Lords Sitting of 3 March 1993

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

Income Support: Expectant Mothers
Earl Russell Earl Russell asked Her Majesty's Government:
Whether they have any evidence to show that expectant mothers on income support, especially those under 25, are able to afford an adequate diet.
The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley): My Lords, adequate diets, as recommended by the Committee on Medical Aspects of Food Policy, can be achieved in a variety of ways and at a range of costs. The welfare food scheme continues to provide a nutritional safeguard for expectant mothers in receipt of income support.
Earl Russell: My Lords, I thank my noble kinsman for that Answer. But he has not told me that he has evidence that women can afford an adequate diet. Can I deduce from his silence that he does not have evidence that they can do so?
Lord Henley: My Lords, no. I mentioned in my Answer the report by the Committee on Medical Aspects of Food Policy. That report concluded that the true additional requirements of pregnancy under conditions prevailing in the United Kingdom are probably modest and are limited to the last three months. Research carried out by the Ministry of Agriculture, Fisheries and Food shows that it is perfectly possible to afford an adequate and healthy diet at a figure roughly the same as that which people are already spending on food.
Lord Skelmersdale: My Lords, does my noble friend accept that the term "adequate" is subjective? What is adequate for the noble Earl or for my noble friend may not be adequate for myself or for someone on income support.
Lord Henley: My Lords, my noble friend is correct.
Baroness Hollis of Heigham: My Lords, if a pregnant woman of 25 needs a minimum of £42.45 per week to live on, how can a pregnant woman of 24 manage on £9 per week less?
Lord Henley: My Lords, on many occasions I have explained the reasons for the difference in the rates. The first is the added cost of increasing the rates for those under 24 of some £360 million. The second is that there are lower earnings expectations for people under 24 and the fact that they have fewer financial responsibilities. The third reason is that they are likely to live as part of someone else's household. In fact, only 15 per cent. of those on income support in that class are in receipt of housing benefit. The fourth
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reason is that I do not believe that levels of benefit should be an incentive to leave home or an attractive alternative to seeking work or training.
Baroness Hollis of Heigham: My Lords, we are talking about pregnant women aged 24 or 25. Is the Minister really saying that pregnant women of 24 may be in the labour market and therefore must expect a rate of benefit lower than a woman of 25? Is a pregnant woman of 24 more likely to be living at home than one of 25 and therefore less likely to need support? I suggest that as the average age for first births is 22 the Minister may like to revise his information.
Lord Henley: My Lords, if the woman under the age of 24 is part of a couple she will be receiving the higher rate of income support. Therefore, we are talking only about single mothers. The minute that a single mother gives birth and produces a baby further awards become available. There are grants from the Social Fund, extra premiums in income support, an extra premium for one-parent families and an extra premium for families. In addition, the woman will be receiving approximately £28.60 and at birth will move on to the higher rate of income support.
Lord Gisborough: My Lords, does my noble friend agree that one of the problems is not so much the amount of money but the inability of many such girls to manage their finances properly and to buy the right kind of food as opposed to expensive convenience foods? To what extent are they given help in addition to their benefits to enable them to feed themselves properly?
Lord Henley: My Lords, my noble friend makes a valid point. The levels are perfectly adequate. It might be that there are problems with education and that people do not know how to spend their money adequately. However, I do not believe that it should be the job of the Department of Social Security to issue guidance on how people should spend their income support.
Lord Stallard: My Lords, the Minister mentioned the diet recommended by the Ministry of Agriculture, Fisheries and Food costing £10 per week. I assume that that is the diet to which the Minister referred because it is the only one I have seen. Its only meat content is equivalent to about one wing of a chicken. Is that known as living on a wing and a prayer?
Lord Henley: My Lords, no. The so-called £10 per week diet was the result of an academic exercise to determine how cheaply a healthy diet could be achieved and whether it was more expensive than an unhealthy diet. However, it deliberately did not take on board issues of palatability or attractiveness. Hence the diet was never recommended, nor was it intended to be. It was used as an illustration in a discussion on healthy eating on low incomes by the MAFF consumer panel.
Lord Mackay of Ardbrecknish: My Lords, does my noble friend realise that the neo-natal and perinatal mortality rates in this country have improved year on

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year? Does he accept that not only is that a tribute to the health service but that it must indicate that the health of mothers has improved? Does that not, therefore, negate all the suggestions put forward from the Benches opposite?
Lord Henley: My Lords, my noble friend makes a valid point. Similarly, life expectancy has increased steadily during the 12 years since 1979.
Baroness Robson of Kiddington: My Lords, I thank the Minister for informing the House that once the mother has had the baby she will receive increased income support. However, despite the Minister's last reply, will he agree that medically speaking it is very important for the health of the future child that the mother should have an adequate diet before giving birth to the child?
Lord Henley: My Lords, I have tried to explain that we believe that income support levels are adequate. In addition, as I explained in my original Answer to my noble kinsman, the welfare food scheme provides free milk—a pint a day—for all pregnant women on income support as well as help with vitamin pills.
Earl Russell: My Lords, before my noble kinsman goes too far along the line of agreement with his noble friend Lord Skelmersdale, will he make an effort to inform himself of the work currently being done by Professor David Barker for the Medical Research Council, which indicates a considerable ongoing problem through low birth weight caused by inadequate maternal nutrition?
Before my noble kinsman goes too far also down the line of saying that people have choice, will he refresh his memory of his own Written Answer to me on 13th January which states that 177,000 women are subject to deductions from their benefits of more than 15 per cent.? Does that affect adequacy?
Lord Henley: My Lords, very often those deductions are to pay for essentials such as gas, electricity and other forms of heating which would otherwise have to be paid for from income support.

Interest Rates: Government Policy
2.45 p.m.
Lord Barnett Lord Barnett asked Her Majesty's Government:
What is their interest rate policy.
The Minister of State, Department of Transport (The Earl of Caithness): My Lords, interest rates are set so as to meet the Government's objectives for low inflation and sustained economic growth.
Lord Barnett: My Lords, I am obliged to the noble Earl for that Answer. Is he aware that we recognise that the Chancellor must, we assume, perform a difficult balancing act between interest rates, inflation, exchange rates and fiscal policy? It would be better if we did not have to start from here. However, did the noble Earl note that on Monday the Governor of the Bank of England said that even if German interest
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rates come down we should not follow suit, but rather we may have to increase our interest rates? Does he agree with that?
The Earl of Caithness: My Lords, I disagree with the premise that the noble Lord said that we should not start from here. This is a very good place from which to start, with interest rates the lowest since 1977 and the lowest in the EC.
Lord Renton: My Lords, is my noble friend aware that each member of the Community tends to have a different rate of inflation, a different level of unemployment, different capital investment needs, different balance of payments problems and that each member of the Community needs to have its own interest rates? Is that accepted by the Government as a factor of economic life?
The Earl of Caithness: Yes, my Lords, we certainly believe that each country should be able to set its own interest rates. That is what my right honourable friend the Chancellor has done. That is why, in real terms, our average is well below that of the EC and the G7.
Lord Richard: My Lords, given the fact that the Government's main weapon against inflation over the past few years has been the use of interest rates and that the use of those high interest rates has wrecked the British economy, has put thousands of people out of business and has ejected many from their homes, are the Government thinking in different terms as to how they might manage the economy when inflation rises again?
The Earl of Caithness: My Lords, inflation rates are fully consistent with a sustained recovery this year, combined with low inflation over the medium term.
Lord Hailsham of Saint Marylebone: My Lords, does my noble friend agree that in the interests of preventing undesirable speculation many of us applaud the fact that he is keeping his cards fairly close to his chest in relation to interest rate policy?
The Earl of Caithness: My Lords, I am grateful to my noble and learned friend.
Lord Holme of Cheltenham: My Lords, given the inter-relationship between the rate of exchange and interest rates, and given the precipitate fall in the value of the pound against both the deutschmark and the yen since last September, will the Minister tell the House to what levels, if any, the Government regard it unacceptable for the pound to fall before they take action on interest rates?
The Earl of Caithness: My Lords, I believe that that question should have been asked yesterday rather than today.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that in regard to the effect on small and medium-sized businesses, it is one matter to reduce interest rates but quite another matter if, at the same time, bank charges—for all sorts of reasons not mentioned previously—claw back the money saved by a reduction, therefore not improving the prospects for business investment?
The Earl of Caithness: My Lords, there have been substantial benefits. The full effect of interest rate cuts since October 1990 are worth over £11 billion per year off industry's interest bill and about £160 per month from payments on an average £33,000 mortgage.
Lord Eatwell: My Lords, will the noble Earl tell the House what is the Treasury's estimate of the impact on interest rate policy of the abandonment of the fully funding rule?
The Earl of Caithness: No, my Lords.
Lord Ezra: My Lords, in view of the Bank of England's first quarterly report on inflation, which no doubt the noble Earl has read with great care, and its estimate that, on present trends, inflation could rise above the Government's target before the end of next year, is that the point at which the Government would increase interest rates?
The Earl of Caithness: My Lords, as the noble Lord will be aware, we continue to look at a number of indicators. We have a range for the inflation rate and my right honourable friend the Chancellor of the Exchequer will take whatever measures are necessary.
Lord Clark of Kempston: My Lords, does my noble friend agree that a reduction in the base rate from 15 per cent. to 6 per cent. is highly desirable? Will he assure the House that the whole of that reduction has been passed on to business?
The Earl of Caithness: My Lords, I agree with my noble friend that that is desirable. I have said that the full effects of interest rate cuts are passed through to businesses and to home owners.
Lord Bruce of Donington: My Lords, following his answer to the noble Lord who has just sat down, and his reply to the noble Lord, Lord Harmar-Nicholls, is the noble Earl aware that although he is correct in assuming that the minimum lending rate has gone down, that is far from the case as regards ordinary small businessmen? Small businessmen are still being charged extortionate rates. The country requires a policy from the Government that ensures that the full benefit of the decline in interest rates is passed on to small businesses.
The Earl of Caithness: My Lords, from all the discussions I have had with small businesses in recent months I know that they are extremely grateful for the reduction in interest rates.
Lord Barnett: My Lords, will the noble Earl confirm, when he said he was happy to start from here, that he is happy with the present level of the exchange rate? At the same time, will he answer the original Question on the Order Paper?
The Earl of Caithness: My Lords, as regards the noble Lord's second question, I answered the original Question on the Order Paper in my first Answer. With regard to the noble Lord's first question, we talked about sterling's value yesterday.
Lord Stoddart of Swindon: My Lords, if the noble Earl and the Government believe it is right for each
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country in the Community to set its own interest rate policy, why are the Government forcing the Maastricht Treaty through the House of Commons, and presumably through this House in due course, when economic and monetary union and the formation of a European central bank will remove that right from individual members of the EC?
The Earl of Caithness: My Lords, I congratulate the noble Lord for bringing the Maastricht Treaty back into Question Time. We look forward to discussing it with him in the near future.

Homes: Private Lettings
2.52 p.m.
Lord Skidelsky Lord Skidelsky asked Her Majesty's Government:
What steps they are taking to expand the market for low-cost private rented accommodation in view of the shrinkage of the local authority housing stock.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Strathclyde): My Lords, we are committed to increasing the supply of homes for rent. Deregulation of the private rented sector in 1989 has freed rents from excessive regulations and led to a welcome increase in private lettings, and there are a number of incentives in place to encourage investment in homes for rent. We have been meeting with institutional investors and others with a view to identifying what barriers there are to expansion of the sector, and what can be done to overcome them.
Lord Skidelsky: My Lords, I thank my noble friend for that reply. However, he must be aware that since 1979 the proportion of private rented households to total households has declined from 10 per cent. to 7 per cent. and the resulting immobility of labour is one of the main causes of avoidable long-term unemployment. Does he really believe that present policy offers a realistic prospect of reversing that decline in a matter that is so essential to the creation of a more flexible economy?
Lord Strathclyde: My Lords, my noble friend is, of course, quite right in saying that there has been a reduction in the private rented accommodation sector. That concerns the Government. In my original Answer I said that we have been meeting with institutional investors and others to see how we can rectify the imbalance.
Lord Molloy: My Lords, bearing in mind that local authorities have done so much to house thousands of people over many years, would it not now be possible for the Government to contact those local authorities or their association representatives, particularly those authorities with long waiting lists, to explore ways in which the Government may be able to help local authorities to build more accommodation? That would also help the building industry.
Lord Strathclyde: My Lords, the Question deals quite specifically with the private rented sector. We

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believe that the main provision of social housing lies with the Housing Corporation. That is the role of the Housing Corporation, not of local authorities.
The Earl of Halsbury: My Lords, is it not anomalous that we have millions of unemployed, the construction industry at a standstill and an inadequate housing stock? Do the Government object to a national recovery loan to get the industry spiralling uphill again?
Lord Strathclyde: My Lords, the noble Earl will have seen that in the Autumn Statement we released enormous amounts of money from local authorities through their capital receipts to boost the housing sector and thus to help the construction industry. We also made special grants.
Lord Clark of Kempston: My Lords, does my noble friend think the Housing and Urban Development Bill will increase private rented accommodation?
Lord Strathclyde: No, my Lords.
Lord Dean of Beswick: My Lords, the Minister will be aware that the Question tabled by the noble Lord, Lord Skidelsky, refers to the shrinkage of local authority housing. The Minister must be aware of reports in the press which state that the Minister in another place, Sir George Young, is introducing a scheme that will further encourage people to buy another million council houses by increasing the credits or discounts that they can obtain. Is the Minister aware that the one and a half million local authority houses that have already been sold have not been replaced and that the present rate of building by the voluntary sector will not replace those houses this century or indeed well into the next? We now have the worst of all possible worlds bearing in mind the number of repossessions that are occurring. There are now more people without a roof over their heads than ever before.
Lord Strathclyde: My Lords, our objective is to ensure that a decent house is within reach of all families. Measures have been taken to increase the supply where it is needed and the increase in funding for housing associations, together with increased efficiency, means that we shall be able to provide around 170,000 homes in the current three-year period.
Lord Monson: My Lords, does the noble Lord agree that the more Ministers talk about giving people the right to own or control the property in which they live, as they have been doing recently, the less inclined will potential landlords be to let vacant residential property for fear that in a few years' time a Bill will be introduced to allow tenants compulsorily to acquire their houses or flats against their landlords' wishes, and very probably at less than the market value?
Lord Strathclyde: My Lords, this Government have no desire compulsorily to require landlords to sell their houses which are let.
Baroness Hamwee: My Lords, does the Minister agree that the Housing Corporation's programme for next year comprises some 50,000 new units? One should set that against a demand for 102,000 new units, according to the corporation's consultant study, or 76,000 using the figures of the Audit Commission. What does the Minister have to say about the shortfall?
Lord Strathclyde: My Lords, we have discussed on many occasions the reasons for the increased number of households that have arisen in recent years. Indeed my noble and learned friend the Lord Chancellor is undertaking a special study to consider the relationships within families which lead to the increased number of households. Our job is to ensure that houses are available that meet the needs of society as a whole. We believe our policies are achieving that. I accept that we need to do more as regards increasing the amount of accommodation available in the private rented sector.
Baroness Hollis of Heigham: My Lords, I wish to press, the point about low-cost private rented housing. Is it not the case that private rents are now so high that rent officers now refuse full housing benefit in one-third of all cases because the rents are unreasonable? Therefore families who are unable to afford the high rents become homeless. Surely the answer, as so many noble Lords have already said today, is socially rented housing.
Lord Strathclyde: My Lords, there are a number of ways of solving that problem. Housing benefit is available and it can meet 100 per cent. of a person's reasonable rent and accommodation-related service charges if income is at or below income support level. We have a firm commitment to the private rented sector and we would like to see it increase.
Lord Stoddart of Swindon: My Lords, is the Minister aware that his reply to the noble Lord, Lord Monson, will not cut much ice? Does he not agree that firms or individuals who rent out their houses are at great risk from this Government, bearing in mind the latter's record? Does he not agree that this Government have forced local authorities and housing associations to sell off their properties to anyone who wants them at discount prices? Under the Housing and Urban Development Bill people who own leases are being forced to sell their leases to other people. What is there to stop Citizen Major coming forward, just before another general election when he wants to defend some marginal seats, and promising tenants of private landlords that they also may buy their houses, whether or not the landlords wish to sell them?
Lord Strathclyde: My Lords, the noble Lord has entirely missed the point of the Housing and Urban Development Bill and its relationship with the private rented sector. There is absolutely no doubt that a Conservative Government seek to increase the level of the private rented sector. They certainly do not seek to reduce it, and never to nationalise it in the way that the noble Lord suggests.
Lord Stoddart of Swindon: My Lords, ask the Duke of Westminster whether you can trust a Tory Government.
Noble Lords: Order!

Publishing: VAT
3 p.m.
Baroness David Baroness David asked Her Majesty's Government:
Whether they are still of the opinion that the imposition of value added tax on books would adversely affect education and cultural pursuits in this country.
The Earl of Caithness: My Lords, we have received a number of representations from all sectors of the publishing industry about the consequences of VAT being levied on publications, and those will be considered very carefully in the period leading up to the Budget. It would therefore be inappropriate for me to comment further at this stage.
Baroness David: My Lords, that is a not unexpected reply. Is the Minister aware that not only the publishing industry but also the whole educational world are extremely worried about the prospect of VAT on books? University libraries and university students will really feel the pinch if VAT is levied on books. Since further education colleges and sixth form colleges will come out from under the umbrella of the local education authorities, they too will not be able to claim the return on VAT which they have to pay on books. Therefore a much larger area will be affected.
The Earl of Caithness: My Lords, the Government are fully aware of the VAT position of education establishments. We shall take that into account, too.
Baroness Birk: My Lords, reading is habit forming in particular when the habit is acquired at an early age. If any factor cuts down or prevents the habit continuing, it affects not only knowledge, education, employment and much else, but cuts out an enormous slice of sheer enjoyment in life. Will the Minister include that point in his representations? There is a lighter side to the Question, but it is just as important a factor in people's lives.
The Earl of Caithness: My Lords, I shall draw what the noble Baroness said to the notice of my right honourable friend the Chancellor of the Exchequer.
Lord Beloff: My Lords, I must declare an interest as deputy chairman of the Hands Off Reading Campaign. However, although Budget secrecy is a part of our national mythology, is there also a part which refers to Cabinet solidarity? There have been unequivocal demands from both the Prime Minister and Secretary of State for Education for an expansion of education and a raising of standards. Does that not bind the Chancellor's hands?
The Earl of Caithness: My Lords, I note what my noble friend says. Again, I cannot comment.
Lord Jenkins of Putney: My Lords, I believe that the unusual circumstance has arisen in which the
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noble Lord, Lord Beloff, and I are in agreement. Does the Government recognise that there is a widespread body of opinion throughout the country which retains opposition to the taxing of literature which successive governments have maintained? Will the Minister bear that in mind? Will his noble friend the Chancellor also bear it in mind?
The Earl of Caithness: My Lords, I hope that my noble friend Lord Beloff does not make a habit of the present circumstance.
Earl Russell: My Lords, will the Minster ask his right honourable friend the Chancellor to make a separate consideration of the market in learned academic books? Does he agree that those are a little like printed Parliamentary Bills? They are a market too small and too specialised to work by the normal rules. Does he agree that if such books were to disappear, it would be a considerable blow to education in this country?
The Earl of Caithness: My Lords, I have noted carefully what the noble Earl said.
The Lord Bishop of Chester: My Lords, does the Minister accept that such a tax would have an enormous impact on the spiritual and moral knowledge of people in this country? It would have effects on distance learning, on spiritual and moral individual development and on RE resource centres.
The Earl of Caithness: My Lords, I have listened carefully to the right reverend Prelate. Having heard what everyone has said in the House today, it does not surprise me that we are so much better than Europe, which has VAT on books, magazines and newspapers.
Lord Richard: My Lords, is the Minister aware that during the last election campaign the chairman of the Conservative Party stated,
"VAT will not be imposed on books, newspapers or periodicals"?
Does that remain the policy of Her Majesty's Government?
The Earl of Caithness: My Lords, the policy remains as I set out in my original Answer.
Viscount Montgomery of Alamein: My Lords, does my noble friend agree that both the price and availability of books would be much improved if he would consider the abolition of the Net Book Agreement.
The Earl of Caithness: My Lords, that is an interesting idea but it is slightly wide of the Question on the Order Paper.
Lord Strabolgi: My Lords, is the Minister aware that VAT on books would have an adverse effect on the smaller book shops—in particular, those in outlying areas? It would lead to the much higher prices of books.
The Earl of Caithness: My Lords, I take note of what the noble Lord has also said.
Lord Howie of Troon: My Lords, is the Minister aware that VAT levied on books and periodicals in

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certain Continental countries is at a rate of about 2.5 per cent. or 5 per cent.? If VAT were levied in this country at 17.5 per cent., the printed media would be much more heavily taxed than any of its competitors in Europe. Is he further aware that competitors in Europe have subsidies on transport costs and postage? Similar subsidies would be required of Britain if we were to achieve the famous level playing fields about which we hear so much.
The Earl of Caithness: My Lords, the range of VAT on books in Europe is from zero in Britain to 25 per cent. in Denmark. On magazines, it is from zero in Britain to 25 per cent. in Denmark. On newspapers, it is from zero in Britain to 10 per cent. in Ireland.
Baroness Nicol: My Lords, does the Minister realise the special difficulties that may be caused to charities which supply magazines as part of their members' subscriptions? Does he agree that whatever may happen to other magazines, those issued by charities will remain zero-rated?
The Earl of Caithness: My Lords, I shall also pass that remark on to my right honourable friend.
Lord Holme of Cheltenham: My Lords, I must declare an interest as a publisher. Does the noble Earl agree that British books make a notable contribution both to British exports and to British influence throughout the world? It would be desirable to avoid any measure which weakens the strength of British books in their home market.
The Earl of Caithness: My Lords, if the book is exported, there is no VAT.

Business
3.6 p.m.
Lord Hesketh: My Lords, in the humble anticipation that your Lordships will agree to the Motion which is about to be moved by my noble friend the Leader of the House, I should like to say a word about this afternoon's debates standing in the names of the noble Lord, Lord Carter, and the noble Lord, Lord Dean of Beswick. As the mover is allowed 15 minutes, and the Minister should rise to reply not less than 20 minutes before the scheduled end of the debate, in the case of the debate in the name of the noble Lord, Lord Carter, this means that all other speeches should be limited to a maximum of seven minutes, and in that of the noble Lord, Lord Dean of Beswick, 11 minutes. If any noble Lord were to speak at greater length, he would be doing so at the expense of subsequent speakers in either debate. I remind your Lordships that when either the seven minutes or 11 minutes are indicated the eighth and 12th minutes have been entered into.

Business of the House: Debates this Day
The Lord Privy Seal (Lord Wakeham): My Lords, I beg to move the Motion standing in my name on the Order Paper.
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Moved, That the debates on the Motions in the names of the Lord Carter and the Lord Dean of Beswick set down this day shall each be limited to two-and-a-half hours.—(Lord Wakeham.)
On Question, Motion agreed to.

Rural Areas: Social and Economic Needs
3.8 p.m.
Lord Carter Lord Carter rose to call attention to the case for comprehensive and coherent policies for the social and economic needs of rural areas; and to move for Papers.
The noble Lord said: My Lords, the Motion which stands in my name on the Order Paper today calls for comprehensive and coherent policies for the social and economic needs of rural areas. Obviously it is a subject which has a wide range of facets. I know that speakers in the debate will wish to deal with those different aspects—education, housing, transport, and agriculture, or the special problems of Wales and Scotland. In opening the debate, I wish to set out an overview.
First, what do we mean by rural areas? The Office of Population Censuses and Surveys (OPCS) defines rural areas as the residue after urban regions have been defined. On that basis, about 80 per cent. of the UK land mass is rural; about 20 per cent. of the population live and work in the countryside, and less than 3 per cent. of the population—those engaged in agriculture and forestry—are the custodians of the visual and environmental aspects of the 80 per cent. of the land mass which is rural.
At the same time, a recent survey shows that 13 million people now living in towns and cities would like to live in the country and that 4 million people actually expect to move to a more rural area in the next five years. Forty-five per cent. of those surveyed longed for the open spaces of the countryside. Between 1981 and 1991, the census figures show that the fastest growth in population was in the remoter, more rural districts. But alongside this imagined rural idyll, there is the uncomfortable fact that 25 per cent. or more of rural households are living on or near the margins of poverty.
A recent survey of 10,000 rural parishes found that only 60 per cent. had a shop, only 3 per cent. had a public nursery, 94 per cent. had no day care groups for the elderly, and 60 per cent. had no primary school. There is real rural deprivation for some, but by no means all who live in the countryside. That is a fact of life which is borne out by many reports in recent years.
The biggest obvious change affecting the countryside is the decline in agriculture as a major employer, but with the paradox that agriculture, with an annual output of £12 billion to £13 billion, is probably still the largest single economic interest in the countryside. We know that nearly 100,000 jobs for farmers and farmworkers have gone in the past 10 years. Various estimates suggest that another 100,000 may go by the end of the decade.
This is a fundamental restructuring; it is not just a recessionary blip. As was put to me, we cannot expect someone who has worked on the land all his life to go

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off and retrain as a computer operator. For example, one little-remarked on fact about the proposed set-aside of agricultural land is the potential job loss resulting from a successful set-aside policy—if one could define success in terms of set-aside. The estimates vary from one job lost per 400 acres of set-aside to one job lost per 800 acres of set-aside. Whichever figure is correct, an effective set-aside policy can only add substantially to the problems of rural unemployment.
The job losses in the countryside do not just result from the decline in agricultural employment. In the seven years from 1984 to 1991 nearly 38,000 jobs were lost in rural areas as a result of pit closures. As one miner's daughter pointed out, coal is a culture, not just an industry. Whole communities have been dependent on that culture—the infrastructure of the village revolved around the pit. The pit was the great provider and when the pit goes, so do the support services, sports facilities, recreation facilities and social facilities.
My own district council in Wiltshire is a rural area of villages and small market towns with a population of about 67,000. The waiting list for homes is 1,754 families. The number of homeless families in temporary accommodation is 110. The cost of the bed and breakfast accommodation is £50,000 per year and it has been as high as £80,000, compared with only a few thousand pounds five years ago. There is no doubt that the local authority waiting lists considerably understate the housing need for single people and couples without children who often just do not bother to register.
In that same small rural district, the latest unemployment figure is 1,358—the highest for many years and again considerably understating the true level of unemployment. Two years ago there were 106 people unemployed for between six and 12 months. The figure now is 494, an increase of nearly five times. In May last year 217 vacancies were notified and in January this year there were 55 vacancies. We know that 35 per cent of Army wives in the district are able and willing to work but there are no opportunities for them and they are not even on the register.
I have already mentioned the increase in population in the countryside, but we know that that growth is not balanced in terms of age and occupation. The rural areas have a greater proportion of retired people and fewer children and people of working age than in the country as a whole. That has led to the phenomenon which has been aptly described by Professor Howard Newby as, "two nations in one village".
There is a real social stratification in rural society with one part of the rural population having less need for jobs, schools and public transport, thereby increasing the pressures on the rest of the rural community who depend on such things. The two-car family has little need of the village shop but 25 per cent. of the rural families in Wiltshire have no car. We know that many villages have thus become dormitory settlements rather than balanced social units.
However, when all the various social and economic problems that beset the rural areas are considered,
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there is one problem that stands out above all others. There is absolutely no doubt that the biggest social problem by far in rural areas is the lack of affordable homes to rent or buy. That view has been recorded and emphasised by report after report: the Duke of Westminster's study group; the Rural Development Commission; the Housing Corporation; the Association of County Councils; the Rural Housing Trust; the Archbishops' Commission report, Faith in the Countryside; and our own Select Committee on the European Communities in its report on The Future of Rural Societies. Paragraph 217 of that report states:
"The Committee were struck by the weight of evidence suggesting that the largest, and in some ways the most intractable problem affecting rural areas in the United Kingdom is the provision of adequate affordable housing for local communities".
The report of the Archbishops' Commission says the same thing on page 95:
"One issue above all others—housing—has been at the centre of the evidence which we have received, especially on our regional and diocesan visits".
We know that this problem is the direct result of the Government's right-to-buy policy for local authority housing, accompanied by the refusal to allow the local authorities to replace the lost houses.
If rural houses, as they become available, are snapped up by the rural incomers, thus pricing even the modest homes way beyond the reach of the working population, there must be a replacement supply of affordable housing if there is not to be a major social shift within villages.
That is exactly what has happened. It is a classic example of a popular, vote-winning policy bringing major socially undesirable results. The tragedy is that the Government could have achieved the objectives of the right-to-buy policy and prevented the worst social effects if they had allowed the local authorities either as enablers or as providers to replace the stock.
There are, of course, many other aspects of rural life that are affected by the social and economic pressures of living in the countryside. The village shop used to be an integral part of village life, but the spiralling cost of rural freehold property and the competition from supermarkets in nearby towns has drastically reduced the number of village shops. The Village Retail Services Association estimates that as many as a further 3,500 village shops are at risk of closing.
The National Federation of Women's Institutes says that its members identified the village shop and/or post office as the most highly desired amenity in rural areas. The situation of rural pharmacies is rarely mentioned, but the rules which govern dispensing by doctors can threaten the survival of the rural pharmacists who provide much more than just a dispensing service.
The problem of child care can be severely worsened by rural isolation, as can the situation of the army of informal carers looking after the elderly, the infirm or people with disabilities. The pressure to close community hospitals is intense in some rural areas, certainly my own.
Village shops, rural pharmacies, child care, informal caring, the closure of community hospitals are all examples of the many rural problems that may

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be small in terms of absolute numbers but where the impact on the local community can be very severe indeed. We know that sports, play and leisure facilities play an important part in rural life. We also know that many rural education authorities are considering whether school playing fields are surplus to requirements. The lack of leisure centres and play or activity schemes is a feature of many rural areas. I should declare an interest here as a trustee of the newly formed John Arlott Memorial Trust, which has been set up to raise funds for the Rural Housing Trust and the National Playing Fields Association.
Time does not allow me to cover fully what has been well described as a damaging web of problems. We know that systems and structures have been dismantled, thereby creating the pieces of an immense jigsaw for which there is no obvious blueprint or co-ordinated approach. Virtually every agency—both public and voluntary—which is working on rural problems mentions the the overlapping of functions and the lack of comprehensive and coherent policies mentioned in the Motion for today's debate.
As an example, consider a small businessman who is looking to expand, or a farmer who wishes to diversify, and who is located in a less favoured area which is also an environmentally sensitive area, inside a national park and part of a rural development area surrounded by a site of special scientific interest. It is perhaps a far-fetched example but it illustrates very well the plethora of agencies and policies which exist in the absence of proper co-ordination.
A vast amount of very valuable work is done by voluntary agencies which are grappling with rural problems. Much of the work is done by those very rural incomers and urban transplants whose arrival is part of the continuing social stratification in rural areas. I do not use the phrase "the urban transplant" in any pejorative sense. I was one myself. But the irony is that the very same people will also have the time to serve on the parish council and will then resist the low-cost housing which is required in their hamlet or village to replace just a few of the houses that they have bought up. We also know that they are the people who have time to serve on the planning committees. It has been well put that the attitude to planning in rural areas is much more protective of conservationism than it is developmental. In my view there is an overlapping mix of policies and agencies which should be co-ordinated to present a coherent front.
The need for a coherent approach has been emphasised, but the general concept embraces a number of rather different ideas. First, the broad objectives of policy, whether economic, social or environmental, must be clearly formulated, together with guidelines for arbitrating the conflict between them. Secondly, those broad objectives must be translated into specific programmes which will actually achieve them. Thirdly, resources must be allocated in a rational way, so that if the aim is, say, to support farm incomes or to promote employment, the means is chosen with an eye to cost-effectiveness for that purpose. I gave the example of the set-aside of
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agricultural land. Has anybody attempted to work out the unemployment cost of that? Fourthly, policy in so many different areas—agriculture, employment, education and training, housing, transport, and so on —must be planned within a coherent overall framework when decisions in one area so often have implications in another. Fifthly, different agencies, local or national, which implement policy must work smoothly together at a day-to-day level. Sixthly, and very importantly, the distinctive character of rural needs and rural problems must be given due recognition, even in areas such as housing, transport and education which straddle the rural-urban divide.
In the past there has been an argument for a department of rural affairs. It has not been accepted, even by my own party. But I believe that in time the argument for such a department will become even stronger. Far from fostering a coherent approach to rural policy, the present structure of government leads at best to piecemeal tinkering and, at worst, to an actual exacerbation of the conflict.
This immense subject requires a well planned combination of government action and voluntary effort. I know that other speakers will wish to deal with many aspects in more detail. I conclude with two quotations. The first is from the Prime Minister, Mr. Major, speaking at the Oxford Farming Conference in January 1991. He said:
"We do not want to see a population exchange with the less well-off in rural areas being driven into the cities by the absence of affordable housing and jobs in the countryside".
One could wish that the policies of the Government were geared towards the objectives set out in that quotation.
Finally, M. Jacques Delors, the President of the European Commission, said:
"Rural development is a public good which corresponds to a fundamental need of society as a whole".
My Lords, I beg to move for Papers.
3.24 p.m.
Lord Shuttleworth: My Lords, I must at once declare an interest as chairman of the Rural Development Commission. The commission's task is to advise government on matters affecting rural England and to take action in partnership with others as appropriate for further development of those rural areas. Because of my responsibilities outside this House, I speak mindful of the Addison Rules.
I should like to thank the noble Lord, Lord Carter, for initiating the debate. I want to re-emphasise much of what he said. We do not disagree on the analysis. The Rural Development Commission does not always believe that rural areas, and more importantly rural people, get their fair share of attention. I should like to refer to three key issues which presently face rural areas in England. I shall refer to them briefly, because they were all mentioned by the noble Lord, Lord Carter.
In many areas the rural economy is facing substantial structural changes. As we all know, over the past 20 years the number of people employed in agriculture has fallen by about 40 per cent. As many as 100,000 full-time jobs in the United Kingdom may

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disappear in the 1990s. As many again may be lost in related supplying and processing industries. Half of those jobs, about 50,000, will be in rural areas.
Between 1984 and 1992, as we have heard, 40,000 jobs were lost as a result of the closure of rural collieries. Of the 30,000 mining jobs in the current review, over 10,000 are in rural areas. Again, the closure of defence bases and the run-down of defence industries will have a marked effect on many rural areas, including Suffolk, Wiltshire, the South West and my own county of Lancashire. It is ironically known as the peace dividend.
I also agree with the noble Lord, Lord Carter, that housing is another issue of crucial importance for rural communities, particularly affordable rented housing to meet local needs. A study carried out for the development commission in 1990 estimated conservatively that an additional 80,000 affordable rural homes were needed over the next five years; that is some 16,000 a year. We are nowhere near that number at the moment. However, I am delighted by the measures introduced by the Government to increase the supply of rural social housing. Those measures are welcome but, as I have suggested, more are still needed.
Access to services in the countryside is also a problem. Last year, as the noble Lord, Lord Carter, reminded us, the commission published the results of the first-ever survey of rural services in some 8,000 parishes in England. Looking at six key services we found that about 40 per cent. of parishes were without a permanent shop or post office. Nearly a quarter, perhaps sadly, were without a pub. More sadly, over half were without a school. There were 30 per cent. without a village hall, and 73 per cent. without a daily bus service. We would not argue that each of those services should be available in every village. But the survey shows that, even in the most prosperous parts of the countryside, life can be difficult for some groups of people, particularly those without a car.
So what can we do about the problems facing rural communities? What are we doing? The Motion refers to "comprehensive and coherent policies". The development commission has always believed in an integrated approach to economic and social problems. In each of the priority areas —the rural development areas, as we know them—we have introduced rural development programmes. These are integrated programmes of economic, social and related environmental action drawn up by local partnerships from the areas to which they apply. They involve county and district councils, English estates, the county rural community councils and other agencies such as the TECs. In 1990 we extended that approach to two new rural coalfield areas in the East Midlands. Last year we launched our new countryside employment programme in three pilot areas facing the challenge of severe agricultural change in order to help diversify the local economies.
These recent initiatives reflect the commission's evolution of a proactive role in tackling new economic problem areas. Parts of rural England need a regeneration agency just as much as the inner cities. The commission has launched a number of new or
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improved programmes in the past year geared very much towards helping businesses weather this recession and prepare for new growth. Our business service has launched new advisory packages. We have greatly expanded our marketing grants. We have launched new grant schemes to encourage TECs and local enterprise agencies to provide more business advice and training in rural areas. Last year we expanded the scope of our redundant building grants scheme which provides economic environmental benefits most cost-effectively. We have continued to expand our social programmes. For example, we have funded a range of demonstration projects in child care and training for women which, among other benefits, improve the currently poor prospects for rural women of finding work.
Last but not least we have launched a grant scheme to help village halls cope with the costs of complying with new health and safety regulations. I must add that the burden of regulation is now one of the biggest bugbears of rural businesses and charitable bodies. The Government's renewed determination to reduce those, burdens is very welcome. We shall monitor progress closely. I hope that those brief examples will demonstrate to your Lordships that the Rural Development Commission takes a comprehensive view of its responsibilities and promotes an integrated approach to rural problems.
I should like to stress one final point that lies behind this Motion; namely, that preserving and protecting the physical aspects of the countryside, flora, fauna and landscape is all very well, but in itself does not safeguard the countryside's future. To do that we must above all have regard for the people—people who need jobs, homes and services.
3.31 p.m.
Lord Beaumont of Whitley: My Lords, we are deeply indebted to the noble Lord, Lord Carter, for moving this Motion this afternoon. Many noble Lords, particularly those who will speak in this debate, deeply regret that more time could not be given to it. There is a very short time at our disposal in which to deal with a very important subject. Although I am the third speaker, as can be seen, I do not speak for the Front Bench of my party. The noble Lord, Lord Geraint, who will wind up the debate, will undoubtedly say such things as need to be said from the party's point of view.
I imagine we all agree that the rural areas of this country are suffering from pernicious anaemia and poor circulation. There is no shortage of suggestions on what is needed to alleviate the symptoms. Most of those suggestions are good. As has already been said, action is desperately needed in the areas of housing, transport, and many others. But the disease goes very deep and relief of symptoms is not enough. We need to tack the malaise at its root. The truth is that the countryside in any nation cannot be healthy without a thriving, effective and populous agriculture. If one needs to look at the state of our agriculture today, one has only to read the extremely good speech of the noble Lord, Lord Palmer, last Wednesday.

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Britain has been blessed and cursed with a very efficient agricultural system. It has been blessed because it was able, among other things, to bring us safely through the war and blessed because it has paid off for many years in a monetary bottom line. Britain has been cursed because ever since the agricultural revolution we have been travelling down the path of measuring prosperity in monetary output per worker, and the logical conclusion is the anaemic state of the countryside today. We have missed out on healthy peasant farming which has been the glory of most of Europe and which was the policy beloved of our Liberal forbears, of Hilaire Belloc and G. K. Chesterton and the people who preached the Liberal doctrine at the turn of the century, including Jesse Collings who spoke for the countryside from the Labour Party. We have missed out on that, although it is just possible that Spain and Italy are now just beginning to tread the somewhat ruinous path that we have trodden.
Those of us who read The Times on Saturday know, from reading the entertaining life of Paul Heiney, the possibilities of small farming. Of course it does not pay and it has to be paid for by his journalistic efforts. But we should find some way of making that kind of farming pay. Earlier last year the Prince of Wales spoke to the RASE and pointed to some of the ways forward. SAFE, the campaign for Sustainable Agriculture, Food and the Environment, has produced a 10 point programme which I commend to your Lordships' attention. I shall briefly mention six of those points. I emphasise that this is a plea for the kind of agriculture that we should have throughout the EC.
First, there must be a farm support system which sustains rural employment. I may be wrong but I thought that the noble Lord, Lord Carter, suggested that we did not know the effects of set-aside. I understand that some research has been done and it has been suggested that one job is lost for every 130 hectares put into set-aside. We must have a farm support system which encourages employment. We must have a farm system that controls surpluses by rewarding environmentally friendly farming systems. We must have a farming system that encourages lower outputs—low farming rather than high farming—and avoids much of the damage done by energy-intensive farming. We must have a farming system that produces protection for wildlife habitats; a farm support system that encourages the restoration and creation of such habitats; and a farming system which militates against the inhumane treatment of farm animals. All that is done by a low farming system.
In conventional terms that is expensive and we are financially a poor country—over the past few days I have heard many speeches implying that we are a rich country; but we are a poor country with a lot of rich people. It will be argued that we cannot afford such reforms. But a country is basically prosperous or not depending on whether it can provide a satisfying life for its citizens. Part of a satisfactory life in Britain and Europe is a stable and satisfied rural population. For far too long we have calculated the bottom line only
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in pounds and pence (previously in shillings also). It is time that we started to calculate in terms of human values a proper relationship between man and his environment and even aesthetic satisfaction. But if we continue as we are doing, in the words of the prophet, "we shall make a desert and call it peace."
3.38 p.m.
Lord Northbourne: My Lords, we are all grateful to the noble Lord, Lord Carter, for bringing this very important subject to the attention of the House. We are not alone in this country in having problems in our rural community and with farming. I have with me a report which was published in November for the French Senate. It draws attention to the problems of what the French call their "rural spaces". It lambasts the French Government with a ferocity almost equal to that of the noble Lord, Lord Carter, this afternoon. Perhaps some of your Lordships heard the debate between M. Mitterrand and a number of Frenchmen just before the referendum on Maastricht. A French farmer tackled him, claiming: "You are destroying the farmers of this nation; it is genocide!"
This afternoon I want to speak briefly about the problems of the British farmer. Many people in this country perhaps do not realise what the farming industry is going through. Unlike the miners and French farmers, we do not go out and burn trucks on the road and parade through the capital with our tractors and combine harvesters.
I am told by the NFU that over the past two years more than 13,000 farmers and farm workers have left the agricultural industry. The Samaritans have had to set up special units in the countryside to deal with calls from farmers because there have been so many rural suicides. The important point is that British farmers, unlike French farmers, are not resistant to change; but sometimes circumstances are such that they do not have time to make changes. Farmers live by the rhythm of the seasons and of the life cycle of the animal population. It is therefore difficult, if not impossible, to make rapid changes.
I should like to look at the question of what the urban majority in our country want from the farming community. That is what the farming community want to know. If they know and are given time to change, they will respond. I believe that what the urban population want—put crudely —is cheap wholesome food and a picture book countryside. I suggest to your Lordships that the two are simply not compatible.
Picture book farming is today an expensive way to produce food because of the march of technology and the reasonable expectations of those who work on the land. When I was a boy my father farmed under 1,000 acres and employed 35 men; today we farm over 2,000 acres and employ 3.5 men. Agricultural wages in 1940 were £3.6 per week—£63 at 1992 values; today, wages are on average £216 per week. That is a change we cannot reverse. We cannot expect those who work on the land to go back to 1940 wages; we cannot turn back the tide of technology.
What can we do to produce cheap wholesome food in a countryside whose appearance is acceptable? The

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French Sénat report suggests four measures. First, that the Government should define clearly a national policy for the future of the countryside; secondly, that they should open up new outlets for agricultural production—the report refers particularly to the possibility of producing fuels from agricultural products—and thirdly, that the Government should put in place a plan to relieve agriculture of some of its tax burdens. I must admit that that looks to me like a hidden subsidy; what price the level playing field? Fourthly, the report recommends the development of industry and business in the countryside as a source of alternate income for people living in the countryside. There are lessons we can learn from those proposals and perhaps the last of the four is the most important.
In my view, in seeking a long-term solution to the problems of the countryside and the farming industry, we shall need to differentiate between areas with soils of different productivity potential, different climates and different landscape values. I suggest that in areas with a high potential for high-yielding crops or grazing and with suitable topography, farmers should be encouraged to practise highly efficient, low unit cost agricultural food production. Those are the areas which would produce most of the country's low cost food and help with our balance of payments.
By contrast, in areas of exceptional national beauty where small farmers predominate, farmers can be subsidised to practise traditional and picturesque farming methods—what I might call "Mrs. Tiggywinkle farming"; a kind of open-air museum of farming the countryside. In areas of the Lake District, or parts of Devon or Wales that might be justified and the public may be prepared to pay the not inconsiderable cost.
In areas of poor or steep land I believe that forestry must be an important element in the solution. Finally, on all the land that lies in between I believe that we must look at extensification and, above all, at part-time farming. Part-time farming is the only way in which we can keep people in the countryside, enable them to participate in relatively small-scale farming and, at the same time, enable them to earn a reasonable living wage.
Whatever the policy is to be, I plead with the Government and all political parties to work together so that we do not have changes every time there is a change in political influence. Farming cannot be a political football; it takes too long to change direction. Finally, and in sympathy with the noble Lord, Lord Beaumont, I remind your Lordships of the words of Jean Jacques Rousseau,
"Agriculture is the first and most admirable of all the Arts".
3.45 p.m.
Lord Vinson: My Lords, we are indeed indebted to the noble Lord, Lord Carter, and I am particularly so because for 10 years I was chairman of the Rural Development Commission between 1980 and 1990. I have little to add to his comprehensive survey, nor to that of my successor, my noble friend Lord Shuttleworth—except perhaps on one or two points.
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The perception of rural life is often quite different from reality. One of the tasks of those of us concerned with rural affairs is to illustrate the essential difference between living in the country and living in the town. Distance and sparsity have an inescapable effect on the rural dweller. It is around those two factors that any government policy specifically aimed at rural areas should be framed.
Your Lordships will need no reminding that it is not uncommon in rural areas for people to have to travel 40 miles to visit granny in hospital—a round trip of 80 miles; to travel seven miles for a hair cut; to go five or six miles to the nearest village store where inevitably the costs are higher than those in the supermarket. The car has emancipated the rural dweller. To him it is not a luxury, it is a necessity. I make this point particularly because when we speak of broad-brush policies to reduce CO2 emissions by increasing the cost of energy, the rural dimension needs to be remembered, and the substantial extra cost that a rise in the cost of fuel would bring to the rural dweller. It is something that all of us who take any part in formulating policies should keep in the back of our minds.
There may be some policies that can and should be specifically aimed at the rural dweller. But there are also a number of policies that constrain the economic development of rural areas and constrain the natural development of alternative jobs in rural areas, in exactly the same way as they constrain them in urban areas. Therefore, before we look at specific new initiatives—one initiative to pile on another initiative —it is important that the Government examine the framework within which the economy works and within which the rural economy works.
Perhaps I can give two examples. When I was chairman of the Rural Development Commission we came to the conclusion that the best thing we could do was to encourage local enterprise, recognising that most of the businesses one finds in rural areas were started by people who lived in those areas in the first place. The natural thing to do therefore would be to cherish the acorn and try to help it turn into an oak.
Such businesses needed somewhere to start, and yet 10 years ago there were draconian planning regulations against the use of redundant farm buildings and against people working from their own homes. Our agency, along with others, quietly nibbled away at that concept, and I believe that literally hundreds of thousands of new jobs have been created in rural areas—not because of government but in spite of government. We must remove the constraints that prevent jobs from happening spontaneously and organically. That is why, in the formation of policies, one should stand back and examine the situation widely.
We looked at a second initiative, one which again did not apply wholly to rural areas. We recognised that lots of people would have liked to have been their own boss and would have liked to have started their own business; but they had the desperate problem of how to start their own business and yet not be accused of moonlighting while they lived on the dole. The solution was very simple—to legitimise moonlighting

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under a scheme called the Enterprise Allowance so that those people could go on drawing the same money, in effect, as the dole. The change of name to the Enterprise Allowance from the dole opened up a whole new range of opportunities and gave people a financial life-line to start their own businesses. It was responsible for the creation and sustenance of hundreds of thousands of businesses both in rural and urban areas.
In trying not to dwell on many of the subjects that have been touched on already, I should like to suggest three more initiatives which I believe could be applied just as well to urban areas as to rural areas.
We are all anxious about unemployment yet we regard employment as being a full-time job. The laws are so structured that if one takes a part-time job and one is already unemployed, the hassle of deregistering and then reregistering makes it almost impossible to take a temporary part-time job. Yet, particularly in rural areas, there are masses of part-time jobs.
Only this week an instance came to my knowledge of a girl who is 23 and unemployed. She volunteered to become an assistant shepherdess during lambing. As noble Lords will know, there is always a demand for pairs of hands during lambing. A deal was struck offering her £250 a week for four weeks—£1,000. She came back five days later and said, "I have discussed this with social security and, frankly, if I come off unemployment benefit, I shall be worse off as I shall lose my mortgage subsidy, my child allowance and all the other things. I cannot afford to take it, even at £250 a week". It is madness to have constraints on natural re-entry into the labour market via the part-time route.
We should not be driven by self-imposed regulations that prevent the market from working naturally. We should re-examine this whole area to see whether some concessions cannot be made in this field to allow quicker deregistering and reregistering on and off the unemployment roll or an allowance as applies to old-age pensioners; say where the first 50 per cent. of earnings for those who have been out of work for a reasonable period are disregarded. We must free up the existing barriers to re-entry via the part-time labour route.
My second point concerns the question of how small businesses finance themselves. Uniquely in this country, we have a system of accountancy that taxes working capital. As a small business or a small village shop expands, its stock and work in progress goes up. That is regarded as profit if the business is profitable overall and it pays tax of 25 or 30 per cent. on its increased stock holdings. It pays tax on its working capital. All business costs are ultimately allowable. If the same business then goes out to buy a small computer, instead of that cost being allowed in the year in which the expenditure occurred, the cost is spread either over four or seven years. In other words, the recovery of that cost, while allowable, does not happen at once. In the year it expands, that business has to pay both for its new investment and tax. Other countries look at this quite differently and enable companies to be exonerated from tax on increased
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working capital. It would be perfectly possible for us to do that in this country in the same way up to a maximum limit.
Last but not least—I apologise to the House for over-running my time—is the question of overregulation. It has been said to me that it is impossible to run a small farm or business today without breaking the law. We must bring in more de minimis regulations for small businesses. Many of them feel like Gulliver in Gulliver's Travels. No one silken thread holds them down but thousands of them prevent economic activity that should properly happen from happening. I believe that there are areas that the Government could look at, where deregulation and a change of existing regulations would emancipate businesses greatly to the benefit of the economy whether they be in rural or urban areas.
3.54 p.m.
Lord Stallard: My Lords, I too congratulate my noble friend on initiating this debate and on the way in which, from his obvious expertise, he introduced it. He has probably saved many of us a lot of time in our own speeches.
We do not often get the opportunity to discuss in any detail the social needs of rural areas. It is sad that noble Lords have only seven minutes, but in the few minutes available to me I should like to say something about the housing needs of rural areas. We tend to relate all the problems connected to the acute shortage of housing to urban areas and we seldom realise that those same problems exist in some lesser or greater degrees in rural communities. It is fortunate for me that recently the all-party group on homelessness had two speakers from the rural areas. We had a speaker from Action for Communities in Rural Areas, Miss Catherine Chater, and a speaker from the Association of District Councils, Mr. Graham Facks-Martin. We were brought up to date reasonable well by those two speakers.
Research by ACRE on behalf of the Rural Development Commission in 1990 indicated that, after taking account of re-lets, there was an annual shortfall of rural social housing provision of between 23,000 and 37,000 units. That is a massive shortfall when one considers the size of the problem in the rural areas. Graham Facks-Martin of the ADC said:
"It must be stressed that the root cause of the homelessness crisis is the inadequate provision of social housing, and should not be blamed on anything else. In the six years prior to 1991–92 the amount of social housing built was down to 30,000, from 80,000 in the first three years of the decade".
Local authority waiting lists significantly underestimate need, particularly in communities where they have little stock to offer. Those who are not classed as in priority need—single people or couples without children—tend not to register at all. There are many people in that category who do not show up in the records.
Homelessness in rural areas is increasing at a faster rate than in urban areas, according to a recent report, Homelessness in Rural Areas, by the Rural Development Commission. In the four years to 1992, the incidence of homelessness has tripled in deep rural areas. We know too that many homeless people who

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originate from rural areas often seek accommodation in large cities—we certainly know of that problem in London—but even so it is clear that increasing numbers of people are now sleeping rough in rural areas as well. They may not be as obvious as they are on the Embankment. They are not sleeping on the streets but they are sleeping in cars, in garages—sometimes garages are let to people to sleep in—and in tents.
The report Homelessness in Rural Areas, produced for the RDC by Glen Bramley at the School for Advanced Urban Studies in Bristol in 1992, found that rural authorities tended to be stricter in their interpretation of the statutory homelessness legislation. For example, people encountering mortgage repossession, living in inadequate mobile homes and those living in short-term lets were seen to be intentionally homeless and therefore councils did not have a responsibility to provide housing for them—otherwise, the numbers accepted would be even larger. In Cornwall, for example, it was found that it was common for people living in short-term, six-month, winter-let accommodation to be made homeless when their accommodation was let as holiday accommodation for the rest of the year. The report also found a worrying increase in the use of bed and breakfast accommodation by rural local authorities which previously had not had to use it at all to house homeless people.
It has already been said that over a million council houses have been sold through the "right to buy" policy since 1980, which is nearly a quarter of all stock. In some rural communities the proportion is much higher without a single vacancy occurring from one year to the next. For some time local authorities have not been in a position to replace their stock directly because of financial restraints.
Housing associations have made some contribution, but still the shortfall remains and worsens. Until the recent collapse of the housing market, house prices had been rising rapidly and were beyond the means of the majority of those in rural communities. Another report found that 55 per cent. of new households in the under-30s age group could not afford to buy a new house and that 75 per cent. of large families had no option but to rent.
The Housing Act 1988 abolished fair rents, creating assured tenancies where the prevailing market sets rents. Those rents are dictated to a large extent by fluctuations in the housing aid grant schemes. I understand that housing association grant schemes are about to be further reduced. From 75 per cent. in 1989, they are now currently running at 71 per cent. and going down during this current year to 67 per cent. It is estimated that it is the intention to reduce them to 60 per cent. and then 55 per cent.
Those changes will create a dramatic increase in rents. The percentage of rent on a 67 per cent. grant is 30 per cent. of the net income; on a 60 per cent. grant the figure is 32.6 per cent. and on 55 per cent. the figure is 34 per cent. When one considers that the aim of the housing associations is a grant of 25 per cent., one can understand how very unaffordable these homes are going to be. Therefore I hope that the Government
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will consider the overall effects of all those various aspects of the rural problem and that they will initiate changes along the lines suggested by my noble friend Lord Carter.
4.2 p.m.
The Earl of Radnor: My Lords, I too am extremely grateful to the noble Lord, Lord Carter, for bringing forward this debate. I believe that rural affairs in this context are every bit as important in their own way as urban affairs. I know the noble Lord well enough to appreciate that he knows a great deal about this subject. I also listened very closely to his overview which summed up the situation as it stood. I believe that he did that very well indeed.
I disagree with only one aspect that he emphasised as being the most important matter—that is, affordable housing. I would put unemployment first and then affordable housing. By unemployment in the countryside I mean the person who used to work in the countryside and who is, in a way, pinned to it either because of his housing or lack of a motor car, his skills or some such reason. I do not mean people who now treat the countryside as a dormitory. There will be many more of those in future.
Perhaps I may start—it is not because I sit between my noble friend Lord Vinson and my noble kinsman Lord Shuttleworth—by talking for a moment about the Rural Development Commission from the outside rather than from the inside of the agency. The nearest that I come to it is reading its report. I have said before in your Lordships' House that the commission is of prime importance in the countryside. There is a case for widening its remit and giving it a little or even quite a lot more money.
Re-reading last year's report I was a little disappointed to see that it concentrated on rural development areas—no doubt it picked them with great care because of their special poverty—but we are now dealing with poverty and a degree of deprivation over a large proportion of the country. I believe that there is a very strong case that the commission should be expanded. All its duties are well done. Going back to my employment theme, it has an extremely important role to play in that regard.
Perhaps I may now turn to the Government's duties. We have heard about the Prime Minister's speech at the Oxford conference. Reference was made to different provisions for employment in the countryside, such as workshops and factories and so on. That should not be inhibited by the planners. I rather doubt whether those words actually got down to grass roots level. It is very important indeed that influence should be used to ensure that redundant farm buildings, if they are wanted, are capable of being made into workshops or small factories. In addition, if someone has the initiative, money and, possibly, the help, he should be allowed to build a small workshop anew. Those measures would do a great deal to revitalise the country and perhaps take advantage of a faint rise out of the recession which surely must come some day.
Perhaps I may also mention retraining. Although the agricultural worker is an adaptable man, it is very

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difficult for him suddenly to jump into another and totally different job. The remit of the Agricultural Training Board might be altered to show that its duties are not confined to training people for agricultural duties, but to retraining them for other duties and employment.
The point I made at the beginning of my speech as regards unemployment was occasioned by narrowing farmers' margins and, the final blow, the 15 per cent. set-aside. The set-aside land is allowed to be used for non-food projects. People rack their brains as to what that might be. I am told that there is an area the size of Norfolk which employs nobody at all.
My suggestion is that the situation provides an excellent opportunity to practise forestry. We have a declining forestry business. I ask the Government whether they can once more look at the grant structure of private forestry to encourage people to plant trees in areas where it is suitable so to do. At the moment the grants look reasonably robust, but the taxation advantages run out this April. When those were taken away—I sometimes feel that that was done to spite a few rich people—planting stopped. The Government have a completely arbitrary target, I believe, of 35,000 hectares per year. I believe it should be greater. That target has never been hit. They do not seem to take notice of the time it takes for trees to reach even production let alone profit levels.
The present grants do not acknowledge the fact that if 15 per cent. of land is to be put to forestry its asset value will drop from, say, £2,000 an acre to about £300. I ask most earnestly that the whole matter of forestry be looked at again with the possibility of re-planning the system to what it was before and at least increasing grants. More importantly than anything, those grants should be indexed because they are eroded by inflation and people do not trust them any more.
Finally, I make a plea that the bias that exists towards the green idea of every tree being of the deciduous variety should at least in part be reversed so that we can once more get going with a proper forestry industry.
4.10 p.m.
Baroness David: My Lords, I shall speak about village schools and I shall start with a quotation:
"Whitehall bureaucracy is totally unsympathetic and even fundamentally opposed to small schools … Concessions have had to be wrung out of a reluctant bureaucracy. It seems a pity that politicians in London seem quite unable to lift their eyes to the horizon to see the good things going on in rural communities. They are not able to contemplate rationally the havoc they are causing in the heartlands of the nation".
I have been quoting not from a Labour politician or from a Labour pamphlet but from a "high Tory" (so he describes himself) who is chairman of an education committee.
In the debate today we are talking about very important values. In a village there was, once upon a time, the church, the village store, the village inn, the post office and the village school. The church may have been made redundant or, to use the fashionable word, "clustered" with neighbouring parishes. The
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post office and the stores have too often vanished. The school is in danger and, with it, the community education and activities that can go on in the building after 4 p.m. and at weekends: the activities that make for the cohesion of the community.
I know well the arguments for closing small schools. I faced all the problems when I was vice-chairman of Cambridgeshire Education Committee. I can reel them off: the dependency on the head and perhaps one or two teachers who may have been there for years. Is it right to leave a child with an inadequate staff for three and perhaps eight years of his or her schooling? Will there be the stimulus of a varied enough peer group to produce the interactions a larger number of children from different backgrounds could bring? Will it be possible to present the national curriculum? What about games? What about PE? What about music? Will pupils from a small school feel uncomfortable when they move to a secondary school? And what about the cost?
The supporters of small schools have answers. The cost may be greater, but there are costs in closure and in transport. There are, sadly, accidents. In Somerset a girl of 10 was killed in tragic circumstances. The coroner's court heard that an eight year-old boy had been in the front seat operating the door. Not all authorities have a strict policy of using only properly licensed vehicles and drivers. There are great advantages in being community based, and many say that these outweigh the disadvantages, which anyway can be overcome. Peripatetic teachers can be used. It is easier for one teacher to travel than for 20 or 30 children. So long as LEAs exist, INSET for teachers at teachers' centres can help the isolated teacher enormously.
Many heads say that they can deliver the national curriculum and in fact have been doing so for years. In response to a department document, Curriculum Organisation and Classroom Practice in Primary Schools, which queried the effectiveness of small schools, the ACC said that counties overwhelmingly reported that small schools could deliver the national curriculum so long as they received support. Several in fact felt that it was in the smaller schools where the planning and introduction of the national curriculum had been most effectively achieved. However, there are other heads who say: "Can any school deliver the national curriculum?" One thought it overcomplicated and overloaded. Another thought the problem was not the national curriculum but the unnecessary documentation. Dr Burstall, the director of the National Foundation for Educational Research, having examined all the small school HMI reports for a three-year period from October 1983 to October 1986, said that one point emerged clearly. I quote:
"No evidence is presented in the reports which supports the view that a small school per se is inherently disadvantaged from an educational standpoint".
Many authorities—and Cambridgeshire was one of them—started to develop sharing arrangements between the schools, often trading under the general description of "clusters" or "federations". These are not cheap either but may go some way to compensate

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for the curriculum isolation that small schools may suffer. The White Paper of July 1992 proposed that small schools could opt out in a group. It states:
"Any small primary school will be eligible to apply for grant maintained cluster status together with at least one other primary school, including those in neighbouring LEAs. It is expected that schools with fewer than 100 pupils will benefit most from forming a cluster".
Such is the Government's enthusiasm for an energetic pursuit of opting out. The ACC did not support the proposal and queried whether the clustering would allow more economic provision. Where authorities had introduced clustering it was clear that co-operation between schools depended not only on an area's geography but also on what was acceptable to small schools and their communities. In every case, though, the role of the LEA in establishing clusters and in providing extra funds to support the arrangements and to give advice had been essential.
There was not much enthusiasm for "federation", as suggested in the White Paper: that is, the creation of a multi-site school under a single head and with a single governing body. However, the Government's proposals appear in Clauses 109 to 119 of the Education Bill, shortly to make its appearance here. I would like to issue a warning based on the Cambridgeshire scheme to link four schools. All four were closed, with the approval of the Secretary of State, using Section 13 of the 1944 Act. When, later, the committee decided to end the federation it was able to close two of the schools, with no legal obligation to fulfil to the communities concerned. They were powerless: so beware.
Closing schools is a very emotive topic and it invariably attracts strenuous opposition. There is an example from Devon, where a school with 12 pupils was proposed for closure. Parents unanimously voted for grant maintained status. The closure proposal and the grant maintained application sit on Mr. Patten's desk. His decision will be of interest.
The cry from the department is, "Get rid of surplus places". A government adviser was complaining that money was being thrown away on school buildings where there were surplus places, and was quoting village schools as a clear example of that. It has been suggested that Ministers have been afraid to risk the wrath of the Tory village schools lobby. In fact it is not village schools, even thousands of them, that would make an appreciable difference to the total—1.5 million—of surplus places. One may have to conclude that this is just another ploy for taking village schools away from village communities. Rural communities must not be sacrificed in an attempt to minimise urban schools' surplus places. As the National Association for the Support of Small Schools said in a recent newsletter:
"Let every village school display its number of surplus places outside for all to see. That will tell all".
One final point is causing anxiety in rural areas: if the cost of transport is delegated to schools, how is this to be managed fairly? Apportioning the cost will not be a simple matter; in fact I think that it will be a very complicated one. I hope that the Minister will be able to give some reassurance about this. I look forward to discussion in Committee on the Education
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Bill, and I beg the Government to listen very carefully to the arguments for retaining village schools. I would remind noble Lords of what my noble friend Lord Carter said: that according to a recent publication, Regional Lifestyles 1992, 4 million people plan to move to the country in the next five years, and younger age groups are particularly keen. Schools are going to be needed.
4.18 p.m.
Lord Wade of Chorlton: My Lords, first I should like to thank the noble Lord, Lord Carter, for having introduced this debate, and particularly for laying out the facts of the rural economy so clearly. These are factors which are often misunderstood by those who come to talk about this subject. I must declare an interest in that I am chairman of the Rural Economy Group. In recent weeks we have had presented to us a number of different views, all connected with the rural economy.
The first view considers the whole of the economy and structure of Great Britain. It argues that it is time to revise the received wisdom of always trying to regenerate our cities, on the basis that cities grew because they were economically viable and because there were certain needs that brought people together to work and invest in a particular area but that now the needs of the people have changed. There again the reference to the fact that many people now want to move from urban areas shows that that is changing. We need to look now at the demands of where investment wants to go rather than trying to push people into an area where they do not want to go so that they have to be given great incentives to move, and where we have seen in the past enormous failures of investments that have been made by taxpayers to attract people to areas where they did not really want to go, and they very soon left. Many of the declining areas in our cities are the results of such policies. Following that, the view was taken that we should look again at all our economic resources, and to a much greater degree encourage or allow investment to be made where the investors wanted to put it.
Another point of view takes that a little further. It has recently been advocated by the Economic and Social Committee of the European Communities, which has been asked to look into the problem of rural communities in Europe. I should like to quote three short paragraphs that explain the view that the committee has taken. The first states:
"The Committee emphasizes the need to reverse the trend towards an even higher concentration of population in major urban centres … a situation already criticized in the Green Paper on the Urban Environment".
The second states:
"In this Own-initiative Opinion, the Committee aims to put together proposals on how to provide residents of rural and extra-urban areas with high quality structures and services on a par with those found in cities and geared to the areas concerned".
The committee then stated:
"Europe needs a determined policy for planning and developing rural areas. The policy of rural depopulation and excessive population concentration in capital cities and a number of regional cities must be stopped".
I recently had discussions with a new organisation that has been set up to bring together a consortium of

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rural training and enterprise councils. These TECs are primarily involved in the rural areas and are deeply anxious about the problems of training, to which my noble friend referred, and about how we can stimulate opportunities for younger people, especially in rural areas. I found the existence of that organisation very telling. It reflects the way in which this problem is hitting closely at those TECs.
The right reverend Prelate the Bishop of Chester (who is in his place) has coaxed me into becoming involved in trying to save the declining churches in the rural areas of his diocese. Perhaps there is no better illustration of what is happening now in rural areas than the fact that in previous centuries we have been able to raise the money in rural areas with which to build splendid, fine churches, but we are now finding it extremely difficult to raise enough money from our populations to keep the glass in our church windows and doors.
The other view that I have heard expressed is that we should attach only one prime aim to our rural areas—that is, the importance of the environment. Many bodies of opinion in this country hold the strong view that the environment is of prime importance in rural areas and that the market should not dictate what should happen there. That view says that we should not consider the needs of the people or the businesses who might want to go to those rural areas, but should consider primarily the needs of the environment. Such people believe that our prime responsibility is to get the countryside to look—as the noble Lord, Lord Northbourne, has said—as it used to look 100 years ago. Such people say that we should set out a planning programme that will ensure that we do not encroach on our rural areas.
In tackling this problem, we must understand the dilemma facing the Government. There are two very extreme views on the economy of our rural areas. I know that some noble Lords participating in this debate rightly have the view that economic considerations should be paramount; but others feel equally strongly the other way. There is a way to reconcile those two views. Even if one allows some development and investment in rural areas, encourages growth and encourages people to find other ways of creating wealth (which the decline of the agriculture industry has made so necessary) that can be done without spoiling the rural environment. We could still leave vast areas of Britain's beautiful countryside completely untouched.
When we refer to the necessity of encouraging further investment in order to provide services for an extra 5 million people, we are really only talking about developing the margins of our existing country towns and villages. There is no need to create new towns in rural areas. There is no need to create vast new industrial complexes. However, what there is a need to do is to realise that the economic aspect of what we do in our rural communities is as important to the nation as what we do in our cities.
Britain's future will depend upon us being the most efficient producer of everything that we produce. But one cannot be an efficient producer if one pays people
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not to produce on their efficient land while giving them a subsidy to produce on their inefficient land. That is a sure recipe for destruction whatever the industry, yet that seems the overriding policy that the environmentalists have imposed upon the Government. The Prime Minister has declared clearly for such a change, as have many Ministers. In my view, the Government have taken a very positive step forward in PPG7, which is a new attitude to planning. They must now build on that and think in terms of what is right for the nation and industry as a whole. They should not be influenced too much by those small pressure groups which do not necessarily feel that it is their responsibility to think in terms of the nation, but only of their own point of view.
4.25 p.m.
Lord Underhill: My Lords, the noble Lord, Lord Wade of Chorlton, rightly stressed the economic situation of the rural areas. However, any economic development would be useless without satisfactory transport—and it is with the question of transport that I should like to deal.
The lack of adequate transport makes staying in the rural areas very difficult for various categories of people. There are those who for various reasons want to stay but who, because of the lack of facilities to which my noble friend Lord Carter referred in the excellent and comprehensive speech with which he opened the debate and because of the lack of transport, feel that they have to leave even though they may have been born and bred in a particular village. This applies particularly to the young families we should like to see staying in the countryside. I understand that some 5 million women live in rural areas. Many of them do not have a car or access to one during either the day-time or the evenings. The same applies to quite a number of elderly people. If transport is not available, such people feel isolated and denied the things that make up the quality of life.
The noble Lord, Lord Vinson, pointed out that a car is not a luxury in a rural area; it is a necessity. However, despite the general increase in car ownership, many people cannot afford to buy a car or to pay the running costs. That is particularly the case given the long journeys that are necessary in rural areas, especially to reach employment. Many people find that the running costs are an unbearable drain on the household budget, especially as wages in rural areas are often on the low side.
In many rural areas there is little or no public transport. Where there are bus services, they are regularly axed at evenings or weekends. The services are often infrequent. As many noble Lords know—I have experienced this when travelling around—there may be only one or two buses a week. That is a problem for many people in rural areas. Where there is a bus service, it must be regular, reliable and properly timetabled. There may be a long walk, sometimes of miles, to reach the bus stop or pick-up point. That distance can often only be covered with the help of a friendly lift. To say the least, it is annoying to make such a journey (either walking or with a lift) only to find that the bus has left, that the

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timetable has been changed, or that there is no bus because the operator does not have a reliable reserve vehicle to replace one that has had to be taken out of operation. That is one of the problems of deregulation and is, I believe, increasingly a problem in rural areas.
I turn now to the present position of the county councils. As their budgets do not allow them to subsidise all the bus routes that might be required to cover the rural areas, consideration must be given to other less conventional means of transport. Where there are school buses, these could be made available to other passengers. There is, however, the problem of the school holidays, so consideration would have to be given to how such periods could be covered.
Then there is the maximum possible use of post buses. I have had the pleasure of at least a couple of dozen holidays in rural areas in the north-west Highlands, and I know the value of the post buses to the community there. Without them there would be no transport at all. That system should be developed as much as possible. Of course there is a possible threat to the Royal Mail and one dreads to think what may happen to many of the post bus services which are such a boon to the people in the rural areas.
Every possible help should be given to enable community transport to be provided. This may be done with minibuses given by village or voluntary organisations. There must be an effective rota of voluntary drivers. Car sharing can be of help, but often the person desiring the lift finds that the times which suit the person offering the car sharing are inopportune, and that is another difficulty. Provision of transport for tourism can be of considerable help. But then we have a further problem outside the tourist areas.
Rail services play a useful but limited role in the rural areas. Only a small percentage of villages have either a station or a rural halt. Services mainly provide travel to, and between, the larger towns. Of course we have the services provided by certain metropolitan authorities through the Section 20 grants. These pay for rail services many of which go into the rural areas. They are operated by British Rail's regional services. What may be the position if the threat of rail privatisation becomes a reality one dreads to think.
Full consideration must be given by the county councils in particular and by district councils to the question of transport. Reference has been made to the need for integrated policies. Consideration of development plans should be linked to transport needs and how to make provision for them. I should like to think that in each county council there was a section devoted solely to transport with a view to assessing exactly how to cover each rural area and, where one cannot be covered by public services, to deciding what encouragement will be given to ensure that community services are brought into being. The aim must be to cover every part of every rural area with the best transport we can, whether by means of conventional services or of unconventional services.
I was very interested to hear the noble Lord, Lord Shuttleworth, and the noble Lord, Lord Vinson, who I believe was his predecessor as chairman of the Rural Development Commission. I know little about the
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work of the commission, but I am always happy to receive its Rural Focus. I find that the work it is doing is of considerable interest. As a statutory body, that work is of great importance, but it needs to have adequate resources to do its job. The elected regional councils whose establishment the Labour Party is urging could, along with the commission, play a great part in developing transport.
The aim must be to have adequate transport: without it, life in the rural areas becomes almost impossible because of the feeling of isolation. If we cannot provide proper public transport facilities, then every encouragement must be given to the development of unconventional services.
4.33 p.m.
The Earl of Bradford: My Lords, all those living in the British countryside must be grateful to the noble Lord, Lord Carter, for introducing this subject for debate today. Sadly, Her Majesty's Government, and their predecessors since 1979, while professing and declaring their belief in helping and maintaining the rural economy, have actually achieved exactly the opposite. With friends like this, those in rural areas certainly do not need enemies. In terms of numbers, we are very much an urban society these days, and therefore when there is discussion of social deprivation, poor housing and unemployment, it always seems to revolve around urban areas. However, there is now an ever greater need to highlight the problems in rural areas, much of them as a result, sadly, of Her Majesty's Government's policies.
Many noble Lords have already drawn attention to the disastrous results of the common agricultural policy, which has accelerated the decline in employment in farming. While some of the decline is due to greater efficiency, now we have the dreaded set-aside in action, taking good land out of use and leaving less work for farm workers. We used to be self sufficient in milk production, but thanks to obeying to the letter the EC imposed milk quotas—and can we believe that everyone else is following such a strict line as we do?—we now have formerly expanding businesses producing wonderful and individual farmhouse cheeses which are now not allowed to produce the milk to expand further. Agriculture this century has been a great success story. Is it not sad to see what is happening to it now?
The position with forestry is even worse. One would think that in a country that has to import 92 per cent. of its requirements of timber and timber products great incentives would be given to increase production, as we have in many ways ideal growing conditions for effective forestry. For many years, as has been mentioned by my noble friend Lord Radnor, we had a taxation regime that encouraged the planting and growing of trees. As many in your Lordships' House will remember, my father was at the forefront of those who advocated forestry in Great Britain. Indeed, he planted many hundreds of acres not with blankets of uniform conifers but with beautiful, mixed plantations—a prophet of correct ecological practices well before others.

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Would he not be disappointed to see the outcome? Private landowners all over Britain are being forced to lay off their forestry workers because Her Majesty's Government reacted far too hastily to the fact that certain pop stars and BBC presenters were using the forestry taxation rules to convert taxable income into capital. Unfortunately, the ill thought-out changes in taxation penalised active, long-term family forestry operations, particularly in our case where we have little mature timber as a result of my father's active planting policy, and therefore a very low Schedule B income.
We have reacted in the only way that we could—as have many other private forestry owners—by making our staff redundant. What a dreadful consequence for them and for the British countryside! Surely the same end of preventing the use of forestry taxation reliefs for tax avoidance could have been achieved without jeopardising the future of family forestry businesses.
The recession has also had its effect on estate works departments, where the fact that outside builders, given their low workload, can give such keen quotations means that often estate departments are unable to compete. Taking our particular case as an example, Weston Park is now in the ownership of a private charitable foundation. Obviously, the trustees have to abide by charity rules, and the estate works department, which traditionally carried out all the work on the mansion house and buildings in the park, helpfully balancing out summer and winter work, now quite rightly has to compete with the prices quoted by outside contractors, and is unable to do so. Therefore, yet again we have had to cut back, and now have a much smaller team, which is disastrous for local employment, as we have had to make redundant many workers, some of whom had been on the estate for their working lifetime, and in many cases their fathers before them.
We also now have many redundant farm buildings, often most attractive and potentially useful structures, Which cannot be used for farming because they are unsuited to modern practices. As we are in a green-belt area, it is often difficult to obtain a practical change of use for those buildings, though I believe that some planning authorities are more enlightened about this than others. The overall effect of the present situation around us has been, and continues to be, a serious decline in rural employment and the local economy, with little apparent hope of any improvement; a situation that is repeated all over the country.
There is also a considerable cost penalty to living in the countryside. For instance, within one mile of our house, we have the largest gas pipeline in Britain; but we are unable to get a gas supply, which is the cheapest and most effective form of heating. It now costs a small fortune to be connected to the mains electricity supplies or mains water. If one happens to live in a remote area, try getting a telephone line connected at a sensible price if, apparently, it requires more than 100 man hours to install it.
Many noble Lords have touched on the necessity to own a car because local bus services appear to be in terminal decline. There are fewer small shops while the
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new and wonderful out-of-town supermarkets are not all that far out of town. Therefore they are available easily to those in the countryside only if they have transport. Old people find it hard to collect their pensions unless they have their own transport because the day when every village had its own post office has long gone. Village schools have all but vanished for very good and understandable reasons, but all that penalises country dwellers.
Sadly the idealised view of rural living is far removed from reality. We believe that as we are so few we are considered to be relatively unimportant in economic terms. We do not protest as the French do by blocking motorways and overturning fish markets. And if we did could we expect to receive the same lenient treatment from our authorities? In France no one seems to be arrested. Perhaps we should not be so silent and inactive. That appears to result from a sense of helplessness to do anything to improve our future as more government and EC policies destroy the economic and social position of rural areas.
4.41 p.m.
Lord Taylor of Gryfe: My Lords, I am particularly indebted to my noble friend Lord Carter for introducing the debate. Some of your Lordships may have noticed that for the past two years I have had on ballot for short debate the future of the forestry industry. The fact that I have not yet been successful in the ballot enables me today to say a few words about my favourite subject. I propose to take advantage of the debate so to do.
I am also indebted to the noble Earl, Lord Radnor, whose father was one of my predecessors as chairman of the Forestry Commission. I agree with his plea and that of the noble Earl, Lord Bradford, whose father was a most distinguished forester, that the tax regime should be re-examined. The net effect of the change in policy has meant no further money to the Exchequer and it is helping to destroy an industry.
The noble Earl, Lord Radnor, also said that the set-aside—that is, the land which is doing nothing and for which farmers are paid—should be considered more actively as a suitable area for substantial forestry development. As the noble Earl, Lord Bradford, said, this year our trade deficit will probably be about £11 billion. The import value of timber and timber products will probably amount to £8 billion, which makes a substantial impact on our balance of payments situation.
When the subject was considered on a previous occasion I was encouraged by government assurances about their commitment to forestry. Perhaps I may read from the annual report of the Forestry Commission which gives the forestry policy as stated by Ministers on 18th September 1991. I was encouraged by the aims stated in the report, which reads:
"Forests and woodlands are an integral part of the rural environment, providing important opportunities for recreation and for public access to the countryside. They are also a valued component of our landscapes and an essential habitat for wildlife. Our forestry industry makes a substantial and increasing contribution to meeting the growing national demand for timber… The two main aims of the Government's forestry policy are thus:

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The sustainable management of our existing woods and forests.
A steady expansion of tree cover to increase the many, diverse benefits that forests provide".
That is a statement of government policy. Indeed, the Government have reiterated the fact that their target is still 33,000 hectares.
In the light of that commitment, perhaps I may quote the figures. Some 20 years ago we in this country were planting 42,000 hectares per annum. That has dropped to approximately 15,000 hectares per annum. That is hardly consistent with the Government's commitment to an expanding forestry policy. In the uplands in particular forestry provides five or six times the number of opportunities for employment as compared with, for example, sheep farming. Yet despite the fact that employment in forestry can make a sizeable contribution to the issues which we are discussing today forestry is decreasing in employment terms. The Forestry Commission did a remarkable job in restoring some of our woodlands and in providing rural employment. However, it is now the victim of doctrinaire thinking on the part of the Government.
I know that the Minister rejects that view but the facts are there. During the past 10 years the Forestry Commission planting programme has been cut from 15,000 hectares to 3,000 hectares last year. The organisation is now concerned with administration rather than its original function of planting trees and increasing our tree cover. During the past five years the Forestry Commission has shed more than 2,000 employees. That is important in our rural economy because there are few opportunities for employment in some of the areas in which the Forestry Commission operates. Therefore, the Government cannot go around saying, "We believe in an expanding forestry policy", while at the same time allowing the industry to die. The industry is in crisis. We have encouraged large investors to come to this country on the assumption that timber supplies will be available for the new pulp and news print mills. However, that is not the case. A decline in the planting programme today will catch up with us in 20 or 30 years' time.
I beg the Government to look at their future policy. When I was chairman of the Forestry Commission there was a partnership in forestry in this country. There was no serious competition between the private and state sectors. We worked together. About 50 per cent. of our planting programme was private and the rest was state. It was a healthy relationship. We shared research, experience, pest control and good neighbourliness in the countryside. It was an excellent example of a mixed economy.
That no longer exists because the Forestry Commission is being steadily diminished. That would be all right if the private sector were taking up the slack. However, the tax regime is such that the private sector is no longer interested in substantial forestry investment. As a result there has been a contraction in a basic industry which uses up a renewable natural resource and the Government must look at that problem urgently.
This has been a friendly and non-party debate. I believe in partnership and consensus in dealing with those problems. However, the Government must get
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away from their doctrinaire attitude of diminishing the state sector when the private sector is unable to take up the slack.
4.50 p.m.
Lord Marlesford: My Lords, I too have an interest to declare as a member of the Rural Development Commission chaired by my noble friend Lord Shuttleworth.
There are two points that I should like to make. The first is to draw attention to an aspect of what I see is the imbalance between conservation and development in rural areas. The second is to make a specific proposal for, in the words of the most useful Motion in the name of the noble Lord, Lord Carter, coherent policies for the economic needs of rural areas.
For generations there have been battles between conservationists and developers. I yield to no one in my concern for conservation, having been for 12 years a member of the Countryside Commission. Nevertheless, I believe that we must face up to certain crucial points. First, there is a hierarchy of designated areas in the countryside. It is important to stick to designation and to recognise that those areas need to be especially cherished. However, even in those areas it is possible to have useful development. I recommend to those of your Lordships who do not already know them to visit the useful high tech developments which have taken place in the Peak District National Park.
Some areas have been forced to diversify. An obvious example is Durham. In 1951 there were 134 pits employing over 100,000 miners; now, I believe, there are only two pits employing fewer than 2,000 people. However, it is interesting as an example of the fact that pollution, which is so disliked by conservationists, does not come only from new industries but also from old industries. I was staggered to see that even today coal waste is being tipped directly into the sea at Seaham in Durham.
Agriculture has a part to play. My noble friend Lord Bradford was perhaps aiming at the wrong target when he complained about the Government. Perhaps he should have spoken about Brussels. I am an unashamed free trader. I believe that it is possible to be a free trader and a supporter of the European Community. I believe that set-aside is total nonsense and non-viable in the long run. Nevertheless, I salute my right honourable friend the Minister of Agriculture for having taken action in the negotiations which ensured that the set-aside nonsense is nothing like as pernicious and discriminatory against British agricultural production as Mr. MacSharry originally hoped that it would be.
Paradoxically, because macro interventions of the set-aside type usually get it wrong, there is now a useful extra injection of set-aside cash to the rural economy from the devaluation of the pound and also from large increases in the price of certain products. Feed wheat at £140 per tonne is rather helpful for those of us who grow it.
I believe that there is unbalanced emphasis on conservation in the planning process. There is a particular proposal which I should like to make to the Minister. We hear a great deal about environmental

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impact assessments as part of the planning process. I am not quite sure how—perhaps the Minister and his colleagues will give some thought to it —but an economic impact assessment should also be introduced into the planning process so that the economic impact of proposed developments in the countryside can be balanced alongside the environmental impact. They are both important. However, I believe that at present we have the balance slightly wrong.
Finally, I make one specific suggestion as to how we could give an immediate and cost-effective boost to jobs in rural areas. I am not a great believer in large-scale megaprojects. Very often, with road building and so on, the phasing is wrong in terms of the economic cycle. One should always be looking—and I should like to think that the Government are looking—for short-term action which is fairly certain to be effective. I have a modest proposal to make but I hope that the Government will consider it. Perhaps the Minister will discuss it with my right honourable friend the Chief Secretary.
English Heritage, with which I have no direct links, has a budget of about £100 million per year, of which some £17 million is spent on giving grants for the repair of individual historic buildings and monuments, both secular and churches. Of that about £10 million goes to churches. Currently the grants are about 40 per cent. They used to be up to 90 per cent. when the scheme first started.
In rural areas it is very difficult for small parishes with important churches to begin to afford the balance between 40 per cent. and 100 per cent. I therefore suggest that the Government should offer for 1993–94 an additional £5 million to be spent specifically on giving help to the repair of listed churches. I mean parish churches and not cathedrals because, on the whole, cathedrals find it much easier to raise funds for themselves.
Such a scheme would have several advantages. First, churches are widespread throughout rural areas. Secondly, the contractors who would do the work are almost exclusively British. Thirdly, the materials used for that work are almost entirely United Kingdom sourced. Fourthly, it would encourage greatly the craftsmen and craftswomen who can do that kind of work. Fifthly, it is an extremely good time to undertake such work because competition is very keen and the Government would receive extremely good value for money.
I recognise that proposals to spend extra money are never popular with the Treasury. Nevertheless, I hope that it will look at the advantages of spending that kind of money compared with some of the other vast expenditure which often provides less value for money. I suggest that the Government need to consider such schemes as a means of giving a stimulus in the short term to rural areas and particularly to small building companies. That may be relevant to the debate which is to follow. It could make all the difference between the survival and disappearance of such companies.
4.57 p.m.
Lord Geraint: My Lords, I am particularly grateful to the noble Lord, Lord Carter, for giving us the opportunity to discuss the problems of rural Britain. I am grateful too for his constructive and inspiring opening speech.
I thank all other noble Lords who have expressed anxiety about the plight of those who live in rural areas, and in particular my noble friend Lord Beaumont of Whitley for his emotional plea on behalf of the agricultural industry. I thank him for that.
I am a countryman born and bred and I have never wished to live anywhere else. However, I should be the first to say that country life on the whole is not the idyllic dream so often portrayed on the television or written about in glossy magazines. For those who live and work in the countryside, the reality is too often grinding poverty, compounded by poor housing, inadequate services, non-existent public transport and a chronic low wage economy which drives away youth and enterprise.
I do not wish to paint a picture of unrelieved gloom. Many survive happily in the country. They have worthwhile occupations and manage very well. However, I wish to press home the point that rural Britain has problems to equal those of urban Britain and that the case for coherent and comprehensive policies to tackle them is unanswerable.
Time is limited in this debate but I should like to mention some facts. Unemployment in rural areas is on the increase. In many areas the figures are above the national average. Some of the worst areas are South Yorkshire, Cornwall, Cleveland and the Isle of Wight. There is also the problem of a chronic shortage of affordable housing. In Wales we are very much aware of that and sympathise greatly with other areas where young local families have been forced to move away as a result of the influx of affluent second-home owners and the depletion of council housing stock. This problem, in my view, needs to be tackled urgently unless we want our villages to turn into picturesque but lifeless museums or just boring dormitories for city commuters.
Village shops are disappearing at a tremendous rate. Rural schools are closing and cottage hospitals are becoming a thing of the past. What is vital for the survival of rural life in Britain is, undoubtedly, the health of the agricultural industry. Although it is the largest industry in the country, it employs only 2 per cent. of the working population—in Cardiganshire where I farm, the percentage is much higher of course —but it underpins the whole rural economy. If agriculture is allowed to decline, the whole rural economy will decline along with it. I wish to make a plea to the Minister. I am sure he is aware that there is now a distinct possibility that the Agricultural Training Board Cymru will be abolished and decision making and funding for Wales will become the province of a single agricultural training board based at Stoneleigh in Warwickshire. If we want to keep our young people in Wales and if we want to train them, I beg the Minister to keep the Agricultural Training Board headquarters in Wales.

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The Liberal Democrat approach to agricultural policy is to place it within the whole rural context and to develop policies with that concept in mind. In today's world I believe that that is more necessary than ever and I fear that the Government's somewhat piecemeal approach, leaving so much to market forces, can only fail us in the long run.
I wonder whether I might, as a Welshman, make one suggestion. We in mid-Wales have benefited a great deal from the setting up of the Development Board for Rural Wales, which has brought in light industry and helped small business as well as assisting social developments. I do not pretend that it has solved all our problems by any means. It does not have sufficient finance or power as yet. I should like to see its boundaries extended. However, within its limitations, it has done a good job. Might it not be a good idea to set up a similar development board for rural England to cover all rural counties which could co-ordinate policies and encourage renewal in the most hard-pressed areas?
Before I finish I should like to touch briefly on two other points. The first concerns crime in rural areas, which has grown tremendously over the past few years. This is not the time to discuss the reasons for that as the debate would go on for hours, but I think that police numbers should be increased to deal with the vast distances involved in rural areas and to give the population in those areas the confidence of the police presence.
Secondly, I am concerned about transport in rural Britain. I shall refer only to Wales as I am more familiar with our problems there. We have experienced the cut-backs and rationalisations forced on British Rail through lack of proper funding, but I become less and less confident about the future. We have learnt recently that British Rail is to lose freight business because Shell has decided to transfer its oil transport from rail to road when supplying its Aberystwyth depot. Not only will this mean more large lorries on heavily used tourist routes, but it will also undermine the viability of the Birmingham to Aberystwyth route and cast another shadow over its future. I am told that the decision has been taken for commercial reasons. That does not fill us with confidence over the prospect of the privatisation of British Rail. Commercial considerations could well kill a number of the less profitable but socially useful routes in Wales and other parts of rural Britain. To lose the Shrewsbury to Aberystwyth line or the Heart of Wales line, for example, would be yet another blow to the rural economy. We need those routes for our tourist industry and to link our small communities. They must not be allowed to close.
5.4 p.m.
Lord Gallacher: My Lords, this has been not merely an interesting debate but a very comprehensive debate. In spite of the fact that it was time limited, the variety of subjects covered in the two and a half hours allocated to it has, in my opinion, been quite remarkable, as has the quality of the speeches, due no doubt in large measure to the experience of the people who took part in the debate.
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The reform of the common agricultural policy, while not at the heart of this question, is certainly now a major factor concerning it. There will inevitably be reductions in farming effort as a consequence, and included in that will be some continuation of the inevitable reduction in the number of people employed on the land. Thus we have an accentuation of a policy which is already of considerable concern.
In rural areas any reduction in farming effort and in the intensity of farming means a contraction in economic activity overall and that of course, in turn, produces social effects because there will be a spin-off in ancillary trades and some reduction in the willingness of other people to come in with new development. Rural unemployment is thus increasing and I am sorry to say that investment in the countryside may be in danger of decreasing.
The role of planning machinery in all this is of vital importance. I am glad that this point has been emphasised by a number of speakers this afternoon. Change of use and new development are vital if some of the difficulties which rural areas are experiencing are to be reduced. In this area there is a new element, the reform of local government, which, although it will be a slow process in England because of the method chosen by the Government, has already produced specific proposals for Wales for single tier authorities.
I do not wish to advocate any particular form of local government for England, but the fact of the matter is that the attitude of the planning authorities to developments in rural areas is of vital importance both now and in the future. So, too, is training. The future of the Agricultural Training Board was raised by the noble Lord, Lord Geraint, and in particular the question of the funding of that board. It has had a useful existence, funded as it is by the Ministry of Agriculture. If there were to be, as a result of the review, any major reduction in funding for the Agricultural Training Board, that would be a serious matter for the rural areas, particularly at a time when more training and retraining of an agricultural character is still essential.
Rural public transport has been mentioned by more than one speaker and in particular by my noble friend Lord Underhill, and with it the impact upon the Post Office bus if proposals for the privatisation of the Royal Mail are proceeded with. There has been, under pressure from central Government, some reduction in county council funding of rural transport. The loss of the Post Office bus—if that were to be an outcome of the privatisation of the Royal Mail—which was pioneered in Scotland would be serious for all communities, as has already been pointed out.
The effect of Sunday trading on the village shop cannot be ignored. I served as an assessor to the Auld Committee which considered the Shops Act 1950 in some detail. I was particularly struck at that time by the evidence of the Ministry of Agriculture, Fisheries and Food to the Auld Committee which drew serious attention to the likely impact on small food shops everywhere if there were no restrictions of any kind on Sunday trading, particularly as regards the large supermarkets. Inasmuch as the Government have

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reactivated this question, we must look very carefully at the three options which the Minister mentioned the other day in another place. We must take care to look hard at his own point of view; namely, that no restrictions whatever would be the best solution. I do not believe that the impact of that solution across the board can be ignored, and certainly not in rural areas. While affordable housing in rural areas may not be the most important subject, it is certainly a basic subject so far as concerns the rural communities.
Some 30 years ago I served the International Co-operative Alliance movement. At that time I was almost embarrassed by the fact that the housing co-operatives in many countries in Western Europe and in the United States, upon which our present British housing associations are largely based, were full of admiration for the municipal housing which was then going full steam ahead in Britain. Those foreign housing associations were impressed by the speed with which local authorities could acquire land for housing, the ease with which planning consents were granted, the funding of such development by central government, the avoidance of fragmentation in development so that in the main the developing authorities were sizeable bodies, and the continuity of policy. In those days those factors radically impeded housing associations in Western Europe and North America.
Affordable housing is geared to land costs, interest rates and rent subsidies. Perhaps the Minister will answer this question when he replies to the debate. Are Her Majesty's Government totally committed to excluding local authorities from housing development of any kind in rural areas? We are grateful that the noble Lord, Lord Shuttleworth, was able to report briefly but effectively on the work of the Rural Development Commission. Its work is impressive and we strongly support it. That body performs an essential task in England. One hopes that parallel organisations exist in Scotland, Wales and Northern Ireland. The work that the RDC undertakes is no less essential beyond the boundaries of England.
The Rural Development Commission's present lines of development are directed at the main problem areas, although saturation points may have been reached with wrought iron gates and craft shops. New enterprises are essential in the country because, as well as creating a favourable climate, the Rural Development Commission has pursued an active policy in promoting them. One would wish to see some liaison in training courses between the RDC and the Agricultural Training Board. We welcome the initiative of the commission on village halls, subject to the condition about their having charitable status and certain other factors.
From these Benches we wish to encourage the Rural Development Commission to consider prospects for village community co-operatives, perhaps to run the shop, the pub, local transport, halls, the Post Office and other relevant activities. There now exists a body in Britain called the United Kingdom Co-operative Council. It is fairly new and it has had the good sense, on changing its chairmanship recently,
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to invite my noble friend Lord Carter to take on that additional task. The important factor about the UKCC is that for the first time we have in Britain an organisation which represents the whole co-operative activity. Therefore an experiment between the RDC and the UKCC in developing a suitable rural village co-operative is worth consideration. Expertise is now on tap covering banking, insurance, supplies, retailing, credit, leasing, mortgages and farming. We welcome the emphasis which is now placed on rural areas by the Government and in particular by the Minister of State for the Environment and Countryside. I believe that his apprenticeship training in MAFF stands him in good stead and we are not too disappointed by the noises that he makes about the way in which he considers the future should be developed.
I do not pretend that rural areas are more deprived than urban areas. Deprivation in the rural areas undoubtedly exists, as many speakers have pointed out, even though it is of the genteel variety. Problems exist and will grow in a recessionary situation. Policies are certainly important; and that is the purpose of the Motion that we have put down today. A positive response is required, plus, as we see it, continuity of assistance.
5.15 p.m.
Lord Strathclyde: My Lords, like all noble Lords I welcome the opportunity to have a debate about our rural areas. The debate began extremely well with the speech of the noble Lord, Lord Carter. He quoted the Prime Minister and Jacques Delors. We later had a quotation from Jean Jacques Rousseau. I thought that we might have had a debate made up of quotations, but regrettably they came to an end.
It is an important debate because it draws attention to the need for comprehensive and coherent policies for the economic and social development of rural areas. I am pleased to have the opportunity to explain to your Lordships how the Government have developed a strategy to meet the needs of the countryside, today and in the future.
The countryside is the result of continuing changes, from the Ice Age to the enclosures, the industrial revolution and our present age of modern technology. It is continuing to change fast, as the economy adapts to changes in agriculture and other industries in the countryside.
In his opening speech, the noble Lord, Lord Carter, recognised that the rural economy is no longer based exclusively or even predominantly on farming, forestry and local raw materials. Agriculture, forestry and fishing now produce less than 2 per cent. of the gross domestic product of the United Kingdom. In the past 30 years the number of people engaged in agriculture has fallen by 39 per cent. In the Rural Development Commission's priority areas, the rural development areas, agriculture accounts for only 9 per cent. of waged employment. We have a responsibility to address the implications of this decline in agriculture—for farmers and other country dwellers and for the landscape and wildlife habitats.

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There are still areas where jobs are short, but in general the rural economy is extremely diverse. The service sector, manufacturing, distribution and catering industries are now the main sources of employment in the rural development areas. Indeed, some rural areas have an employment structure which is akin to that of successful urban areas. However, success has brought with it a range of new problems, such as the availability of affordable housing for people on lower incomes.
In future we shall see further changes and we shall need to keep their implications under review. There will be further changes in agriculture as CAP reform takes effect, and changes reflecting improvements in communications technology. Farmers will continue to use large tracts of our countryside. They currently farm some 73 per cent. of the land surface of England. But as worries about food shortages are replaced by worries about over production, as the noble Lord, Lord Beaumont of Whitley, said we should more and more look to farmers to manage our countryside in environmentally sensitive ways—by managing hedgerows, by planting broadleaved British trees and through less intensive farming methods.
The Government's role is to ensure that there is a coherent comprehensive and up-to-date package of policies in place to maintain a thriving countryside. We need to achieve this through a sensible balance between the development of the rural economy and the protection of the countryside. Our two key objectives are to achieve a healthy rural economy and an attractive rural environment. That was well explained by my noble friend Lord Shuttleworth, and by my noble friend Lord Wade of Chorlton, who brings to the debate his unique and wide experience.
Our aim is the promotion of a diverse, healthy rural economy through the stimulation of employment and development in the countryside, while at the same time making sure that there are adequate measures to maintain and enhance our landscapes and wildlife.
Those are our objectives. They set a difficult balancing act. It would be rash to claim that we have in all cases and at all times struck exactly the right balance. But we are facing up to the challenge. Our 1990 White Paper, This Common Inheritance, laid down principles which we apply to all our environmental policies throughout the United Kingdom. We reaffirmed those policies, and added fresh initiatives, in the first and second year reports.
Last year we published Action for the Countryside, a major policy document setting out a clear, comprehensive and co-ordinated package of policies for the countryside in England. It includes a £45 million package of new, improved and extended initiatives to promote rural development, to conserve and enhance landscapes and wildlife and to promote access to and public appreciation of the countryside. Scotland, Wales and Northern Ireland have also published statements on their rural policies during 1991 and 1992.
These departments work closely with others to ensure that there are comprehensive and coherent policies providing a framework for the economic and social development of rural areas. But their main task
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is to guide and encourage others. We want to encourage the enterprise of all those who live and work in rural communities and to see increasing activity by the private and voluntary sectors. We are anxious to see that the best possible use is made of limited public funds, by making full use of opportunities to influence others and by concentrating activities in areas with the greatest need. But we do not hesitate to take direct action where necessary. A key example of that is the advice which we have issued on planning policy in England and Wales. That was recognised by many noble Lords who spoke during the course of the debate.
Planning Policy Guidance Note 7, which was issued by my department and the Welsh Office last year, recognises the substantial changes that are taking place in the countryside and incorporates the principles set out in This Common Inheritance. It makes clear that it is important to sustain the process of diversification and to accommodate change, while continuing to conserve the full and varied countryside. Rural areas have to change if they are to survive. Indeed, a vibrant rural economy—rural homes and rural jobs, changing with the times—is an essential precondition for the protection and enhancement of the countryside. PPG7 recognises that rural areas can accommodate sensitive development without detriment. It gives advice to local authorities on the need to encourage rural enterprise and balance it with the need to safeguard open countryside and protect special areas like national parks.
PPG7 has been widely welcomed, as my noble friend Lord Wade said. That was the near universal reaction at the national conference we held last summer. In the year since PPG7 was issued we have put a lot of effort into getting its message across, at the national conference and a series of regional seminars, and for example in a popular guide for farmers seeking planning permission for diversification ventures or new agricultural developments. We are monitoring development plans to ensure that PPG7 policies are appropriately reflected and taken into account in planning appeals. Research on some key changes introduced by the PPG is under way. We believe that its balanced approach to rural development and conservation is the right one, and we are continuing to ensure that it is appropriately implemented.
My noble friend Lord Radnor asked whether we should do more to publicise it. If we have failed, then of course we must do more. My noble friend Lord Marlesford asked whether we should include some assessment of the economic impact rather than just the environmental impact. That is something that I shall have to take away with me and think about.
The noble Lord, Lord Carter, and others, mentioned the major problem of rural housing. On rural housing, we have been taking steps to ensure that there is an integrated package of policies. We accept that it is important for affordable housing to be available for those who live and work in rural areas. We recognise that there are particular difficulties in

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some rural areas, especially where house prices have been driven upwards by demand from long-distance commuters and well-off retired people.
On the other hand, we cannot simply resist those market pressures. After all, they represent genuine demands from many people who wish to live in attractive rural surroundings. The survival of rural communities depends on successfully adapting to change. In July 1988, the Secretary of State for the Environment announced his rural housing initiative which, for the first time, set out a policy on low-cost housing in the rural areas in England. Since then, we have introduced a series of measures designed to boost the supply of low-cost housing in rural England. Likewise, the noble Lord, Lord Stallard, mentioned that point. We are increasing the level of investment in rural areas through housing associations which have a major role to play in providing affordable housing for rent and low-cost sale.
To help ensure that our policies for rural communities are carried forward in a co-ordinated and coherent way, the Government also sponsor specialist agencies. In England, the Rural Development Commission, which is sponsored by my department, is the Government's main agency for diversifying rural enterprise. In Wales, similar tasks are undertaken primarily by the Development Board for Rural Wales and the Welsh Development Agency. In Scotland the main agencies are Scottish Enterprise, Highlands and Islands Enterprise and the local enterprise companies. In Northern Ireland, the Government have established the Rural Development Council, an independent body funded by the Department of Agriculture with assistance from the European Commission.
The agencies have a star-studded list of achievements to their credit. In 1992–93 Highlands and Islands Enterprise is expected to have created or retained 2,700 jobs. Since 1979, the Development Board for Rural Wales has built some 630 new factory units providing about 7,300 job opportunities. In England the Rural Development Commission's workspace programme created the potential for 2,287 jobs in 1991–92. Those are records of which we are proud and I am particularly grateful that my noble friend Lord Shuttleworth, who is chairman of the RDC, joined the discussions today.
Both the noble Lord, Lord Carter, and my noble friend Lord Shuttleworth discussed the problems with rural services. Where particular rural service problems arise they are generally tackled by the organisation or agency concerned. The Rural Development Commission also keeps a watching brief on developments in rural services on behalf of my department, the Department of the Environment, and makes representations where it is appropriate. I hope that the noble Lord, Lord Underhill, will be interested to know that, for example, the Rural Transport Development Plan, administered by the Rural Development Commission, with funds from the Department of Transport, is there to assist with
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capital start-up costs of new, innovative rural bus services in England. Similar schemes exist and are run by the Scottish and Welsh Offices.
The Rural Development Commission is also taking an increasing interest in village shops. In March 1992, it initiated three demonstration projects to explore ways in which village shops can be helped by financial management and community support. A report on the findings of those projects is currently being prepared. In addition, the RDC offers advice and training to shopkeepers through its business advisory services and has held seminars for prospective shopkeepers.
So to schools. The noble Baroness, Lady David, enunciated the plight of village schools most clearly. As a government we recognise that many small schools do an excellent job. We also recognise that many have to be retained because of the geographical isolation of the communities they serve, especially where the alternative schools available would necessitate unacceptably long journeys to schools for young children. The Government have made it clear that assessing the viability of small schools is not only a matter of the numbers on the roll. Wider considerations such as parental choice, local geography, the distances to be travelled to alternative schools and the age of children making these journeys are also very important.
Our policies for promoting improvements in the education service—through grants for education support and training, through the local management of schools and the implementation of the national curriculum—have all taken account of the needs of small rural schools. The Government hope that many small schools will be able to benefit from the proposals contained in the Education Bill, currently before Parliament, to allow them to apply for grant-maintained status in clusters. This will put the many benefits of grant-maintained status within the reach of schools that might otherwise lack the confidence to go it alone. Forming a cluster will be entirely voluntary and there is no question of schools being forced into clusters. Such schools will continue to be able to apply for individual grant-maintained status. We believe that grant-maintained status is best for all state schools and this is just as true for small rural schools.
I turn to the question of forestry which was raised so eloquently by my noble friends Lord Radnor and Lord Bradford and the noble Lord, Lord Taylor of Gryfe. The noble Lord, Lord Taylor, said it was his hobby-horse. He has been interested in forestry over the whole of the United Kingdom since his time as chairman of the Forestry Commission—and a most eminent chairman he was.
The Government's long-term forestry strategy sets out two aims; first, the sustainable management of existing woods and forests and, secondly, a steady expansion of tree cover to increase the diverse benefits that forest provides, social and environmental as well as economic.
One point stood out in the speeches of the three noble Lords who mentioned forestry. It was their belief that forestry was for the long-term. Therefore, I think it wrong to criticise the Government for action taken in the short term. If we are honest, a small

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two-year or three-year gap and a fall-off in the amount of planting that has taken place will be irrelevant in 40 to 50 years' time when the trees reach maturity.
Lord Taylor of Gryfe: My Lords, the figures I quoted showed a trend over 20 years of a substantial and steady decline. Over how many years is the Minister prepared to judge that policy?
Lord Strathclyde: I look forward to the time when his debate will be chosen from the ballot and we can go into those problems far more fully. I intended to say that I accept the points made by the noble Lords who mentioned forestry. In the last election the Government had a clear manifesto commitment. We said at that time that we would review the effectiveness of the current incentives for forestry investment. I can tell the House that the Government hope to complete their review this year.
I turn to the point made by the noble Lord, Lord Geraint, on rural railways. I believe that we are being unduly pessimistic about the future for the railways, particularly with regard to the rural lines. The Government want to see more people travelling by train, not fewer. We also want to see the railways run efficiently. Our policy to achieve that is to privatise the railways and harness the skills of the private sector to run services; not just because we believe that private sector operators would be more efficient but because that should bring about a sharper focus on passengers and will ultimately lead to better, more reliable and more attractive services.
Nevertheless, we have given a clear commitment to continue to provide subsidy where necessary to support services which, although loss making, provide a valuable social service. There is no question of loss making services being regarded in any way as second best. Rather, the Government's franchising proposals are based on a desire to bring the benefits of a private sector operation to all passenger services, not just to those that can make a profit. There is therefore no reason why privatisation and the introduction of franchising should result in closures.
As the need arises, new policies and initiatives are introduced. For example, last year the Rural Development Commission launched its countryside employment programme to help diversify the economy and improve job prospects in areas which are suffering from structural changes in agriculture. The commission will deploy the full range of its programmes in the pilot areas and will co-ordinate these with the services available from other partners. Local businesses, land owning and environmental interests are also associated with the project.
My noble friend Lord Vinson referred to burdens impairing the success of small businesses, many of which operate in rural areas. I entirely sympathise with his concern. As my noble friend will know, we recently launched a drive to free businesses from the burden of unnecessary and over-bureaucratic regulation. I can assure noble Lords that that initiative is being pursued with vigour.
Perhaps I may respond to my noble friend Lord Bradford, who made a powerful speech on the problems of the common agricultural policy and on
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our whole policy towards rural affairs over the course of the past 13 years. I felt that that was overstated. As my noble friend Lord Marlesford so wisely said, my noble friend Lord Bradford should look in the direction of the European Community. Set-aside has been caused by the problems of success. Surely in the short term it is far better to have set-aside than to have no source of income for our farmers throughout the country and in the rest of Europe.
Only through having a thriving, vibrant countryside can we ensure that our countryside, and our people, are well cared for. We can provide the policy framework and assistance where necessary, but the economic and social development of the countryside is not something which is solely for government. We are in the business of managing a vibrant and evolving countryside coping with today's needs. The key to that lies in the people of this country—not only those who live and work in the countryside, but those who enjoy it in their spare time. The future depends on the actions of all of us.
5.35 p.m.
Lord Carter: My Lords, we have had an excellent debate. I should like to thank everybody who has taken part in debating a subject which this House can cover with both experience and expertise. It was certainly wide-ranging. By my count no fewer than 24 different topics were covered by the 15 speakers in the debate. The very range of topics mentioned indicates exactly the need for the comprehensive and coherent policies which are called for in the Motion. I should like to repeat my thanks to all who have taken part, and to the Minister for his very interesting reply. I hope he will not mind if I say that I was not completely convinced by the answer that he gave on rural housing, but I am sure that we shall return many times to that subject. My Lords, I beg leave to withdraw the Motion for Papers.
Motion for Papers, by leave, withdrawn.

The Building Industry
5.37 p.m.
Lord Dean of Beswick Lord Dean of Beswick rose to call attention to the state of the building industry; and to move for Papers.
The noble Lord said: My Lords, I rise to move the Motion standing in my name on the Order Paper. I am extremely grateful to be given the opportunity to debate the situation in which the building and construction industry finds itself today. I raise the matter not in a carping and over-critical sense, but in the hope that this great industry will be able to attract some further assistance from the Government when Members of the House have put the case to them. That is my main reason for putting forward this Motion. I believe it is quite a while since we had a debate solely related to the building and construction industry.
How did I go about obtaining the information that I thought should be placed before noble Lords? I contacted the usual people: the Building Employers Confederation and the Federation of Master Builders. I also contacted two or three of the larger building

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companies that are usually identified with success, such as Wiltshire's and Laing's, in order to see the situation from an individual point of view. I regard the building industry as a barometer of how the country is doing and see it as closely related to the manufacturing industry. I believe it is accepted by anybody involved in this particular discussion that the building industry provides the first measure of how a country is doing economically. I say it is interrelated with the manufacturing industry because, if one starts to prime up the building industry (houses, new factories, etc.), the results feed out into various manufacturing industries and the benefits are immense.
It has been said, quite rightly, that approaching half a million building operatives have been made unemployed since the present recession started. Unfortunately there is no sign that that number will diminish. Everybody I have spoken to expects the situation to be exacerbated further during this year.
One of the disturbing figures that I was able to pluck out from the usual technical journals—it does not come from any political source—was that during that period almost 50 per cent. of the architects involved in the building and construction industry and the people termed "technicians" (I take it that that means surveyors, quantity surveyors, clerks of works, and so on) have lost their jobs and been made redundant. It is shocking that the country has allowed itself to drift into such an appalling state of affairs that no use can be found for people of such talent. As I said, my figures come from two different places which are not political. They are associated with the architectural profession; namely, the RIBA and the Association of Consultant Architects.
There is another point I wish to raise that has not been widely mentioned. My information comes from the Building magazine, which is a contractors' journal. There is a danger that has begun to surface more clearly than ever before. Because of the need to obtain work and keep teams together, firms are now bidding at 10 per cent. below costs. That is not my figure but comes from the trade magazine. It is a very dangerous situation when, in order to keep themselves afloat and keep going, normally successful companies have to buy work. That cannot be judged a success by anybody.
We might be told—it has proved wrong—that the Chancellor's Autumn Statement contained measures that would help the building industry. It was supposed to be able to raise £1.5 billion by a further sale of capital receipts. But that did not mature, as some of us said would happen, because most of the best assets had already been sold. We called for the release of substantial sums of money from the funds held in reserve. We did not believe in the mythical new sales, which in fact did not occur. Before the debate this afternoon I spoke to a Member from the other side who has a close relationship at a high level with the building industry. Unfortunately he could not speak in this debate. He said that my conclusions were right and bang on that particular situation.
I also took the trouble to check with the public
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sector. Sometimes some Members of the Government give the impression that local authorities are the worst people in the world at operating in this field. However, in the local authority building departments, it appears that contracts that are also let out to the private sector will have to be drastically reduced because, to use a well worn phrase, the rate-capping and financial straitjackets that have been placed on local authorities will once again have the effect of contracting the building industry.
There is another point which does not concern the Government as such. The banks continually tell us how things are improving in their field. My figures show that the banks do not come out very well at all. Only last week one of the banks announced record profits; but from information given to me by someone involved in the building industry, once again in the private sector, it appears that in 1991–92, when interest rates stood at 15 per cent., the borrowing rate was plus 2 per cent. or 3 per cent. That equals a mark up of 13.34 per cent. or 20 per cent., depending on which figure is used from the basket. At present the interest rates stand at 6 per cent. But the banks are still charging a borrowing rate of 2 per cent. or 3 per cent., which is a mark up of 35 per cent. to 50 per cent. That is a financial rip off. No one could accuse the banks of trying to help the present situation by treating the building industry in such an ungenerous manner. I think it would make sense to treat it better.
A survey dated 8th February from the Federation of Master Builders and the Building Employers Confederation found that there were the slightest of signs that the situation appeared to be getting a little better. But it is so fragile that it would be speculative to put a great deal of reliance on it. There are other denominators which indicate the other way. For instance, the figures which were issued today by the Halifax Building Society showed that house prices had dropped by only one quarter of 1 per cent. But they are still dropping. Prices are not holding and not rising. Even if they are going down by such a small percentage, that feeds into the industry and has a very adverse effect.
The Federation of Master Builders' quarterly trade journal notes that the workload of 45 per cent. of firms remained at the same level, and 45 per cent. of the rest recorded a decrease. It says:
"Reviewing 1992, 62 per cent. of members reported a below average or low workload. Expectations for 1993 are not high. Seventy-seven per cent. of our members expect their workload to remain at the same level or less".
The national president of that association, Mr. Ted Evans, says:
"No further fall in workload is reported in the survey overall. However, members' firms remain at a particularly low level of work with only 19 per cent. working to full capacity".
Such figures are relevant to the comments of the Building Employers Confederation. I have no time to go through all the figures, which I am sure your Lordships will appreciate. Under their new chairman, Sir Brian Hill, substantially the same figures were produced. Unless something is done, the little glimmers of light that appear will be blown out very quickly.
Let us put the question: what can be done to deal with the situation? Before introducing this debate to your Lordships today I naturally consulted the biggest trade union involved; namely, UCATT. That union says almost the same as the building employers. It is the same right across the board: there is very little difference in any of the percentages or in the picture they paint. Together with the building industry employers, it has a programme, most of which makes sense even to people who do not like to see too much government intervention.
Having speculated £7.5 billion in one day, trying to save the so-called economy of the country, the Government surely must understand the reports coming in over the years, not from the political arena by any means but from some of the names mentioned by my noble friend and colleague, Lord Carter, when he opened the previous debate this afternoon; namely, the Duke of Edinburgh scheme, the archbishops and the Audit Commission. They all draw attention to the appalling deterioration that is taking place in our housing stock, our schools and our hospitals. That is what they were saying. It is not what people in your Lordships' House invented. Surely a government that can speculate £7.5 billion on the roulette table of the money markets, can find resources from somewhere, somehow, when attention is drawn to such a serious issue.
I shall quickly skip through some of the proposals. A further cut in interest rates to 5 per cent. is suggested to stimulate business confidence in the housing market. Most people, and even many Conservative supporters, would agree with that. The Government should restore cuts in funding to youth and adult training and reintroduce an apprenticeship registration grant to employers so that they will train people; and they should raise the contribution which should be made to keep young people in training. The Government should start a local authority housebuilding, repair and maintenance programme—I shall probably be told by the Minister that local authorities can already repair—using the £5 billion in capital receipts that already exist, rather than the £1.5 billion that we knew from the start was a gamble. They should bring forward the vital multi-million pound transport improvements such as the West Coast main line improvement and the high-speed Channel Tunnel rail link. Those schemes are essential if we are to obtain our fair share of what is to take place in Europe.
The Government could remove the restrictions on local authorities which prevents them from borrowing on the open market to fund capital investment programmes. That will enable them to begin work immediately on the £4.3 billion repair and maintenance system. Our crumbling school buildings are only one section of that. Anyone who, as a Member in another place, has represented an area with crumbling school buildings, will know what it is like. I had what I may call the "disprivilege" to do that for a long time. Finally, the Government should start a temporary work programme to bring unemployed building workers back into the labour market.
In fairness to other noble Lords who have put down
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their names to speak—I am glad that they have—I believe that we can have a debate which is objective in a way that may help the building industry. More than one Member from the other side has said to me, "The building industry? You mean what is left of the building industry". I ask the Government, in the name of sanity, to listen to what is said today. If they cannot give us a basket of proposals, they must do something urgently that will at least allow our great building industry to move forward once again and play its part in creating the social fabric that we want in this nation of ours. My Lords, I beg to move for Papers.
5.53 p.m.
Lord Auckland: My Lords, the House is obliged to the noble Lord, Lord Dean of Beswick, for initiating this debate in a thoughtful and thought-provoking manner. Nobody with a grain of common sense or intellect will deny that the building industry is facing horrendous times—not only in this country. I have much to do with Scandinavia, particularly Denmark and Finland, and with the old Commonwealth countries—Australia and New Zealand. They are all facing the same problems. That is no compensation for the many who are unemployed in the industry here and I would not wish the point I have just stressed to be used to camouflage any of those problems.
I must declare an interest as a non-executive director of a small firm of civil contracting engineers. I have a son-in-law who is a project manager for one of the world's largest construction companies. However, as my speech may well show, I have never been employed in the building industry.
It is an industry where one can be high on diagnosis of the problems but face extreme difficulties as to remedies. Obviously there are a number of theoretical remedies that one could produce. One involves value added tax, particularly on building improvements. That is a considerable disincentive, particularly to small builders. It would be wrong for me or anybody else to anticipate the Budget. But one hopes that whatever happens in a week or so, some consideration will be given to changes at least in value added tax, particularly for small builders. They are the ones who are really suffering.
I should like also to say a word on tourism. One Scottish hotel group in its annual report for 1992 revealed a 67 per cent. room occupancy for the whole year. That is a tribute to the hotel industry. One hopes that the Government can give some incentive to tourist development areas. Some is already given, but more is needed.
I am not a believer in the handing out of subsidies, particularly when they go to the wrong people. But it is almost ingenuous to say that the construction industry is the main industry in this country. No factory, no commercial concern, can operate without a roof over its head.
Speaking as one who spent all his working life in the City of London, I was aware that there was a great deal of overbuilding in the 1970s and 1980s. One only needs to visit the City of London—not only London; almost any major city in the world—to see the number of unoccupied buildings due to the worldwide

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recession. We must all face the fact that the recession will be with us for some time to come under any government. I cannot see—admittedly it is a pessimistic view—that any government can produce short-term major remedies for the building industry. But that does not mean that a start should not be made.
I am old enough to remember the well-known Conservative Party conference some years ago where there was a plea for 300,000 houses. And 300,000 houses were built. Alas, we are not seeing that nowadays, not only under the present Government but I suggest under any government. There is not the capacity.
We must ensure that the labour is available. What is happening—certainly in the small company of which I am a non-executive director—is that site managers and engineers are taking a cut in wages as are the executive directors because the laying-off of essential people who work on building sites can be countermanding. One of the real difficulties is that once a site engineer is made redundant, it is extremely difficult to replace him. He may well feel bitter and say that once is enough and go in for some other industry. Solutions are very difficult here but I hope that, particularly for areas of special development and areas of tourism, the Government will give some sympathetic consideration to those in the industry, especially small builders who are involved in the construction of buildings which increase our exports and our trade. Tourism is an important export and I believe that the Government can be of some help.
We have a challenge—all parties face a challenge here—but to expect that politicians alone can solve the problem is being very naive. It will take an overwhelming effort all round. Let us hope that that can be achieved.
6 p.m.
Lord Bruce of Donington: My Lords, I observed with some concern in the evening press that the Prime Minister is complaining that there is too much gloom around and that part of our problem is that the gloomsters seem to have taken over the means of public expression. I can understand the Prime Minister's anxiety. When he looks round his own Cabinet table it cannot give him much cause for joy. I therefore hasten to inform the Government that my few remarks this evening are designed to help them to develop those green shoots of recovery, which apparently are once again trying to poke through, and to see that they reach full fruition. I hope, therefore, that the Government will take a constructive attitude towards these matters instead of becoming suicidally depressed, as they appear to be at the moment.
My noble friend Lord Dean of Beswick pointed out that there are at present some 450,000 people unemployed, formerly of the construction industry, comprising joiners, carpenters, bricklayers, electricians, glaziers, plumbers, roofers, tilers, drivers, operators of concrete machines and so on. It is envisaged that a further few thousand will to come onto the unemployment register at any time. All that
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is happening at a time when it is quite clear that the national requirement for the services of the building industry is clamant in terms of improving the infrastructure—roads, sewers and, above all, housing. I shall not refer to commercial buildings, of which there appear to be a surfeit at the moment. It must depress the Prime Minister to realise that, on the one hand, there will be close to 500,000 unemployed people in the building industry while, on the other hand, there are clamant needs, particularly in the field of housing.
Your Lordships will appreciate that last year there were I million houses unfit for human habitation and that drastic repairs and alterations were required to a further 1.5 million to bring them up to an acceptable building standard. There are a number of homeless people. I shall not put a figure on it. Figures seem to vary, according to taste, between 100,000 and 250,000. There are also those in bed and breakfast accommodation. It must therefore depress the Prime Minister to look at wasted resources on one hand and the clamant need on the other.
Apparently, the Treasury and the Prime Minister's economic thinkers do not seem to be able to solve this problem for him. We all know perfectly well that the 450,000 unemployed people in the building industry represent an addition of some £4 billion to the public sector borrowing requirement. The PSBR, in its turn, is an inhibition on further public expenditure. How, therefore, do we get out of the situation without exacerbating the threat of inflation which the Treasury seems to think would arise if we put more public expenditure into housing and into the construction of new housing in particular? I have deliberately omitted other forms of construction whose needs are also clamant.
Surely it is far better to employ people—skilled people in the main but some unskilled as well—to produce something really useful than to pay them out of social security for doing nothing. To pay them for doing something must be less inflationary than paying them for doing nothing. I should have thought that even the pessimism of the noble Lord, Lord Strathclyde, would enable him to see that. If we begin to put people to work in the building industry, although the multiplier effect is rather less than that in manufacturing industry, for every person who is put back to work one can reckon that over a phased time another 2.5 jobs will be created. That is the conventional figure.
Why not put people back to work? The building industry is essentially an assembly operation. It does not need vast capital expenditure to equip it with new and sophisticated machinery or anything of that kind. Most of its machinery and plant is already there—where it is not rusting through not being properly covered. It therefore does not require any vast investment because a house is the end product of 100 different trades. It needs glass, hardware; and there is a fall-out too in the semi-durable field. That is the obvious thing to do, so why do not the Government do it?
We all know perfectly well that local authorities have at their disposal large capital sums that they are

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not allowed to use which are the proceeds of the sale of council houses. That money could be put to use very quickly. The Government's classic answer, to which I have listened now on three or four occasions to a point where it becomes tedious, is that all local authorities do not have these resources and that therefore it would be unfair to allow any of them to use the resources at their disposal. I sincerely hope that we shall not have that answer trotted out again today.
It would be far better for the Government to use their own funds to provide local authorities with the necessary money. The local authorities are the real instruments to use. A little time ago the noble Lord was injudicious enough to say that housing construction in the United Kingdom was at an all time high. On reflection, he will realise that that is not the case. Indeed, I have the Government's figures in front of me.
In 1979 local authorities in Great Britain produced 75,573 houses. Last year it was 8,073—a shortfall of 67,500. If one takes together the house construction in new towns under the Government's own departments of housing, the total public housing provision at the end of 1991 was about 77,000 less than it was at the end of 1979. Even housing association residential accommodation was 2,000 houses less and housing provided by the private sector was 15,000 less. At the end of 1991 the total housing per annum was reduced from 244,504 in 1979 to a mere 188,120 at the end of 1991, which is a shortfall of 96,884, with 1 million properties still unfit for human habitation and 1.5 million still requiring extensive work for them to be brought up to a civilised standard.
Quite clearly the Government's duty is simply to go ahead with public housing. They have nothing to lose but their own prejudices which have become so closely ingrained that they appear almost incapable of thinking. Why do they not adopt a commonsense attitude toward these matters and use all the instruments at their disposal to avoid the terrible spiral into which they are getting themselves and which—and I say this with the utmost regret—will before very long, unless they are very careful, precipitate them from office.
6.12 p.m.
Lord Davies: My Lords, I declare an interest in that I own and run a construction company in mid-Wales. I have spent my whole life in the industry and started with one of the illustrious companies which the noble Lord, Lord Dean, mentioned.
In preparing for this debate, I looked back at the record of our debate on the construction industry which took place in January 1992, which was the last time, I believe when we debated the subject. Again, it was introduced by the noble Lord, Lord Dean of Beswick, to whom I am most grateful for bringing to your Lordships' attention a vital industry, crucial to the economy and to the well-being of our citizens.
It is interesting—indeed depressing—how little has changed in the past year. Then, as now, we were hoping for a small improvement during the coming year. During that debate, I said:
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"interest rates, which were coming down with inflation, are now stuck, in real terms allowing for inflation, at an all-time high, and may have to go up again. We are told that rates must stay up to support the pound. But can the pound be at the correct level if interest rates have to be kept well above those of our competitors even when inflation is down to their levels? I do not know the answers to those questions, but I do know that if nothing is done we may be in for a further downturn which will be a disaster for our industry".—[Official Report, 15/1/92; col. 266.]
We were told by Government Ministers that leaving the ERM would cause interest rates to rise and that the economic consequences would be disastrous. During the debates in your Lordships' House on the economy, I was surprised to hear several illustrious speakers, all of whom thought we had gone into the ERM at the wrong rate, castigating the speculators for getting us out. Thank God for speculators, I say! They did what the Government seemed incapable of doing. Just try to imagine the state of the economy and the construction industry if we still had interest rates at a level necessary to sustain the pound at the ERM exchange rate, and the effect on our exporters of coping with that rate. At least our interest rates have been allowed to fall with inflation again, although real interest rates (base rate less the inflation rate) are still at historically high levels.
The Government urge us to have confidence in their policies and in the future of the economy, in an effort to restore confidence. But confidence will not return to the businessman who wishes to build a new factory or to a family which wishes to buy a new home, until they can be reasonably sure of three key factors: first, that their new asset will not go down in value; secondly, that their interest payments will stay at a level that they can afford and will not be pushed up again to the horrendous levels seen in recent years; and, thirdly, that their anticipated income stream will continue or grow.
How can they have that confidence when the Government's policy—if it can be called a policy—seems to indicate that interest rates are as likely to go up as down? Ministerial statements on interest rates still seem to be aimed more at the foreign exchanges than at the domestic economy. But the foreign exchanges do not believe what Ministers say; after all, they are the same people who said that we had to stay in the ERM and that we would not devalue. But they react to what Ministers do and to the underlying economy.
What must be tackled by the Government is the revival of the economy and the health of the manufacturing and construction industries. They must develop and put into action a coherent policy, including interest rates, to achieve that end. If they do not, our balance of payments, exchange rate and thus inflation, will all go the wrong way. So far, there has been very little sign of such a policy.
Until that policy is put in place and made to work, there are palliative measures which can help the construction industry to pull through this awful recession. At the moment there is very little sign of an increase in workload, but in the past few months there has been a faint and frail revival at the lower end of the housing market. That revival must be nurtured and

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supported and not stamped on by, for instance, the imposition of VAT on new housing which some people have talked about.
Housing renovation grants are providing much needed labour-intensive work for the smaller builders while also giving a valuable improvement to the poorer housing stock. However, the scheme does have some room for improvement. Under the regulations the householder can insist that the grant is paid to him or her rather than direct to the builder, even where this has previously been agreed, and can then sit on the grant for six months or so until the cumbersome and slow-moving legal system extracts the grant for the builder in payment for his work done—indeed, if the money is still there.
Councils have used the agency system to alleviate that problem but have, in some cases, been paying late themselves due to dwindling funds towards the end of the financial year. For many firms in present circumstances, such delay can be devastating. It is essential that funds made available for this scheme are not further reduced, as has been indicated that they are to be reduced in the coming year.
Another measure which would be of great help, and which has been mentioned before, is the reduction of VAT on house renovation and alteration work now allowed by the EC regulations down to 5 per cent; That would increase the value for money to householders, while reducing the advantage that unregistered operators have over properly set up and VAT-registered firms, while at the same time providing an added stimulus to the workload.
The construction industry is a vital element in the national economy, employing 1.3 million people and producing 7 per cent. of GDP. It is crucial to the well-being of us all, providing and maintaining our homes and places of work, among much else. This recession has caused unemployment in the industry to approach half a million. And it is a recession brought about by the pursuit of goals which proved illusory. "If it isn't working, it isn't hurting".
Now that the game has been lost, we implore the Government to pursue the new goal to turning round the economy with a great deal more zeal and determination than they have shown so far. The control of inflation is desirable, but it is not an end in itself; it is only of use if it is a means of realising the goal of greater prosperity for the nation. The construction industry wishes to be allowed to play its part in that endeavour.
6.18 p.m.
Lord Sefton of Garston: My Lords, every time we engage in a debate such as this one looks through all the official figures for statistics and therein lies a problem. Everyone in the debate gives statistics but everyone seems to have different statistics. It was notoriously difficult in the past to get the real truth of the situation in the building industry. I remember in 1929, when I first joined the building industry, one of the older members of our community saying to me, "It is a funny thing; you have got to recognise that we are now building houses in exactly the same way as they
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were built when they built Rome. There has not been much change". It does not seem to me that there has been much change as regards our attitude to assist the building industry.
From one of the statistics I gleaned today, the percentage of growth of the national product that the building industry accounts for is between 7 per cent. and 10 per cent. That is an important element. Frankly, I do not know how that is going to be affected if foreign and continental firms make further penetration into British firms. I should have thought there would be an adverse effect, but, as I say, I am not an expert. However, I know a little bit about the building industry.
The changes that took place in the building industry in the 1930s had something to do with the growth of technology. Finally, after the Second World War, we reached the situation when the do-it-yourself trade practically killed thousands of small builders because nobody any longer could afford the cost of employing decorators or individuals in the building trade. With the growth of do-it-yourself, people began to do many things for themselves, and that accounted for the major decline in the building industry.
On the other hand, the scale of the construction industry became so great that there had to be large wealthy firms with all the resources and investment to plough into the machines that were needed to do the job. And so the industry almost became divided into two separate industries: the industry that catered for the home user, the home dweller and do-it-yourself, and the industry which catered for international development on a large scale.
There is no doubt also that we seem to have had a figure of 300,000 or 400,000 unemployed in the building industry. In 1919 4,700 firms went bankrupt. Seven thousand firms went bankrupt in 1991. Tarmac's profits were down 81 per cent.; Wimpey's profits were down 98 per cent.; and Barratts had a deficit of £100 million. That is hard luck for the private company but it is worse news still for the Exchequer. I understand that the Exchequer, according to statistics produced by the Institute of Housing, lost £1,000 million in that year. We can hardly afford that, and I do not want to go through the long list of things that can be done to get people back into work in the building industry. We have already heard some of them, so I will not take up time by repeating them.
In housing ownership there has occurred the growth of so-called negative equity: that is having a tremendous effect on ownership. It is leading to a situation where we need rented accommodation. Essentially, rented accommodation could be provided by buying in all the repossessions and allowing the small builder to get in on the act and make the houses fit for renting, especially to local authorities. No one is going to dispute the need for that kind of accommodation provided by local authorities to house the homeless if for nothing else.
Lately the Chancellor of the Exchequer, the Prime Minister or the Cabinet decided that it would be helpful if we were to employ a "brains trust" to help the Chancellor. It does not seem as if that brains trust has had a collective view. It seems that they get into a

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room and have an argument about what ought to be put in the public sector. So the Chancellor is left in a very invidious position.
I should have thought that perhaps the Government ought to do something about the building industry. It may be that if we forget our prejudices from one side or the other and if the employers and the employed sit round a table, such as they used to be able to do in NEDO, they may well come up with a solution that will not impose too much of a burden on our economy. If they could do that we would be half-way towards meeting the plea made by the noble Lord, Lord Bruce of Donington. He asked: why can we not solve this apparently insoluble problem by getting together? That is the question.
I feel sorry for the noble Lord on the Front Bench opposite: it seems that in this Chamber whatever subject comes up we have the noble Lord, Lord Strathclyde, to give an answer. However, perhaps he could answer the question which was put by the noble Lord, Lord Bruce. Why can we not get together and why cannot the Government issue a very clear and concise statement about what they intend to do in the matter of the building industry? There is no doubt about the need for a statement or about the need for the Government to activate a programme that will lead to the solution of some of the so-simple problems that everybody has enunciated.
Your Lordships will not be surprised if I look at the building industry against the background of the place I come from. I do, and will continue to do that, because one of the major problems in the building industry will be the unequal distribution of resources inside the industry when the upturn comes. I have no doubt that the upturn is coming, and I have no doubt at all where it is going to be. It will not be much further than a couple of miles from this building. So, on the question of statistics, I put down to the Government a Question for Written Answer. I did not want to take up the time of the Chamber by putting down an oral Question. My Question was a simple one: how much money have the Government spent in refurbishing and decorating buildings within one mile of Whitehall? The answer was, "Sorry, we cannot tell you because it would take too much trouble to get the figures." I could therefore ask them for the figures in regard to each building. I could ask the Government how many buildings they have and why they have had to spend £80 million having bought a brand-new building costing £100 million for the Secret Service. It may be that I would not get an answer, because it is such a secret service inside Whitehall. That all goes to underline what is going to happen when the upturn comes. It will not be an upturn in places like Northern Ireland, Merseyside and the North East; so that needs looking at in advance.
I do not really wish to pose the problems of Merseyside—not too often anyway—because people get the idea that there are always problems on Merseyside. There are. So, in advance, I say this to the Government. You have heard the reasons. I could have defined the problem as being the state of the building industry. I could have defined that quite easily: it is in a hell of a state. But the Government
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know that. They have now heard reasons and will hear more before the end of the debate about the problems facing building, together with some of the proposed solutions.
So I say to the Government: get your act together and realise that you are talking about 10 per cent. of the gross domestic product. Realise that you are in a single market and that there is a very great danger that the British building industry and construction industry will face extinction. It will instead become a European one. I ask the Government to face those problems and at least take the nation into their confidence. Have an inquiry, have a Royal Commission—although it would take too long—but have an inquiry, get a judge to preside over people from the employers and the employed. Get them together and have a brains trust. I only hope that any brains trust the Government finally get is a better one than the Chancellor has had. At least that would give us some confidence that even out of that small inquiry and meeting the Government could perhaps put forward just one scheme. They may say, "We are going to take a chance and plough in the necessary money, first, to deal with homelessness; secondly, to deal with the question of negative equity; and, thirdly, to provide other people with the homes they need." The Government should say that they will take a chance and plough in millions of pounds to start the building industry on a process of recovery because there is no doubt at all that the building industry is ill and that it needs immediate resuscitation.
6.29 p.m.
Lord Blease: My Lords, I join other noble Lords in commending my noble friend Lord Dean of Beswick for initiating this debate and for the positive way in which he has drawn attention to the crucially depressed state of the building industry in the United Kingdom. The building and construction industry throughout the United Kingdom is very much influenced and controlled by overall government capital development policies and by fiscal measures.
I recognise—and in some detail—the do-it-yourself and the master building operations that were referred to by my noble friend Lord Sefton of Garston. However, I should like to deal with the main elements of the building and construction industry within which there are nationwide organisational links and contractual arrangements between companies, management, professionals and employees. I should like us to build upon the organisational links which exist throughout the United Kingdom.
The tremendous changes that have already been referred to in building and civil engineering technology, with modern hi-tech plant, machinery and working equipment, are widely developed with skills and working practices and are closely adapted by individual companies throughout the United Kingdom. A vast amount of private and public capital finance, as well as significant workforce skills, talents and vocational commitment is vested in the industry. That is something of which we should he proud in the United Kingdom. We are second to none. I know that

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Northern Ireland exports advanced computer design techniques to companies throughout the world and that we have taken a lead in that area.
Arising from the ongoing recession are the appalling pattern of unemployment, the rising wave of closures and the depressing drop in business confidence. These stark features are woven deeply across the diminishing tapestry of the construction industry. Those features cast dark shadows over all regions of England, Scotland, Wales and Northern Ireland.
When I rise to speak in your Lordships' House, it is assumed that I shall deal mainly with Northern Ireland affairs, just as my noble friend Lord Sefton deals mainly with Liverpudlian matters. Indeed, on this occasion my remarks will refer directly to the affairs of Northern Ireland because I believe that they reflect the situation in other areas of the United Kingdom. I know that some issues relate solely to Northern Ireland, but the main thrust of my remarks relates to features that can also be identified in other parts of the United Kingdom. I hasten to add that the matters that I shall raise are outside the direct remit of the noble Lord, Lord Strathclyde, who is to respond to the debate. As I have not given the noble Lord any notice of the points that I propose to raise, I do not expect him to respond directly on the affairs of Northern Ireland. However, perhaps he will take them on board and relay the substance or the gist of this part of the debate to the Northern Ireland Ministers and the Secretary of State.
In June 1985 Northern Ireland had 25,000 employees in the construction and building industry. By September 1992 that figure had fallen to 21,130 employees in employment, with 1,820 registered as unemployed. The figures show that in a six-year period some 2,000 employees left the industry and that almost 2,000 were unemployed. That is a loss of some 16 per cent. of construction employees in seven years. Yesterday I spoke to the Northern Ireland official of the Union of Construction, Allied Trades & Technicians—UCATT for short—who indicated that since September last the employment situation has worsened considerably and the outlook for the industry is grim.
A feature worth noting is the Government's official figure for output in the industry. In financial terms, output from the industry in Northern Ireland rose from a base figure of 100 in 1985 to 142 in 1991. In financial terms, this is an output increase of 7 per cent. per year. With the reduced workforce of some 16 per cent. and the rise in output of some 49 per cent. over the period, this indicates, in my opinion, that the industry is strong in its efforts to encourage performance, competitiveness and innovation.
Sadly, like the rest of the United Kingdom, during the past six years business failures in Northern Ireland have increased dramatically. Figures from Dun & Bradstreet, the business information company which publishes Stubbs Gazette, show a record of 578 business failures in Northern Ireland in 1992. That compares with a business failure rate of 258 in 1987.
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The building and construction industry suffered highly in those closures, with 105 closures in 1991 and 100 in 1992.
I turn now to the views of the Northern Ireland Construction Employers Federation and of its executive director, Mr. Gordon Burnison, as quoted in a Business Telegraph report of 2nd February, which stated:
"Mr. Gordon Burnison, Director of the Construction Employers Federation, drew together the conclusions from the first survey of the state of the building and civil engineering industry in the early days of 1993 in Northern Ireland.
Two features stand out. First, the continuing high level of unemployment in construction … This is a major cause for concern and suggests that measures to reduce it should be 'implemented immediately'.
Second, most of the evidence points to the continued existence of a large amount of unused capacity in the firms in the industry. In six months time, 57 pc of the firms expect to be working at not more than 50 pc of their capacity".
The article continues by referring to two matters,
"which may create some caution. First, the continuing rise in unemployment and the fears of redundancy will restrain people who might otherwise have traded up in the housing market. Second, the large amount of empty commercial property in Belfast will continue to depress the realisable rents on new space".
The biggest single factor boosting the construction industry in 1993 will be the commitment which has been given by the Government to increase its capital spending, largely on construction, by up to £50m above the original plans.
Much of this additional spending will help the civil engineering side of the industry. Already the cross harbour bridges and weir in Belfast are providing large contracts. The investment in the water and sewerage services is another big element.
This is a significant amount, but might be partially offset by some fall in private sector contracts".
I should like to continue in the same vein. I recognise that in Northern Ireland the Government have put a fair amount of capital into projects that had been neglected for many years. I support the general remarks of my noble friend Lord Bruce of Donington who said that further capital finance spending by the Government would have a multiplier effect of two and a half. However, I believe that such spending in Northern Ireland would be money well spent in terms of the good will and the economic well-being of the community.
My figures from the Department of the Environment relate to town and country services. I take the point that was made by Mr. Gordon Burnison of the Construction Employers Federation of Northern Ireland when he said that measures should be implemented immediately. I believe that such plans must be ready and in existence. I have obtained information from the planning division that some 20,000 plans are approved annually by the Northern Ireland Planning Division. Many of these already exist on shelves.
Would the noble Lord, Lord Strathclyde, kindly suggest to the Ministry in Northern Ireland that these plans be taken from the shelves in the 26 local government offices and in the agencies such as health, hospitals and the Northern Ireland Housing Executive? They could be put into operation through some financial backing. This finance could be used for existing plans for repairs, improvements, and alterations to housing, hospitals, schools, roads and

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other essential public amenities employing building and construction workers, and not appealing to voluntary labour to go out and do this work on a voluntary or part-time working basis. This would be real work that required expertise and would be a great return to the Northern Ireland community. I thank the noble Lord the Minister.
6.41 p.m.
Earl Attlee: My Lords, I am grateful to the noble Lord, Lord Dean of Beswick, for initiating this debate and also for drawing it to my attention last week. For some years before coming to your Lordships' House I was involved with supporting the plant hire industry, and in particular the crane hire industry. I should like to draw your Lordships' attention to the capabilities of the crane hire industry today and the effect that this Government's policies have had on the industry. I should also like to address a particular problem facing the support side of the plant hire industry.
A task that is often carried out nowadays is the replacement of a railway bridge over one weekend. It is achieved by using modern, heavy, mobile cranes that can lift the massive pre-assembled sections into place. Mobile cranes are available that can lift as much as 800 or even 1,000 tonnes. More important is that the weight can be lifted at a distance from the crane. As much as 70 tonnes, the weight of a Challenger main battle tank, can be lifted at a radius of 30 metres from the crane. To support such an operation as many as 12 38-tonne artics are needed to carry the crane's ballast and other paraphernalia. Also, there will be the two 100-tonne low loaders to carry the new beams for the bridge.
Clearly the railway will be out of action while the bridge is closed to traffic. Any breakdown with the crane or the logistics would jeopardise the opening of the railway for Monday morning. The results of a main line closed on a Monday morning do not bear thinking about. The problem is that the capital investment for these machines is enormous. A 300-tonne crane costs over £1 million. The crane industry, and indeed the construction industry generally, needs a reasonably constant demand, and not boom or bust.
Several major companies have gone the latter way, sunk by the payment for under-utilised equipment being hired out at uneconomic market rates. The market will sort out the supply and the rates, but it cannot quickly adjust to a demand change without sending many firms under. That then makes a loss for the finance industry on the money advanced for the equipment. It is the Government's duty to run a stable economy, not one where at one moment the rates for goods and services are sky high and the next you are lucky if you can obtain much more than the marginal costs of being in operation.
I should now like to draw your Lordships' attention to a problem facing the plant fitters; the mechanics who repair and maintain the construction equipment. They often have to work in extremely adverse conditions. As a rule they have to work outside in all weathers, and often far away from home. The employer frequently issues the fitter with a van for his
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own use to carry his tools and equipment. The fitter is allowed, and indeed encouraged, to take the van home with him so that if the fitter receives an out-of-hours call he can go directly to the job without first having to go to the depot to collect the van. To take the example of the railway bridge project, consider the effect of a simple breakdown with any of the vehicles involved. The effect of just one extra hour of unnecessary delay could be disastrous to the whole project.
The problem is that under Sections 154 and 157 of the Income and Corporation Taxes Act the plant fitter is taxed under the Inland Revenue's P11D system. This was designed to catch the directors and higher-paid employees. The rationale is that the employee has the benefit of the private use of the vehicle. After a few months as a fitter's van most vehicles are entirely unsuitable for any sort of private use. The driver's seat and controls will invariably be contaminated with oil, grease, and other unmentionables. The passenger's seat will be, to say the least, suspect. No wife or girl friend would want to travel in such a vehicle.
The rear load area will always be a little bit dirty and often filthy. There will be wrenches, jacks, crowbars and oil; not to mention the evidence of last week's catastrophic breakdown. For those reasons the fitter will often have his own family car for private use. I am well aware that some other employees in other industries have the use of a van which they can keep clean, empty, and use privately. One of my friends has one to carry television sets around. His van is always less than 12 months old, and it is right that he should be taxed on the benefit of his private use. In the construction industry there is no benefit for the employee. All the benefit goes to the employer, otherwise why would such a junior employee have his own vehicle?
The decision in Pepper v. Hart was that teachers in private education sending their children to the school where they themselves taught should be taxed only on the marginal cost to the employer and not on the cost to a new parent. In consideration of that case the Inland Revenue very kindly decided that some fixed costs—for example, road fund tax —no longer needed to be taken into account where the private use of the vehicle was incidental to its business use. The point is that the marginal cost to the plant company of having his employee keeping the vehicle at home is practically nil. The value, as I have indicated, can be great to the employer.
Lord Bruce of Donington: My Lords, I am most grateful to the noble Earl for giving way. Can the noble Earl say whether the case has been taken to the commissioners on appeal against this kind of nonsense?
Earl Attlee: My Lords, I have no idea, but I doubt it. The gain to the employee is that he can provide a better service. I am not an expert on tax law, so I am not well placed to suggest a solution. However, I believe that it is possible for the Inland Revenue to

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make an extra-statutory concession. The alternative is to address the problem in the Budget. What is the Government's position on this matter?
6.48 p.m.
Lord Monkswell: My Lords, I thank the noble Lord, Lord Dean of Beswick, for introducing this debate. It has been interesting to hear all the contributions. We have had a wide range of contributions from the input of the housing industry and the building industry to the input of cranes into the building industry. It has been illuminating. In my contribution this evening, I want to come somewhere midway between. Before I do that, I should like to look at the global situation.
This is the second recession that we have had in 14 years of Conservative government. During the first one, in the early 1980s, I was employed by a firm making earth-moving machinery used in the building industry. I remember saying to the managing director, "Why don't you go down to Whitehall and explain to the new Government what their policies are actually doing to our company?". We were being crucified. He said, "I have done that. I went there as part of a delegation of the CBI to see Keith Joseph and we explained the problems. The problem for us was that it was like talking to a brick wall because he did not understand what is going on". We have moved on a little but I am not sure that the brick wall has disappeared.
During the mid-1980s local government had the opportunity to raise local taxes and to borrow money. As a result of the combination of those factors, local government injected economic activity into the affairs of the nation. Then came Chancellor Lawson who also pumped money into the economy. Things took off in 1987 and 1988 and we saw unemployment go down and the building industry boom. There had not been such a boom in the building industry since the Barber boom of the early 1970s. Unfortunately, the result was the same; the collapse in the property market and in the building industry.
We are in the middle of the second and an even worse recession. If I hear any more talk of the green shoots which are appearing I shall scream, and I am sure that I shall be joined by a good number of the populace of this country. Please, let us hear no more about green shoots.
We now have an additional problem. For several years the Government have succeeded in hamstringing local government. We in local government—and I speak wearing my local council hat—no longer have the opportunity to raise revenue. We are effectively capped, whether poll tax or council tax. We cannot raise our revenue above certain limits set by the Government. We are also more rigorously restricted in borrowing capital than in the mid-1980s. Local government can no longer come to the aid of the national economy; that is solely in the hands of the Government. That may be one of the reasons why the present recession is so deep and continues for so long.
Perhaps I may explain what is happening in one element of local government and describe the
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education scene in the City of Manchester. More than £30 million-worth of capital expenditure projects have been identified and are ready and waiting to be put into action. The Government allow Manchester to spend less than £10 million on a capital programme in relation to education. Your Lordships will appreciate the tremendous capacity which exists for work to be done.
Lord Strathclyde: My Lords, can the noble Lord tell the House how much in capital receipts Manchester hopes to release during the next nine months?
Lord Monkswell: My Lords, given the current recession, it would be a bold man who could say how much Manchester could raise in capital receipts during the next nine months.
Lord Dean of Beswick: My Lords, I am grateful to my noble friend for giving way because I believe that the Minister deflected him in his argument. Is it not a fact that Manchester schoolchildren received two-and-a-half times less in government support than those in schools on the periphery which have opted out? It is a fact that children who attend schools which have opted out receive in government support two-and-a-half times that spent on children who attend schools in an authority such as Manchester whose needs are greater. That is the unfairness of the situation and defuncts the point that the Minister was trying to make.
Lord Monkswell: My Lords, I am glad for that intervention. It is interesting to note that not one school in Manchester has opted out of local education authority administration. However, in Tory Trafford at least two schools have opted out from a Conservative local education authority. That says something about the feelings of parents in terms of their confidence in Labour LEAs as compared with Conservative LEAs.
The direct works department of Manchester City Council has identified £26 million-worth of what it terms "programme refurbishments". That includes reroofing, rewiring, the relaying of playground surfaces, and so forth. We expect to have a government allocation of £400,000 to spend on those programme refurbishments. The situation is that £400,000 plays £26 million. I am explaining to your Lordships that there is an enormous demand for capital work and building industry work within just one section of one local authority.
The Minister in his intervention raised the subject of capital receipts. I am in something of a quandary because it is argued that local authorities are sitting on capital receipts which they have not been allowed to spend. That is the case. When in previous years local authorities sold property or land, they were allowed to spend only 25 per cent. of the capital receipts and had to bank the rest. Like most local authorities which have capital receipts, Manchester has that money in the bank.
We have a building industry which today many noble Lords have said is flat on its back and with a massive under-used ability to carry out work. The

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Government are effectively preventing us from using the money that we have to employ building workers who are out of work to provide a decent roof over the heads of our children in school. I must point out that only last month I visited a school. It happened to be raining and I saw water dripping through the ceilings in the classrooms. I have in mind another Manchester school where the primary schoolchildren must brave the elements outside to go from the classrooms to the toilets. The children in Britain should not have to put up with those conditions. We have the money and we have the resources but when will the Government give us the opportunity to carry out the work?
7 p.m.
Lord Howie of Troon: My Lords, I begin by thanking my noble friend Lord Dean for initiating the debate. I should like to go further and add my thanks to one other speaker; namely, my old personal friend the noble Lord, Lord Auckland. He is the lone speaker from the government Back-Benches. He may be a lone speaker but he was sympathetic and well informed. I hope that the Minister's reply to the debate will be at least as sympathetic as the speech made by the noble Lord, Lord Auckland.
I wish to speak only very briefly about the general picture of the building and construction industry. I then wish to raise a specific matter. Although my noble friend Lord Dean specified the building industry in the title of the debate, in his speech he extended the subject to include the rest of the construction and civil engineering industries. Noble Lords will be aware that civil engineering is where my own personal interests lie and have lain.
I received a letter from the director of external affairs of the FCEC, the Federation of Civil Engineering Contractors—I rather expect that he has sent a copy of the letter to other noble Lords—in which he says that civil engineering has not been as badly hit as building, which is true, and that, unusually, civil engineering will come out of the recession quicker than building. In all my past experience it has been the other way around: building has come out of the recession quicker than civil engineering. However, that is not true on this occasion.
In his letter he points out that, although civil engineering has not been as badly hit, its profitability has been. He explains the reason in his letter which states:
"This is a product of a combination of causes—the pace and scale of the decline in the building sector; builders crossing over to compete for civil engineering work; uncertainty e.g. over the Government's expenditure plans; unevenness in the flow of work, e.g. last year there were hiatuses at the time of the Election and again ahead of the Autumn Statement; clients looking to exploit a buyers' market by lengthening tender lists and letting work out only in small packages; and so on".
He goes on to say:
"Our sector of construction is not going to be restored to health in all senses until such time as there is a real prospect of recovery in building".
Therefore, the recovery in building is not only important for the building industry but is important for the construction industry as a whole. That goes
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beyond building and civil engineering and applies equally to the supply of materials and plant and a wide range of ancillary services. That is all I wish to say in general about the building and construction industry.
I wish to refer to one matter which has arisen in the past few weeks; that is, the publication and acceptance by the Government of the Warne Report entitled A Review of the Architects (Registration) Acts 1931 to 1969. That was published two weeks ago and accepted in another place by Sir George Younger on behalf of the Government.
It is important because it has significant effects on the architectural profession which is an important and integral part of the building industry. The report proposes the abolition of ARCUK—the Architectural Registration Council for the United Kingdom. It also proposes an end to the statutory protection of the title "architect".
I hesitate to defend ARCUK in its present condition, but I deplore the deregistration of the professional title. The title was protected in the early 1930s in order to protect the public from charlatans —now called cowboys. I give your Lordships one example. Had registration existed in the 1920s—that is before ARCUK was set up—the late John Poulson, who died a few weeks ago, would never have been able to set up as an architect. That in itself would have been sufficient justification for protection of the title.
I quote Sam Webb writing in last week's copy of Building Design. He said:
"Poulson was unqualified; he never passed any recognised examination in architecture. He got in through the back door, having left school with no qualifications and after failing his studies at Leeds School of Art and being fired by his employer".
When he set up as an architect, which he could do under the then rules, his previous employer said that he could not design a brick privy. He was not quite as polite as that. However, that was his estimation of the capabilities of the man who eventually built up the biggest architectural practice in Europe with extraordinary consequences.
Webb goes on to say:
"As his first assistant, Bert Jones, said: 'The one profession he could set himself up in at that time with no qualifications was architecture'".
Warne's analysis is extremely superficial. He has swallowed the ethos of competition, applying it to the professions just as the Government apply it to everything. He seems to have no notion of the professional ethic—tattered at the edges though it may be sometimes these days. Warne notes that architecture is the only construction profession where title is protected by registration. He wonders whether it should be extended to the other construction professions; that is, civil engineering, structural engineering, heating and ventilation engineering, or building services engineering and so on.
Unfortunately, as he says on page three of the report, that falls outside the terms of reference of the review. Having asked the question, he was unable to answer it. At that point Warne should have laid down his pen and asked for new terms of reference. He did not do that. He feebly concluded that architecture could no longer be singled out and that the title's protection should be abolished merely because it was

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the only construction title that was protected and because, by his terms of reference, he could not discuss the other professions. Therefore, he concluded that it should be abolished. That is an extremely feeble argument.
Does it matter? I believe that it does. I mentioned Poulson and I quote Webb again. He says later in his article:
"After Warne, he would probably be allowed through the front door to a fanfare of trumpets by the shortsighted guardians of our future".
He got in through the back door before Warne and would get in through the front door after Warne.
I draw attention to another example. Here we have a case where a protected title is about to be abolished when legislation is introduced. In the other construction professions, the title is not protected so that anybody can describe himself as a civil engineer or construction engineer. I notice that in the magazine the New Civil Engineer—and I should say that for a considerable time I was a director of the company which publishes that excellent magazine—Brian Hughes, the chief executive of the Incorporated Association of Architects and Surveyors explains why IAAS members want to be known as engineers. Noble Lords will note that it is not that they want to be engineers; they merely wish to be known as engineers, whether or not they are qualified in engineering. The chief executive is so qualified, as are some of the members, but the great majority are not. Because the title of "engineer" is unprotected, nothing can be done, as the Secretary of State for the Environment said a few weeks ago, to stop them. That is surely the height of absurdity. No doubt the Government think that this is unimportant. Over a considerable number of years the Government have shown animus towards the professions as a whole, except possibly the profession of law. Engineers cannot be protected at the moment whereas architects can still be protected. It is important for the strength of the engineering profession that the protection of its title should remain. I apologise to the Minister for not informing him in advance that I wished to raise this matter. I do not expect him to reply to me tonight but I hope he will reply to me later on. I suggest that the Minister throws out the Warne Report.
7.10 p.m.
Lord Ross of Newport: My Lords, like others I, too, wish to thank the noble Lord, Lord Dean of Beswick, for initiating this short debate. As regards housing and the health of the building industry, he is a doughty warrior. He is right constantly to remind us of the continuing problems of those two interlocking subjects. I apologise for the fact that I am winding up the debate for my party rather than my noble friend Lord Rodgers of Quarry Bank. Many noble Lords will know that my noble friend is Director-General of the Royal Institute of British Architects. I am certain my noble friend would have loved to be present to hear the speech of the noble Lord, Lord Howie, as he would have supported every word of it.
I qualified as a chartered surveyor in land agency. I was proud that I finally passed the exams with the aid
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of a 10 per cent. reduction as I had been in the services. Like the noble Lord, Lord Howie, I believe our professions, particularly engineering, are not being treated with the respect that they deserve. This country will lose out if people believe this issue is of no importance and that anyone can call himself an architect whether or not he has any professional qualifications. We shall be going down a very sticky road when that happens. I hope my noble friend Lord Rodgers of Quarry Bank will be present on another occasion to defend the architectural profession.
My noble friend Lord Davies has journeyed some 200 miles to be present for this debate. I thank him for that. My noble friend is in at the sharp end of this business as he is a practical builder. I should declare an interest in that I am on the managing committee of a housing association that places some contracts with builders. We have not placed any yet with my noble friend Lord Davies but that may yet happen as he does not live far away. I also have an Irish son-in-law who is, not surprisingly, involved in the building industry. He is based in Southampton but he is working in Manchester at the moment. At least the Prime Minister recently promised some £50 million, if not £100 million, to Manchester. I realise that is not to repair schools. I hope my son-in-law is presently engaged on work in Manchester connected with schools. He has travelled a long way to find work. I am sure many others involved in the building industry have had to travel far from their homes to find employment.
I do not have much to add to what has already been said today and on many previous occasions, both by honourable Members in another place and by noble Lords on both sides of this House. The noble Lord, Lord Sefton, gave us some terrifying statistics on the building industry. I have recently resigned as chairman of the National Housing Forum. I do not suppose many noble Lords have heard of that body but it is a useful body as it has representatives from nearly all the professions and from bodies such as Shelter, SHAC, the Institute of Housing, the Housing Centre Trust and others. The National Housing Forum tries to present a common approach to housing problems. I had the honour to serve that body for, some three years. That body annually promotes National Housing Week and it represents a good cross-section of a large number of bodies that are associated with housing in one way or another. It has representatives from the professions including the RIBA.
Regrettably, however, it does not include among its membership the Building Societies Association or the Council of Mortgage Brokers—I do not know whether those bodies cover the same areas—and it has representatives from only one of the builders' organisations. That is a pity as the National Housing Forum would have a lot more to offer if it had a more comprehensive membership which included more of the building concerns. That was my wish when I was chairman.
Certainly the present housing Minister has always treated the forum's views with respect. We are indebted greatly to the Rowntree Trust for much of

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the research that has been carried out in this area. Sir George Young has always responded to the papers we have submitted to him. At my request he also readily attended at least two of the forum's meetings during my time in the chair. There is a great opportunity at the moment to achieve a consensus over housing policy. I believe it is the first time in many years that that has been the case. That opportunity is one that is well worth pursuing. The National Housing Forum presents just such an opportunity to achieve a consensus. That is a major advance on past history. The Government would do well to maintain that position.
Sir George Young is universally popular. I believe it is accepted that at long last we have a housing Minister who really knows his job. Whether he is able to obtain the money to do what he wants to do is, of course, another matter. However, I am sure he will do his best to maintain the present consensus on housing policy. Some of his recent initiatives, particularly in London, are greatly to be welcomed. I do not think they have had much effect on the building industry but nevertheless some useful initiatives have been instigated and I hope they will be extended to other cities.
I have some experience of conditions in rural areas. This matter may have been mentioned in the previous debate. These days small builders are almost entirely dependent on housing associations to keep them in business. I should add that incomers to rural areas such as myself also provide them with employment as we tend to renovate the houses we buy. I am an incomer to deepest Shropshire. The home I have in Shropshire is my only home; it is not a second home. Up the valley where I live there are four or five properties which have been skilfully done up in recent years and that has certainly provided work for small, local builders. However, much of that work is drying up at the moment. Certainly the housing association contracts that have been issued lately have kept going many of the smaller builders in my part of the world. I speak as a member of a management committee of a housing association which has some 550 properties. At present we have a continuing programme of new build. I hope that will be allowed to continue.
However, I am concerned that housing associations in England are now being threatened with the distinct possibility that many of them will lose their development role and will be expected to concentrate purely on management. We fought that proposal last autumn when it came from Ty Cymru which is the Housing Corporation of Wales these days. We fought it most vigorously because the original proposition was to reduce the developing housing associations, of which there were some 36 in the Principality, to about six or seven. I believe the original proposition was to have three or four in South Wales, one in North Wales and one somewhere in the centre. It was suggested—it is still being suggested in England today—that substantial savings would be made through awarding very large contracts to a single builder using standardised designs which could, if necessary, be split between different sites.
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I am glad to say that in Wales saner counsels have prevailed and it has now been conceded that some 21 of the 36 housing associations should continue to both build and manage. I have raised this matter on previous occasions. Much time is devoted by people on a voluntary basis to the management of housing associations. They do not want merely to end up as managers. They want to see houses being built as, on the whole, they want to see something being done for the younger generation and for the elderly.
There is real hope as regards what is happening in housing associations because the mix of houses they are providing is quite comprehensive. We are providing accommodation for the single homeless, for the elderly, for kids who are in trouble and for families. That is a heartening scene and I believe that it is true of the country as a whole. I pay tribute to the Government for helping us to achieve that position, but I hope to goodness it will continue.
What happens in England will have a direct effect on small builders, local architects and quantity surveyors if the housing associations are to lose their development role. If that is pursued to its ultimate extent it will, I believe, lead to a repeat of the mistakes of the 1960s which have left us with badly designed estates and a huge bill arising from modifications and repairs where those repairs have been possible.
Some years ago I went to the former GLC estate in Andover. The properties were all built with flat roofs. I have never forgotten the vast amount of money that had then to be spent on lousy designs to rectify the problems by putting on pitched roofs.
Larger does not necessarily mean cheaper, as Rowntree research has proved. That research shows that some small builders can do the job more cheaply than the bigger boys. Already too many designs have cut the floor areas too rigidly. Designs are far below Parker Morris standards; perhaps those standards were over the top. But throughout the 1980s we have been cutting the space and are now putting up some very small boxes. That is proved by research from Salford University.
While more homes are desperately needed, I would rather that they were built to a good standard, even though it means having fewer starts—and there are few enough of them already. There has been a shortfall of about 60,000 a year in the social housing sector. Even the Audit Commission puts the figure at about 75,000 a year. Most people believe that the figure is nearer 100,000.
Rural social housing has been discussed recently. I got the chairman of Ty Cymru at least to accept that there is a role for housing associations in small villages in rural areas where there is room to build perhaps three or four properties; and that should be done. It would be totally wrong if the smaller housing associations in rural areas were not able to perform that role.
I lived for 18 years in a village on the Isle of Wight. If we had not built six council houses before the war and six after, we would never have had a fast bowler in the cricket team or someone to pull the bells in the church. That generation has now grown up. Those

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people have had to go away because no other houses have been provided; and the village has become somewhat of an old-age area.
A crisis is upon us with regard to maintenance and repair of housing stock. The noble Lord, Lord Bruce of Donington, dealt with this point in his speech. A paper prepared by Rochdale Borough Council—I read it before I came to the Chamber—is being discussed by the National Housing Forum this month. It demonstrates only too clearly that there is an enormous demand for maintenance in particular on council-owned property, which is falling into disrepair. There is great concern about that. The noble Lord, Lord Bruce of Donington, referred to about 1 million unfit houses in Britain today. That is a terrible statistic, but it is probably true. That is surely an area in which we can help to a much greater degree than at present. A number of skilled men are currently unemployed. Given the chance, they could play a major role in restoring and repairing our built environment.
I was sorry to hear my noble friend Lord Davies state that where grants have been given by local authorities to restore housing, perhaps to re-roof or some such matter, and the money is paid to the person employing the repairer, the employer sits on the money. Seven or eight years ago a small builder whom I knew nearly went bust because of such a situation. I gave him a job and prevented him from going bust. But it took him nine months to get his money. That situation ought to be rectified. If people who manage to obtain improvement grants sit on the money and then make some stupid excuse as to why they have not handed it over, it is diabolical.
Figures are bandied about which seem to contradict the present situation of the Government's urban programme. I read some of the Questions and Answers in another place recently. Some claim that the programme has been cut; Ministers strongly deny that. Perhaps we shall have a response from the Minister when he replies. However, there is no doubt that, if we do not take urgent action now, such maintenance and repairs will cost us even more in the future.
I refer to some points raised by the noble Lord, Lord Dean. A number of large contracts which were promised in the past seem to have got nowhere at present. What is happening about the extension to the Jubilee Line, for instance? We heard that it was going ahead, but nothing has happened. There must be some big contracts about to be placed. The noble Lord referred to two other railway projects, and schools. At least we have a rail link into Manchester Airport which is about to open up. What about the link between Paddington and Heathrow? It is absolute madness that with an enormous major airport at Heathrow—almost the largest in the world—this country does not have a fast and efficient transport passenger service to it. If one travels on public transport, one is thrown about on the Piccadilly Line, with nowhere to put one's cases. It is extraordinary. I understand that the British Airports Authority is prepared to meet 80 per cent. of the cost.
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Office conversion into housing is yet another area worth pursuing. We shall never occupy the offices that now exist in London, and no doubt elsewhere.
I conclude by paying a tribute to the construction industry. I was lucky enough to go to the Falklands when the airport was opened. It was a magnificent achievement put together by Laing, Wimpey and other large construction companies. They even built their own port. Could they do that today? The noble Lord, Lord Auckland, referred to the loss of skilled people. Can they be got back in the future? All we can usefully ask the Minister to do is to press his department to keep pursuing the Chancellor of the Exchequer in the hope that some really worthwhile initiatives will come about in the forthcoming Budget.
7.26 p.m.
Lord Peston: My Lords, the subject of the debate is an important one and is of considerable practical significance. I much enjoyed listening to a number of noble Lords making contributions directly from their experience with some knowledge of the relevant industry. I shall not be able to emulate that. I echo a remark by the noble Lord, Lord Howie. I was delighted that the noble Lord, Lord Auckland, felt able to contribute to the debate with his normal good sense. However, I too was somewhat taken aback that none of the Minister's friends—other than the noble Lord, Lord Auckland—felt able to be present and speak either in support of the Government or for the industry with which many of them are connected. They may have reasons for that.
Perhaps we may start with the factual picture. If one considers the history of construction, say, from 1979, essentially it has mirrored the behaviour of the economy—the gross domestic product. However, it has fluctuated considerably more widely than GDP. When the economy goes wildly into recession, the construction industry goes into recession in a major way. Quite clearly when the economy somewhat boomed in the mid-1980s, the construction industry boomed away even more. But when the good times came to an end, as they did for the economy—they were not sustainable because of faulty economic policies—the position for the construction industry also came to an end but in a much bigger way. That is the position at present.
The statistical picture to which noble Lords have already referred is intriguing. Fixed investment at constant prices in dwellings peaked in 1988 and has been falling continuously since. If we consider the number of housing starts, that too peaked in 1988 at 250,000, and in 1992 was 156,000, a considerable decline. Completions, which lag somewhat behind starts by definition, peaked in 1988 at 232,000. They came down to 168,000 in 1992. Given that they lagged on starts, I assume that when we have the completion figures at the end of 1993, they will be even worse.
Above all, what I find interesting—I do not speak as an expert on housing—is that if we look at local authority housing starts, we see that they have dropped from a fairly low figure, in the middle of the period about which we speak, of about 20,000 per annum to under 3,000. I may have misunderstood the

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figures because I find them astonishing. I have considered the figures and wondered whether I have misunderstood the Government's published statistics because they are so low. Essentially the Government have destroyed the local authority housing sector.
Indeed, for those of our fellow citizens who are on below-average incomes, the drop in local authority housing starts will not be replaced by the private sector. It is simply not profitable for the private sector to meet the demands of those poor people.
In the extremely interesting debate that preceded this one, my noble friend Lord Carter referred to the problem of affordable housing in rural areas to which the noble Lord, Lord Strathclyde, had to apply his mind. My noble friend was right to emphasise the problem, but it exists throughout the economy in urban areas too. The problem of affordable housing for poor people is chronic and it is of concern to us all.
I did not read the evening paper so I was not aware of the Prime Minister's admonition, which my noble friend Lord Bruce mentioned, that we must not be gloomy and that we must cheer up. Noble Lords will know from my contributions to debates on other economic matters that I regard that as an absurd view. The only possible way to get the policy right is first to face the reality and not to pretend that things are better than they are. Essentially, the Chancellor of the Exchequer, having pretended for a long while now that things are better than they are, has failed to act and goes on failing to act. Therefore, the correct position is, if anything, to assume that things are worse than they are. Then one might start to get them put right.
My noble friend Lord Sefton said—and I agree with him—that there will certainly be an upturn. However the problem is twofold, and he is as much aware of that as I am. There will be an upturn because we have never known the economy eventually not to turn up, but there are two problems. When will it happen? And, more important than that—because there are the beginnings of a sign that it may happen in 1993—how strong will it be? I am yet to be convinced that there will be a strong upturn in the economy at large and, a fortiori, I find it hard to believe that there will be a strong upturn in the construction industry.
Perhaps I may again refer to a topic raised by the noble Lord, Lord Auckland. He referred to the empty offices all over London and reminded us that the problem exists in many other places. We should concentrate on the London problem because many of us have direct knowledge of it. We see it out there. It shows the nature of the difficulty with the economy. Given the enormous excess stock of offices, there is in a sense no need for more building at present. We ask: when will the stock be eliminated? Can a policy be devised whereby new uses are found for the offices, both in London and elsewhere? Unless we can find other ways of using some of the space the outlook for the construction industry is even more parlous. In other words, the point made by my noble friend Lord Bruce holds even more strongly.
Lay people often ask me: how can it be that we are short of housing in our country? Why is it that our
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schools, like many other buildings in the public sector, are in disrepair? How can it be that our country's infrastructure is poor and deteriorating? Yet, at the same time, there is massive spare capacity in the construction industry. How can that be? Economists —and I include myself among them—are not short of clever answers to such a question. It is to do with excessive expansion in the past, the need for restructuring, the need to control inflation, and so on. No doubt the Minister's brief contains such clever answers.
However, the ordinary person insists that there is surely something wrong with an economic system if it reflects such a contradiction between demand and need on the one hand and capacity to supply but failure to do so on the other. As noble Lords know, I certainly regard myself as a very clever person but I am bound to say that for once on this subject the apparently uninformed view, the unsophisticated view, that essentially we have failed and that the economy has failed is correct. I do not think that the public want smart alec answers.
On policy, I have a few brief points to make. A great deal follows from what I said. The capacity to meet demand for construction is there; the industry is still there. We ought to be engaged in policies that lead to the capacity being used. The point I always make is that the building and construction industry is not import intensive and therefore its expansion does not have the deteriorating effect on the balance of payments that perhaps other expansion may have.
However, there is one other aspect of policy that concerns me and which my noble friend Lord Dean and others have raised. We shall certainly need the construction industry in the future. I for one was not aware—although I could have guessed and noble Lords made the point—how much unemployment there was until I was preparing for the debate. I certainly was not aware, although on reflection I should have been, of the enormous waste of talent involved in the industry currently being so depressed. In particular, the position with respect to architects is appalling. And that must be true of engineers and almost everyone else involved in the industry.
The point is that we shall need these people one day. When we need them, where will they be? The same goes for the point made by my noble friend Lord Dean. If workers are not in work then workers are not being trained, particularly not on the job. Therefore we shall not have workers with the appropriate skills in the future. I can already see that there will suddenly be a day when we shall be back again to the normal stop bit of the stop-go. People will say that the economy is overheating, that there is a great shortage of skills and the construction industry cannot meet the demand.
All that is sad, but the sadness is exacerbated by three other matters. I add, as a matter of ideology, that those who advocate intervention that might get the construction industry back to full operation are often accused of being Keynesians. Many of them are, but noble Lords ought to be aware that the economists who in the past 50 to 100 years called themselves classical economists have always advocated the use of

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public works in a depression in precisely those circumstances. In other words, there is nothing particularly ideological about advocating expansionary policies.
A further main point I wish to make is that in the past recovery has been connected with construction. If we take the history of the 1930s, I agree that part of the expansion that eventually occurred then was connected with rearmament. But a great deal was connected with building up the construction industry. Supporting what my noble friend Lord Bruce said, the construction industry was being built up with cheap finance which was important in those days. It is certainly not irrelevant today.
My last point is slightly in favour of the Government. They showed signs in the Autumn Statement of moving in the right direction. There is no doubt about it. I am sure that the noble Lord, Lord Strathclyde, will remind us of what was in the Autumn Statement because it is not obvious of what else he can remind us. The Government took useful action. But what concerns me is that it showed us the main weakness. The Government do not seem to believe in what they are doing. All they do is too little and, with the present Chancellor, too late. What we really want now is a statement. I accept that perhaps the noble Lord, Lord Strathclyde, cannot give it to us and we may have to wait for the Budget, but we need a statement now that the Government are fully committed to expansion and to supporting the construction industry. Then, to put it simply, the world and the economy will be a better place.
7.38 p.m.
Lord Strathclyde: My Lords, the noble Lord, Lord Dean of Beswick, opened the debate well enough. He said that he was not interested in carping and being over-critical. He wanted to be objective and helpful. Generally speaking, I believe that he was, as was my noble friend Lord Auckland. One or two other noble Lords made helpful and interesting speeches, such as the noble Lords, Lord Davies and Lord Blease. Unfortunately, the standard of the rest was hardly memorable. We had speeches of special pleading from the noble Lord, Lord Monkswell; capital receipts from the noble Lord, Lord Bruce of Donington, who even accused me of being a pessimist. I may be many things, but pessimistic is hardly one.
We had yet another interesting speech from the noble Lord, Lord Sefton of Garston, about Merseyside and the iniquities of this Government. I listened carefully, and I must tell the House that not only do we listen carefully, but also that we listen very sympathetically to the leaders of the construction industry when they set out the industry's problems. I can assure the House that we fully appreciate the severity of those problems. We are aware of the crucial role that construction plays within the national economy.
The noble Lord asked for a strategy. That is why we have a "strategy for growth" set out in the Chancellor of the Exchequer's Autumn Statement, aimed not just at promoting recovery in the economy in general, but
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also specifically at providing a genuine boost to the construction industry. That was naturally enough spotted by the noble Lord, Lord Peston. It did this by a mixture of fiscal help designed to give an immediate spur to activity, and longer term projects. The Government's intention throughout was to restore confidence and so to stimulate the return to sustainable growth.
One of the areas where a return of confidence is especially important is the housing sector. We know that there is pent-up demand for housing. Equally, we know that the existence of a sizeable overhang of unsold properties is a drag on recovery. So we have taken steps to deal with it, and to give a boost to the housing market generally. As noble Lords will be aware, we have made available £750 million in the UK in the current financial year. In England about £580 million of it was allocated to the Housing Corporation, to enable housing associations to purchase new, empty and repossessed properties. The corporation estimates that this will take up some 17,500 units.
I felt during the speech of the noble Lord, Lord Peston, that perhaps he did not know of the existence of the Housing Corporation and what it was for; namely, to provide affordable housing right across the country.
Lord Peston: My Lords, perhaps I may interrupt the noble Lord. Would he care to remind us of how many houses the housing associations are currently building? I looked at those figures, but he might himself like to remind the House of what numbers we are talking about.
Lord Strathclyde: I certainly hope to have those figures for the noble Lord before the debate finishes.
Lord Ross of Newport: My Lords, we are talking about 40,000 this year.
Lord Strathclyde: The noble Lord, Lord Ross of Newport, has the answer. It is 40,000. That is not a bad figure, particularly in this year; and we shall continue to see those kinds of figures over the course of the next three years.
All of this will play a vital part in helping those in housing need. But for the housing market to recover, we need to encourage those people who are actually waiting to take the first steps into home ownership. So another £50 million has been made available to expand schemes which provide existing housing association and local authority tenants with grants towards the purchase of homes in the private sector. That will enable up to 3,500 new first-time buyers to enter the housing market and should act as a catalyst to get the market moving again. It means that, all in all, the package should take some 21,000 properties out of the pool of empty stock. That is a very significant reduction—it is certainly more than our original estimate.
Although a large number of the schemes approved so far have involved the purchase of new properties from developers, that is partly because such sales can be negotiated sooner than others. We expect more private treaty sales and purchases of repossessed

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property to come through later. However, the specific type of property assisted does not matter. The aim of the package is to revive the housing market generally, and we need to look at the wider spin-off effects that those measures will have.
The noble Lords, Lord Davies and Lord Ross of Newport, mentioned the situation of renovation grants. The noble Lord, Lord Davies, suggested that renovation grants made by local authorities to private householders should be paid direct to the builders responsible for the work. I understand that firms can request that grants are paid direct to them; but local authorities can only do so when they have the permission of the householder. It is important to remember that the contract will be between the householder—not the local authority—and the builder. It will be for the householder to ensure that work is carried out satisfactorily. However, in those cases where householders unreasonably withhold payment, it is important that legal processes to ensure payment are efficient and effective. Therefore I sympathise with the point made by the noble Lord.
Another very important change to provide short-term help was the temporary relaxation of the usual rules on local authority capital receipts. All the proceeds of sales of assets generated from 13th November 1992 until 31st December this year will be available for use by local authorities.
The noble Lord, Lord Bruce of Donington, always enjoys this bit of my speech. But the noble Lord has fundamentally misunderstood the essence of capital receipts—what their purpose will be, and what was the purpose of past capital receipts.
That change is expected to stimulate £1.75 billion of extra capital spending over the next three-and-a-half years, and that could mean the creation of significant employment opportunities for the construction industry. The £1.75 billion figure is not our figure. These are forecast figures from local authorities on top; we have allowed a little bit extra for growth, and that is where the £1.75 billion figure comes from.
Lord Dean of Beswick: My Lords, I am grateful to the Minister for giving way. We are almost into the period when the £1.75 billion is supposed to be raised. The Minister must be aware—indeed I think he may be unaware—that what he has just said is not borne out in reality. The local authorities say, and said at the start, that they could never realise such a figure, because most of their best assets had already been sold off. The builders now say that that is not feeding through. At the time we asked for a release of the money that was always there. Even if we were optimistic enough to think that the £1.75 billion would work its way through, the calculation meant that it would take nearly two years before it triggered off the building of one house. We are talking about urgent action now, not pipe dreams from Mr. Lamont.
Lord Strathclyde: My Lords, I do not know if the—
Lord Monkswell: My Lords, I wonder whether the Minister would give way again. I suggest that the Government's action is likely to make the situation
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worse. Here we have a situation where there is an overhang in the property market. There is no demand for empty office blocks. There is no demand for expensive houses, particularly in the London area. In that market situation the Government say to local government, "Sell your assets". Yet the money is just not there for people to buy them. There is no demand for those assets. But the local authorities have the money from previous asset sales sitting in the bank. Why can we not use the money that we have to stimulate the market rather than depress the market by having what is almost a fire sale at the moment?
Lord Strathclyde: My Lords, I think I was being charitable when I said earlier that noble Lords opposite had misunderstood. I think it is wilful misunderstanding of what we are putting across. I shall deal quite specifically in a moment with past capital receipts. The point is that these figures were originally forecast by local authorities. There are hundreds of millions of pounds of assets in the hands of local authorities that can be disposed of in the current property market. There are airports, houses, car parks and vacant land. There are enormous opportunities for local authorities. If the local authorities choose not to realise those assets, that is a decision entirely for themselves.
We hope that early and effective use will be made of this new freedom. It will of course be up to individual authorities to decide how they want to use the funds available, but they can be applied over the full range of spending programmes. That means that they could facilitate work on housing, school and local roads programmes; and that would mean the creation of significant employment opportunities for the construction industry. Noble Lords opposite should now ask their local authorities why they are not acting rather than talking to me.
Lord Monkswell: My Lords, I apologise but perhaps I may intervene yet again. The estimates of the capital receipts that local authorities were making at the back end of last year were surely on the basis of all the green shoots that the Chancellor was talking about which have not appeared.
Lord Strathclyde: My Lords, noble Lords should not worry. I shall get to my passage on the role of the economy shortly. But let me first deal with a point raised earlier by noble Lords opposite: that the concession is time-limited and does not apply to receipts already in hand. This is because the underlying argument in favour of using part of these receipts for debt redemption remains true. When councils sell assets, it is only right that they should use the proceeds to reduce the burden of local authority debt—debt which was incurred providing the assets in the first place. Anything else would be unfair to those authorities who have, quite rightly, repaid debt as the law requires. In any case, failure to reduce the overall level of debt only stores up problems for the longer term. There may well be an ideological barrier between noble Lords opposite and myself. But that is the reason why we believe that local authorities should use their past receipts to pay off debts.

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My right honourable friend the Secretary of State for the Environment has backed up the concession on local authority receipts with a new initiative called Capital Partnerships. This will encourage authorities to use their available receipts for work of lasting benefit to communities. It offers government incentives to secure the maximum private sector topping up for that work.
The first fruits of the Capital Partnerships initiative were announced last month. They were very impressive. The first tranche of schemes agreed included 81 projects in 46 districts or towns, involving everything from bus stations to business parks, nurseries to freight distribution complexes. The total cost of the schemes was £183 million, of which local authorities contributed £33 million, and central government £20 million; while no less than £130 million, over 70 per cent. of the total, came from the private sector. There is no point in the noble Lord, Lord Bruce of Donington, shaking his head. That is what happened last month. He does not like it because he does not like success.
That illustrates very strikingly that private sector funds are available, just waiting for good investment opportunities. It is a key feature of our policy for construction to bring in those funds.
The increased involvement of the private sector—whether it is in the aftermath of privatisation, or injections of private finance into central government programmes, or indeed in the form of increased home ownership—has one very great advantage that I hope noble Lords will not fail to appreciate. It gives a stable anchor for construction demand to an extent that is never going to be possible within the constraints on purely public spending.
That said, the Government will not shy away from playing its part. Despite a difficult public spending round, many of the key capital programmes affecting the construction industry have been safeguarded. It was confirmed that, subject to the satisfactory conclusion of negotiations, the Government would go ahead with the single major project for which the construction industry had been arguing all through last summer and autumn: the Jubilee Line extension. If that project goes ahead, it will on its own represent £1.2 billion of public sector money over three years, and it has been estimated that it would add at least 3 per cent. to the total civil engineering workload over that period.
The road programme too was preserved in cash terms. That means public expenditure at record levels both in local authorities' support for expenditure on roads and in the national programme for motorways and trunk roads. Last month, my right honourable friend the Secretary of State for Transport announced in another place expenditure on new construction and maintenance of national roads of just over £2 billion, which is the highest level for over 20 years in real terms and, in fact, one of the highest ever.
In a difficult year for public expenditure this clearly demonstrates the Government's commitment to capital expenditure and to investment in infrastructure. Lower tender prices meant that we could have
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opted to cut back the funding to the same level of activity: but instead we have chosen to go for more work for the same money. In fact, the number of new schemes next year should be double this year's levels. I know the industry has welcomed our decision.
The new injection of funds for the Housing Corporation this year will much more than deliver the manifesto commitment to provide 153,000 homes over the three years following the election. That is the figure for which the noble Lord, Lord Peston, was looking. The funds made available for education also provide for the overall capital spending on schools to be maintained in real terms at least at this year's level. The capital programme for the health service is the largest ever, and represents a construction investment equivalent to the total cost of the Jubilee Line extension.
We have also been able to preserve, in full, the funding for both Rounds 1 and 2 of City Challenge. Round 1 will make £400 million available for inner city regeneration over a five year period, starting this year. Round 2 will entail another £750 million, again spread over five years. The projects involved should attract private sector investment, so increasing the amount of work generated by the injection of public money.
The single European market is now a reality—a harsh reality perhaps. It brings competition and it brings challenges, but it also brings genuine opportunities. Industry in this country will not be slow to seize those opportunities, both those that lie in Europe and those that lie beyond.
The construction industry's ability to compete in these wider, competitive, markets is going to depend upon its ability to provide a quality product, on time and to cost, to compare with what competitors can provide. For example, it must increase its effort on research and development. New building methods and new technology will be a vital factor in gaining work in the years ahead. The groundwork must be laid now. Later will be too late.
The industry must ensure that its workforce has the skills needed to meet not just the challenges of today, but those of the future. The recovery will create a demand for skilled labour, as the noble Lord, Lord Peston, said, in the same way that resources were in demand as we came out of the last downturn, in the early 1980s. The number of jobs in the industry rose from 1.5 million in 1983 to 1.7 million in 1989. We need to be geared up to face this challenge. To that end, my right honourable friend the Secretary of State for Employment has recently announced that the Government have agreed to the reconstitution of the Construction Industry Training Board for a further five years to spearhead training within the industry.
In addition, we are making renewed efforts to remove unnecessary regulation. One of the seven deregulation task forces to be set up by my right honourable friend the President of the Board of Trade, will cover the construction industry. My right honourable friend the Minister for Housing, Planning and Construction has just announced that statutory registration of architects will be abolished—a piece of legislation which does not benefit employers,

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customers or architects themselves. The noble Lord, Lord Howie, rightfully made a speech about that matter. But other construction professions are satisfactorily self-regulated. The term "chartered" is protected: chartered architects, surveyors, builders, building services, engineers, and so on.
A few moments ago I mentioned markets overseas.
Lord Howie of Troon: My Lords, before the noble Lord leaves that point, perhaps I may say that he must be aware that, although the other professional bodies in construction are self-regulating, they would have no objection to registration sectors under ARCUK being extended to them. That of course was outside the Warne terms of reference.
Lord Strathclyde: Indeed, the whole thrust of this policy is to remove unnecessary regulation. Let me return to markets overseas. Last year my right honourable friend the Minister for Housing, Planning and Construction led a trade delegation to Vietnam, and I led one to Indonesia. That experience made it very clear to me that there are wide opportunities available to UK companies in countries which are growing rapidly, like Indonesia, and where that growth is putting pressure on the existing infrastructure.
My experience also made it clear that the standards of British design, construction and component manufacture are as good as or even better than the best available elsewhere. Last year, British construction contractors reported overseas earnings of about £26 billion; our consulting engineers earned £600 million; and our building materials and component manufacturers achieved exports worth £23 billion.
Shortly after I returned from Indonesia—though I claim no credit for this—Bovis landed the management contract for the prestigious Jakarta stock exchange project. There are many other British success stories from elsewhere in Asia, such as the contract won by Robert Watson to supply the steelwork required for the major and innovative new airport terminal at Kansai Airport in Japan.
Lord Bruce of Donington: My Lords, the noble Lord has touched on the earnings of those very learned and useful professions. Perhaps he could also say how many hundreds of millions of pounds were earned by insolvency practitioners?
Lord Strathclyde: If we were having a debate about insolvency practitioners I should have that figure to give you. However we are not. The noble Lord does not like to hear successful stories about the British construction industry. The noble Lord said that the Prime Minister felt that too much about him was gloomy. I shall have to tell my right honourable friend the Prime Minister not to listen to the noble Lord, Lord Bruce of Donington.
Lord Ross of Newport: My Lords, a celebrated British architect has just acquired the contract to redesign many parts of Shanghai. Would he have
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obtained it had he not been classified as an "architect"? Perhaps the Chinese would not think he was fully qualified.
Lord Strathclyde: My Lords, I am sure that he won the contract because he provided the best quality building.
Many noble Lords spoke of taxation policies. Those are clearly matters for the Budget, but I shall pass the comments on to my right honourable friend the Chancellor of the Exchequer.
The conditions are now in place for faster growth within the United Kingdom. Inflation is at its lowest level for six-and-a-half years; interest rates at their lowest for 15 years and the exchange rate is highly competitive. The view of the City and elsewhere is that, following the measures announced in the Autumn Statement, growth will begin again this year and pick up thereafter. The measures contained in the Autumn Statement create a climate of opportunity. They point the way to new activity and jobs so that the sad growth in industry unemployment that we have seen over the past couple of years can be stemmed and reversed. It is up to the industry to seize the opportunities for renewed growth that that provides.
8.1 p.m.
Lord Dean of Beswick: My Lords, I am grateful to all noble Lords who took part in the debate. It has been extremely worthwhile. I do not comment on the absence of speakers from the Government Benches. I knew that the Minister would speak with his usual candour and make a useful contribution to the debate. I can only assume that the many noble Lords on the Government Benches associated with the building industry who did not speak had nothing kind to say about the situation in which they find themselves.
My noble friend Lord Peston clearly indicated what lies behind the problems of the building industry. In your Lordships' House over the past two months we have had two debates on various aspects of the economy, including the manufacturing industry. A politically honest Member from the Government Back Benches—a former senior Cabinet Minister—had the candour and principle to admit that when he was in office, "We got it wrong". I speak of the noble Lord, Lord Joseph. He said that the Government of which he was part, along with the 10 noble Lords who came here after Dissolution, got it wrong.
We would start to get things right if the Government would admit that they got it wrong again and started to introduce the measures to get it right. Honesty is always accepted. But the Government refuse to do that, and that is their business.
I thank all noble Lords who took part today in what has been a worthwhile debate. I hope that the Government consider in an objective way what has been said for the industry. The industry does not hold the view given from the Dispatch Box by the Minister. Having said that, I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.
House adjourned at three minutes past eight o'clock.