fact that people's expectations have risen so rapidly, and partly for the demographic reason that there are so many elderly people now in the community.
In those circumstances, where there is that position and where state resources are always going to be inadequate. I give way—
The Lord Bishop of Manchester: My Lords, I thank the noble Lord for giving way. If one accepts his premise that it is impossible to satisfy the needs, is he really saying that the needs should be satisfied of those who possess the financial resources and not determined on other criteria?
Lord Wigoder: My Lords, all I am saying is that where the needs cannot be satisfied by the state it is in the public interest that there should be an increase in the amount of resources devoted to the health care of the community. If that volume of resources cannot be forthcoming from the National Health Service alone, it is very much in the interests not only of the NHS itself but of the community as a whole that it should be supplemented by every possible source. It seems to me self-evident that if the private sector, which is very small —it only covers some 5 million people at present —can be encouraged to grow, it is bound to reduce to some extent the number of people who are dependent on the National Health Service. That is self-evident. If that can be done it is equally self evident that the limited amount of resources necessarily available for the NHS can be applied to looking after a rather smaller number of people than would otherwise be the case. There is bound to be treatment available to them in those circumstances which is not available at present.
I venture to say that that is a simple fact which is recognised by everyone outside Westminster. It is recognised by everyone who is not a doctrinaire politician, a doctrinaire doctor or —if there is such a creature —a doctrinaire bishop. The professionals, the people who are actually engaged in delivering health care, are concerned with making sick people better. Throughout the country in hospitals, in medical centres, in industry with occupational health, doctors, nurses, pharmacists, physiotherapists and those who are somewhat less skilled, work quite happily side by side curing sick people without bothering their heads as to whether they are in the private sector or the NHS. Not only that; there is very substantial co-operation in training, facilities, equipment, laboratory work and so forth. It is not all one way because the private sector, although small, has made a substantial contribution in many ways to the progress and prosperity of the NHS. In addition to that co-operation there is a very strong element of competition, which is good for both sectors.
That deals with the people who work in the health field. What about the patients? I have heard and seen patients coming to after an operation. They say "Am I better?". They do not say "Doctor, am I in the state sector or the private sector?" It does not worry the patient in the least where he or she is. His or her concern is simply to get the best first-class treatment.
I knew that it would be impossible to hold this debate without someone using the words "two-tier system". Those words were spoken in due course. In some ways they constitute the "in" cliché in terms of health care. No one talks about two-tier motor cars, two-tier holidays or two-tier houses, but for some reason those words are constantly used with health care. Let me make it quite clear that if a two-tier system meant that people with money would get superior medical care I would be as much against it as the right reverend Prelate. It means only that the people who go private do so because, first they may want a particular consultant; secondly, they may want an operation done at a particularly convenient
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time; thirdly, they may want particular facilities in the hospital; fourthly, and often very importantly, they may want privacy for themselves. The day has not come, and I hope it never will, when people go private because they will get better health care. There I agree with the right reverend Prelate.
If I am broadly right, as I believe I am, in saying that the private sector therefore has a contribution to make, the problem is how the growth of the private sector can be sensibly encouraged by a government. The answer is surely to increase the number of people who are medically insured. It would be possible to try to encourage people to cover themselves privately, but the costs are enormous and present experience is that much less than 1 per cent. of the population is involved in any attempt to use the private sector without medical insurance.
How does one encourage the growth of the private sector therefore? The answer comes down to the fact that there is a particular problem with elderly people. Any insurer has to link the likely risk against the claim. That has to be balanced out. It is a fact that once people get to their sixties their medical claims are four or five times as much as they were when they were in their thirties or forties. Therefore it is inevitable unless there is going to be a degree of cross-subsidisation, which would not be very desirable, that premiums for privately insured elderly people have to be substantially higher than those for younger people.
Not only do the premiums have to be higher because treatment costs are so much greater, but the rise in premium occurs all too often at the very time when those elderly people have ceased to work, have lost their regular salary and have started to live on a pension. That is a very real problem. There is a temptation for elderly people in that situation to leave the private sector and go back—as a burden, inevitably, to some extent —to the National Health Service.
That is where the Government's proposal for tax relief is crucial —for elderly people only. Neither I nor BUPA has suggested that it should be extended beyond elderly people. It will not encourage many people who are not at the moment insured to join, but it will encourage a large number of those who have joined to remain insured when they reach the age of 60 or 65 instead of drifting from the private sector back into the NHS. Every time those elderly people, through insurance, use a private hospital, it is a direct gain to the NHS and to the users of the NHS.
Perhaps I may turn finally to a point that has attracted little attention in the debate; namely, the terms of the Motion. The proposal of the noble Lord, Lord Bruce-Gardyne, seeks to extend to other elderly users of the private sector, who are not insured, tax relief similar to that which is extended to the insured. That is not a fanciful proposition. The noble Lord will be aware that it has been adopted in some other countries. Ireland is one example where it is extensively used.
Nevertheless, the proposal to extend the system in that way gives rise to certain problems. The first and principal problem is that those engaged in health

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insurance very sensibly and properly seek to moderate the charges of the hospitals and doctors in order that premiums might be kept down and that the number of subscribers might increase; thus, the more subscribers, the larger the private sector, which is ultimately to the benefit of the hospitals and doctors who find themselves under some price restraint as a result of discussions and negotiations with the medical insurers. If the same relief were extended to those who go private but who are not insured, there would be no pressure in those cases for costs to be kept down. Medical inflation, which is already serious, might well rise even more rapidly and medical costs might go sky high. That is the danger of the noble Lord's proposal. It is not wrong in principle, but it may be undesirable in practice for that reason. There are also obvious administrative complications which are not for me to outline. If I am right in suspecting such complications, it is for the Government to indicate them when the noble Earl, Lord Caithness, replies.
In conclusion, tax relief for private treatment for non-insured patients is practicable. But there are practical dangers which do not make it a very attractive alternative. As to the matter with which I began, I thank the noble Lord, Lord Bruce-Gardyne, for bringing forward this apposite Motion. Perhaps I may suggest to him, politely and with the utmost goodwill, that what is in danger of becoming a vendetta between him and the organisation that I represent might perhaps now come to a peaceful and happy end.
6.54 p.m.
Lord Bruce of Donington: My Lords, the noble Lord, Lord Wigoder, will forgive me if I do not enter in detail into the differences that have apparently arisen between the organisation of which he is the distinguished chief and the noble Lord, Lord Bruce-Gardyne. This is not the occasion to examine in detail the proposals made by the Government in the last Budget and enshrined in Sections 54 to 57 of the Finance Act by virtue of which those over 60 years of age have paid insurance premiums—that is what they are—to the various organisations concerned in BUPA. It would not be profitable to discuss the proposals now because the regulations which stipulate the details of the scheme that will come into operation on 5th April have only just been laid and will come to the House for discussion through the usual channel on the normal agenda of the House. That would be the occasion for the consideration of the proposals and the position of insurance companies and operators such as BUPA and Crusade Insurance.
Noble Lords will recall the first details of the Government's proposal to devote £40 million of the funds available to them for the purposes that they described. There was one press release on 14th March and another from the Inland Revenue on 15th July which was somewhat complex and which, I am told, BUPA and other insurance companies or providers of private health are still studying. There is also Order No. 23/89 which is itself a complex
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document and has still to be discussed here. I do not wish to set out tonight the detailed arguments that I shall use at a later stage because it would be more appropriate to do so then.
The Motion of the noble Lord, Lord Bruce-Gardyne, is in two parts. The first refers to the scheme which comes into operation on 5th April by virtue of which, subject to various conditions, some £40 million will be paid on behalf of those over the age of 60 who qualify. That is a quite considerable sum of money. In general, the onus lies on those who put forward the scheme to prove that it is in the best national interest so to do. We should bear in mind that, if put into the National Health Service, £40 million a year would fund the employment of 2,000 extra nurses or the undertaking of 20,000 hip operations.
The arguments put forward by my noble friend Lord Rea and by the right reverend Prelate the Bishop of Manchester have some relevance here. If £40 million is available as it obviously is—otherwise it would not be given by way of relief—where should it go? What should the priority be? The noble Lord, Lord Wigoder, mentioned some reasons why individuals in possession of money sought to enter the private schemes or be covered by them. He mentioned greater convenience, privacy and a number of other factors.
One point that he did not mention was that it enabled people to jump the queue. That is the one thing that he omitted to say. Undoubtedly all that the £40 million relief, which quite clearly could have been available for other purposes, does is encourage people who are already in the upper income bracket. Not all people over 60 or 65 are in the upper income bracket. It enables them to jump the queue. It enables them to pre-empt resources that would otherwise be available for the National Health Service as a whole.
Indeed, it is particularly poignant when speaking of priorities to note that that £40 million concession goes to that section of taxpayers in the United Kingdom which has already been very well dealt with by previous Chancellors of the Exchequer by way of tax reliefs. It goes to those people who do not need it at a time when half that sum—half the £40 million—would have settled the entire pay rise claimed by the ambulance personnel, who are held in high respect in the United Kingdom. That is the pity of it. It is humbug to suggest that all the over-65s are on the same level and that they all have equivalent resources.
The noble Lord, Lord Bruce-Gardyne, in the course of his earlier remarks seemed to think that this measure would benefit all those over the age of 65. As he well knows, most of them have no resources which would entitle them to any kind of tax relief at all. The proposal itself is all the more immoral because everybody, including those who are in the schemes to which the noble Lord, Lord Wigoder, referred, are also in the National Health Service itself. Large numbers of those who subscribe to BUPA and the other societies at the age of 65 still get their prescriptions free from their ordinary medical practitioner. If it suits them, they attend the surgeries of their own general practitioner when they want

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advice on a comparatively small matter or for a preliminary diagnosis. This relief simply gives encouragement to people to exercise the power of money.
Lord Wigoder: My Lords, the noble Lord will agree that those to whom he is referring, when they use the private sector are also paying their taxes for the National Health Service.
Lord Bruce of Donington: Yes, indeed, my Lords. That was the whole reason the National Health Service was set up in the form in which it was founded. It was thought by those who founded it—and I was very close to its founder—that it would be unfair to exclude from the National Health Service those who contributed by paying higher rates of tax. It was to be open to all. There was no question of excluding people of a certain income level. Indeed, as is well known, 99 per cent. of the population joined it.
As I said, we shall deal in greater detail with the BUPA position and that of the other societies when this House considers the order. Suffice it to say that there are certain areas which are still not covered by BUPA or any other society. First of all, there is a financial limitation on certain forms of treatment, which was referred to by the noble Lords, Lord Bruce-Gardyne and Lord Wigoder. One thing that BUPA and such societies do not undertake save under conditions of very high payment indeed—if at all—is cover for chronic illness that requires treatment over a protracted period of time. Care in cases of chronic illness that cannot be dealt with within two or three months or so is not covered by any of the existing schemes.
The second part of the noble Lord's Motion does not deal with the question of tax relief on premiums, which, as I said, is covered by the order to which I referred and which this House still has to discuss. It concerns tax relief on payments made by the patient direct to medical practitioners and others. My noble friend Lord Rea has already dealt with the health economics relating to direct payments. Quite clearly, if that were done it would further damage the National Health Service. It would further secure priority for people who can pay over those who unfortunately will still have to remain in the queue and cannot pay.
I do not know the extent to which the noble Lord, Lord Bruce-Gardyne, is in agreement with the Prime Minister on this matter. In a remarkable statement made at the end of July the Prime Minister delivered herself of the following observation:
"We shall make the National Health Service so good that nobody will want to go private".
I must ask the noble Earl who will reply for the Government whether that is still official government policy. I have to ask that question because the Prime Minister used the word "we". I am not quite sure whether she was using it, as she sometimes does, in the semi-regal sense or whether she was using "we" to cover herself and her Cabinet. But if that is true, it would seem that not for the first time there is some dichotomy of thought within Her Majesty's Government. Quite clearly, if the Prime Minister
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fulfils that intention and carries the Cabinet with her nobody will want private medical care. One can understand the reasons for that.
So the first question that I must ask—I should like the noble Earl to reply unequivocally—is whether that represents the policies of Her Majesty's Government. If it still represents the policies of Her Majesty's Government I then ask whether in the next Budget they intend to repeal Sections 54 to 57 of the Finance Act 1989 under which those privileges of tax relief were granted to that specified group of persons. On the other hand, if the noble Earl cannot confirm that such is the Government's policy, when does the Cabinet, to whose members I have referred somewhat irreverently in the past as hypnotised hamsters, intend to reproach her with the utterance that she made on its behalf?
Secondly, I should like to ask the noble Earl whether any estimate or assessment has been made of the likely cost of the extra relief proposed by the noble Lord, Lord Bruce-Gardyne, in having tax rebates on payments made direct by ordinary individuals ouside the health service. In that connection, although the noble Lord did not read out the entire letter that he received from the Treasury Minister, I was surprised at its mild and ambiguous terms. It seems that the Government's objection to the noble Lord's scheme lay not so much in its cost—although that was mentioned marginally—but in its administration. In administrative terms it would create extra bureaucracy and organisation, therefore there was something reprehensible about it.
Although the noble Lord did not reproduce the letter in its entirety, what surprised me, in particular in the light of the Prime Minister's observation, which has now become one of the sayings of the year, is that there was not an objection in principle by the Treasury to the proposals put forward by the noble Lord.
Our position on these Benches is quite clear. We object in principle to these matters. We object not only to the amendments to the service which have been incorporated in Sections 54 to 57 of the Finance Act 1989 but also to the proposals that have been put forward by the noble Lord today.
I speak for my party. We stand firmly behind the principles enshrined in the original National Health Service which was introduced by our Government immediately following the war: that there should be a universal service in which the needs of the individual would be the paramount consideration; and that it should be free, as the right reverend Prelate the Bishop of Manchester said, at the time of its use, to relieve any further anxiety that is the natural lot of those who find themselves ill in a variety of circumstances. We stand by those principles.
We quite understand that privately people may make other arrangements in order to secure treatments, possibly in different parts of the country, or by people to whom they have been recommended. We therefore do not object to the existence of the private sector. However, this much we insist upon. In the United Kingdom there are those who are not

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blessed with great wealth, who are not fundamentally secure or enjoying the security that quite considerable possessions and higher salaries confer. In the fashion of the old hospices of the Middle Ages, the service should be primarily, although not exclusively, concerned with tending the sick, in particular those who are poor, cannot look after themselves and cannot afford private provision.
That is the essence of the social morality that should lie behind any health proposals and health service. Persons should not be asked—as I am afraid they are in other parts of the world after they are brought in, even after an accident—when they open their eyes, "Where is your credit card?" We do not want that kind of society here. We want a better society. The way in which we look after our health, and in particular that of the weaker and poorer members of our society, should give us the rating to which Britain ought to be entitled as a civilised society.
7.15 p.m.
The Paymaster General (The Earl of Caithness): My Lords, it was typical of the nature of my noble friend Lord Bruce-Gardyne that he introduced the debate in your Lordships' House this evening in the way that he did. If I may be allowed to say this to him, there was absolutely no need for apology. The noble Lord has raised an important matter. It has led to a most interesting debate. I am glad that so many noble Lords took part. Contrary to the right reverend Prelate, who would like quantity, I prefer quality; and often brevity leads to better quality. That is something that noble Lords are often rather good at.
I am pleased to have this opportunity to explain the provisions for tax relief on private medical insurance premiums, to be introduced this April, and to reply to the points raised. Some of those points were considered by us when the relief was introduced, and I shall deal with those general issues first.
The Government's general approach to taxation has been to cut the rate of tax and at the same time to reduce the number of tax reliefs and exemptions which influence individuals' choices and distort markets. However, our approach has been flexible, and we accept there may be certain areas where tax reliefs are justified to achieve specific objectives.
This new relief was announced as part of the Government's reform of the health service proposed in the White Paper Working for Patients, which was published on 31st January 1989. One of the themes of the White Paper was to encourage the public and private health sectors to work together, to learn from each other, support each other and provide services for each other. The intention is that, by encouraging the development of health services in the private sector, the diversity of provision and choice of health care will be increased.
The private health sector has grown significantly over the past decade, and a major factor in this growth has been the spread of private medical
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insurance. Company schemes have played an important role in this, but we should not forget that half a million trade unionists have such insurance. The noble Lord, Lord Bruce of Donington, described them in fluent words as in the category of the upper income bracket; they have great wealth.
This growth has meant that since 1980 the number of people covered by private medical insurance has increased by some 50 per cent. to around 5.5 million people at present. This represents approximately 10 per cent. of the population. But if one looks at those people over 60 the percentage of those covered is only 5 per cent—half that of the population as a whole.
Part of the reason for that was clearly enunciated by my noble friend Lord Bruce-Gardyne and the noble Lord, Lord Wigoder. It is that when people retire they often find it difficult to continue their insurance cover. Because of their age, premiums tend to rise at a time when their income falls. It is precisely to counteract this problem, to help to overcome it and to enable people to maintain their insurance cover in retirement, that we are introducing tax relief on premiums for such cover, and that cover will of course affect the trade unionists. I know that the noble Lord, Lord Bruce of Donington, supports that.
I have mentioned that our general approach to taxation has been to cut the rate of tax but at the same time to reduce the number of tax reliefs and exemptions. Thus it would not be appropriate to introduce a general relief for private medical care and the measure that we have introduced is designed to address a specific problem; namely, that people often find it difficult to continue their insurance cover when they retire.
The relief then, is a limited measure to address that difficulty and will help people to make the continuing commitment to private medical cover in retirement. In contrast, the market for direct payment for medical services is well developed and one does not in general see the same increase with age in cost of an operation that one does with insurance premiums.
The relief serves a secondary purpose: to alleviate pressure on the NHS. Thus the types of treatment that can be offered are restricted to those that are more often carried out free within the NHS than in a pay bed or privately. In this way, those who continue to have their medical treatment within the NHS will also benefit, because—contrary to the views of the right reverend Prelate the Bishop of Manchester—the increasing numbers who choose to take treatment privately will help to reduce the pressure on NHS waiting lists. I know that the right reverend Prelate will forgive me for not following his thesis on the NHS. That is not because it is not interesting or important but because it is not the Motion on the Order Paper. It will not surprise him to know that I disagree with much of what he said.
Consistent with the targeted approach that we have adopted the relief will be available on premiums where the insurance contract covers an individual over the age of 60. The noble Lord, Lord Bruce of Donington, was right to remind us of that;

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it is not over the age of 65 as appears on the Order Paper. I know that my noble friend Lord Bruce-Gardyne knows that the contract refers to the age of 60. It covers an individual over the age of 60 years, a married couple where one partner is over 60 or a group of people over 60. Relief is available even where a younger individual pays on behalf of someone over 60. Typically, this may be where a son or daughter pays the premiums for his or her parents. Relief is given at source like MIRAS for mortgages so that only a net premium will need to be paid to the insurer. It means that even where a subscriber is not liable for tax, relief will still be given. It also enables a small central unit in the Inland Revenue to administer the relief and minimise bureaucracy.
I should like to comment on the point raised by the noble Lord, Lord Monson. I confirm that the relief is not limited to the basic rate but applies to those on a higher rate in line with other tax reliefs.
To introduce a more general relief, as suggested by my noble friend Lord Bruce-Gardyne, for direct medical costs as against insurance premiums would not directly help the NHS. The scheme that he put forward is based on the letter that he received from Mr. Rushton and he was kind enough to provide me with a copy. The market for direct payments is, in any case, well developed.
There is a further point. It concerns the administrative difficulties of a general relief. The Inland Revenue would need to ensure that individual claims met the criteria for tax relief. Inevitably bills from hospitals, consultants and ancillary services would need to be verified. That would not be impossible but it would increase bureaucracy, By contrast, the relief that we have introduced will be administered by a small central unit dealing with medical insurers. I know that as a former Treasury Minister my noble friend may say that he has heard that revenue argument before. But that does not make it any less true.
My noble friend may not have a high opinion of medical insurers but the fact is that many people find it convenient to take out insurance in order to pay for private treatment. That is the route chosen by four out of every five people who use private hospitals. I suggest to your Lordships that that is hardly an indication that the service delivered by insurers is poor. Rather the figures indicate a successful sector and satisfied customers.
In general, contrasts of medical insurance do not provide unlimited cover for all possible ills. Similarly, they do not usually provide for long-term care but concentrate on the treatment of illnesses when they are in their acute stage. Schemes on offer vary considerably and there is now an excellent range from which to choose. I believe that that was the point being made by my honourable friend the Financial Secretary when he wrote to my noble friend. They vary from comprehensive schemes at one end of the scale to budget schemes which provide only limited cover at the other. An individual can select a scheme that best suits his or her personal needs both in relation to the level of cover required and the premium payable.
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Private medical insurance has proved popular and the number of people covered increased by around 50 per cent. during the past decade. The measure that we have introduced will further increase its competition. The number and range of schemes on offer should also rise. This will improve the choice for the individual who should have little difficulty in finding a scheme that suits his or her particular circumstances. However, I believe that in that respect my noble friend Lord Bruce-Gardyne has a point. It is one which we all face when we join any scheme or look at any contract: one needs to be aware of what the contract offers. I have no doubt that, as with all other contracts, those who take out private medical insurance will wish to know what their benefits will be in advance of putting their name to the scheme.
I know that what I have said in answer to the question of the alleviation of direct costs will disappoint my noble friend Lord Bruce-Gardyne and the noble Lord, Lord Monson. But I wonder whether they can think of a scheme, cost the tax relief, assess the take-up and the benefit to the NHS, which is an integral part of our scheme, and the cost of administration. They will see how difficult it is to implement what appears to be a good idea. On top of that I know that my noble friend Lord Bruce-Gardyne, as a former Economic Secretary to the Treasury, would also wish to assess whether the money could be better spent elsewhere.
I turn to a question put by the noble Lord, Lord Bruce of Donington. It is difficult to assess the cost of the proposal put forward by my noble friend. It has not been possible to assess the precise cost without the necessary details I have suggested. However, the cost would be considerably more substantial than the £40 million for relief that we have introduced.
Like the noble Lord, Lord Bruce of Donington, I shall not follow down the path of the BUPA controversy. However, I should like to take up a point raised by my noble friend Lord Bruce-Gardyne. It is the question of whether the relief that we have proposed will push people into the arms of insurers who do not provide a full range of cover. Broadly speaking, the independent sector mirrors the NHS in providing a very wide range of treatments and services. But no individual hospital or nursing home in either sector is likely to provide the full range. We have always recognised that the private sector cannot do everything that the NHS can do but that is no reason why it should not take pressure off the NHS in areas where it can help.
In general, contracts of medical insurance do not provide unlimited cover for all possible ills. Similarly, they do not usually provide for long-term care but concentrate on the treatment of illnesses when they are in their acute stage. That is more to do with the nature of the insurance than with the range and standards of care which the private sector can and does offer. Schemes on offer vary considerably and there is now an excellent range from which to choose. As I have said, they vary from comprehensive schemes at one end of the scale to budget schemes which provide only limited cover at

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the other. An individual can select the scheme that best suits his or her personal needs.
There may be individuals who find that their insurance is not as extensive as they thought. Indeed, my noble friend has referred to some advertising being misleading. Any advertising placed by medical insurers is subject to the same restrictions as that placed by any company and it can be dealt with by using well-established channels. In addition, the insurers are regulated by the Department of Trade and Industry which has a duty to check that the insurers are fit and proper to offer insurance. It is also able to investigate complaints from the public and, overall, the customer has very good protection. Many people find it convenient to take out insurance to pay for private treatment and that is the route chosen by four out of every five people who use private hospitals.
The noble Lord, Lord Rea, and the right reverend Prelate the Bishop of Manchester said that the cost of the tax relief will divert resources away from the NHS making worse the difficulties of the NHS. That point was picked up by the noble Lord, Lord Bruce of Donington. I reassure your Lordships that there is no question that the Government are not fully committed to the NHS. The Government have committed enormous resources to the NHS. Gross spending on the NHS for 1990–91 is bound to be some £28.8 billion. The projected cost of the tax relief in 1990–91 is only £40 million; less than 0.15 per cent. of the total NHS spending. The Government have made clear the fact that the NHS will continue to be available to all regardless of income and that it will be financed mainly from general taxation. I can certainly reassure your Lordships that the NHS is safe in the Government's hands and that we wish to maintain and improve the standards that it offers.
The noble Lord, Lord Bruce of Donington, stated that the NHS would benefit from a direct injection of £40 million. Who can dispute that? However, what was illogical in the noble Lord's argument was that he did not in any way try to assess the benefits to the NHS of the scheme which we propose. One of the effects of the relief will be to encourage individuals to take treatment privately rather than under the NHS. Such treatment will often be of the type where NHS provision is most under pressure. The NHS and those of us who continue to be treated by it will therefore benefit.
I thought that the noble Lord was in fine voice today. He waxed lyrical about the principles of the NHS. Those were fine words but, alas, one can look back and see that the Labour Party, whenever it was in power, organised its finances so badly that it could not give to the NHS the full resources that it needed in contrast to what this Government have been able to produce. I am sure that on reflection the noble Lord will see what a good job we have done for the NHS.
In conclusion, I am grateful to my noble friend Lord Bruce-Gardyne for raising this Question. I have carefully noted what he said about medical insurance but I remain convinced that to give tax relief for
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direct medical expenditure is neither desirable nor practicable. However, I am convinced that we have a workable and worthwhile scheme which will get off to a good start in April. I look forward to discussing it in more detail with the noble Lord in due course.
Lord Bruce of Donington: My Lords, before the noble Earl sits down, will he answer the first question which I put to him, where, as he will recall, I gave him the citation and the precise words used by the Prime Minister in July last which has become the most renowned saying of the year? I asked the Minister whether what the Prime Minister said represents government policy and whether the Government stand firmly and squarely behind the statement that she made.
The Earl of Caithness: My Lords, as I have indicated already, the Government are totally committed to the NHS and to increasing resources.
Lord Bruce-Gardyne: My Lords, I thank all those who have taken part in this debate. Needless to say, my noble friend's reply did not entirely console me, but I hope that we can look at these matters further. In the meantime, I am very grateful to all those who have taken part and I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Transport Policy
7.32 p.m.
Lord Mountevans Lord Mountevans rose to ask Her Majesty's Government whether present policies towards road and rail reflect each mode's potential to satisfy the nations future transport needs.
The noble Lord said: My Lords, at the outset I declare an interest and also my gratitude to other noble Lords who have put their names down to speak in this debate. I do not intend to call for more investment in rail or road. The Government's recently announced plans for some £12 billion of expenditure (possibly increased by privately funded toll roads) seem to me more than enough. In respect of rail, Sir Robert Reid's remarks to the Institute of Transport that BR's annual level of investment, running at about £1·25 billion per annum, is about the maximum that it can physically manage deserved wider publicity than they received.
I am more concerned about the conclusions reached by the European Conference of Transport Ministers during the recent period of British chairmanship when they collectively agreed that mobility is essential to economic development and that transport users should bear the costs which they impose on the infrastructure and the environment. Those are European sentiments which I think we can all share. Close at home we are all aware of industry's needs for efficient transport. They were articulated by the CBI in its recent report Trade Routes to the Future. That report was unanimously adopted as policy at the confederation's conference last autumn.
We are also aware of the transport requirements posed by our need to be competitive in a single European market and of the opportunities posed by the Channel Tunnel. At a purely personal level we are all aware of the problems of congestion and we cannot ignore the demands of the environment. It seems to me that all those matters have an influence on the financing of transport investment, which in turn has an influence on how or if users pay.
British Rail's investments are largely funded by internally generated funds. By far the largest source of funding, if I read its corporate plan correctly, comes from fares and charges. Those are expected to rise at a greater level than inflation. The user is quite rightly paying his share of investment costs and can be expected to go on doing so provided that fare increases do not reach a level which will drive him to use other transport modes. I believe that the principal choice is in fact only one mode; namely, road transport.
The second largest source of funding for BR is its highly successful property board which raises money by disposal of assets, rental income and joint ventures. Income from that source reached a peak last year, is expected to fall a little this year, recover slightly next year and then fall quite sharply through 1993–94. Therefore, I wonder whether we can really look to the property board as an ongoing and major source of finance for British Rail's investment.
Thirdly, there is the public service obligation grant which includes an element for investment, renewal and replacement. However, we must remember that that PSO grant has been falling and will fall yet further. In fact by 1993 it should be payable only in respect of the provincial network. As a source of investment funds I feel that the grant will fall in terms of importance.
The fourth major source is borrowings from the Treasury. In recent years BR has been a repayer under that heading but it will become a borrower as its share of major privately financed ventures like the London to Channel Tunnel link costs come on stream. One must not overlook the fact that in terms of the sources which I have already described the fare payer or freight customer—the user—will be funding the interest and eventual repayments of those loans.
One other major financial source of income is private capital. As I welcomed in my opening remarks the possibility of private capital for roads in joint ventures such as the Channel link and the Heathrow express, so I hope we shall make progress in finding private capital for rail.
How attractive are such opportunities for the private sector? Returns are certainly not particularly eye-catching if perceived through the short-termist City eyes with which we now seem to have to live. Meanwhile, the legislative process is quite simply discouraging and one can only repeat the hope—because that hope has been stated before in this House and, indeed, in another place—that both Houses will find a formula more appealing in terms of the private sector's potential to contribute towards our infrastructure costs. The private Bill procedure must be simplified.
There are other lesser sources of funding such as the welcome contribution to investment made by the passenger transport authorities. On the horizon there is the possibility of capital grants. They have hitherto been available under some circumstances to those building metro railways in provincial cities but have only recently been an option to British Rail.
Last month the Secretary of State published new objectives for British Rail. Hitherto in terms of investment any BR proposal for investment had to demonstrate an 8 per cent. return on the assets, but in setting out the new objectives, the Secretary of State announced that where such a rate could not be demonstrated, BR and the Department of Transport should carry out a cost-benefit analysis to see whether capital grants would be justifiable on wider social or economic grounds. That was another remark that did not receive the publicity it deserved.
I should like to ask the noble Viscount, Lord Davidson, whether it is an option for part-funding of, say, the London cross-rail proposals. It seems to me a far more rational approach to solving our congestion problems than does the recently announced but unspecified level of private funding contributing to the unquantified costs of the Jubilee Line extension. That is an instance where, for me at least, the availability of some private sector funding seems to have given us the least useful of the many rail proposals being discussed for London.
Alternatively, I ask the noble Viscount whether grant is a possibility for longer projects such as electrifying the North or South Wales railway lines. For example, the EC is keen on the electrification of the North Wales line. Our friends in Ireland are also keen on electrification. Would grant be a feasibility in funding or part-funding the Midland main line electrification? I tend to think that that and the Edinburgh-Glasgow northern electrification are probably the two most desirable electrification projects at the moment, but British Rail cannot justify either of them on the return on assets criteria. The remarks of the Secretary of State were somewhat hedged with "ifs" and "buts"; however—and this is only a possibility—is grant only a matter for urban projects such as the proposed suburban electrification in Birmingham?
Let me now turn to the sources of road investment funds. If I am briefer than I have been on rail it is because road financing is much more simple—almost entirely from public funds. I do not dismiss the contribution made towards direct costs by the road haulage industry; nor do I overlook the contributions made by private developers in local contexts. I hope, as I have already said, that the Government will be successful in attracting private funding for road development, but I wonder whether the noble Viscount can report on progress.
In the longer term, because it is mostly private funding, it seems to me that the principal source of road investment will continue to be the nation as a whole. At a lower level this means the corporate and the personal taxpayer, whether the tax be national or local. As long as that remains the case, the roads ability to deliver point to point, from A to B, at any time of day or night will always seem more attractive

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than rail's ability to move large volumes of passengers and bulk shipments of freight.
The investment regime seems to distort the picture in terms of even-handed competition. This distortion recurs in terms of payment for use. The rail passenger pays his fare. The road user hardly ever pays a toll. The rail user pays through his fares for the policing of the railway network; he pays for litter removal. It is worth mentioning that the green Bill, given its Second Reading in another place last night, puts additional obligations on the railways in this respect. The rail user pays for the listed buildings. There are whole books on the number of listed buildings which the railways preserve. I assume that there are listed structures on the roads, but I also assume that, again, they are paid for out of the great national pot. The road user finds all these costs borne by the nation—lucky road user!
Turning to safety, the Government have published their aim to reduce road casualties by one-third before the end of the decade. That is a very laudable aim, not least when one notes that over 5,000 people were killed on the roads in 1988, whereas the rail figure was 97. The average figure for deaths on the railways over the five years to 1988—here I quote the railways inspectorate's annual report—was only 79, a rather smaller number than were killed on the roads of Dorset in the first 11 months of last year. Indeed, it is a considerably smaller number than those killed on the roads of Hampshire in the months of June, July, August and September last year.
Who pays for the Government's road safety policy? Once again it seems to me that it will largely be the nation as a whole. We know that British Rail's investment plans over the next three years include £125 million for safety and that availability of money will not stand in the way of implementing the Hidden recommendations arising out of the tragedy at Clapham Junction. Who will provide this money? The form book suggests that it will be the rail user. Rail is already treated differently from road in that British Rail bears the full costs of the consequences of its accidents, whereas the costs of road accidents are divided between insurance companies and a whole range of spending departments and local authority bodies.
Before I summarise my sentiments I should like briefly to raise two matters. The first is the so-called Section 8 grant whereby governments can contribute to the costs of railway sidings and rolling stock if this diverts freight from road to rail. In terms of a national transport policy that would seem to be a very practical and sensible proposal. However, it is a laudable concept that has rather fallen into disuse as awards are governed principally by effects measured purely in local terms and taking little or no account of the increasing number of bypasses and motorways that are being built.
I urge the Government to rethink the criterion, not least because it switches freight away from road and thus reduces congestion but also because of the potential arising out of the Channel Tunnel. I can see—I have said this before—a situation where, because of the number of private sidings, particularly
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in France and Germany, and because of the wagonload of business that is done by the railways in France and Germany, material will be railed to the first convenient point on this side of the Channel Tunnel and then transferred to road instead of going by rail from one end to the other.
I also ask Her Majesty's Government what steps they are taking in respect of the increasing number of instances of road vehicles hitting railway bridges. I have become aware of that in the past two years because three times in that period I have been delayed on a train because a bridge down the line was hit. I am also aware that the railways inspectorate is increasingly aware of this problem. Again, its annual report says that the number of instances where a road vehicle hit a railway bridge rose by over one-third to over 400 occurrences; that is more than one a day. The inspectorate notes that that figure includes a threefold increase of serious incidents. A serious incident is where the track is so distorted that an oncoming train might be derailed, with possibly a major accident.
We have had King's Cross and a very thorough analysis by judicial inquiry of the consequences of fire. We have had Clapham with an equally thorough analysis of the consequences of failure to look after safety. Are we now to have a third major inquiry when we have a substantial rail disaster resulting from a road vehicle hitting a railway bridge?
In exploring the relationship between rail and road I have not asked for more subsidy because I share the view of the Government that subsidy is a matter of need, not of right. Nor have I asked for more investment. What I should like to see is a more even-handed approach to investment appraisal. The 8 per cent. rule applied to railways is, I feel, discriminatory when contrasted with the cost benefit criteria applied to roads. I also ask that road users pay a greater share directly of the costs related to their use of roads. The method for so doing I leave to others, though I notice that think tanks of both political persuasions go against the Government in that the think tanks favour road pricing. That is, I believe, the equitable way to ensure the fair competition between transport modes that Her Majesty's Government seek to achieve.
7.50 p.m.
Earl Attlee: My Lords, I start by congratulating the noble Lord, Lord Mountevans, upon tabling this Unstarred Question,
"To ask Her Majesty's Government whether present policies towards road and rail reflect each mode's potential to satisfy the nation's future transport needs".
I regret to say that in my opinion the answer has to be an emphatic no. In talking about road and rail I shall not be mentioning anything about London because next Wednesday the noble Lord, Lord Tordoff, will initiate a short debate that covers this subject. I might mention freight on road and rail; therefore, I should declare an interest. The public relations company of which I am chairman has as one of its clients the firm of Tiphook Plc which is the largest container rental company in Europe. I must also mention the fact that I am in receipt of a British Rail pension.

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When we discussed in this House the deregulation of buses and coaches, we said that if it went ahead passengers would get a poor deal, services would decline and costs would increase. In addition, many small villages would be without any bus service whatever. We have been proved right in that respect. There has been a dramatic drop in passenger miles and in all aspects of business to do with buses and coaches.
Turning to motorways I mention the M.25. We are now told that a fourth lane is to be introduced in each direction. I used to believe that this need was the fault of the planners and I wondered why on earth the fourth lane was not built originally. I have been reliably informed that the reason is that the developers were given so much with which to build the orbital road around London and only three lanes could be afforded. When the bridges were being built I would like to know why they were not extended slightly so that if in the future one wished to build a fourth lane there would be no need to demolish the existing bridges.
We are told that the Government are thinking of allowing overtaking on motorways on the inside. A person wrote to the Daily Mail last week and said that this idea was very similar to someone trying to give up smoking and being provided with larger ashtrays. A few days later an American gentleman wrote to the Daily Telegraph and said, "Whatever you do, do not allow overtaking on the inside. We have it in the United States and it is dangerous". I concur with that.
I normally find myself travelling on the M.25 which carries a vast volume of traffic. However, one can be in the middle lane and looking a mile or two miles' ahead see one vehicle on the nearside lane. People will not move over to the nearside lane. It is ridiculous. My fear is that if we have a fourth lane the same situation will occur. Instead of having one lane under-utilised there will be two. It seems to me that so many are not moving over that we should get the police to do something about it.
The same can be said about tailgating. We have had recently a very bad accident in fog on the motorway which people alttribute to all kinds of things. It is not so much a question of speed, but when travelling at 50 or 60 miles per hour cars are so close to each other that it would be impossible to get one car between them. Therefore, if one car brakes there is a smash. If you are a good driver and keep a decent distance from the car in front, you will eventually find yourself being overtaken and you have to pull back further. I believe the good rule is the rule of three. You watch the car in front pass a marker on the road and if you can count to three before you reach that point then you are travelling at a safe distance. If the count is under three then you are too close.
I shall not mention facilities for disabled drivers because I feel sure that the noble Baroness, Lady Masham, will be dealing with the matter. I see that the noble Baroness shakes her head, but I shall still not mention the subject. Reliable studies indicate that if the amount of freight going by rail was doubled it would reduce the amount of freight on the road
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by only 10 per cent. and that reduction would not be noticed.
I now turn to the subject of rail. As noble Lords know, whenever the subject of British Rail arises I defend it and not because I am in receipt of a pension from British Rail. I worked for seven years as the assistant public relations officer at Waterloo so I know of the problems. Until the other day I can honestly say that I had never criticised British Rail. I was going home the other night in the one and only first-class smoker compartment. There were six seats and there were six male passengers. They started complaining and they all had exactly the same complaint.
I joined in. They said that they had written to the director of Network SouthEast and had not even received the courtesy of an acknowledgment of their letters. I have written twice to the director and I have not received an acknowledgment. Not one of us has received an acknowledgment. It does not matter how good the service is: if you write to the boss you should at least have the courtesy of a reply.
When I worked at Waterloo the general manager acknowledged every single letter to him. I know that because one of my jobs was going through the answers to letters. As a heavy smoker I become very annoyed when, in an eight car train, there may be only one compartment for smokers. And that will always be over the bogies. It may be that smoking is bad for us. But the proportion of smoking to non-smoking seats bears no relationship to the number of smokers.
I wish to ask the noble Viscount a question but I do not expect to receive an answer tonight. It concerns subsidies. Here I disagree with the noble Lord, Lord Mountevans. I wish to know what subsidy is paid at the moment per thousand passengers per passenger mile in the United Kingdom compared with that paid in France, Germany and Belgium? It is my belief that those other railways are heavily subsidised while in the United Kingdom the subsidy to the railways is going down and down.
France and Belgium are building high-speed rail links to the rest of Europe. Unfortunately, if we do not do something we shall be left out of this great improvement. The same situation applied to shipping. Rotterdam became the major port and the London ports became a wasteland. We are going to miss the boat. I do not intend a pun. There is no doubt that we need high-speed trains. This means new lines because the existing ones are not suitable.
I am dead against privatisation of the railways. Were that to happen there would be a terrible danger of trains being run by the private operators during the peak hours only with basically no services at off-peak times. That would be a very sad state of affairs for people who have to travel every day. I have spoken for nine minutes; I shall not take up any more of your Lordships' time.
8 p.m.
Baroness Masham of Ilton: My Lords, I thank the noble Lord, Lord Mountevans, for asking this important Unstarred Question. Many of the present policies towards road and rail are not satisfying

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the nation. Unless some urgent improvements and changes in policy are made, the present frustrations, which in some areas have already reached an unacceptable level, will bring the country to a grinding halt.
Many people ask why large sections of our motorways up and down the country are coned off with no work in progress. Often one sees single line traffic causing endless hold-ups while two lanes stand empty behind miles of cones. This causes great frustration and must cost industry a great amount of money in wasted time and extra wages for lorry drivers, to say nothing of the inconvenience to car drivers.
In the past year one of the worst roads has been the section of the A.1 between Doncaster and Newcastle. For years now this road should have been given motorway status. It still has intersections, which often cause lethal accidents, and, around the Wetherby area, it even has cows crossing. Over the past two years the escalating volume of traffic, the increased sizes of lorries and the traffic jams, sometimes 10 miles long, have become a nightmare. With the removal of some of the roundabouts on this stretch of the A.1 some improvements have been made but no notice has been taken of the advice of the police to build a hard shoulder. There are stretches on this very busy road with no space should the emergency services have to reach the scene of a crash. It is a very dangerous situation and it is high time the Government gave greater priority on the need for accident prevention and the safety of all road users.
Unless a high priority is put on taking pressure off the M.1 and A.1, the journey between the North and the Channel Tunnel may take as long as in the days of the stage-coach. Do the Government have plans to extend the motorway to Cambridge, with a road which could link up with the under-used Humber Bridge? It is important that the Government should realise that there is a great deal of country beyond Watford. This includes Scotland, which has always had a special friendship with France. Does the Department of Transport realise the importance of another road linking the North and the South? Without one there will be an enormous extra build-up of northern traffic in the London area. We must not be blocked off from the heart of Europe by clogged-up routes.
Recently there was a multiple pile-up of cars in fog on the M.25 motorway. This is a relatively new motorway. Would it not be money well spent to install in the black spot areas where fog often lies more yellow fog lights and flashing warning signs? More should be done in the future to guard against the dangers of fog. Drivers who persistently drive too fast in fog should have their licences removed as they are removed for drunken driving.
There is in society a worrying growth of aggressive behaviour. This seems worse when people drive cars. The most aggressive drivers—I hate to say this as I am the only woman speaking in the debate—tend to be men. They may have been drinking alcohol and they think only of themselves. Again it would be of
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future benefit to society if research was conducted on the subject of aggression. Something might then be done for individuals to help them learn to control their habits.
The Government may well say that we do not have the worst record for road casualties. That is no reason for complacency. The death or serious injury of a single individual has the same effect on him and his family as the deaths of a thousand upon those individuals and their families. Our National Health Service is experiencing a great many problems in coping with injuries such as whiplash injuries which need treatment in physiotherapy departments. At the physiotherapy departments of Westminster, Charing Cross and St. Bartholomew's Hospitals, one can see the pressure under which these departments are working. No doubt the position is similar in hospitals across the country.
Today I heard on the news that the Government believe that the police have adequate powers to deal with drivers who have drunk too much alcohol. I hope they are right. I congratulate Peter Bottomley on the work he did on this subject when a Minister at the Department of Transport. I hope that the emphasis on the dangers of alcohol and driving will not slip down the list of priorities. Of all the numerous letters and pleas for help that I receive, the most heartrending have been from people who have had a member of their family killed by a drunken driver.
I ask the Government to look seriously at the standards of pedal cyclists. In the past few days I have taken special note of cyclists. Some ride in heavy traffic wearing no bright coloured markings and carrying no lights in bad visibility. Yesterday morning one man in a grey mackintosh shot round Hyde Park Corner in bad light, looking neither left nor right. It is sometimes difficult for car drivers to see cyclists. In the past few days a conference on head injuries has been held at the London Hospital. Would it not be wise for people riding bicycles to wear helmets for protection? A serious head injury is one of the most awful injuries a person can sustain. I suggest that it would be wise to introduce legislation requiring cyclists to wear headgear, as motorcyclists are required to do. Cyclists are a very at-risk group.
As well as driving a great deal I use British Rail. When one sees long-disused tracts of land where the railways have closed lines one cannot help but wonder whether it was wise to close some stations and railway lines. Where I live in North Yorkshire there is now virtually no public transport. As many members of families have to travel to work, each family has several cars. This is one of the developments of a prosperous society. I am a constant user of the line from King's Cross to York. I should like to pay tribute to many of the porters who help disabled people on and off the trains. Disabled people who are severely disabled have many extra expenses. I have heard that in the future only one place per train will be allocated to a disabled person. This is quite unreasonable. I would draw to the attention of the House the fact that the noble Viscount, Lord Ingleby, uses a wheelchair. How many more people with disabilities may want to travel on the same train? With modern technology,

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it cannot be impossible for the seats to be removed quickly with a press button device. As it is now possible to remove some of the seats, this facility should be improved for the future so that people have a choice to travel either first class or economy class.
I have personally experienced disrupted travel due to vandalism on British Rail. I asked two Questions for Written Answer just before the Christmas recess. I was disappointed by the Answers, which rather indicated that the Department of Transport is not very interested in curbing vandalism. Like Pontius Pilate, the department washed its hands of the responsibility, stating that the problems of vandalism were strictly matters for the British Railways Board and the British Transport Police. Surely the co-operation of the community at large is needed to help curb vandalism and crime of any sort. For example, what about the "Crime Watch" schemes which work due to the co-operation of the police and the local communities?
I am sorry that government departments such as the Department of Transport take this rather unhelpful attitude. On one train in which I was travelling between Leeds and Doncaster metal drums had been placed on the line causing great damage to the train and putting it out of action. It also caused great expense to British Rail and great difficulty to the passengers who had to change trains. Just before Christmas I travelled up to York. The train in front of ours, which was a 125, was an electric train that had broken down due to ropes being placed over the electric cables. They attached themselves to the train, bringing down all the electric cables on top of it. Our train and several others following behind were delayed for over two hours. Moreover, the guard had no way of communicating with the other trains. In this modern day I think that there should be better communication between trains.
A few days later on the same line a signal box was saturated with petrol and set alight. For days there were many hold-ups due to the signals not working. Further, a business friend of mine told me about a journey he made up to Birmingham to visit the exhibition centre. The journey should have taken over an hour but it look him four hours due to a bicycle having been thrown over the electric cables. Unless there is a concerted effort to curb this kind of vandalism it does not bode well for future travel by electric trains.
Other European countries have had electric trains. Why does this country have so many disruptive people? To ensure the safe running of trains in the future perhaps the Department of Transport should look a little more closely at the problem. If the authorities are not satisfied with the present position, perhaps they might put on extra trains at popular times of travel instead of raising the costs and frustrating more people with the difficulty of travelling. That may well help clarify the underlying reasons behind vandalism. I hope that the matter will be looked into seriously.
8.13 p.m.
Lord Dunleath: My Lords, I too should like to thank the noble Lord, Lord Mountevans, for having
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introduced this topic in his Unstarred Question. I should like especially to thank him for his very informative and obviously well-researched speech in introducing the debate. The matter has been discussed previously in your Lordships' House from various angles but perhaps now it is even more urgent and important. It may be even more topical now than the noble Lord realised when he first tabled the Question.
Perhaps I may be a little more, not theological but doctrinal about the subject. In my humble view we are now facing a critical situation somewhat similar to what our forebears faced 150 years ago. At that time the question was whether the railways, which had been running for only 15 years, would live up to their early promise and whether they would be given the opportunity to provide a revolution in transport in our country. In the event they did; they lived up to their promise and were given the opportunity to do so by means of massive private investment and, on the whole, helpful Parliaments which passed Acts enabling the network of transportation to be developed. What took place was revolutionary to our society, to our economy and, indeed, to our demography.
That was the situation then. We are now faced with another situation which is equally critical. It is not a question of whether the railways will be given the opportunity to open up our country; it is whether they will be given the opportunity to save our country from being closed down. That is the situation which we now face. We are at a turning point.
In the 1950's and 1960's it was not unreasonable to look on future transport policy as being in the construction of more motorways and runways and in the expansion of civil airports. However, that philosophy, whch had its merits—and perhaps its flaws—has now, in my respectful view, become irrelevant. We must look elsewhere for the future. I say that because, with our overcrowded motorways, with our cities and towns having had to endure internal surgery for the benefit of the motor vehicle, with the atmosphere having become polluted by exhaust fumes, with the density of aircraft over the major airports being such that air traffic control is now on the margin of viability and with air channels at peak periods having the semblance of refugee holding camps, it seems clear that more motorways, more vehicle parking spaces, more runways and larger air terminals are no longer the answer.
I take the case in point mentioned by the noble Lord, Lord Mountevans. The Midland main rail line is only electrified as far as Bedford. Simultaneous to that, the M.1 motorway is now reaching the extent of its capacity to carry vehicles which wish to use that road. Indeed, it is becoming inadequate and I understand that there is a proposal to widen the motorway in the same way as the M.25 is possibly to be widened, as mentioned by the noble Baroness, Lady Masham.
Such improvements would cost an enormous amount of money; so indeed would electrification of the Midland main line. I say that because, apart from electrification, the line would also need to be re-aligned to enable average speeds of 100 mph to be achieved. That average speed would be needed

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to make the line competitive with the motorway. In fact both improvements would involve tremendous capital investment. But as the noble Lord, Lord Mountevans, pointed out, the capital for motorway and road investment tends to come from the taxpayer and from public funds.
However, in the case of the railways the policy seems to be verging towards investment having to come mainly from internal sources; for example, from the sale of property, from the revenue account and from the revenue reserve. That is an inequitable situation. If the railways are to fulfil their function and take traffic off the roads, it is necessary for public funds to provide the investment required for that purpose. To make the electrification of the Midland railway effective, it would need to proceed as far as Sheffield and Leeds and perhaps have branches serving Nottingham and Derby as well.
Substantial investment is needed in other areas of British Rail's operation. In addition to the Channel Tunnel link to London, it is necessary to extend such direct communication to the rest of the British Isles. The cross-London link between the Channel Tunnel fast line and King's Cross is essential. The proposed high speed line from Paddington to Heathrow has been mentioned. It is most desirable, but the advantage of being able to get from Paddington to Heathrow in 15 minutes will be eroded if it takes 50 minutes to travel from your Lordships' House to Paddington. That is how it will be if more and more traffic is encouraged on to the roads and is flung at the cities, which will then become congested. No amount of urban clearways or throughways or traffic management will solve that problem.
I subscribe to Her Majesty's Government's view that it is desirable that the railways should, if at all possible, be profitable, but —I throw in this caveat because we have seen it before —if the management decides that it is desirable to close down a service it goes about it by making that service less and less attractive so that fewer and fewer people use it. The seemingly indisputable argument can then be put forward, "We must close it. No one is using it. It is losing money". I suggest that that is unfortunately possibly the case with the overnight service between London and Stranraer. That was a valuable service, especially to Northern Ireland. It will be even more important in the future if it is continued —I hope that it will be continued —once the single market comes in in 1992.
Northern Ireland is on the periphery of the European Community, and maximum use of the shortest sea route (Larne to Stranraer) is essential. The rail link to Stranraer is therefore essential, so we greatly deplore the closure of that service. It is not just that it is to our economic disadvantage: it was most discourteous of British Rail not to consult ScotRail or Northern Ireland Railways before announcing the closure. I understand that in both instances senior executives first learnt about the closure in the newspapers.
With regard to the single European market, it is important that Northern Ireland's internal communications should be as good as possible. There again, it is to be deplored that a potential
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grant of £50 million towards the upgrading of the Belfast to Dublin main line has had to be deferred because the Republic of Ireland has apparently not yet come forward with its submission. Northern Ireland Railways was promised that the proposal would be considered in May of last year; again in October; and again in December. It has now been deferred once more. I ask Her Majesty's Government, perhaps through the Anglo-Irish Agreement, which we have been told will do so much to assist co-operation between the two states, to put pressure on the Government of the Republic to expedite that matter so that the line between Belfast and Dublin can be upgraded and speeded up to one hour 35 minutes for 113 miles, thus making it competitive with the roads.
As in 1840, there must be developed the political will and financial commitment to enable the railways once again to transform our transport system. I hope that Her Majesty's Government are fully alert to the opportunities that exist and to the dangers with which we shall be confronted if those opportunities are not taken.
8.26 p.m.
Lord Tordoff: My Lords, I congratulate the noble Lord, Lord Dunleath, on what he said. He has covered a broad spectrum and if that is theology, well then it is theology that I greatly enjoy. I shall not follow him down the highways and byways of the Irish dimension but what he said has my sympathy, especially in relation to the Stranraer night sleeper. It is scandalous that such a useful service should be scrapped.
I start by thanking the noble Lord, Lord Mountevans, for mounting this short debate. It is always a pity that transport subjects attract so little participation and so little interest in your Lordships' House, when transport is one of the major factors of our daily lives. Like the noble Earl, Lord Attlee, I started my notes by saying that there is a short answer to the question and that short answer is no. The present situation is clearly totally inadequate. Our roads are congested and will be inadequate for the foreseeable future. Rail has the potential to carry infinitely more traffic, both freight and passenger, than it does at the moment, and is limited only by the level of investment and the capability of advanced technology which could and should be employed but is not yet employed, again because of lack of investment.
There are two fundamental errors in current British transport policy. The first is the general under-investment, especially in the transport infrastructure and research and planning. The second is the fallacious assumption that a transport undertaking making a profit on its own account is necessarily serving the best national interest. One sometimes wonders whether the only period of a coherent transport strategy in Britain was at the time of the Romans. At least they had a clear idea of what they wanted from their transport system and they went out and achieved it with some straight roads. In fairness, I suppose that the latter part of the 18th century was also a good time for transport stategy, when the newly engineered roads—many of them

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toll roads, incidentally —were built to facilitate the running of the new express coaches.
The noble Lord, Lord Dunleath, mentioned railways in the 1840s and so on. It is true that that was a time of a great blossoming of the railway industry, but one must remember that it led to the unrestrained competition which produced a considerable over-capitalisation of the railway system, to the great detriment of our road system, which took a long time to recover. Although I too am a supporter of expanding the railway infrastructure, I hope that we shall not go down the route our forefathers took in the middle of the previous century.
Today, however, we have the free operation of market forces and, as one would expect, the problems are worse than ever. The unfortunate result is that the less the nation's transport requirements are subject to strategic analysis, the less we have a coherent network and the more the demand is pushed onto the roads. After 50 years of piecemeal transport strategy, the demand on the roads is even greater than before. It will grow, we are told, by a minimum of 20 to 25 per cent. every 10 years. There is no limit to the demand for road transport unless we produce a strategy in which road and rail transport, both public and private, each plays a proper part in a coherent network of services.
The amounts of investment have clearly been shown tonight to be too low. They are almost all piecemeal. I know that the Government will proudly tell us at the end of the debate that vast sums are being invested by British Rail. But as has already been pointed out, a lot of that has come from the sale of assets which admittedly probably ought to have been sold, but there is a limit to how far we can go on selling assets off.
If we compare recently announced investments—higher though they may be —at 1989–90 prices, the difference between this country and France is quite startling. In terms of millions of pounds, at 1989–90 prices, starting with 1988–89, British Rail investment is expected to be £465 million; for 1989–90, £618 million, for 1990–91, £724 million; then £901 million, £961 million and £870 million. The French railways however are expected to invest £2,000 millionin each of those years. In other words, over the six years British Rail will have invested £4,500 million but the French will have invested £12,000 million, on top of an already well-funded system.
Looking at exhibit 19 of the CBI's Trade Routes to the Future, it is quite clear —to a certain extent this answers the question of the noble Earl, Lord Attlee —that we spent 0·2 per cent. of our GDP on financial support to rail in 1987, compared with twice that in the Netherlands and 3·5 times that in West Germany and France. Investment in Italy and Belgium was even higher. The idea of having to fund the railway entirely from fares —which is what we are faced with —gives wrong signals, as the CBI rightly says. The problem is that people travelling by car have in their minds only the cost of petrol for the journey. They cost each journey at the marginal cost. An accountant will tell you that that is wrong,
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but nevertheless it is a perfectly understandable thing to do.
The figures given by the CBI in its booklet show that a journey from London to Newcastle by car will cost £18·66. The standard rail charge is £42. If there is a family in the car as well it makes a tremendous difference, in spite of all kinds of railcards. The truth is that the pressure of price all the time moves people away from rail and onto road. That cannot be good for the state of the nation as a whole, particularly for the environment not just in this country but worldwide.
There are now further reductions in funding. It was depressing to read the other day that because of those reductions British Rail has to take out of its list the park-and-ride schemes. Those schemes seem to me to be absolutely essential if we are to persuade people to get onto the railway and leave their cars outside the major city centres. I do not wish to go too much into the situation in city centres, particularly in London, as the noble Earl, Lord Attlee, has pointed out that we shall have a debate on that next Wednesday.
We also have the problem that Underground fares are being raised by 10 per cent. in February. There will be further real annual increases. Why? In order to suppress demand, we are told. It will not suppress the demand of people trying to get into London to their jobs. All it will do is to suppress the demand to use the railway. People will bring their cars instead.
In the present situation the excess demand always goes to the roads. Here again we are at the bottom of the league. Like the noble Lord, Lord Dunleath, I do not wish to see too much money spent on roads. Schemes are needed to relieve congestion but I do not see massive new road schemes as being the answer to our problems. Apart from anything else, the very presence of roads tends to create more traffic, as the Americans have learnt in Los Angeles and other places.
There is a need for some alleviation of traffic congestion by the building of some roads. We spent only half the percentage of GDP here in the period from 1982 to 1985 compared with West Germany. The Department of Transport's projected demands show an expected increase of between 27 per cent. and 47 per cent. between 1988 and the year 2000.
Reading the Independent on Monday I noticed that Mr. Robert Atkins had written to Transport 2000. The article said:
"Robert Atkins, the Minister for Roads and Traffic, has written to Stephen Joseph, the group's director, stating that 'it is not possible or desirable to meet forecast levels of demand. They are not a target or option which the department has set itself the objectives of achieving'".
What does that mean in relation to the road schemes that were announced in May last year in the Government's publication Roads to Prosperity?They were justified on the basis of demand forecast. Have the rules changed? I think that we have the right to know whether the rules have changed and if they have, what the new rules are. On what basis are by-passes being agreed to?
Some noble Lords may remember that I asked a Question about the Ilminster by-pass on the A.303.

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The noble Lord, Lord Brabazon of Tara, said that it was built with a single carriageway because demand did not justify a dual carriageway; it was done on the basis of projected demand. That by-pass has now been open for 18 months and already there have been six fatalities. It is a main trunk road which is now becoming dual carriageway for most of the way until we reach the by-pass at Ilminster, when it suddenly becomes single carriageway. Not unnaturally, people who have been used to banging along at 60 and 70 miles per hour find themselves restricted to 50 miles an hour. To be honest they do not obey the signs.
The Department of Transport says, "Oh well, it is all the fault of the drivers because they do not stick to the speed limit". Yes, it is their fault, but it is perfectly understandable when there are 13·5 kilometres of open road in front of them with no turnings off for people to feel somewhat inhibited on a main trunk road when they have to drive at 50 miles an hour with virtually no opportunity whatsoever to overtake.
I quote from a well-known periodical called The Star, produced in Taunton. It is pushed through my letterbox free each week, for which I am very grateful. It states that:
"Mr John Myer, a spokesman for the Department of Transport … revealed that when the proposals for the by-pass were made it was decided to build to the modern standard of a … single carriageway. 'Generally it is not common practice to build dual carriageway by-passes' he said. 'The standard design is now a single carriageway.' Mr. Myer admitted that the main reason for this was the cost".
There is nothing to do with meeting the demand in that statement and nothing to do with safety. It is a case of building to the minimum cost and then blaming the fatalities on drivers. I ask the Minister to clarify the basis on which new roads will be built in the future.
So there we have it. There is a complete lack of strategy. We have railways which fit the need only where they happen to match that need through historical convenience or historical coincidence. We have the problems of the Channel Tunnel links, which are rapidly becoming farcical. The Government having painted themselves into a corner by refusing to put any public money whatsoever into the Channel Tunnel project, which we said at the time the legislation was going through was a foolish decision, are now wondering where they can turn to produce a railway system which is capable of linking up with the one which the French have on the other side of the Channel. Sir Bob Reid has spoken out in recent days about this matter. One cannot but comment that it would have been much more helpful if he had spoken out on the same subject in the same way a few years ago.
Remarks have been made about the electrification of the North Wales and Midland lines. I certainly agree with those comments. I hope I may put in a local bid for the electrification of the line to the South West and to South Wales. Those areas will be virtually cut off from the Channel Tunnel, apart from one night train. However, one will have to get to Bristol first to be able to get on that train at all.
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I have no doubt that the noble Viscount will tell us that all is wonderful. However, I think the debate tonight has shown him, if he is listening, as I am sure he is, that all things are not wonderful and that there is a great degree of anxiety in people's minds in this country and in this House that we do not have a relevant transport strategy for the coming century and that, if we are not careful, the country will suffer badly.
8.42 p.m.
Lord Carmichael of Kelvingrove: My Lords, one of the points that the noble Lord, Lord Tordoff, particularly mentioned was that there was little interest in transport debates. That fact always amazes me because there is enormous interest in specific transport problems. Everyone is interested in those, as anyone in the Department of Transport will acknowledge. The department knows that from the large number of letters it receives on the subject. Members are continually harassed by constituents on transport matters.
We should all be grateful to the noble Lord, Lord Mountevans, for raising this debate tonight. He is better informed than most of us on these matters, as his discourse showed. However, the standard of debate, up till now at least, has been extremely high. Many informed comments have been made. The noble Lord spoke about a number of lines which he was surprised were not electrified and where he thought serious consideration should be given to electrification. He mentioned the Midland line and the Edinburgh to Glasgow line. That latter line immediately encapsulated for me some of our transport problems.
I have always taken the view that only a fool would drive from Glasgow to Edinburgh. I use the train a lot for that journey. However, recently the train has reached the point of absolute suffocation. If anyone can find a parking space in Edinburgh during off-peak periods he will be a fool not to drive if he has a car, as the train is becoming quite impossible. Electrification would give us better, bigger and more comfortable trains. We might also get better frequency, although the present half hourly interval between trains is extremely good. If electrification cannot be made to pay on such a line, I do not know where it possibly could.
Having listened to all the speakers from different parts of the country tonight, one cannot dodge the fact that we have a transport crisis in Britain. Our towns and cities suffer from serious congestion and many of our major trunk roads and motorways are a crawling mass of vehicles for at least several hours each day. The pollution which is often caused by the mass of slow moving or stationary vehicles is becoming intolerable. There is a debate going on in London about this, and it is worth mentioning again that traffic in London, at under 11 miles per hour, has now reverted to the speed of the horse and cart. The total cost nationally of road congestion according to the CBI is estimated to be in the region of f 15 billion per year.
I think everyone is more or less agreed that public transport is shabby, unsafe, expensive and

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capricious. If one does not own or have access to a car, one faces the problem of isolation. At off-peak times women and young children feel a sense of uneasiness when travelling. Poor pay results in low staff morale, which sets off a spiral of still poorer services. That leads in turn to lower morale, and so it goes on. If we treat public transport as a Cinderella we must expect an indifferent response from the workforce. In many cases on an almost daily basis things are kept moving because of the feeling of responsibility that in the main transport staff have somehow managed to bring to their jobs, despite the fact that they have been shabbily treated.
We have all had the experience of friends returning from abroad and telling us how wonderful the public transport system is in Paris, Munich, Hong Kong or Singapore. To those of us who are particularly interested in transport that can be irritating, largely because we know it is true that systems abroad are better than ours. However, in the last analysis —this has been well illustrated tonight by almost every speaker—the answer is simple. We just do not spend as much as other countries on public transport. According to the 1986 report and accounts of the British Railways Board, Switzerland spent 50 per cent. more per train kilometre than we did. Italy spent more than five times as much as us. Capital expenditure is also treated differently in other countries. There are the great French trains and the reliable, smooth, comfortable and clean German, Swiss and Italian systems, with their different grades of train. The top Italian grade of train is extremely good.
The Select Committee on Transport in another place called on the Government to increase public spending on transport. It pointed out that in the past four years spending had fallen by 14 per cent. in real terms. In the period 1985–86 to 1988–89 real expenditure on the roads went up by only 2 per cent. but expenditure on rail fell by 45 per cent. On other forms of public transport, including London buses and the Underground, the reduction was nearly 20 per cent. Yet in the past 10 years overall demand for all forms of public transport has increased by 30 per cent. Transport has surely been the orphan of the Treasury over the past 10 years, with government spending on it at least £2 billion a year less than in the 1970s. Those figures come from the report.
Our rail and bus fares are now among the most expensive in Europe. Revenue from all forms of vehicle taxation has increased from £9 billion in 1978–79 to over £15 billion in 1988–89. In 10 years there has been an increase of £6 billion. However, the money was not used, even in part, to improve our infrastructure. It was used to help fund tax cuts. I suggest that it is not only public transport that is paying for the cheers that greeted the past two former Chancellors when they made their tax cuts. The whole of British industry, education and health is suffering because of the manipulation of the budgets in those years. I believe we must begin to plan a slow increase in revenue support, at least in the short term. This would be used not to reduce fares but to finance improvements in the quality of rail and bus services. I think people would be happy to pay the
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fares, even increased fares, if the money were spent on the genuine improvement of the service.
I have dealt so far with public transport, but that in no way means that I and the party I represent here are anti-road. We want all investment plans to be judged on a common basis to take full account of environmental, social and economic benefits for both users and non-users.
At present, new road schemes are measured by a full economic and social cost-benefit analysis. New British Rail schemes are judged in purely financial terms. The light railway schemes are judged on cash revenue and to some extent on non-user benefits. An across-the-board assessment methodology will help to ensure that policies on public transport, roads, parking and traffic management are all by and large complementary and not wasteful of investment and of resources.
Sadly, the Department of Transport as it is presently constituted is not an effective instrument to ensure an efficient transport policy. For many years its main concern has been overwhelmingly with new roads. If one looks at the Department of Transport numbers involved in roads and the numbers involved in railways —I know there are excuses for this but they have never quite convinced me —there is no doubt that the leaning of the department is towards roads. The priority must be to change the remit of the department to achieve the proper balance, which has been widely emphasised this evening.
In our cities there is little space left to build new roads and yet we still have interest groups urging that there be more roads. In Glasgow, we have a situation where they are trying to get two new bridges across the river. Where the traffic will go to when it gets across the river is beyond me because the city centre is too small to take any more. There is no room unless we knock down some of our best buildings to cope with more roads.
We should appreciate the wisdom of the old Buchanan Report, which clearly showed 20 or more years ago that if one drives at off-peak hours bringing cars into towns is fine, but if like most commuters one must travel in the morning and evening rush hours one is being extremely anti-social. That anti-social facet is getting worse.
One of the problems, which is much less obvious in other parts of the world, is the company car. Whatever the original reason for it—and there were perhaps reasons such as the higher taxation that we had at one period; so the company car was given to offset that —to a large extent the company car has become a perk. Last year in Britain 60 per cent. of all new cars sold were registered by companies. In France and Germany such cars account for less than 10 per cent. of new cars sold, and they are probably closer to the genuine working cars that we all accept are needed in business. One cannot say that the French and German economies are lagging behind ours, so all the pleas that there must be company cars in order to keep the industry going strike me as being somewhat hollow.
I should like to quote from an article in the Observer of Sunday, 7th January by, I think, a very

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respectable reporter, Adam Raphael. He said he was one of the minority who had a company car. The article stated:
"As one, I should hastily admit, of the few, let me explain. If I drive the 10 miles from my home in Notting Hill across central London to the Observer's offices … all I have to pay for a comfortable journey" —
he is travelling at non-peak hours —
"listening to the radio is roughly a third of a gallon of petrol —say 60p. Every other cost, including tax, insurance, depreciation and parking is paid for by my employer who in turn is heavily subsidised by the Government.
"If, on the other hand, I travel by public transport, I am involved in two uncomfortable, unpredictable, unsubsidised bus journeys and one tube journey, taking altogether twice as long and costing £3.40—five times as much.
"Is there any wonder that traffic congestion is getting worse?"
He also says it has been calculated that a parking place in central London —also provided by the firm, of course —is worth between £15 and £25 a day.
I am not using those figures to try to be a dog in the manger. I am using them because this is undoubtedly the biggest single problem of cars in the inner cities. I know from looking around where I live in London and where I live in Glasgow that dozens of cars come into the city every day and they do not turn a wheel until they leave at night. Some people come in very early in the morning in order to get a parking place and they leave their cars there all day, slipping out to feed the meters. These are the problems.
We want mobility. We want people to be able to move about. We want greater investment in the railways. We want the roads that are required. As the noble Lord, Lord Tordoff, said, certain roads are undoubtedly required, but we have no necessity for some of the huge road programmes that are being suggested, especially if they are valued in a totally different way from the way in which the cost benefits of our railways are assessed.
9.56 p.m.
Viscount Davidson: My Lords, I am grateful to the noble Lord, Lord Mountevans, for initiating this stimulating debate and for giving me the opportunity to set out the Government's plans for meeting the future transport needs of the nation.
The Government's policy is that both road and rail should play a full part in meeting the increasing demand for transport. The Government are seeking to ensure that transport infrastructure is improved and expanded wherever it is cost-effective to do so. Investment in both road and rail infrastructure is rising strongly and further substantial increases are planned. Last November the Government announced an unprecedented increase in transport investment in the future, showing our commitment towards a transport system with the highest safety standards, which will tackle congestion and which will be sensitive both to the environment and to the transport needs of the future. We can now afford to invest more because Britain is earning more, and the Government's economic policies have laid the foundations for growth.
That growth is naturally putting a strain on our transport systems, and we have some catching up to
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do. In the past six years the number of passengers using British Rail has increased by around 10 per cent. The number of passengers on the London Underground has gone up by 70 per cent., and road traffic has grown by 30 per cent.
On the railways, the Channel Tunnel is being built and investment in British Rail is at the highest level for a quarter of a century. Since 1983, over £3 billion in today's money has been invested in British Rail. We have endorsed a further increase in spending over the next three years to £3·7 billion —a 75 per cent. increase in real terms over the three years ending in March. This will include huge investment in new rolling stock, especially for London commuter services, and investment of over £1·2 billion in relation to Channel Tunnel services.
The noble Lord, Lord Mountevans, asked about inter-urban railway electrification and cost benefit analysis. The new objectives for British Rail announced by my right honourable friend last month made clear that cost benefit analysis can be used in circumstances where there are wider social and economic benefits, such as relief of road congestion. This will enable the Government to decide whether capital grants would be justified for new investment in British Rail's grant-supported sectors, Network SouthEast and Provincial. For British Rail's commercial sectors, investment will continue to be appraised on a financial basis. It seems unlikely that improvements to inter-urban services would in general lead to significant external benefits in addition to the benefits for which passengers are rightly expected to pay.
In London the major upgrading programme recommended by the Central London Rail Study and costing £1·5 billion is already under way with both London Underground and Network SouthEast planning record levels of investment. Further work is also under way on the major new lines proposed by the Central London Rail Study to decide which of the options offers the most practical and cost-effective solution for the relief of congestion in the central areas. As the noble Lord, Lord Tordoff, said, we are looking forward to his debate next week on London traffic and I shall not therefore say much on that subject tonight save that, subject to the satisfactory outcome of that work, the Government expect to authorise the introduction of a Bill for another major new line in November 1990.
The noble Lord, Lord Mountevans, asked about the possibility of grants. The Government believe that new investment in the railways should in the first instance be funded by those who will benefit from it. The main beneficiaries are likely to be the passengers and it is right that they should contribute through the fares that they pay. Other beneficiaries might include property developers and land owners who would benefit from the improved access which a new or improved railway line would bring. It is appropriate that they should contribute as well. However, the Government do not rule out grant support where the income from such sources is not sufficient and where the grant required can be justified by the benefits which the investment would bring to non-users, such as the relief of road congestion.

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The noble Earl, Lord Attlee, asked about international comparisons of subsidy paid to railways. Although he kindly said that he did not expect an answer tonight, I can tell him that accurate international comparisons of subsidy to the railways are virtually impossible to make. The Government continue to give substantial financial support for the railways, but British Rail's need for grant is now much reduced, reflecting greater efficiency and the increase in the number of passengers using the railways. That means that BR is generating more finance internally to pay for new investment. BR is certainly one of the least subsidised railways in Europe, but we believe that that is good news for taxpayers who accordingly get the best value for their grants.
The noble Lord, Lord Mountevans, asked about Section 8 grants for railways freight facilities. The Government are carrying out an internal review of Section 8 grants which looks particularly at the question of environmental benefits from reduced road traffic congestion.
The noble Lord, Lord Dunleath, asked about further electrification —for example, of the Midland main line. The Government certainly welcome worthwhile electrification schemes, as our record shows. It would be for BR to put forward new proposals. In many cases diesel trains can and do offer a very good service and there would need to be significant additional benefits to justify the large capital costs of electrification.
The noble Lord expressed concern about the sleeper service to Stranraer. British Rail's intercity sector which runs the sleeper service to Stranraer has a commercial remit and must decide whether there is sufficient demand to make the service viable. BR regards that service as loss-making which no doubt reflects the competition from other modes such as airlines and coaches. I understand that BR is at present consulting those with a particular interest in that service.
The noble Lord, Lord Tordoff, referred to the investment in Network SouthEast, including park-and-ride schemes. I understand that BR has no programme of investment cuts, but naturally, like any business, it must look at priorities for spending. That is particularly so this year when BR's financial position has been damaged by last summer's strikes. It may be that BR has to defer some small schemes, but major investment is going ahead. BR expects to invest over £300 million in Network SouthEast this year and some £1·2 billion over the next three years. Major schemes worth £450 million have been approved by the Government this year alone.
The noble Baroness, Lady Masham, raised the question of vandalism on the railways. As she knows, preventive measures lie with the transport operators. British Rail and London Underground are well aware of the problems and are best placed to develop appropriate counter-measures with the British Transport Police. I can assure the noble Baroness that the department is not washing its hands of the matter. I know that she is particularly concerned about the security of signalling and vandalism on trains. I am assured that even the most determined individual would find it immensely difficult to
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tamper with signalling equipment in such a way as to cause a dangerous situation. Improved communication between train drivers and signalmen will improve passenger security, as will the phasing out as quickly as possible of non-corridor compartment carriages.
Baroness Masham of Ilion: My Lords, is the noble Viscount aware of the case in which petrol was poured on to a signal box in the Doncaster area, that that delayed many trains and must have cost a great deal of money, and that the person was caught?
Viscount Davidson: Yes, my Lords, I am aware of that. Let us hope that it does not happen again.
From what I have said about rail transport it is clear that we are fully aware of its importance. But even with continued expansion it can take only a small part of the increase in demand for transport. By and large road and rail serve different markets. One cannot easily be substituted for the other. We must provide for the development of both networks and above all we must respect the public's right to choose the most convenient mode.
The way in which the public exercise their choice today is heavily weighted towards the road network. That is not the result of under-investment in rail; it is the result of greater prosperity and the greater use of roads to meet the varied transport needs that prosperity brings. Twelve times as much passenger travel and 10 times as much freight movement is by road as by rail. The consequence is that, even if rail traffic increased by 50 per cent. and all the extra journeys would otherwise have been by road, the reduction in road traffic would be only 5 per cent.
Last May the Government announced an expanded programme of inter-urban roads in England, more than doubling the previous programme to a total of £12 billion. Provision for the next three years stands at over £4 billion for new construction and over £1·3 billion for capital maintenance. That is a dramatic increase which fully recognises the serious congestion on many of our major roads. The total programme will add 2,700 miles of new or improved trunk road to the national network by the turn of the century.
Many eyebrows have been raised by the recent national road traffic forecasts which suggest that traffic demand could increase by between 83 per cent. and 142 per cent. by the year 2025. But forecasts are not and never were regarded as targets; they are estimates of total increase in demand for road travel. It may not be possible or even desirable to meet that demand in full, but it cannot be ignored. There is no change of policy over that.
Doing nothing is not an option. It would mean adding to the chaos and congestion which are all too familiar to road users today. Congestion imposes higher costs on the consumer; it leads to more accidents; it wastes fuel and it increases pollution. New roads which relieve congestion can also benefit the economy and the environment, both locally and more widely.
The noble Baroness, Lady Masham, spoke about unacceptable delays from road works. Wherever possible works are programmed when traffic is

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lightest and measures adopted for increasing the capacity of traffic through road works.
The noble Baroness will also be pleased to note that the A.1 is well provided for in the expanded roads programme. We fully recognise its importance as a major north-south route. Substantial improvements are planned. They include widening 33 miles of existing motorway sections and conversion of a further 42 miles to motorway. Major improvements to non-motorway sections are also planned. Studies will investigate the possibility of full motorway status from London to Tyneside.
The noble Lord, Lord Mountevans, mentioned proposals for private roads. The Government will shortly make a statement on the responses received to its consultation document, New Roads by New Means. We have meanwhile been considering private finance bids for a second Severn Bridge, and for the Birmingham Northern Relief Road. Other schemes are under consideration, including a bridge to the Isle of Skye. The Government hope to introduce the legislation outlined in the consultation document at an early opportunity.
On the question of road user costs, all vehicles at least cover their share of the cost of building, maintaining and policing the road —track costs —trough fuel duty and vehicle excise duty. Cars and light vans pay over three times their track costs. Heavy goods vehicles more than cover theirs, and the heaviest pay disproportionately more to reflect their greater social and environmental impact.
I can also tell the noble Lord, Lord Mountevans, that the Government have carried out a full review of the problem of over-height vehicles hitting bridges, and that they are implementing an action plan aimed at reducing the risk substantially. Measures include: improvements to the signing of low bridges; use of detector equipment at high risk bridges; and increasing the awareness of drivers of the height of their vehicles and loads.
That leads me to another aspect of the Government's important work in reducing road accidents. I was very moved, as I always am, by the concern of the noble Baroness, Lady Masham, for the safety of cyclists. It is clearly right that they should make themselves as conspicuous as possible by wearing fluorescent or reflective clothing. It is equally important that drivers should look out for them and that they should make themselves conspicuous by sensible use of lights in conditions of poor visibility. The Government recently launched a conspicuity campaign to drive these messages home.
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Much evidence is also emerging to show that by wearing helmets cyclists can reduce the seriousness of head injuries or prevent minor injuries altogether. But we have no plans to make any of this equipment compulsory. Legislation would only work if it were generally respected. It is difficult to legislate for cyclists, many of whom are below the age of criminal responsibility. It is better to increase awareness of the benefits and let individuals decide. That is what the Government are doing.
I should mention roads in London, where the Government have developed a broad strategic approach. This includes providing through traffic with good alternative routes around London. The M.25 is being widened, and the new bridge at Dartford is being constructed with private finance. We also want to see the best possible use of existing roads, by better parking enforcement, by the introduction of more traffic responsive traffic light controls and by the boroughs investing in road schemes to eliminate bottlenecks. The Government are ensuring that London is properly linked to national and international transport networks, with major trunk road schemes, and tackling congestion black spots in inner and outer London. We shall be discussing this matter further next Wednesday.
I hope that noble Lords will welcome the Government's commitment towards increasing transport investment. The Government are determined to ensure that Britain has transport systems which will enable it to play a full part in the single European market for 1992. People want to use public transport, and we want to see that they have a safe and efficient system to use. At the same time we cannot ignore the congestion on our roads or pretend that railways can offer the whole answer. There must be increased provision of roads in the interests of both the economy and the environment. That is why the Government plan to spend more on road building and road maintenance, and to make better use of roads by improved traffic management.
Freedom of movement is central to our society and our future prosperity. Ten years ago no one would have predicted the economic growth which has placed real strains on both our road and rail systems. The Government are determined to secure the improvements which are necessary to tackle transport congestion and meet the nation's future transport needs, with road and rail playing a full part.
House adjourned at eleven minutes past nine o'clock.