Lords Sitting of 25 October 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 Norwich

Lord Attenborough
Sir Richard Samuel Attenborough, Knight, CBE, having been created Baron Attenborough, of Richmond upon Thames in the London Borough of Richmond upon Thames, for life—Was, in his robes, introduced between the Lord Cledwyn of Penrhos and the Lord Walton of Detchant.

Tributes to the Late Lord Grimond
2.47 p.m.
The Lord Privy Seal (Lord Wakeham): My Lords, I know that it will be the wish of the whole House that I should take this opportunity to pay tribute to the memory of Lord Grimond, who died yesterday. Tribute has already been paid outside this House to his role in the Liberal Party. His leadership perhaps ensured its survival. However, he was far from being solely a party man. He was someone who was regarded with admiration and warm affection by members of all parties.
On his retirement from another place, his distinguished record made it natural that he should be made a Member of this House. I am sure that your Lordships will agree that he was naturally suited to this House. It was not surprising that he became and remained an active participant in our proceedings. Indeed, his last speech in this House was made the last time the House sat, only last Thursday.
The noble Lord's presence will be much missed on all sides of the House. I know that I can speak for all of your Lordships in sending our sincere condolences to his widow and family.
Lord Richard: My Lords, on behalf of these Benches perhaps I may echo the sentiments expressed by the noble Lord the Leader of the House on behalf not only of his party but of us all.
Lord Grimond was a somewhat rare figure in our recent political life. He was pre-eminently a man of deep conviction and deep principles. As the noble Lord the Leader of the House said, probably more than any other single person he was responsible for the survival of the Liberal Party. Although we were political opponents, all of us will wish to pay tribute to those qualities of leadership, determination, foresight and vision which he showed, particularly in his lifelong advocacy of the two great causes of European unity and Scottish self-government.
He was a regular attender in your Lordships' House. As the noble Lord the Leader of the House reminded us,
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he was in his place as recently as Thursday of last week. Therefore the news of his death came as a shock to us all.
Lord Grimond was cultivated and humorous. He had a mildly self-deprecating air which proved extraordinarily popular with the British voter. He had little time for the pompous or over-pretentious. His views on the intricacies of our bureaucracy were never concealed and were expressed pungently and with great force. In short, he was a man who gave politics a good name. We shall all miss him greatly, and I should like to join in the expressions of sympathy to his immediate family.
Lord Jenkins of Hillhead: My Lords, with the sudden death of Jo Grimond, the House arid the nation have lost an unusual figure of high natural distinction. It is rare for a political figure who never held office to achieve such a clear place in the hearts and minds of the public as did Jo Grimond. It is perhaps rarer still to retain it with, if anything, growing affection and respect over 25 years of retirement from fully active leadership. It was partly because he inspired a generation, as David Steel put it so felicitously last night. It was also because of the quality of his private personality which, because it was all of a piece with his political image, somehow managed to communicate itself to a wider public.
He was an immensely funny man with a deflating, and as the noble Lord, Lord Richard, said, self-deprecating wit of which I have rarely seen the equal. He had dazzling charm, which was saved from ever being cloying because he could not see a balloon with even a touch of pomposity in it—his own as much as anyone else's—without desiring to prick it.
In this House for the past 10 years he was perhaps a little insulated by growing deafness. However, once he had got onto the wavelength of a conversation he had all his own lightness of touch, as I rediscovered as recently as Wednesday of last week.
He had an exceptional unforced dignity and distinction. He was not perhaps the most glossily turned out of Members of your Lordships' House, but however old the suit, however shaggy the appearance, no one in any company could ever doubt his inherent quality. He will be much missed in many circles.
Our sympathy goes to his wife, who, after many years in which they constituted a most notable couple, has herself been sorely afflicted for the past year, and also to his three children.
Lord Weatherill: My Lords, it is a privilege to have been asked by our convenor, my noble friend Lady Hylton-Foster, to speak from these Benches. Lord Grimond was Leader of the Liberal Party when I first entered the other place in 1964. In those days it was not considered good form to call senior Members by their Christian names. So it was not until 1967, when I joined that most discreet and exclusive of all the secret societies, the Whips' Office, that I came to know him as Jo.
The highest accolade in the Commons is to have the respect of the House. Those Members of your Lordships' House who were previously in the other place will know exactly what I mean. I refer to those Members who, when they rise to speak, bring other

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Members into the Chamber rather than send them out. It is an accolade achieved only by those of the highest integrity. Therefore, if I were rationed to one word in describing the outstanding quality of Lord Grimond, it would be his integrity. I would, however, wish to mention also his great courtesy and charm.
I shall never forget, on a visit to northern India some years ago, seeing an obelisk which had been erected by the villagers in memory of a young, honourable East India Company collector. I forget his name but I well remember the inscription. It was,
"He was trusted absolutely".
That is a fitting epitaph to our much respected and much loved colleague and friend, Jo, Lord Grimond.
The Lord Bishop of Norwich: My Lords, I endorse all that has been said in tribute to the memory of Lord Grimond. From these Benches we face, not political opponents, but those with whom we share a commitment to a certain independence of political spirit. No one did more in his generation than Lord Grimond to foster the spirit of independence that is so profoundly important to the health of our political institutions. His example will be missed, not least by those on these Benches. We had very great respect for Lord Grimond. I join your Lordships in expressing sincere sympathy to his widow, his family and his many friends.

Parliament: Health Act Provisions
2.57 p.m.
Baroness Turner of Camden Baroness Turner of Camden asked Her Majesty's Government:
Whether they will now take steps to improve the health and safety at work of all who work in the Palace of Westminster, and unambiguously apply the Health and Safety at Work etc. Act 1974 to the Palace and its outbuildings.
The Parliamentary Under-Secretary of State, Department of Employment (Lord Henley): My Lords, it is the policy of authorities in both Houses of Parliament to comply fully with the provisions of the 1974 Act, as if they were binding on them in the same way as on the Crown. As my noble friend Lord Ullswater made clear in March, Her Majesty's Government hope to extend its scope to the Palace of Westminster at the first suitable opportunity.
Baroness Turner of Camden: My Lords, when will that be? As the Minister said, I was assured on 30th March that the Palace authorities had agreed in principle to the extension. We have been waiting some time for that agreement to be put into effect? When can we expect the extension to take effect?
Lord Henley: My Lords, I can give the noble Baroness no advice other than that it will be at the first suitable opportunity. It has been agreed to by this House; it still has not been finally and formally agreed
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to by another place. Obviously, we have to have the formal agreement of another place before we can go ahead.
Lord Monson: My Lords, does the noble Lord agree that in contrast with most other establishments where people finish work between 5 and 6 o'clock in the evening, most of the staff of the Palace of Westminster, most honourable Members in another place, and most of your Lordships more often than not work until midnight or even later? From the point of view of health and safety, is it right that there should be no nursing sister on duty in the Palace of Westminster after 6 p.m.?
Lord Henley: My Lords, I appreciate that we sometimes work hours somewhat later than other places of work. As I said, we try to comply with the provisions of the health and safety legislation so far as possible.
There is a nursing sister on duty until 6 o'clock each working day, as the noble Lord states. As to later hours, I can only say that I shall pass on the remarks that the noble Lord has made to the appropriate authorities.
Baroness Masham of Ilton: My Lords, does the Minister agree that Members of another place have far better medical facilities than Members of your Lordships' House? Many noble Lords travel long distances from all parts of the country to attend here. Should there not be facilities for medical checks to guard, for instance, against the possibility of strokes?
Lord Henley: My Lords, I should not like to comment on whether the facilities in another place are superior to those in our own House. I am satisfied that what we are doing in this House is satisfactory as regards the health and safety at work legislation. What the noble Baroness asks goes somewhat beyond that. Again, I shall pass on the remarks she has made to the appropriate authorities.

EH 101 Helicopter: Order Delay
3 p.m.
The Earl of Kinnoull The Earl of Kinnoull asked Her Majesty's Government:
What has happened to the RAF order for EH 101 helicopters, and whether they are aware that the delay is causing damage to other potential export orders of this helicopter.
The Parliamentary Under-Secretary of State, Ministry of Defence (Viscount Cranborne): My Lords, we are not yet in a position to make a Statement, but we shall do so as soon as we can. In the meantime, we have made clear to potential export customers, in particular the Government of the Netherlands, our strong support for the EH 101.
The Earl of Kinnoull: My Lords, I thank my noble friend for that reply. First, will he confirm that this is a very successful joint Anglo-Italian project? It has already cost this country £1.6 billion. Secondly, that the trial flights of the RAF version have proved exceptionally good for all-weather capability and very suitable for Bosnia and Northern Ireland? Is the

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Minister aware that the continuing delay is causing deep concern in one of our most successful exporting industries and that those concerned in the RAF deserve our finest British technology?
Viscount Cranborne: My Lords, I am very happy indeed to confirm to my noble friend that this is an extremely successful project. I can also confirm from personal experience that it is a remarkable aircraft in which to fly. The delay in the orders for the utility version is nevertheless, to some extent, contradicted by the faith which we have shown in the airframe itself, which is the key part of the project, by virtue of the fact that we have ordered 44 of the Merlin version for the Royal Navy and that the trials for that version are now two-thirds complete.
Lord Williams of Elvel: My Lords, is it not the case that the decision to order the project was taken six years ago by the Government? Is it not also the case that the EH 101 is the only helicopter offering all-weather capability which is essential in potential trouble spots such as those which we have seen recently? Is it not further the case that the EH 101 development programme is two-thirds complete? A great deal of money has already been spent on the project. Are the Government now considering buying secondhand Puma helicopters and more Chinooks? Is that really what they are considering, or will they get a move on and order the EH 101 for the RAF?
Viscount Cranborne: My Lords, I can confirm that, as the noble Lord knows well, an announcement was made six years ago about our intention to purchase the helicopter. That announcement was in the context of strategic considerations prevailing at the time. We have looked again at the requirement in view of the changed strategic position and I can certainly confirm to the noble Lord that we have an enhanced requirement for support helicopters. From his own military history, the noble Lord will be aware that there are two considerations here. One is lift and the other is the consideration which he mentioned. There are a number of possibilities which we are examining, including a mixed force of Chinooks and EH 101s. I believe that the noble Lord used the words "two-thirds complete". That refers to the Merlin programme which, as he well knows, is the naval version of EH 101.
Lord Wyatt of Weeford: My Lords, is it not time that the Ministry of Defence explained to the Treasury that every time it makes a cut in our defence projects we lose billions of pounds in foreign orders? At the moment, this year alone, our foreign exports of weapons have amounted to £5.6 billion. If the Treasury knocks that off, it will make a horrible hole in our balance of payments. Therefore, it would be wise not to proceed with a project for cuts worth £1 million because we shall suffer in the long run.
Viscount Cranborne: My Lords, I am very happy that the noble Lord, Lord Wyatt, pays tribute to the export performance of British defence manufacturers. As he well knows, it is second only to that of the United States in world performance. That is a tribute to the
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policies of procurement which we have pursued over many years. It ensures that the quality of what we procure is not falsely subsidised and that operational requirements are not graded downwards in order to satisfy the lower standards which some foreign manufacturers are able to satisfy. I point out to the noble Lord that this helicopter has been bought by the Canadians. That is a tribute to the quality of the beast concerned.
Lord Finsberg: My Lords, will my noble friend accept from me that I have spoken about the plane to parliamentarians, particularly in the Western European Union? While they understand that Her Majesty' s Government have made clear their strong support for the project, the parliamentarians use such varying phrases as: "Fine words butter no parsnips", and "It would be as well to put one's money where one's voice is". Will my noble friend accept that if we are to get into the export business with this aircraft, a quick decision is needed?
Viscount Cranborne: My Lords, I am the first to agree that one of the principal supports which Her Majesty's Government and, in particular, the Ministry of Defence can give to our export efforts in the defence field is that we should buy British equipment. I also feel, paradoxically, that the quality of British equipment is much improved by a rigorous procurement process. The balance between those two things is a fine art of which I am sure my noble friend and the noble Lord, Lord Wyatt, are well aware. I merely say to my noble friend that the purchase of the helicopters which the Canadian Government have made is evidence enough that the trust we have shown by ordering the naval version has been helpful in that regard.
Lord Williams of Elvel: My Lords, if that is the case, why do not the Government get on and order the utility version for the RAF? Why do they persist in thinking about a Chinook replacement, which is, after all, old technology? Everyone recognises that the EH 101, an advanced technology helicopter, is superior to anything else available on the market at the moment.
Viscount Cranborne: My Lords, I yield to no one—least of all to the noble Lord, Lord Williams—in my admiration for the technology of the EH 101 helicopter. It is a fine example not only of British industrial capability but also of European co-operation. The noble Lord and I agree about that. What we must also realise is that the Armed Forces of the Crown deserve the best and most cost-effective solution. In view of the changed. climate, that is what we are endeavouring to procure. In defence of the Chinook, I would say that, as with the. C-130 aeroplane, the fact that, apparently, an airframe: has been continuing in the same shape for more than 20 years does not necessarily mean that the inside works are exactly the same as they were when it was first produced.
Lord Chalfont: My Lords, while I accept the remarks about the admirable nature of the EH 101, is it not true that at this very moment, with the defence industry and defence budget in such a precarious state,

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the important issue is value for money? Will the Minister agree that what is needed here is the right decision, not just a quick one?
Viscount Cranborne: My Lords, I am grateful to the noble Lord, Lord Chalfont, who echoes my sentiments precisely. Nevertheless, the right decision does not necessarily mean that we shall procure an aircraft other than the EH 101. We are anxious that the operational requirement should be satisfied, which may be by the purchase of one aircraft or a mixture of aircraft. I ask your Lordships to give us a little more time. We are as anxious as anyone else to come to a decision on this matter.

NHS Supplies Authority: Audit Provisions
3.8 p.m.
Lord Dean of Beswick Lord Dean of Beswick asked Her Majesty's Government:
Whether, in the interest of public expenditure, there are any audit provisions in place in the management and running of the National Health Service Supplies Authority.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege): Yes, my Lords. The NHS Supplies Authority has appointed KPMG Peat Marwick as its internal auditors and has agreed to establish an audit committee. The authority is subject to external audit by the Audit Commission's district audit service and the National Audit Office. Oversight of the authority's business plans and performance is provided by the NHS management executive.
Lord Dean of Beswick: My Lords, I am grateful to the Minister for that detailed reply. Am I right in saying that the latest figures show that that part of the National Health Service had a turnover last year of £4 billion? That is an enormous sum of money. Bearing in mind some of the financial mistakes and blunders that have taken place over the past 10 years involving substantial sums, can the Minister give us an absolutely copper-bottomed guarantee that the audit will take place totally independent of the department? We should bear in mind that five out of six of the non-executive directors are already employed in the National Health Service as chairmen of various component parts, such as the district health authorities and other bodies.
Baroness Cumberlege: Yes, my Lords. To take the noble Lord's first point, I believe that he is quoting from an article in the Sun newspaper. I am aware that C. P. Snow (I believe it was) said that comment is free but facts are precious. The Sun newspaper is right to be free with its comment, but I have to say that in this instance it should have been more careful with its facts.
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The NHS Supplies Authority has a budget of £1.7 billion a year which it contracts with the NHS. The remaining sum of money is contracted directly from hospitals for goods and services that they require.
With regard to independent audit, the noble Lord can rest assured that the National Audit Office, which undertook a study two to three years ago that resulted in the setting up of the NHS Supplies Authority, has now set in train a follow-up study to review the implications of its recommendations. That study will, of course, be absolutely independent.
Lord Bruce of Donington: My Lords, while I do not wish to quote anything that appeared in the Sun newspaper, is the noble Baroness aware that some of the transactions that were reported as being undertaken by this body give rise to some queries as to the application of the term "value for money" as regards this particular organisation? Will she give an undertaking that the audit report undertaken by the private auditor to whom she referred, together with the review by the National Audit Office, will be made public as quickly as possible?
Baroness Cumberlege: Yes, my Lords. The National Audit Office publishes all its findings. With regard to "value for money", this organisation has done a great service to the National Health Service. Between 1992 and March of next year, the NHS Supplies Authority will have saved the NHS at least £84 million by better purchasing, and a further £20 million by reducing operating costs. The organisation does give effective value for money.
Lord Ennals: My Lords, while I fully understand and support the principle that savings can be made across the board by the purchasing authority, will the Minister say whether the Statement made on Thursday about the further reorganisation at a regional level will in any way affect the task of the supplies authority?
Baroness Cumberlege: No, my Lords, it will not affect it in any way. The NHS Supplies Authority is a special health authority, directly accountable through the management executive to the Secretary of State.
Baroness Seear: My Lords, will the noble Baroness agree on second thoughts that the axiom that opinions are free but facts are sacred should be attributed to C. P. Scott of the Guardian—in those days it was the policy of the Guardian so to behave—and not to C. P. Snow?
Baroness Cumberlege: My Lords, I know the National Health Service brief fairly well; I stand corrected on the literary quotes.
Lord Williams of Mostyn: My Lords, bearing in mind the shock that we must all feel at this wholly unprovoked attack on an unsuspecting, unprotected organ like the Sun, will the Minister recognise that there is very deep concern about the scale of waste in these public services: £63 million in the Wessex health authority; and a claimed £100 million in the authority that is presently the subject of the Question of the noble Lord, Lord Dean of Beswick? Accepting what the Minister has said about the independent audit and its

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publication, is it within the contemplation of the Government that those who mismanage these organisations shall be subject to a disciplinary sanction such as dismissal?
Baroness Cumberlege: My Lords, noble Lords will be aware that that is the case. Where there is any waste, we root it out. In the case of Wessex and the West Midlands, action has been taken and people have left their posts.
Lord Dean of Beswick: My Lords, I accept the correction that the Minister made regarding the figure published in the Sun; but will she cast her mind back to about 12 months ago, when I put down my first Question regarding this organisation, and when, I believe, her Answer included the fact that then the budget was expected to reach £3 billion in a short time? Does she agree that either she was badly out then, or she has the figure, £1.7 billion, wrong now?
Baroness Cumberlege: My Lords, there is no doubt that the NHS Supplies Authority saves the National Health Service money—as I have already stated, £84 million between 1992 and March 1994, and a further £20 million through its better operating cost. I believe that that is a great tribute to this organisation. What is more, the money saved will go towards providing more patient care.

Television Contracts: Ownership
3.15 p.m.
Lord Thomson of Monifieth Lord Thomson of Monifieth asked Her Majesty's Government:
Whether they have any proposals for changes in the ownership rules for commercial television contractors under the Broadcasting Act 1990.
Baroness Trumpington: No, my Lords, but my right honourable friend the Secretary of State is continuing to consider the points made to him during discussions he had with the Independent Television Commission and the ITV companies.
Lord Thomson of Monifieth: My Lords, I thank the noble Baroness for that Answer. Is she aware that there is a good deal of pressure from some ITV companies for premature action to change the rules relating to takeover bids within ITV, although the system has been operating for less than a year? Would it not be wiser for the Government to take a long view of this problem, wait for 1996, when the BBC charter has to be renewed, and reshape British broadcasting—terrestrial and satellite, BBC, ITV and Mr. Murdoch—as a whole?
Baroness Trumpington: My Lords, that is one of the options put to us for consideration.
Lord Stallard: My Lords, is the Minister satisfied that existing rules are able to prevent undue dominance by particular shareholders?
Baroness Trumpington: My Lords, there is no monopoly, if that is the expression that the noble Lord seeks to get from me. The ITC has licensed over 70
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cable and satellite channels so far, with many different ownerships. This is my first appearance answering for the department to which the Question is addressed. I had been worried that I might get my knickers in a twist; the noble Lord would be the one.
Lord Donoughue: My Lords, I shall continue to resist the many temptations that the Minister puts before us. While I am impressed by the relaxed approach that she takes to the Question of the noble Lord, Lord Thomson of Monifieth, will she confirm that there are only nine weeks to go until the end of the moratorium which protects British regional television companies from takeover by continental predators, although there is no practical possibility of reciprocal British takeover of the Europeans? Does she agree that this is an intolerable situation; that the industry needs a further period of stability; and that she should cease dithering and make an announcement of long-term policy?
Baroness Trumpington: My Lords, as the noble Lord said, it is perfectly true that the ownership rules have been in operation only since January. They were very carefully considered and extensively debated in both Houses. The rules are intended to allow a range of ownership while allowing economies of scale to provide diversity and choice for viewers and listeners. EC member states should not treat their own nationals more favourably than those from other member states. We believe that such action is contrary to the Treaty of Rome. Our ownership rules do not discriminate against other EC states.
Lord Donoughue: My Lords, before the Minister sits down, do I take it that that answer means that the Government intend to do nothing about the moratorium?
Baroness Trumpington: My Lords, that is not at all what I said. I said that the matter is still under consideration.

Business
3.19 p.m.
Viscount Ullswater: My Lords, at a convenient moment after 3.30 p.m. my noble friend Lord Arran will, with the leave of the House, repeat a Statement that is to be made in another place on the security situation in Northern Ireland.

Business of the House
Lord Wakeham: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the debate on the Motion in the name of the Lord Windlesham set down for 26th October shall be limited to five hours.—(Lord Wakeham.)
On Question, Motion agreed to.

Standing Orders (Private Business)
The Chairman of Committees (Lord Ampthill): My Lords, I beg to move the Motion standing in my name on the Order Paper. The House may wish to have a brief explanation of these proposed amendments to Private Business Standing Orders.
The amendments to Standing Order 27 have been requested by the Association of County Archivists. The Standing Order requires that plans relating to Private Bills be deposited in duplicate with the proper officer of each county, metropolitan district or London borough, and includes the provision that one copy,
"shall be sealed up and retained in the possession of the proper officer or chief executive with whom it was deposited",
until called for by order of this House or the House of Commons.
While the archivists would be happy to maintain their obligation to keep a copy for public inspection, they regard the retention of a sealed copy, which by definition cannot be unsealed for inspection, as an uneconomic use of scarce shelf space to nobody's benefit. The Chairman of Ways and Means and I agree with them.
The amendment to Standing Order 39 would have the effect of substituting for the Department of Energy, which no longer exists, the Department of National Heritage in the list of those departments at which copies of all new Private Bills must be deposited.
Moved, That the Standing Orders relating to Private Business be amended as follows—

Standing Order 27

Line 14, leave out ("in duplicate")

Line 18, leave out ("in duplicate")

Line 64, leave out paragraph (5)

Standing Order 39

Line 9, leave out ("Energy") and insert ("National Heritage") (The Chairman of Committees.)
On Question, Motion agreed to.

Steel Industry: ECC Report
3.22 p.m.
Lord Ezra Lord Ezra rose to move, That this House takes note of the report of the European Communities Committee on Restructuring the EC Steel Industry (24th Report, HL Paper 111).
The noble Lord said: My Lords, I rise to present to the House the Report of the European Communities Committee on Restructuring the EC Steel Industry. The European steel industry is at present going through a major crisis. That is due not only to the recession, which has caused it a great deal of harm, as it has other major industries, but also to the import of low cost steel from eastern Europe where the markets for steel have not been as large as they were before recent events and to the difficulty that there has been in renewing the multilateral trade agreement with the United States which is inhibiting the export of steel to traditional markets for European steel in America.
But a much larger issue than any of those is the overcapacity of the European steel industry. It is that
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overcapacity which has very largely created the present crisis. It is on the recommendation of the noble Lord, Lord Gregson, who I am glad to see will speak in this debate, that we decided to look at the issue in Sub-Committee B of the European Communities Committee. Members of the committee decided that it would have to be done quickly and so our report has been prepared in quite a short space of time. This is a matter for urgent attention by the Council of Ministers and the Commission.
I should like to express appreciation to the distinguished witnesses who appeared before us at short notice, in particular Mr. Tim Sainsbury, the Minister for Industry, who presented us with a detailed written report, then answered our questions as a witness and subsequently provided us with further information which was most helpful, and Mr. Brian Moffat, Chairman and Chief Executive of British Steel, who not only appeared as a witness but also saw us on a number of occasions and provided the committee with more detailed information. We had much help from our specialist adviser, Professor Aubrey Silberston of Imperial College, and we are much indebted to our Clerk, Mr. Edward Wells, for the great skill that he showed in organising the inquiry and drafting the report.
In fact this is not the first crisis that the Community's steel industry has suffered since the existence of the Community. There was a crisis at the start of the 1980s. On that occasion the solution, which was provided under the terms of the Treaty of Paris, which set up the European Coal and Steel Community, and was ratified in 1950, was to apply a situation of "manifest crisis". That involved setting quotas and fixing prices. It resulted in a degree of rationalisation and a reduction of surplus capacity which, however, was interrupted by the resurgence of economic activity that happened in the latter part of the 1980s.
Some countries seized the opportunity to rationalise their steel operations substantially. Among those countries were Britain and France. But some countries did not do so, and that is where the problem lies. Before getting to the nub of the issue, I should like to summarise the present situation. In October last year a number of the leading steel enterprises of the Community approached the Commission to draw its attention to the very serious crisis which had led to a reduction of something like 30 per cent. on prices compared with the 1990 level and which was leading many of those enterprises into an extremely serious and precarious situation.
As a result of that approach, in the following month, the Commission appointed M. Fernand Braun of Luxembourg, who had served as a director of the industry division of the Commission, to conduct a survey into what needed to be done to reduce the capacity of the EC steel industry to a more acceptable level consistent with likely market demand. He presented a report which showed that the capacity of the European steel industry was something like 30 per cent. over what it needed to be and something of the order of 20 million tonnes of crude steel capacity needed to be taken out of the system.
That report was presented to the Council of Ministers in February 1993. The Council decided to accept the findings of the report. But on this occasion, instead of declaring a manifest crisis and an interventionist solution such as was done under the Davignon plan, it decided to ask the enterprises themselves to come forward with proposals. Furthermore, it asked the Commission to devise a scheme for financial aid for restructuring and to meet redundancy costs. It asked the enterprises to come back with a report and plan of action to cut out those 20 million tonnes by the end of September. Unfortunately, the timetable has slipped. At a meeting of the Council of Ministers on 21st September, it received a progress report which showed that certain progress had been made but now the date of 21st November for a final report has been set.
The nub of the issue is that certain of the countries in the Community provide their steel industries with substantial subsidy. That is totally contrary to the Treaty of Paris which forms part of the corpus of legislation underlying the Community. Article 4 of that treaty states that certain acts are recognised as incompatible with the Common Market and shall accordingly be abolished and prohibited. Item (c) in that list is:
"subsidies or aids granted by states, or special charges imposed by states, in any form whatsoever".
Nothing can be stronger than that. Nonetheless, in spite of the Davignon plan, there are regrettably still flagrant cases of subsidy. They are concentrated in three countries: Italy, Spain and East Germany. Those are the essential issues with which the Commission has to grapple.
It is generally estimated that to take out the 20 million tonnes of surplus crude steel capacity, about half will need to come from the countries which provide subsidies and the other half from the private sector.
Lord Harmar-Nicholls: My Lords, may I ask the noble Lord how East Germany can be identified separately now that it is part of a reunified Germany?
Lord Ezra: My Lords, I should have said plants located in what was previously East Germany and is now part of Germany as a whole. I thank the noble Lord for that correction. The plant is located on the German-Polish border. It is therefore as far east as one can get. I used the term "East Germany" to differentiate between the plants in what was formerly known as West Germany.
It is felt that 10 million tonnes of the 20 million tonnes excess capacity would need to come out of the subsidised plants and the remaining 10 million from the privatised plants which are not in receipt of subsidy. Understandably, the private companies are reluctant to move until they can see what is going to happen with the subsidised companies. They do not want to give up a large part of their capacity for it simply to be taken over by subsidised products.
In the subsidised enterprises the plants are operating in areas which already have high levels of unemployment. I referred to the situation in Germany where the plant is on the border with Poland and is itself a centre of high unemployment. The plant is known as EKO-Stahl. In Spain the plants are located in the Basque
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country, which also has a high level of unemployment and in which there are number of political perturbations. In Italy the main plant is in Taranto in the south, also known to be an area of high unemployment even in good times. It is therefore clear that the countries concerned will have great difficulty in grappling with the problems.
It is roughly estimated that if the full 20 million tonnes of capacity were taken out, 70,000 jobs would have to go—those would be directly employed personnel—in addition to those employed in the supplying activities, which are always difficult to estimate. That would mean a large increase to the 17 million unemployed already in the European Community. Nonetheless it seemed to the committee that the case was extremely strong for dealing with the situation once and for all.
What is now happening in the marketplace is that subsidised, high cost steel is pushing out competitive low cost steel. The British steel industry is generally regarded as the most efficient in the European Community, if not in the world. But it is finding that it has to face up to the subsidised products which are even penetrating into Britain. That is not a sensible situation at the best of times. But at a time when we are launched into the start of a single European market, distortions of that sort must be removed. If they are not removed, it is difficult to see what the future for the European steel industry can be.
I believe therefore that the Council of Ministers and the Commission need to take a firm line on the issue. They have given an extended period for plans to be put forward. But the Treaty of Paris gave the Commission—then the High Authority—strong powers to deal with the situation. Article 54 reads:
"The 'High Authority' [now the Commission] may facilitate the carrying out of investment programmes by granting loans to undertakings or guaranteeing other loans. However, if the High Authority finds that the financing of a programme or the operation of the installations therein planned would involve subsidies, aids protection or discrimination contrary to this Treaty, a decision to this effect by the High Authority shall have the effect of prohibiting the undertaking from drawing on resources other than its own funds. Undertakings which disregard such a prohibition may be fined up to an amount not exceeding the 'improperly devoted' funds".
In other words, if an enterprise, in spite of the prohibition placed upon it, were to continue to draw subsidies, it could be fined up to the amount of those subsidies. That is a reserve power and everybody will be most reluctant to see it used. Nonetheless, it lies there.
We are talking about an issue of great importance. We are talking about the success of the single market, which many of us support. In the recent Maastricht debate the one thing that I do not believe anybody was against was the creation of a single market in Europe in which goods could flow freely and competition reign. But we must remove distortions. We have a major, clearly identified distortion in the steel industry. I hope that HMG will continue to use all their endeavours to correct that situation and that they will bear in mind that there are substantial reserve powers available if voluntary agreement cannot be reached.
3.36 p.m.
Lord Holderness: My Lords, as a relatively newly-joined member of the sub-committee, it is right that my speech this afternoon should be reasonably short. But I am grateful for the opportunity to pay tribute to the noble Lord, Lord Ezra, who led our inquiry. The measure of our debt is contained in the clarity and authority with which he spoke to us this afternoon.
This debate is particularly timely, placed as it is between the meetings of the Industry Council in September and November. It gives us the chance to express thanks to the noble Lord for all that he has done since he became chairman of the sub-committee. I should like to make clear from all that I have heard that he achieved great things before I joined him. We are all deeply grateful to him and conscious of our debt.
In my opinion, from my short experience, this examination is the most important that the committee has conducted. The report that issued from the inquiry will give valuable support to the position adopted by Her Majesty's Government at the Industry Council. Our ability to debate that report increases its potential to influence opinion in Europe, when further important decisions are to be taken.
The Commission and the Council of Ministers deserve great credit for their determination firmly to tackle what the noble Lord, Lord Ezra, described as the "crippling" continuance of over-capacity, and to try to do so by avoiding resort to any copy of the Davignon plan. I cannot see that any repetition of that experiment can provide a solution to the industry's present problems. Moreover, it is exciting for those whose hearts are in Europe that the new Braun plan challenges the nations of Europe, with the European Coal and Steel Community in a key position, collectively to solve the problem. Looking back into history—not particularly far back—I cannot see how the challenge could be effectively met if individual nations had to meet it on their own.
Before the sub-committee began the inquiry I had no clear idea of either the urgency or the enormity of the problem. Some—I am not referring to members of the sub-committee—seemed to feel that it would go away at the end of the recession even if nothing more was done. I am convinced that nothing could be further from the truth.
One measure, among many, of its magnitude is the very large number of jobs which must now be at risk, a point mentioned by the noble Lord. We have seen in this country the grievous effect of the closure of steel-making capacity, so often, like the cutting off of coal production, in areas where little alternative employment is immediately available. Having in the past had some responsibility in these matters, I am convinced that it is wrong, and would be wrong now, to delay unpalatable but probably in the long run inevitable decisions. It must be better to move as quickly as possible to more constructive alternatives: and this is the strength of being able to take this decision within the European framework. But without doubt, despite any help available to displaced workers, the human price of
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this operation will be great. It is this that must give grave anxiety to anyone with the least understanding of the present deformity of the industry.
Will steel producers and their governments have the will to act? Can subsidies to uneconomic producers be brought to an end? To my mind, the most important sentence of the report is in paragraph 57, towards the end. It states:
"Without the necessary political will on the part of Member States, restructuring will fail".
The noble Lord, Lord Ezra, must feel very proud that under his leadership the sub-committee has done all in its power—it could do no more—to support and strengthen the resolve of the Commission and Council of Ministers to act now, firmly and decisively. All of us must hope that that resolve will not fail.
3.41 p.m.
Lord Elibank: My Lords, I should like to add my tribute to that of the noble Lord, Lord Holderness, to our chairman, the noble Lord, Lord Ezra, who is standing down under the rules of procedure as chairman of our sub-committee. I hope that he will be proud of his last production, if that is the right word, and I am sure that your Lordships will find it a stimulating and interesting document. As chairman, he will be much missed.
In looking at the restructuring plans for a major industry it is helpful to try to peer, however darkly, into the future to see what is the potential of the industry down the years. It is essential to make up one's own mind whether one sees steel as an industry in gentle decline, in steep decline or suffering only a cyclical hiccup. This was a question on which we received a certain amount of help from the witnesses before us. What they had to say your Lordships may care to read in the report, but it may be helpful to summarise one or two of the points that they made.
First, in a mature economic society such as our own the demand for steel is declining. That does not mean to say that all is black. I was myself astonished at the ingenuity and salesmanship of the steel industry in finding and exploiting new products. Apparently, of the 5,000 or 6,000 different steel products on the market, some three-quarters have been invented or processed during the past five years. That shows at least an agile and alert industry seeking to develop its own future.
Other pointers were that semi-finished steel should be produced in countries like Brazil and perhaps, if one may use the expression, East Germany rather than in places like the UK and other advanced technological societies. They have the labour and the resources to make their contribution—that is, with the proviso that shipping steel about is an expensive business. It is a bulky and heavy product and not easily transhipped at economic prices.
As noble Lords will see from our report, there seemed to be a measure of confidence that large steel firms with high resources of technology and research capability would prosper and that small firms aiming at selected segments of the market would also prosper, but that medium sized firms, which could probably do neither of those things, were in a parlous position and might indeed fade slowly from the picture.

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Finally, it looks as though steel-making as a whole will be concentrated more and more at selected large sites, mostly near coastal waters. One would certainly hope that within the EC this would be regardless of national boundaries.
What of steel in the future? One can only give a personal view, but it seemed to me that, taking these factors into account, steel was and is in slow decline. I would expect to see an exercise such as this undergone perhaps in another 10 or 15 years unless the industry itself can phase itself downwards without international or governmental intervention.
The noble Lord, Lord Ezra, and the noble Lord, Lord Holderness, have dealt with state subsidies. It is impossible to consider the situation of steel in Europe without considering state subsidies. They are the rock on which this whole plan may well founder. It is obvious, as the noble Lord, Lord Ezra, said, that private steel companies will not accept painful reductions in their workforce and in their production if they see alongside them state subsidised firms putting out products at effectively a much higher price, the difference being sustained by the taxpayer in the relevant country. That is simply not acceptable and one can only hope that the Commission will be able to deal with it.
The issue of state subsidies is a complex one and one of which we have a long history in this country. I seem to remember—my memory is becoming increasingly fallible—that some decades ago we were pouring around £1 million a day into some of the major state corporations, and even today we apply subsidies to our rail transport. There are often reasonable social and economic reasons for doing this, but if we are to operate a European Community as a common market this must stop. It can only function as an economic entity by the elimination of these subsidies which distort not only steel but the different forms of transport, of which—one might say in parenthesis—the most grotesque example is national airlines.
There is a social cost to this which the noble Lord, Lord Holderness, mentioned—70,000 jobs and probably, with the knock-on effect, a great deal more than that. Fortunately, there seems to be sufficient money in the pot to make very satisfactory redundancy payments to those affected. Money will be available from the Coal and Steel Communities, from the European Commission, from national governments and from employers themselves. Between those various sources it is to be hoped that redundancy payments will be more than satisfactory. Previous speakers have thought sorrowfully of the 70,000 extra unemployed who will be cast on to an unemployment market which is already between 17 million and 18 million. That is a tragedy and one should not try to minimise it. But when one thinks of the sacrifices that have already been made in this country alone in the coal industry and in the steel industry itself, where numbers have dropped from around 250,000 to 42,000 in the space of 10 or 15 years, we have made the most remarkable sacrifices already.
The final point that I wish to touch on—and I dare say that other speakers will elaborate on it—is the position of British Steel. It was a revelation to me to discover
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how British Steel has turned itself around in the space of a decade, or perhaps a little more, from a somewhat obsolete firm into one of the most efficient steel producers, certainly in Europe, and possibly in the world. It has been done of course with notable sacrifices in plant, equipment and manpower. I believe that the whole committee felt that it would be most inappropriate for any reductions contemplated under the Braun scheme to fall again on British Steel. It has already made its sacrifices and already turned itself into an efficient company. It should not be called on to do more.
I can only say that the Braun plan has been welcomed on almost all sides. One of the almost curiosities of the situation is that the problem is generally agreed by everybody and the solution is widely agreed by most people. The only obstacles are the state subsidised companies. It is to the hoped that the Commission will find the power and determination to overcome those obstacles. Given that determination and a successful outcome to that problem, there is no reason that the European steel industry should not prosper for many years to come.
3.53 p.m.
Lord Tebbit: My Lords, I agree with all noble Lords who have spoken that we should be grateful to the noble Lord, Lord Ezra, and his colleagues on the Select Committee. I read the report with a mixture of sadness and some depression and also with a considerable amount of hope. It raises not just economic and political issues, but moral issues too.
It took my mind back very much to January 1981 when I was appointed Minister of State for Industry with responsibility for the steel industry here. That was the time when the European Community steel industry was held to be in a state of manifest crisis. That is no loose phraseology, as we old Brussels hands know. It has a precise legal meaning: it is a Euro-formula which enables the provisions of the Treaty of Paris and the Treaty of Rome—particularly those concerning state subsidies—to be suspended. That seemed to me to be just as well since, as a government, we had inherited from our predecessors a British steel industry which was severely disadvantaged by a sad history of economics subordinated to politics and constant surrender to unreasonable demands from trade unions. It was an industry so weakened that, without subsidy, it would have collapsed.
My noble friend Lord Joseph, who was my Secretary of State, entrusted to me the negotiations which were designed to restore health to the industry. The only strong card in my hand was that, as one of Europe's worst offenders, I had more to concede in negotiations than almost anybody else. I remember well that vice-president Davignon took me aside at the first meeting I attended and asked me: "Minister, what is your position?" "Well Commissioner," I said, "we are behaving like Italians but we would like to be like Germans". Sadly now, even the Germans are beginning to behave like Italians, although we have learned to behave like Germans.

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As noble Lords will know, the 1981 Davignon agreement provided for capacity reductions, quotas and price fixing. In short, it was a classic cartel. I remember well the expression on the face of my noble friend Lord Joseph when I returned from the crucial meeting at which agreement had been reached. He said: "How did it go?" I said: "Very well, Keith". He said: "What happened?" I said: "We have probably created the largest cartel in commercial history and it is designed to force up the price of a product already in surplus". "Oh my god!" he said, clutching his forehead. "Never mind, Keith", I observed, "It will work out".
Of course the redeeming feature of the agreement was that it also provided for an end to subsidy and a phased return to the proper economics of the market. It worked, but as the crisis was overcome so the commitment to the elimination of subsidy was put aside and the game of politics was resumed. So I make it plain that I firmly agree with the committee that we should not again allow a declaration of a manifest state of crisis to be made. That gives far too much to member states who reneged on the 1981 Davignon agreement.
The words of paragraph 49 on page 14 of the Select Committee's report, are worth quoting precisely when referring to the Davignon agreement:
"Perhaps the key weakness was that the plan was not followed through as the economic boom of the late 1980s took away the incentive to change".
I strongly endorse paragraph 51, also on page 14, which says:
"In some industries much of the industry is state-owned. While this does not necessarily lead to inefficiency, witnesses described the reluctance, particularly in Italy and Spain, to close uncompetitive capacity, resulting in high state subsidies. These subsidies are expressly banned by the Treaty of Paris … Witnesses suggested that the rules are not being enforced, particularly in Italy … Even in Germany … inefficient plant has been kept open, often propped up by banks".
That is a turnaround from the situation which we sometimes hear of in this country where efficient plant is closed down mainly at the behest of banks. But that is another matter for another debate. I most particularly choose to share the concerns expressed by the committee in the footnote at the bottom of page 15:
"The Government initially took the view that, in view of the Treaty prohibition, the Decisions could not be justified [that is, to allow subsidy] except on a very short-term basis, without Treaty amendment. By 1989 they appeared to have changed their policy and their legal position. The Select Committee were highly critical of this change: see Correspondence with Ministers 12th report".
I agree with that criticism. We agreed in 1981 to the Davignon plan precisely because we believed that that was the way out of the subsidy trap and that if we allowed that to go on, except in the very short term, it would have required amendment of the treaty. Clearly, anything which undermines the general prohibition of subsidy is damaging to the European Community's economy as a whole but, most particularly, it is damaging to the most subsidy-free member state, which today is the United Kingdom. If Ministers are backsliding, that is a matter for profound regret.
But as I observe, there are also matters in this report for profound rejoicing. Perhaps most clearly that is to be found on page 89, almost at the end of the report, in some of the written evidence that was given. I have in
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mind the evidence offered by the Amalgamated Engineering and Electrical Union. I believe that it is worth reading. Paragraph 13 states that,
"as a result of its earlier drastic pruning … operations, British Steel is now the most efficient producer in Europe—so it would not make economic sense to force cut backs in the United Kingdom.
"Looking at the principles involved—if a company found it had excess capacity and it responded by reducing production at its most efficient plant and subsidising its least efficient plants, it would be well on the way to bankruptcy.
"The same logic applies to the European steel industry—if total output needs to be reduced, it would not make any sense to force reductions in capacity on the most efficient producer (British Steel). The only sensible response would be to reduce capacity at the least efficient plants (those, in other countries, which are most heavily subsidised)".
That is not the Institute of Economic Affairs speaking; it is the Amalgamated Engineering and Electrical Union. It makes a sharp contrast when compared with the flabby thinking of Mr. Pedro Ortún of the Commission. I believe it is well worth while to look at his evidence in the report. I shall quote but briefly from the second column of page 78 of the report. The following is the voice of the Commission:
"We could have chosen the 'let the market work' strategy but it would have been much more negative … It could have led to massive subsidies".
Indeed, it could have led to massive subsidies, but only if the Commission chose to stand aside from its responsibilities and let such subsidies be paid. In fact, the Commission is saying either that it does not believe in the Treaty of Paris or that it does not have the will to apply it.
Let us be clear on the matter. The difficulties of the European steel industry spring, above all, from a refusal to let the market work and a surrender to a political blackmail. No one disputes that the British steel industry is the most efficient in Europe; indeed, among the most efficient in the world. Yet illegal subsidies, especially in Spain and Italy, are forcing British Steel into losses. I have some sympathy with the German problem. The Germans have only just taken on the commitment of East Germany. It will take them some time to sort out the problem. I believe that they should properly be given some time; but that is not the case with the others.
The Commission and the Council sit paralysed as those illegal subsidies force British Steel into losses. They say that it is not their business to destabilise governments of member states. That is a constant theme when one asks the Commission to act. They should think about which governments they are destabilising by a failure to act. The consequences of such policies are all too clear. As has already been mentioned, the airline industry is a particularly blatant example in Europe. Air France continues with illegal subsidies because the French Government lack the courage to stand up to Luddites. The European Community itself pays vast subsidy to open a new coal mine to produce coal at £60 a tonne in Spain, while our pits which produce coal at £30 a tonne are being closed.
What sort of single market is that? If a single market existed and the provisions of the Treaties of Paris and Rome were honoured by our partners, British coal would be exported to Spain as its mines closed and

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British steel would be going to Italy and Spain and their steel works closed. Moreover, if the French could not run an airline to match its competitors then that would also have to be closed. In a single market there is no case for every country to have a steel works or even an airline.
If other member states ignore their treaty commitments and make the rules to suit themselves, then, sooner or later, this country will face an ugly reality: either more jobs will be lost here and taxes will rise to keep in idleness men who deserve to be in work, so putting more men out of work, or Ministers will have to behave with the same lack of scruples and determination to look after their own people as do those of our continental partners
If illegal subsidies continue, they will have to be met with illegal tariffs, or simple prohibition of imports from offending countries. We always hear the same: the French Government cannot comply with their obligations because they are too weak. The Spanish Government would be overthrown or there would be terrible riots in member states if it was insisted that they comply with their commitments. The same cringing weakness is pleaded by the Greeks, and others, as they plunder British taxes and British jobs. It is a moral issue. We are seeing a political system in which wrongdoing and law breaking brings rewards. I do not believe that that should be allowed to he so. If it continues to be so, then the law will be dishonoured and the whole system will break down.
I sometimes wonder how long we in Britain are expected to queue in an orderly manner to be treated as the mugs—the soft touches of Europe. I was shocked to read that my successor Mr. Sainsbury declined in his evidence to rule out further cuts and job losses here in the United Kingdom. However, the problem is not here in the United Kingdom; the problem is elsewhere. It is in Brussels, it is in Rome and it is in Madrid.
Ministers might do well to start here today with the steel industry with a commitment to take the Commission, as well as the Italian and Spanish Governments, to court for persistent, blatant breaches of the treaty, unless those illegal subsidies are terminated and disgorged by the businesses concerned. Nothing could do more for the rule of law, for the creation of a single market and for the future of the European Union.
4.7 p.m.
Lord Geddes: My Lords, it is indeed a formidable task to follow my noble friend Lord Tebbit. However, the one great advantage in so doing is that he has already covered much of the ground. That will make my intervention much briefer. I, too, should like to begin by saying that it has been a great privilege to serve on the sub-committee under the chairmanship of the noble Lord, Lord Ezra. I should like to thank the noble Lord, and also, as he did, to thank our Clerk, Mr. Edward Wells, for the production of such a clear and comprehensive report. Its recommendations largely accord with the restructuring plan drawn up by the European Commission and the Council. Similar conclusions having been reached by ourselves—that is,
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by independent means—I hope that that will add to the weight which should be attached to the recommendations.
As other noble Lords have said, there is no doubt that, if the report's recommendations are implemented, the impact will be traumatic on no fewer than an estimated 70,000 steel workers—and, of course, their families—across the EC. Doubtless, as we have seen all too often in this country, whole towns and communities will initially be devastated by its implementation. We know about that in the United Kingdom. But we also know that the phoenix can and does rise from the ashes and that genuine long-term benefit can be achieved, though only by considerable struggle and the implementation of hard decisions. I am entirely satisfied that the proposals outlined in the report form the basis of the only sensible way forward and, indeed, the only way to ensure a viable future for the steel industry in the EC.
The steel industry in Europe can no longer labour under its present load of subsidies, over-production, over-capacity and inefficiency if it is to retain any prospect of competing in world markets. The Minister for Industry gave evidence to the effect that overcapacity throughout the EC was in the region of 20 per cent. The Braun Report, which was initiated by the Council and the Commission in November 1992 to look at the level of cuts necessary in the industry, put it at an even higher figure. On any analysis, that overcapacity is substantial.
Capacity was reduced by 19 per cent. during the early and mid-1980s which was declared to be a lime of manifest crisis in the EC's steel industry. There is however still a long way to go. The UK participated fully in those cuts in the early 1980s and, unlike many of her EC partners, has continued to make reductions, notably by closing Ravenscraig in Scotland. Ravenscraig, with its consequent job losses of 3,700, is the only closure of an integrated steelworks in the EC since 1988, and resulted in a further cut of 15 per cent. in crude steel capacity in this country—a greater percentage than any other EC country.
Unsurprisingly, there is a similar story to tell with regard to workforce figures. During the 1980s, 40 per cent. of its workforce was shed by the industry, with France, Italy and the UK sustaining the biggest number of job cuts. As has already been said, between 1975 and last year, the UK reduced the number of steel jobs from 250,000 to just under 42,000, obviously far in excess of the EC average of 40 per cent. We are now talking about another 70,000 job losses across the Community. In terms of both production and job losses in the steel industry—here I agree wholly with my noble friend Lord Tebbit—this country, to put it in the vernacular, has done its whack. It is now up to our EC partners to follow.
The issue of subsidies is not at all straightforward. Although subsidies are, as has been rightly said many times this afternoon, banned expressly by the Treaty of Paris (with the specific exceptions of research and development, financing closures or assisting regional and environmental policies), there can be no doubt that some countries in the EC are bending the rules ad

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absurdum. Italy and France appear to be the worst transgressors. I urge the Commission most strongly to heed the words of one of our witnesses, Mr. Ian Blakey—
Lord Ezra: My Lords, Italy and Spain.
Lord Geddes: I thank the noble Lord. Italy and Spain appear to be the worst transgressors. Mr. Ian Blakey, the Director General of the British Iron and Steel Producers Association, said:
"If governments generally want to get the steel industry off their backs … then the subsidies must go. This is a question of political resolve".
I add my own words: no more, no less. Even in Germany private inefficient plants are being propped up, as my noble friend Lord Tebbit said, by banks. I therefore urge the Commission to grasp the nettle—and if your Lordships will excuse the pun—however much it may sting. The solution can only be market led. It lies in increased efficiency and diversity and a recognition of the enormous potential of a well run steel industry. For the story is all not doom and gloom, as my noble friend Lord Elibank said. There are areas where, while the weight of steel per unit has decreased, nevertheless, the overall market share of steel is increasing.
Britain has an especially strong case as our industry is arguably the most efficient of all in the EC. As my noble friend Lord Tebbit said—but I put it in slightly different words—we have complied with the regulations, suffered the closures and increased our efficiency until, as an example quoted by witnesses, our costs per tonne of cold-rolled coil are only 413 dollars as compared with France's 493 dollars and Germany's 558 dollars.
We must not be misled into believing that the crisis in the steel industry is a result of the recession. The boom years of the 1980s may have concealed the problem to a large extent, but no future upturn will solve it. The recession throughout Europe has, perhaps cruelly, stripped away the gloss, and the reality underneath has now been revealed. The Commission should regard it as an opportunity to take tough and painful decisions to ensure the industry's healthy survival into the next century.
4.15 p.m.
Lord Gregson: My Lords, perhaps I may first apologise for not being in my place at the beginning of the debate. That was due to the vagaries of the transport system for reasons that most people will recognise. Perhaps I may also disclose an interest in this subject as a director of the British Steel Corporation for many years. I also congratulate the noble Lord, Lord Ezra, and his committee on an excellent report which well defines the serious crisis facing the great steel nations of Europe.
Under successive governments of both parties, the steel industry in this country has been rationalised and modernised so that it is now among the most efficient in the world. Unfortunately, that is not so with regard to many of our partners in the Community. Clearly they have been caught out by the economic downturn so that
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despite the fact that subsidies or aids granted by the state "in any form whatsoever" are prohibited by the coal and steel treaty itself; despite the fact that a state aids code for the steel industry which provides the Commission with comprehensive and regular information on state aids has been in place since the beginning of the 1980s; despite the fact that specific programmes for the restructuring of the industry and the eradication of state aid were carried out in the early 1980s, subsidy still exists today and thrives beyond the borders of the UK. It is acknowledged to exist on a massive scale in the state-owned industries of Italy and Spain. There are other cases elsewhere.
In Germany, the Government have proposed the construction, with state money, of a new plant in the former East Germany to manufacture a product already acknowledged by the Commission to be in gross over-supply throughout Europe. I was happy to see that the Commission refused to accept that proposal, but I remain very worried by the apparent willingness of some member states to regard the Community's laws on state aid as being flexible, and negotiable when they become inconvenient. How else can one explain the continuing operation of loss-making plants in Italy and Spain, except by the provision of massive state funds and guarantees, in direct contravention of the laws to which those states subscribe.
I recognise that those laws have in the past often been honoured in the breach rather than in the observance, but today the European Community is committed, by the very existence of the single market, to the necessity of establishing fair competition within its borders. The Community has also recognised, as have the British Government, the need to encourage and foster competitiveness if it is to compete successfully in world markets. To meet these requirements the member states and the Commission must eradicate a political climate in which "deals" can be struck on state aid—for instance, so much capacity closed in return for so much aid—and replace it by the widespread acceptance that illegal subsidy will simply not be allowed.
We find ourselves in a situation where privately-owned, efficient companies in Britain—such as British Steel—are competing against heavily-subsidised Community producers and inevitably facing the difficulties that arise from that. They have already caused plant to be closed and workers to be laid off and could lead to further job losses and closures. That simply cannot be allowed to continue. The immediate task for the Government is to ensure that the state-aid cases soon to be brought before the Council of Ministers are settled in a manner most conducive to an adequate restructuring of the industry. They should then go on to secure acceptance of the principle that the law preventing subsidies must be rigidly applied so that the present situation never arises again.
4.20 p.m.
Viscount Mersey: My Lords, I am grateful to the noble Lord, Lord Ezra, for giving the House an opportunity to debate the report of sub-committee B on the steel industry. I am grateful all the more so because the noble Lord is retiring as chairman of that

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sub-committee and this is, as it were, his swansong. A most efficient swansong it was. Would that I could say that the steel industry was efficient but, as all other speakers have said, that is far from the case. The industry is extremely inefficient. Since my membership of sub-committee B I have been involved in producing six reports and I have never come across a subject so convoluted and frustrating as Community steel.
Of course, the problem is one of overcapacity. But who in his right mind would try to solve overcapacity by increasing capacity? That has actually happened in Italy and Spain. The plant at Taranto in southern Italy is less efficient than Ravenscraig but it continues to produce 8.5 million tonnes of steel that is hard to sell; so hard that not even Fiat in Turin will buy it. Taranto is producing more than one-third of the Community's surplus capacity of 20 million tonnes. That mill is in a deprived part of Italy.
Likewise, the Spanish mill is in a deprived area in Bilbao in the Basque country. Both ventures are state-aided, which is contrary to the Treaty of Paris. Both are looked upon as solutions to unemployment. However, as Sir Robert Scholey told the sub-committee, if you put a state-aided factory into a deprived area surely you should choose the type of factory that could make money. I should like to quote Sir Robert's evidence. He said:
"I think it is absolutely crazy that the Spaniards should try to reconstitute the steel industry in the Basque region. They have to have something there but why steel? Why do they not go for something that is going to be profitable?"
More specifically, he told us:
"the steel maker has to be quite clear what his role is. It is not to make steel to support a social situation. His role there is to provide a competitively priced quality product".
I also agree with Sir Robert that there is very muddled thinking about steel. The reason for choosing steel is on occasions not so much economic as emotive. The word is macho; it has overtones of valour. I looked it up in the Oxford Dictionary of Quotations and found that it appears in contexts such as, "girdle me with steel", "give them the cold steel", "Foemen worthy of their steel", and "steel true and blade straight". Therefore, a country with a strong steel industry could be imagined to be ipso facto a strong country.
Whatever the reason, there is overcapacity. As was said by my noble friend Lord Tebbit, one cannot exclude Germany from the list of transgressors because they have uneconomic mills which are funded by the banks. The Commission is rightly looking to make cuts of some 20 million tonnes per annum. That is three Tarantos or, looking at it another way, the combined output of the Netherlands and the United Kingdom. I must reiterate in passing that we have already cut our steel industry to the bone and it is now the most efficient in Europe. There is no state aid. I make no apology for blowing the trumpet of patriotism. We cannot and we will not make further cuts because we are the best.
That said, the cuts needed are considerable and painful. We completed our report on 27th July knowing that we should not obtain specific directions from the Commission until 21st September. We now have something specific, although only partially so, but more
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about that later. Suffice it to say that the Commission is not in the business of destabilising governments and we were expecting it to be somewhat tentative.
Before narrowing down to the suggestions for cuts, I wish to widen the debate by mentioning two global issues. The first is the change in the world market for steel. That was mentioned by the noble Lord, Lord Ezra. There are now trade barriers with the USA, but there is in the former communist bloc a sea change from import to export. Once the mighty Soviet Union needed all 44 million tonnes of Ukrainian steel for shells, guns, tanks and battleships and for its factories, bridges and railways. Indeed, it needed more steel than it could produce so it imported from us. But that is no longer the case. Now Russia and eastern Europe are exporting cheap state-aided steel. Hungary is exporting steel, as is Poland, Romania, Bulgaria and the Czech lands. There is therefore a danger of dumping steel on a scale that would dwarf any decision that the Commission might make about Bilbao. If one adds to that the colossal new steel production of the Far East—that is, North and South Korea and China—limiting production in Bilbao and Taranto becomes hardly more than a spit in the ocean.
The second global issue is that of global warming In that respect there is a confusion. We are unhappy that the market for steel is so small yet we are surely happy that we are able to build high-rise structures using 30 per cent. less steel, that we can make steel cans that are 30 per cent. lighter or, most important, that we can make cars of high-quality coated steel that are less heavy and therefore use less petrol and cause less pollution. A decline in the steel market should be a cause for celebration. Of course, it is not. It causes unemployment, poverty and misery because we do not have the environmentally-friendly industry to put in its place. We must compromise and realise that the playing field of European steel is too big. We must make it smaller, but we must also make it more level.
I turn to the Commission's partial decisions of 21st September. They stemmed from discussions with the countries involved. The Spanish plan to close the Bilbao plant and take out capacity of 2.3 million tonnes. However, they also plan to erect a mini-mill, which will be aided 49 per cent. by the state and have a 1 million-tonne capacity. So the net saving is only 1.3 million tonnes.
I cannot understand the Italian situation. I am relieved that the chief executive of British Steel, Mr. Brian Moffat, cannot understand it either. The state-owned company, ILVA, is to be privatised in some parts, restructured in others, rationalised in others and sold off and liquidated in others. Taranto capacity might be reduced by 1 million tonnes. Mr. Moffat regards that as too little too late. In a recent note to us he stated that the time was fast approaching for the Commission to threaten further sanctions to force a satisfactory solution to the state-aided cases. How right! But when it comes to the crunch, even post Maastricht, it is the national governments which have clout. So the 64,000-dollar question is: how much attention will Rome or Madrid pay to Brussels? We should find that out on 21st November; that is, if matters do not slide even further.

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After the state-aided sector has reduced capacity the plan is for the privately-funded sector to follow suit within three months; that is, by my reckoning, by mid-February 1994. Then, it is to be hoped, the European Community will have reduced capacity by the required 20 million tonnes. I detect an element of pie-in-the-sky about all this because all that we seem to have cut so far is 1.3 million tonnes in Spain. We should do better than that.
Should we manage the target of 20 million tonnes, we should be setting the world a good example. That is important because I am sure that steel is a world problem. I find support for that view in evidence given to us by the senior delegate of the European Commission, Mr. Pedro Ortún, the director of Directorate C. He has already come in for quite a bit of stick from my noble friend Lord Tebbit. However, I found his concluding words to be quite wise. He said:
"The steel problem is not a European one. It is a worldwide problem and [the steel market has become] a worldwide market and the problem of overcapacity which has been very clearly defined and analysed in Europe exists also in many parts of the world and this overcapacity leads in some cases to subsidised prices and these are the root of the global steel problem…We should try to find a common discipline for the world steel trade".
The best way to find that common discipline is to cut drastically European steel production and to cut subsidies completely.
4.30 p.m.
Lord Thomson of Monifieth: My Lords, I join with every noble Lord who has spoken in congratulating the committee on its report. I congratulate in particular the chairman, my noble friend Lord Ezra, not only on the report but also on the way in which he introduced it to the House today.
This is a strong, even stark, report on the future of the EC steel industry. Its recommendations have major implications not only for the future of the structure of Community steel but, more widely, for Community industrial policy. As a non-expert on the steel industry, I was struck, on reading the report, by two contrasting comments. The first was British Steel's evidence on page 25 pointing out that Japan has seven major producers compared to 16 in the European Community along with the comment that European Community industry is too fragmented to be fully competitive. The second comment, on page 16 of the committee's conclusions, was that the cut in capacity which is proposed as essential will result in the loss of about 70,000 jobs. Those jobs will be in areas of high unemployment and also in areas of great political sensitivity within the member states. It has to be remembered that the Community already has 17 million unemployed.
The stark fact, endorsed by all noble Lords who have spoken, is that the European Community must make itself internationally competitive in the steel industry. The only alternative is a loss of living standards and, in the long run, even greater unemployment. Therefore, for my part, I am glad that the committee endorsed the Braun plan. That is strong medicine but it is medicine that must be taken. As my noble friend Lord Ezra
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pointed out, there are powers within the treaties for implementing the recommendations of the Braun Report. What is at issue is the question of the political will of the Commission and of the Council of Ministers.
We need a Community solution which aims to produce an efficient and competitive Community steel industry. As the committee emphasises at paragraph 58 of the report, it must not degenerate into some kind of intergovernmental compromise of the type with which we are rather familiar in the European Community—a patch-up of so-called national burden-sharing. The noble Lord, Lord Tebbit, nods his head. He and I do not always see eye to eye on European Community matters but I agreed with the main thrust of what he said today.
Certainly, as regards national burden-sharing—the noble Viscount, Lord Mersey, made the point very pungently—the United Kingdom has had more than its share of the burden. It has faced up to the long trauma of creating an efficient steel industry. As a Scot, I was fascinated by the evidence, mentioned in paragraph 54 of the report, that Ravenscraig, for all its geographical disadvantages in modern conditions, operated at a level of costs lower than other steel plants which remain open. I agree therefore with the rather barbed point made by the noble Lord, Lord Tebbit, in an extremely interesting speech, about the evidence given by one of his successors at the Department of Trade and Industry. Any idea that out of the Braun plan should come further sacrifices on the part of the British steel industry is, I believe, totally out of court.
In my experience, the European Community always looks for ways to dodge difficult and painful decisions. It is possible to use the East Europeans as a scapegoat. The noble Viscount, Lord Mersey, mentioned the change in the steel industry in the former Soviet empire. The report points out that the present penetration of steel from the former Soviet empire is some 4 million tonnes out of 130 million tonnes. Therefore, it is a 3 per cent. penetration. That is not an excuse for dodging difficult decisions.
The Braun plan will require vigorous action, both negative and positive. On the negative side, as paragraph 56 of the committee's conclusions makes clear, there should be a firm timetable for the ending of all state aids which do not directly facilitate closures. That means a political will to take on the situation, particularly in Italy and Spain.
On the positive side, as paragraph 62 of the committee's conclusions mention, maximum effort is needed as regards extra help for retraining, the setting up of new enterprises and the various other activities in which British Steel has engaged during the dramatic changes which have taken place within the British steel industry over the years.
Perhaps I may be allowed to widen the issues raised by the report. If the report is implemented, it will add another 70,000 redundant workers to the 17 million already unemployed in the European Community. The Community as a whole faces a very real problem in the years which lie immediately ahead as regards longer term structural unemployment. It is rather fashionable to refer, with a certain amount of complacent self-satisfaction, to the failure of Soviet communism as an

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economic system. But unless we find a solution to large-scale structural unemployment in the western industrial world—I am thinking in particular of the countries of the European Community—we shall face a charge of the failure of western capitalism.
That is the wider background against which the report should be seen. I confess that I have no solutions to offer to the magnitude of the problem, but I believe deeply that the only way in which we shall make progress is on the basis of a Community approach. To export our unemployment to each other is no solution in the Community whether as regards the steel industry or industry more generally. I agree with the noble Lord, Lord Tebbit, that if you start to allow illegal subsidies, sooner or later that leads to illegal tariffs. There is no way forward for any of us on that particular route.
I notice with interest that the President of the European Commission, Mr. Delors, and the Social Affairs Commissioner, Mr. Flynn, seem to be jointly engaged in producing a White Paper on competitive growth and employment for the summit meeting of the Community which takes place in December. I am not sure whether I still carry the noble Lord, Lord Tebbit, with me, but I believe that the best hope of finding solutions to the longer-term problems of structural unemployment arising from technological change is action on a Community basis. I hope that the Government will give a fair wind to some of those ideas.
There is talk coming out of the Commission about the need for action on competitiveness combined with other forms of collective Community action. I believe that the Government have a fair case in drawing attention to the paramount need for the European Community economy to make itself internationally competitive within the global economy in which the next generation will have to live. There are big issues here to which I hope the Government will give a fair wind. In conclusion I cannot resist saying that by far the best way to bring influence within the European Community on the issues of maintaining maximum competitiveness, whether of steel or anything else, is from right inside the Community. Standing on the sidelines with opt-outs is not the most persuasive way to exercise maximum influence.
4.40 p.m.
Lord Peston: My Lords, this is an important, interesting and informative report. I join with other noble Lords in thanking the Committee and its chairman for preparing it and placing it before us. I have certainly found today's debate extremely helpful. I use the word "informative" because I found the report informative, particularly in its evidence, and especially the evidence which shows that British Steel is the low cost producer of Europe. I spend a lot of my time pointing out the deficiencies of British industry. For once I almost find it uplifting to be able to say that, on the figures Mr. Aylen presents, British Steel is far and away the lowest cost producer.
The rationalisation that led to that state of affairs was started by a Labour Government and it has certainly been continued by the privatised industry. That leads me immediately to the point which I believe was made by
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the noble Lord, Lord Tebbit, when he referred to the evidence given by Mr. Ortún and that given by Mr. Sainsbury. I was not surprised by Mr. Ortún's evidence because I would expect the Commission in the end to wish to do a deal and obscure matters. However, I was taken aback by Mr. Sainsbury's evidence in the sense that he did not say in forthright terms two things. One is that we should rely on the single market and the other is that we are not going to give in to those who wish to fudge these issues. I am delighted that the noble Lord, Lord Tebbit, drew that matter to our attention. It is a clear-cut matter and one which in your Lordships' House we cannot stress too often.
I say to the noble Lord, Lord Thomson of Monifieth, that of course one wants to see a Community solution to this matter, but for once the Community solution is that the Commission should do absolutely nothing to interfere and should let the market decide this matter. All the Commission should do is to ensure that those who seek to subvert the single market in this case should be stopped from doing so. For once the Community solution is clear and I have no difficulty in that regard. I reflect that, paradoxically, many years ago many of my right honourable and honourable friends were opposed to the Community on the grounds that it was the embodiment of free market capitalism. Nowadays I note that the Right-wing of the Tory Party is opposed to the Community on the grounds that it is the embodiment of interventionist socialism. How the wheels turn full circle. I think there is a balance there, but in the case of a market like steel, clearly we want it to work as the single market was supposed to work. I take it that that is what the report is saying and I support that view most strongly.
On the question of subsidies there are, as we know, many disguised subsidies whether they consist of preferential access to banks and finance or rather arcane offsets to taxable capacity and matters of that kind. It is not easy totally to stop those who wish to subvert the single market in one way or another. However, to return to my main point, I believe that the role of the Commission should be to seek that out. It can be discovered as easily as one can discover fraud, despite all the fuss that is made about that. It is staring one in the face. When I am told that the Commission is investigating this matter, I wonder what it is it thinks it is investigating. It is perfectly obvious to many of us what is going on as regards subsidies. The Commission should say no. It is rather like those referees of football matches who cannot see when cheating is taking place when the rest of us can see it very clearly.
I believe we are all against subsidy which seeks to keep in existence inefficient structures. However, we are not saying that we do not wish to see public money used to produce new efficient structures if it can be so used. I say to the noble Lord, Lord Thomson of Monifieth, that when we debate industry and the economy, as I hope we shall after the Queen's Speech, I do not believe that we should be pessimistic about the possibilities of dealing with structural unemployment on a European scale. I believe a great deal can be done in that area and I shall certainly propose some ideas when we discuss that matter.

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The noble Lord, Lord Holderness, made a point that I am sure we all agree with. When an industry in some sense improves its efficiency, it sheds jobs. Shedding jobs is a human matter as well as an economic one. One has a responsibility to ensure—particularly as we are having difficulty maintaining full employment—that something is done to make the workers who have lost their jobs re-employable. We must ensure that they have hope for the future rather than just the prospect of remaining on the dole. I have no doubt about that whatsoever. I am sure we all agree that it does not help those workers temporarily to prevent the decline of the industries they are in. All that that does is to postpone the problem for a while and make it a good deal worse. The case for intervention and subsidy with respect to the steelworkers as with others is the positive case of what we should do with the resources that are made available rather than the negative case of not allowing efficiency to dominate what happens.
I have one or two brief points still to make. I believe the noble Viscount, Lord Mersey, and one or two other speakers referred to the position in Eastern Europe and in the Far East. Our responsibilities in the Community must still be to welcome competition. We cannot say simultaneously to Eastern Europe, "We want you to succeed and we want your economies to develop; but if there is the slightest chance of your undermining our industry we shall find all sorts of ways to prevent you from undercutting us". I agree that there are still problems with subsidy there, but on the whole I would turn a blind eye in that area, at least for a short while, because I believe it is in our interests that industries are made viable within the new systems developing in that area. It would be catastrophic if the Community said on the one hand how much it favoured Eastern Europe and how much it was willing to give it aid but on the other hand said it was not willing to allow Eastern Europe to beat it at some of the games it is used to winning. I think the principle—
Lord Harmar-Nicholls: My Lords, does not the noble Lord recognise by now that turning a blind eye is setting a precedent which would be much more damaging than the temporary advantage he believes can be gained?
Lord Peston: My Lords, I take the noble Lord's point, but the fact remains that the Eastern European countries are coming from a position that is far behind that of other countries. My first priority would be to encourage them. I would not nit-pick on some matters which I would do if we were dealing with Italy or Spain, or Greece in other areas. The noble Lord's point is valid in the end. Finally, the countries of Eastern Europe will have to compete on their own merits. There is no doubt about that.
Given that simple technology is involved with the steel industry, we must expect the countries of the Far East to become much more effective competitors. Again it would be quite wrong to say that we favour the emergence of the third world and then prevent those countries having access to our markets. I am not
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suggesting that we will do that; I am simply saying that free trade has a rather tough side to it that we must recognise.
I do not wish to speak any longer as it is perfectly obvious that all the good points have been made. I hope that the noble Viscount, Lord Goschen, will make it clear to us that the Government are determined that the British steel industry will not be undermined by deals which seek to share the misery by making all parties involved shed some capacity. British Steel has made itself efficient. It has shed capacity. I believe that Mr. Aylen said that in a truly competitive world it would expand its capacity and its share of the market. We want to hear that kind of encouragement from the Government in forthright terms.
4.50 p.m.
Viscount Goschen: My Lords, I am extremely grateful to noble Lords who have spoken in this important debate for their contributions, which have been both well-informed and helpful. I should also like to thank the committee for its thorough and incisive report on the serious problems facing the EC steel industry. The chairman, the noble Lord, Lord Ezra, and members of Sub-Committee B are to be congratulated on the quality of their report. It is of no surprise that it has been warmly welcomed both by this House and by outside bodies, including the UK steel industry. We were particularly struck by how much common ground there is between the committee and the Government on what needs to be done in respect of EC steel restructuring. The views of the committee have been invaluable in preparing the UK position for the Council of Industry Ministers.
Perhaps I may say at the outset that we fully endorse the committee's view that the current problems facing the EC steel industry are deeply rooted in history. Following the establishment of the European Coal and Steel Community in 1952 demand for steel rose fairly steadily during the 1950s and 1960s. The ECSC treaty contained some liberal provisions, such as internal tariff reductions and a prohibition on price discrimination and state aids, but it also gave the Commission considerable and commanding powers of its own. Those powers came into play during the mid 1970s in the aftermath of the first oil crisis, first with the Simonet plan and then with the two Davignon plans. These established minimum prices, production restrictions and import restraints.
Recession in the early 1980s resulted in significant overcapacity. Some action was taken to reduce capacity but the task was made particularly difficult for two reasons. Most of the major Community steel producers were either state owned or received considerable state assistance. That meant that many were cushioned to withstand the worst effects of recession. Secondly, it was the policy of the Community to encourage steel firms to rationalise by providing state aid. This, together with the burden sharing principles of the Davignon plan, resulted in only limited restructuring.
Most noble Lords who have spoken in the debate have stressed that it is countries which have failed to adapt their steel industries to market conditions which

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must accept most of the responsibility for the serious problems the industry is facing today. The current cyclical downturn in many European countries has severely exposed the underlying structural weaknesses that have been caused by past intervention in the market-place and by the use of state aid to sustain unviable steel producers. Overcapacity—estimated at about 20 per cent. of output—is the main symptom of the industry's current difficulties, and most of that excess capacity is located in those countries where there has been less restructuring—Italy, Spain and Germany—and where many of the least profitable and least efficient plants are located. The situation has been exacerbated, but by no means caused, by US trade actions against EC exports and by increased imports from central and eastern Europe, particularly into Germany.
If market forces had been allowed to operate properly we would not be facing severe problems of oversupply today. If the market was left to its own devices then the answer to overcapacity would be simple: those who run tight ships and meet the needs of the market survive and make profits; those who do not, do not survive. That is the market solution. That is what should happen in the case of the European steel industry.
We should like to endorse the committee's support of the Braun plan, which advocates a market-based, industry-led solution to problems of overcapacity. It is only right and proper for the industry itself, and not governments, to decide how it should restructure and rationalise. The Government also fully support the special package of measures proposed by the Commission and agreed at the February Industry Council, which were designed to help smooth the process of adjustment. These measures are dependent upon the industry committing itself to a definitive programme of capacity reductions. We very much hope that the industry will be able to do that. We support the committee's view, as expressed by my noble friend Lord Holderness, that the Braun plan is far preferable to the kind of burden-sharing measures that have been tried in the past, and which have not only failed but have contributed to the current difficulties. Burden sharing implies that the UK industry should do more than it has already done to help solve the problem of EC overcapacity. That is totally unacceptable. The UK has already done a great deal of restructuring in its industry. It is now for others who have done little so far to put their steel industries on a commercial footing to accept the bulk of closures.
We are most grateful to the committee for drawing attention to the crucial link between the need to eliminate state subsidies and the success of the restructuring process. We cannot expect private sector companies to volunteer capacity cuts if subsidies continue to flow unabated into unprofitable state-owned companies. Subsidies which allow uncompetitive and inefficient producers to carry on operating—and to compete unfairly against those who receive no subsidies—are the root cause of the industry's current problems and a major barrier to a true single market in steel. As the noble Lord, Lord Ezra, stated, Article 4 of the ECSC treaty specifically prohibits:
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"subsidies or aids granted by states… in any form whatsoever".
That prohibition has been modified by successive aid codes, the most recent of which allows strictly limited amounts of aid only for research and development, environmental protection and closures. However, Article 95 of the treaty can be said to approve subsidies beyond those permitted under the aid code, but only in exceptional circumstances. We find it unacceptable that so soon after the finalisation of a strict subsidies code we are already being asked to approve huge amounts of state aid for companies in Italy, Spain and Germany—all under the "exceptional". provisions of Article 95.
The House will not be surprised to hear that the Government are opposed to state subsidies to the steel industry, as is the committee. I can tell my noble friend Lord Tebbit and the noble Lord, Lord Peston, that we have consistently argued for strict application of the aid rules and for action to be taken against those who break the rules. There is no question of Ministers backsliding. We are taking a strong line and will continue to do so in Brussels. There is no UK paralysis. For example, we have taken a lead in blocking the Spanish, Italian and German proposals for new subsidies. We shall continue to veto proposals which disadvantage the UK steel industry. I believe that that is the reassurance which the noble Lord, Lord Peston, sought.
Lord Tebbit: My Lords, I am grateful to my noble friend for giving way. I thank him for what he has said and in particular that Ministers would regard any further closures or reduction in capacity in the United Kingdom as unacceptable. However, he then went on to say that he thought that the bulk of closures should be elsewhere. Where should the closures be which do not come in the bulk of closures?
Viscount Goschen: My Lords, it is not for me at this Dispatch Box to tell the UK industry where or whether it should shed jobs. I have stressed repeatedly that the UK industry has already undergone a great deal of restructuring and is now the most efficient steel producer within the EC. Those are most important points to bear in mind.
Subsidies mean unfair competition for those who are not subsidised. They can mean that the most efficient companies go out of business while those which have access to seemingly limitless pools of state funding survive. Most damaging of all are subsidies which are paid out to meet every day running costs. Only last month United Engineering Steels announced the closure of its Templeborough plant, whereas its less efficient state-aided competitors carry on unscathed. The Government very much share the committee's concern, expressed by many noble Lords today, that other efficient private companies will be forced to close unless subsidies are brought firmly under control. We agree that it would be quite intolerable for other UK companies to suffer as a result of indiscipline in other member states.
The UK steel industry is not subsidised. The issue was referred to by my noble friends Lord Elibank and Lord Tebbit, and by the noble Lord, Lord Gregson. It is among the most efficient in the world. British Steel is widely regarded as the Community's most efficient

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integrated producer. In 1979 it took over 13 man hours to produce one tonne of liquid steel. Today it takes less than five man hours. But that increase in efficiency has not been achieved painlessly—witness the most recent closure at British Steel's Ravenscraig works. The Government are in accord with the committee and a number of noble Lords who have spoken in urging other countries to find the political will to take similar decisions now. Shelving those problems means that even more draconian measures will be needed at a later date.
The three major impending requests for derogations from the aid code are in the Basque region of Spain, the heel of Italy, and former GDR territory near the Polish border. The noble Lord, Lord Thomson of Monifieth, highlighted that those areas are characterised by high unemployment and by their dependence on the steel industry. For political and social reasons steel companies in those areas have been kept going by state subsidies. Regrettably, in those circumstances it is probably inevitable that some strictly time-limited aid may be needed to allow companies to rationalise so that they can then operate on a market basis.
However, we will only agree to those requests if certain strict conditions are met. We shall need to be satisfied that the unsubsidised UK industry will not be disadvantaged by those proposals. Therefore, in exchange for additional state aid we will seek to insist upon substantial, early and permanent reductions in capacity, and we are opposed to any new aided capacity. Finally, and most importantly, we will not sign up to any agreement until it is clear that running cost subsidies are strictly under control.
I am glad to inform the House that there has been some progress on those outstanding state aid cases since the publication of the committee's report, following intensive discussions between the Commission and countries concerned and following the Industry Council meeting last month. Those hold the key to the success of the whole restructuring initiative. However, much has still to be done before the proposals are acceptable to the UK. We need to be fully satisfied that any agreement takes full account of UK concerns. My right honourable friend the Minister for Industry made our views clear to the Council of Industry Ministers in September, and secured useful references to the elimination of running cost subsidies, to capacity reductions and to no new state aided capacity in the Council conclusions and Commission statements. We expect a more substantive debate on these matters at the next Industry Council meeting on 18th November.
The report states clearly that the future of the steel industry depends on it being ready to face the challenge of the single market and competition in world markets. The Government fully agree with that view. In that respect the expiry of the ECSC Treaty and its financial regime in 2002 will make a significant contribution to improving the EC industry's competitive position.
We also noted the committee's points about opening up our steel markets to competition from Central and East European countries. The issue was raised by my noble friend Lord Mersey and the noble Lord, Lord
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Peston. We are keen to promote trade with those countries and to improve access to EC markets, but we must ensure that the trade is fair. We believe that the limited measures agreed represent a reasonable balance between our desire to support the development of those countries' economies and the need to take limited action in respect of certain sensitive imports.
At the end of last year the UK agreed to the establishment of Community-wide restrictions on imports of certain sensitive steel products from the former Soviet Union, excluding the Baltic states, and from the Czech and Slovak republics. We argued for greater access at the February Industry Council and secured a reference to the relevant parts of the Edinburgh European Council conclusions. Those underlined the Community's commitment to support and encourage political growth.
Lord Bruce of Donington: My Lords, before the noble Viscount concludes, will he deal with an important point on which he has not given a definitive reply to date? He spoke of new arrangements and new agreements to be arrived at. Past experience has shown that some member states have no intention of keeping to the agreements that they sign. In the event that those new arrangements are not properly enforced by the Commission, will the noble Viscount assure the House that the matter will be taken before the European Court of Justice?
Viscount Goschen: My Lords, we do not discount any option such as that referred to by the noble Lord, Lord Bruce of Donington. We would perhaps be prepared to take such measures. However, it would be a drawn out process. Last autumn we and the UK steel industry believed that it was likely to be more expeditious to discuss an agreement in the Industry Council. If there is no agreement in November, we shall reconsider what action needs to be taken and again we shall explore all options.
Before the intervention, I was passing to the problems of the eastern European countries. I stated that we argued for greater access at the February Industry Council and secured a reference to the relevant parts of the Edinburgh European Council's conclusions. Those underlined the Community's commitment to support and encourage political growth as well as developing trade, investment and technical co-operation with the former Soviet Union and central and east European countries. My right honourable friend the Prime Minister also gave a general assurance to the Russian Prime Minister last March that the UK would try and ensure that no Community safeguard or unfair trade action would be taken unless it were clearly justified, and the Commission has endorsed that.
In autumn 1992 negotiations re-commenced on a multilateral steel arrangement (MSA), which aims to put in place a "GATT plus" international trading regime for steel by dismantling tariff and non-tariff barriers and imposing strict disciplines on subsidies. The negotiations have made less progress than we would have liked and are currently hampered by fundamental disagreement between the main contracting parties on the way forward. The main difficulties lie in the permissibility of

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certain types of subsidy and action that might be taken against them. The Government attach high priority to agreeing a satisfactory MSA which will end the chronic international wrangling which we have experienced and which has bedevilled trade in this product, and the extensive subsidisation of inefficient production for over 20 years.
Finally, I stress that the Government's overriding priority in respect of EC steel restructuring is to create an EC market in which the UK steel industry can trade freely and without unfair competition. We will act vigorously when the unfair and illegal actions of others serve to disadvantage the UK industry. We are determined to see the reorganisation of the Community steel industry completed as soon as possible and in a way which would achieve sufficient capacity cuts to ensure the industry's lasting competitiveness. The committee has made a valuable contribution to current discussion on EC steel restructuring. We appreciate that and thank the committee for the work that it has done.
5.8 p.m.
Lord Ezra: My Lords, in winding up the debate, I wish to express appreciation to the noble Viscount, Lord Goschen, for the relatively short notice at which he spoke on behalf of the Government and for the wide ranging reply that he gave us. I wish also to thank the members of my committee, without whose help this report and others would never have been prepared.
I am grateful to noble Lords from the committee who have spoken in the debate; namely, the noble Lords, Lord Holderness, Lord Elibank and Lord Geddes, and the noble Viscount, Lord Mersey. I am sure that another noble Lord who sits in this Chamber would have spoken had he not in the meantime been elevated to the Front Bench. I refer to the noble Lord, Lord Mackay of Ardbrecknish, whom I congratulate. I only wish that his elevation had occurred a little later so that he could have spoken in our debate today. I am also most obliged to the noble Lord, Lord Boston of Faversham, for the sympathetic support which, as chairman of the Select Committee, he has always given us in our endeavours.
I believe that today's debate has shown one of the strengths of our House, that through our committee structure we are capable of taking a specific problem away, looking at it in depth—in this case in relatively short order because of the timetable—and leading it to such an informed debate not only by members of the committee but also by other noble Lords who have spared the time to come here. We have been totally unanimous in what we feel should happen. However, what has been particularly important about the debate is that we have shown that it spreads beyond the steel industry in the Community, important though that issue is. It raises questions about how effectively the single market: will operate. It raises questions of the world competitiveness of EC industries. Above all, there is the point made particularly by the noble Lord, Lord Peston: it raises the whole question of how together we shall deal with the problem of structural unemployment.
I believe that we have had a useful afternoon. The speeches were as brief and to the point as the report
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which gave rise to the debate. Perhaps that is an example which may be of interest on future occasions. I ask that the report be noted.
On Question, Motion agreed to.

Northern Ireland
5.10 p.m.
The Parliamentary Under-Secretary of State, Northern Ireland Office (The Earl of Arran): My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Northern Ireland. The Statement is as follows:
"At around half-past nine on Saturday morning a house in North Belfast was taken over by two masked men who said they were members of the Provisional IRA. The occupant of the house was forcibly detained in an upstairs room for some three-and-a-half hours. His car was stolen.
"Shortly after 1 p.m. a similar car was seen parked on the Shankill Road, close to Berlin Street. Two men got out of the vehicle. One was carrying a box. Both walked from the car into Mr. John Frizzell's fish shop at 275 Shankill Road. At eleven minutes past one a bomb exploded inside the shop, which is on the ground floor of a three-storey building. This is a popular shopping area which at the time was especially crowded with people doing their weekend shopping. The building was completely demolished.
"The police, fire and ambulance services were quickly there, and a major rescue operation ensued, with local people providing tremendous help. The injured were taken to a number of Belfast hospitals whose medical and other staff responded immediately. The work of all concerned, both at the scene and in the hospitals, was beyond praise. I am most grateful for the tributes so widely paid to them, to which I gratefully add my own today.
"Ten people died: two children; four women and four men. They included a seven year-old girl and her parents; the owner of the shop, Mr. Frizzell, and his daughter; a wife and her husband; a 38 year-old woman and a 13 year-old girl on an errand for her mother. Fifty-seven people were injured, ranging from young children to elderly shoppers.
"In a statement on Saturday afternoon the Provisional IRA claimed responsibility for this atrocious act. They subsequently said that some of those who carried it out were unaccounted for.
"The Chief Constable of the RUC took immediate steps to safeguard security. In particular, more police and military manpower has been deployed in Belfast and other areas. Two people have been arrested in connection with the explosion.
"The whole House will condemn with revulsion Saturday's hideous attack. There can be no possible doubt about this: these people intended in any event to commit mass murder and to commit it in a busy street full of Saturday shoppers and their children.

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Once again the Provisional IRA has taken away the lives of children, along with those of ordinary men and women who in two instances were their parents.
"The natural reaction of humane men and women to crimes of this enormity is one of rage. The restraint and dignity shown by the people of the Shankill are therefore all the more to be admired. Horrible though the provocation is, I urge the whole community in Belfast and throughout Northern Ireland to continue to show equal self-control in the days ahead. I share the Chief Constable's belief that it will do so.
"Reason tells us that revenge merely multiplies the murder and injustice it reacts against; and reason, not rage, must be our guide. Reason tells us that all violence, from whatever quarter, and certainly including recent loyalist attacks—which have already resulted in another murder since Saturday—must be consistently and universally condemned. But reason also tells us that in this democracy those who commit these terrible crimes, those who commission them and those who justify them must not be bargained with.
"To the innocent victims of this attack and those near and dear to them our heartfelt sympathies go out. I assure them and the people of Northern Ireland that the RUC, with the Government's full support, will spare no effort to track down the remainder of these criminals and to protect the public from others like them. The RUC needs, and it deserves, the help of everyone.
"To those who did this terrible thing and to those who justify the use of violence the message, and the only message, is this. In this democracy no political purpose, whatever it may be, will be advanced by a single inch through the use or the threat of violence. No campaign, however horrible or protracted, will shift us from that determination.
"Finally, this atrocity surely reinforces the challenge to all the participants, including the two Governments, who are currently involved as constitutional politicians in the urgent search for a solution to Northern Ireland's political problems. In this democracy it is only through dialogue—dialogue between those who unequivocally reject the use or threat of violence—that the foundation will in the end he found for a fair and hence a lasting peace."
My Lords, that concludes the Statement.
5.17 p.m.
Lord Prys-Davies: My Lords, I should like to thank the Minister for repeating the Statement made in another place. I am sure that the whole House will join him in condemning with revulsion the appalling atrocity in the Shankill Road last Saturday afternoon and in expressing immense sorrow and sympathy to the families of the innocent people who have so suddenly been bereaved and the 57 innocent people who have been injured. At the same time, there is no concealing that it is deeply disappointing that these dreadful events have led to the need for this Statement.
I am assured by the reasoned tenor of the Statement—and we on these Benches support its central theme
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—that reason, not rage, even in this situation, must guide our response. I am glad to note that the Statement confirms that no effort will be spared to track down the criminals. Although I do not doubt for one moment the Government's intention in that respect, it should be said that that assurance has been embedded in Statements which have been made time after time after every act of carnage in Northern Ireland during the past 25 years. So the people of Northern Ireland will say: "We have been here before". But the sad fact remains that the men of violence have not been defeated, and on the evidence which is observable to outsiders, they are unlikely to be defeated in the absence of a political solution.
We appreciate that there is a huge amount of courageous work being undertaken by the approximately 30,000 members of the security forces deployed in Northern Ireland. But perhaps I may ask the Minister whether the Chief Constable of the RUC and the General Officer Commanding are satisfied that they have the manpower which they require. Is the Chief Constable asking for more resources?
This morning on the radio the Anglican Primate of All Ireland, Dr. Robin Eames, spoke, I thought, with deep conviction and feeling. I hope that Ministers of both Governments will ask themselves the question which the Archbishop posed: "Is there anything else we have not tried?"
We must urge Ministers of both governments to respond to the political challenge and to redouble, and treble, their efforts to seek to agree proposals which both Governments can support and which could lead to a lasting solution—although no one pretends that that will be an easy task. In fairness to the Government, I believe that that point is made in the closing part of the Statement. Meanwhile, we must never forget that it is innocent men, women and children who are being killed and injured by the men of violence and who are, first and foremost, the losers from the failure to seek a reconciliation.
Lord Holme of Cheltenham: My Lords, I too should like to thank the noble Earl for repeating the Statement of his right honourable friend in another place. From these Benches I should like to express our deepest sympathy to the families of those bereaved, particularly perhaps the four women and two children whose loved ones were snatched away so brutally and unexpectedly. I should also like to express our best wishes to the 57 people who were injured in this horrendous atrocity.
We in this House must hope and urge, as the Government and the Chief Constable have urged, that calm prevails in the next few days so that there is no bloody escalation of tit-for-tat violence across the communities. Is the noble Earl satisfied that the Government believe that for the next week or two of acute pressure they have adequate forces on the ground, adequate intelligence and an adequate state of alert?
In the longer term, however, we should remember the overriding need for the political progress to which the Statement refers. In the end, hopelessness will be the best ally of the terrorist. When may we expect to hear from the two Governments? I know very well how

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sensitive this matter is. I know that the two Governments, and Mr. Michael Ancram, are canvassing the two constitutional parties. I should like to express in this House the wish that all the constitutional parties will do their best to respond positively and specifically work out what each of them is prepared to give up in the cause of peace; what sacrifices and compromises they are prepared to make in this appalling situation. I certainly say that it is no time for the leader of any responsible party to be sulking in his tent.
Finally, I wonder how much the document from Messrs. Hume and Adams is helping in the current situation. This is a mysterious document in that we do not know what it says. It is also a much travelled document. It has been to America and to Dublin, but it does not seem yet to have to come to London. Certainly this House and the other place have yet to know what it says. I wonder whether it might not be a distraction from the central need to get the constitutional parties together to make progress.
I do riot want to mar this sad occasion with too strong an al tack on any of the participants, but in regard to Mr. Adams' performance last night and this morning—and, incidentally, if I had to hear him at all, I would prefer to hear him speaking in his own voice rather than in that of an actor—I thought that his remarks were breathtaking in their effrontery, particularly in view of the mainland bombings which have followed today. Does the noble Earl agree that to cause havoc and then promise, if only you can be given what you want, to have a word with your partner about it with a view to stopping it is the language of a protection racket, and that must not be encouraged in any way whatsoever?
Noble Lords: Hear, hear!
The Earl of Arran: My Lords, I am extremely grateful for the expressions of total condemnation of these violent, heinous acts, these crimes against mankind in Northern Ireland. I am also grateful to the noble Lords, Lord Prys-Davies and Lord Holme of Cheltenham, for their sympathy towards those who mourn and their best wishes to those who have been maimed or injured for a speedy recovery.
The noble Lord, Lord Prys-Davies, quite rightly asks about the security forces in the next few weeks, as does the noble Lord, Lord Holme of Cheltenham. As the noble Lord, Lord Prys-Davies, has already said, there are some 30,000 security forces—the RUC and soldiers—already serving in Northern Ireland. My right honourable friend the Prime Minister has certainly said that he will always at all times have sufficient forces in Northern Ireland to combat terrorism. Obviously, we shall continue to devote all resources necessary to security.
Certainly, the Chief Constable has made a number of redeployments of police and troops in the light of Saturday's atrocity. Clearly, if the Chief Constable feels that he needs further manpower to deal with the security situation, I have no doubt that he will put a request to my right honourable and learned friend. Of course, as both noble Lords know well—indeed, as all noble Lords
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know very well—the level of forces is kept under careful review. We would not wish to speculate about any particular future changes.
The noble Lord mentioned Archbishop Eames and said words to the effect that the Archbishop is quoted as having asked: is there anything else that we can do in these circumstances? Over the years successive governments have tried everything in their power to bring about a peaceful settlement. If the Archbishop has some particularly useful suggestions I am sure that he will not hesitate to come forward and put them to my right honourable and learned friend.
The noble Lord, Lord Holme of Cheltenham, is quite right about the talks that are going on. The Government have embarked on a process of further private discussions with the constitutional parties to explore the basis upon which they can come together for further dialogue. The aim is threefold: first, to establish areas of common agreement; secondly, to explore areas of continued apprehension or disagreement; and, thirdly and perhaps most importantly, to try to identify the degree of flexibility which may be needed on all sides to resolve them. As regards the question of timing, I am sure that the noble Lord will appreciate that no specific time has been set in the event of endeavouring to come to a solution.
The noble Lord, Lord Holme of Cheltenham, mentioned the Hume-Adams talks. Obviously, Mr. Hume's talks with Mr. Adams are a matter for his own judgment. I believe that the noble Lord understands perfectly well the position of the Government. It has been made clear very often. We will not engage in talks or negotiations with those who use, support or threaten violence to advance their political objectives.
5.28 p.m.
Lord Mason of Barnsley: My Lords, I should like to join with other Members of this House in expressing much regret and sadness for those who have lost their loved ones in this latest despicable terrorist outrage. Is the Minister aware that it is now obvious that the Provisional IRA was not listening to the Hume-Adams dialogue? Indeed, it was not involved and did not want to know. Is he also aware that, tragically, the talks sparked off a campaign of Catholic killing by the Protestant paramilitaries who were afraid of the rumoured nationalist alliance of Provisional Sinn Fein, Social Democratic and Labour Party and Dublin? Then John Hume, presenting his peace progress suggestions to Dublin and America and ignoring Her Majesty's Government, made matters even worse. Although John Hume tried, those talks are best forgotten. Is the Minister further aware that Gerry Adams is now seen not to be trusted, and in the Province and in talks of this kind is totally irrelevant?
I should like to ask the Minister just one question, because on security much has been said and done. Why do not Her Majesty's Government consider selective detention, a round-up of senior, known suspects—Provisional IRA, Ulster Volunteer Force and Ulster Freedom Fighters—which would take the tension out of the situation, ease the fears of all the people in the Province and hopefully minimise the backlash?
The Earl of Arran: My Lords, regarding selective detention—in other words, internment—as the noble Lord knows very well, that power remains on the statute book, but it would be brought into force only in very particular circumstances; and it is certainly not government policy to discuss what those might be. My right honourable and learned friend has it available to use it if he judges it appropriate.
Lord Fitt: My Lords, the Minister will be aware that in Northern Ireland today there is sorrow, sadness, heartbreak and despair, not only on the Shankill Road but throughout Northern Ireland, because of the terrible, murderous activity of the IRA on Saturday. But added to that there is a great feeling of uncertainty. That is because of the uncertain constitutional position in Northern Ireland, particularly since 1985, since the Anglo-Irish Agreement which was negotiated without any contact at all with the majority community.
Since then in Northern Ireland there has been an air of triumphant nationalism which has caused fear and suspicion among the Protestant majority community. They feel that some way or other moves are taking place behind the scenes which will endanger their position within the United Kingdom. Since then there has been a series of talks—the Brooke talks and the Mayhew talks—with what we refer to as the constitutional parties. Of those constitutional parties there is one—the SDLP—which wants to change the constitution of Northern Ireland and which has entered into discussions with the sworn enemies of the Protestant and Unionist people to change the constitution and to incorporate them into Ireland against their will. Is it any wonder that under such circumstances fear and despair are rampant every second of every minute of every day in Northern Ireland?
I spoke to Robin Eames this morning. I was in the depths of despair about what happened on Saturday and so was he. We spoke of the terrible tragedy and the blood that had been spilt in Northern Ireland. He asked whether there was anything that the politicians could do. The politicians who were involved in the last set of talks—the constitutional politicians—were much too ambitious. Some of them were deliberately too ambitious because they said that nothing was agreed until everything was agreed. Strand 1 would bring about concessions within Northern Ireland. Strand 2 would then involve negotiations across the Border; and Strand 3 would follow. There is absolutely no doubt that agreement could have been found within the limits of Strand 1. The Protestant community and nationalist community could have reached agreement to create political structures in Northern Ireland. But when it came to Strand 2 difficulties arose. It should clearly be stated here that it was the SDLP, allied with the Dublin Government, which wrecked the Strand 1 talks in Northern Ireland.
What happened after those talks failed? The Leader of the SDLP entered into discussions with Gerry Adams, the spokesman for the most murderous organisation that has ever appeared in the whole sad, tragic history of Ireland. What does that convey to the majority population? It conveys fear.
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I have no intention of overstepping or of limiting the discussion. The situation is much too serious in Northern Ireland. It may curtail my remarks. I ask whether there is anything that can be done and reply that yes, there is something. The talks should begin again in Northern Ireland between the constitutional parties. But they must be told that the Border is not an issue. They must be told to find elements of agreement within Northern Ireland and, after having found a reason to learn to live together, then at some time in the future to talk about the eventual—but maybe the eventual—reunification of Ireland.
First of all, John Hume will have to realise that he may be a good communicator in Brussels, Dublin, New York and other parts of the world. But the most important place to communicate is in Northern Ireland with a majority Protestant community. Without their agreement there is no peace in the foreseeable future in Northern Ireland.
The Earl of Arran: My Lords, perhaps I may just say with great respect to the noble Lord that there are people in Northern Ireland who have yet to receive Christian burial and perhaps it might be somewhat insensitive, indelicate and improper to go into deep political discussion at this moment. I shall make just two remarks. First, there is unanimous acceptance that the status quo is not a viable option—everyone wants a settlement. Secondly, there is a general recognition of significant areas of agreement in the 1992 talks, even if much was on a contingent basis.
Lord Merlyn-Rees: My Lords, we have had too many such bloodbaths in Northern Ireland and on the mainland. I join in the condemnation of such acts. However, I must tell your Lordships that the Protestant paramilitaries love it. The more condemnation there is, and the more there is in the papers, the more they feel a sense of victory. They have been mentioned in dispatches. Unimportant people have become important in the United Kingdom. There is no way out of that situation; but they love it.
I should like to express the hope that what happened in the Shankill Road, which has made everybody feel so terrible, will not lead us to believe that it will bring conciliation, because it will not. We have said too many times before that the horror will make decent people say, "We have to do something". One has only to look at the history of the past century. The Liberals tried to do something about Home Rule. How many times did they call on the decent majority in Ireland to stand up and be counted? They never stood up. It is the paramilitaries who stand up and are counted.
I met the Provisional IRA twice when I was in Opposition with my noble friend Lord Wilson. I and my staff spoke with them after the Birmingham bombings—which goes against what I have just said. It is my view that the Birmingham bombings horrified even the Provisional IRA and that they went for some sort of ceasefire. We tried to find a way that the IRA could get out of violence. Some of them said that they were afraid to walk the streets without a gun and if they gave up

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violence how could they walk the streets without a gun? That was the nature of it. They cannot deliver. They get 2 per cent. of the votes in Northern Ireland.
The only people who can win through in Ireland as a whole are the constitutional politicians. I say to my noble friend Lord Mason that I ended detention without trial because of the advice that had been given to me. It was badly done, and I can see that now; it was done badly, and understandably so. It led to the revival of the Provisional IRA, which was a new group at that time. My information is that one of the aims of the Provisional IRA is a return to detention. It is the best thing that they can have to obtain more recruits. I wish the Government well, but I hope that no one thinks that there is an easy way through.
The Earl of Arran: My Lords, the Government are fully aware that there is no easy way through this situation. That is why we are in steadfast talks at the moment and that is why the talks progressed reasonably well last year. I have already expressed to the noble Lord, Lord Mason, and the other noble Lord the Government's view about selective detention; it is an option for the Secretary of State if he wishes to use it. But what your Lordships, and I am sure the whole of this country, are keen to bring about is a settlement which is acceptable to the people of Northern Ireland.
Lord Lyell: My Lords, from these Benches perhaps we can thank my noble friend for making this Statement this afternoon. We thank him and his ministerial team, including my right honourable and learned friend the Secretary of State, for all the work that they do that is not seen and not necessarily appreciated except on tragic occasions such as recently experienced within Northern Ireland. It is the work done by my noble friend and the ministerial team that provides the climate for the ministerial and other talks that have gone some way towards helping to solve the situation in Northern Ireland.
Perhaps my noble friend will agree that the only way to continue talks is, first, to restrict them to discussions between constitutional parties; secondly, to promote the talks between my noble friend and the ministerial team in the Northern Ireland Office and their counterparts in Dublin; and, thirdly, to do all that at the right time. Today, this week or next month may not be the right time, and the current climate of media-driven and fevered excitement that we have had since Saturday, with all kinds of media persons suggesting that something should be done, is not the right time. Can my noble friend confirm that diplomacy and the style in which he and my right honourable and learned friend the Secretary of State are continuing the talks is the only successful way to make the substantial progress that has been made over the past few years?
The Earl of Arran: My Lords, I thank my noble friend for those comments. I agree with him. I remind my noble friend that Ministers are there to do a job, which they do to the best of their ability. It is not thanks to us but to the security forces out there and to the steadfastness of the people of Northern Ireland who, in spite of all the atrocities, go on about their daily lives.
Lord Chalfont: My Lords, mention has been made of the performance of Mr. Gerry Adams on television. Am I not right in believing that there is a. law designed to prevent people like Mr. Adams using television as a platform? Is the Minister aware that at least twice in the past few days Mr. Adams has been interviewed face to face on television, using the transparent device of an actor's voice to put forward his views?
Should not the law be enforced in such a way that it achieves the end that it was meant to achieve? It seems clear to me that both Mr. Adams and the television people are thumbing their noses at the Government. If the law is not enforced, perhaps it should he removed altogether. At the moment the whole thing is descending into farce.
The Earl of Arran: My Lords, I take particular note of what the noble Lord, Lord Chalfont, says. I confess that I am not totally aware of the law as it stands at the moment. The fact that the noble Lord brought the matter up suggests that the law is being improperly used. I shall immediately convey that to my right honourable and learned friend.

The Public Record Office
5.43 p.m.
Lord Teviot Lord Teviot rose to ask Her Majesty's Government what action they propose to take to implement the recommendations for the Public Record Office, contained in the Open Government White Paper (Cm. 2290).
The noble Lord said: My Lords, one comes into the House early to feel the mood of the House beforehand. One hears about the sad and desperate situation of the present and must then talk of the not too recent history. However, one must try to get in the right mood to enable one to talk a certain amount of sense. But it is always pleasant to talk of matters concerned with records.
Since the House debated public records and archives in 1977 the situation has been transformed by the ending of the cold war and the Government's Citizen's Charter. There have been a number of welcome initiatives from the Government culminating in the White Paper published in July this year. There has also been a fruitful dialogue between the Government and the historical profession. On an individual basis historians have made requests for papers to be reviewed; collectively, they have gathered under the auspices of the Institute of Contemporary British History—an excellent institution founded as recently as 1986. They have put forward general recommendations on the operation of the 30 years' rule and have made specific requests for the release of documents.
I want to mention the subject of reducing the times between reviews. Historians particularly welcome the reviews that my noble and learned friend the Lord Chancellor and my right honourable friend the Chancellor of the Duchy of Lancaster initiated, and the releases that have already taken place. For example, there have been over 400 records released by the Foreign Office. I would press my noble and learned friend on a number of matters resulting from these

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exciting developments. In some cases requests for release have been reviewed and a decision has been made not to release. In those cases a further review is planned in 10 or 20 years' time. Can my noble and learned friend try and minimise the time between reviews? Two examples of disclosure being deferred are the Cabinet Secretary's notebooks which date back to 1916, and the blanket ban on intelligence material. Historians accept the importance of protecting individuals who have helped the state. However, they feel that the blanket ban should be kept under regular review.
Another important point concerns the advisory council seeing documents. I had the privilege of serving on the advisory council of my noble and learned friend the Lord Chancellor between 1974 and 1982. The process was that of the rubber stamp. That was because only three members were security cleared. It was therefore rather difficult. The officer in the Public Record Office simply presented us with something that we had to accept. On one occasion we protested. The documents put forward concerned the Carlisle pubs which were nationalised in 1918. They should not have been involved at all. When one saw them they were basically concerned with managers being sacked for fiddling the tills. It is hardly the same thing that we are discussing now.
Has my noble and learned friend made a decision as to whether or not members of the advisory council on public records will in future be able to see the actual records under discussion, bearing in mind the background I have given. Can he also give an assurance that members of the council will be security cleared? While the council will remain an advisory council, that reform would be most welcome. Indeed, it would be the greatest single measure that could be taken to enhance the confidence of the historical profession that the absolute minimum is being retained and only for truly convincing reasons.
I move on to the importance of the Public Record Office. I gather that there have been many discussions with historians in which help and advice has been given by the staff of the Public Record Office. I have been connected with the office for many years and have great respect for its staff. The advice has been deeply appreciated and genuine bridges have been built between the Government and their customers in the historical profession in line with the prime requirements of the Citizen's Charter. "Customers" is not my word, but the word given. Their presence at the meeting of historians which took place on 25th November 1992 and led to the detailed requests for releases was welcomed in the historians' report. It is hoped that this close relationship will be continued at a further meeting of historians that will take place on 25th November this year at the Institute of Historical Research when historians will consider their response to the White Paper. The movement towards open government will make the Public Record Office an increasingly vital resource for the historical profession. As the use of the PRO increases, can my noble and learned friend assure
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the House that the PRO will not be denied the resources necessary to fulfil the demands of more open government?
I turn to the centrality of history to open government strategy. The dialogue which has developed and the response of historians make clear that the needs of the historical profession are a central part of the open government strategy. The collective memory of the nation must be as full and as accurate as possible if our history is not to fall into the hands of the hostile and the partisan. The ending of the cold war has critically important implications in this respect. To understand the experience of this country in that period it is necessary to have as full an access as possible to the records of government. Will my noble and learned friend reaffirm the Government's unequivocal commitment to this central strand of the nation's heritage?
We should also consider the wider world, a subject on which the noble Lord, Lord Mayhew, may say more. The peace process in the Middle East may well be ushering in a new age. Is it not time that we reviewed all the British Government's records on Palestine and perhaps other countries?
5.52 p.m.
Lord Mayhew: My Lords, I would certainly agree with the noble Lord, Lord Teviot, that the White Paper represents a move forward, but in my view it is a very small step. When the new measures are carried out it will leave the whole process illiberal, cumbersome and slow. It will be illiberal because the decisions on whether to release or close records is to be taken by Ministers—on the first 30 years, by departmental Ministers, and after that, by the Chancellor of the Duchy and the noble and learned Lord the Lord Chancellor.
The White Paper does not argue about whether Ministers are the best people to take the last decisions. There is simply no consideration of that at all. Yet it is surely questionable. The decisions to be taken will almost always be borderline interpretations of the criteria set out in the White Paper—would disclosure be harmful; would it cause distress to individuals; would it be contrary to the national interest; and so on. Why should it be supposed that Ministers are better qualified to take those decisions than, say, judges, or an ombudsman, or a panel of Privy Counsellors? I should have thought that the opposite is the case. Ministers will certainly be less disinterested than members of other professions. Politicians are not the most disinterested professionals in the country. I think that the question deserves further discussion.
A Minister is much less likely to be disinterested. The papers might embarrass his department or the department of a colleague; they might embarrass his party; they might even embarrass the Minister himself; whereas other people—experienced, responsible outsiders—are capable of taking these decisions in a way which would probably not only be fairer but would be seen to be fairer.
Another criticism I have of the White Paper is that it fails to deal with the administrative problems of reviewing records. One gets the impression that the system is overloaded, that there is a backlog of retained

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papers, of records which have accumulated year after year because of excessive caution. I should have liked the White Paper to have told us how many reviewers there are; how many records are awaiting review. The White Paper is entirely silent on this point. It tells us that 30 miles of records are reviewed every year by departments at the first stage and that four and one-third miles are reviewed by departments at the 30 year stage. But those figures are meaningless. What is a mile of records? Perhaps the noble and learned Lord will explain what that means. We need figures of a much more practical kind.
For instance, what is the average time taken by the reviewer to dispose of a set number of records? How many reviewers are there? What is the backlog, if any? Is the backlog growing or diminishing? In that way we might get a clear picture of what I think is a problem; namely, the administrative problem of reviewing records.
No one will dispute the need to maintain a certain level of confidentiality in official papers. That goes without saying. But the standards of confidentiality are changing dramatically. A strange anomaly is emerging, a contrast between the standards of confidentiality laid down in the White Paper and the standards observed in ministerial memoirs. For instance, the White Paper lays down, in paragraph 9.13, that confidentiality must be observed in the case of:
"Exceptionally sensitive records containing information, the disclosure of which would not be in the public interest in that it would harm…internatior al relations".
At the same time we have free publication by a former Prime Minister of her efforts to frustrate German reunification, revelations which have certainly harmed Anglo-German relations.
Similarly, the White Paper lays down that records should not be released which contain information about individuals, the disclosure of which would cause distress. But causing distress to individuals appears to be a major aim of recent ministerial memoirs, which freely report confidential Cabinet proceedings and confidential advice to Ministers from their colleagues or from civil servants or from service chiefs—no doubt to the distress of many of them. I venture to suggest that if ministerial memoirs were subject to the restrictions laid down in the White Paper on open government they would undoubtedly be suppressed for at least 30 years. Therefore, all the more objectionable is the closure of records needed by historians and others which could do no harm to anyone.
Perhaps I may give an example of which I have given the noble and learned Lord notice. Why are the records of the information research department of the Foreign Office not yet released after more than 40 years? Historians have complained about that. Perhaps the noble Lord, Lord Teviot, will complain about it again at the meeting in November. I should be very much obliged if he would.
For example, in the Evening Standard and in an authentic history called British Intelligence Strategy and the Cold War 1945–51 the author, Richard Aldrich, writes:
"Why are the records of an organisation [with reference to the information and research department] ostensibly existing to
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provide information retained after more than forty years? Did British strategy for propaganda and political warfare assist in the securing of Western Europe from the communist threat and the unleashing of ideological forces that eventually overwhelmed the East European regimes? Even if the British psychological crusade in the Cold War is now acknowledged by historians, its nature and purpose await further research".
I must now declare a small personal interest. Since I founded and directed the information and research department, I thought that I would fill this gap in hi story by writing a book about that department. The Foreign Office approved the idea but the Parliamentary Under-Secretary, Mr. Lennox-Boyd wrote to me:
"As you probably know, IRD's internal records are retained in the FCO pending review. At this stage it is difficult to say either when they, or what proportion of them, will be released to the PRO".
At Mr. Lennox-Boyd's advice, I contacted the head of the Foreign Office library and records department, who was courteous and sympathetic, but stressed the administrative difficulty of reviewing so many records in different departments. It may well be that administration is at the heart of the difficulty. I certainly cannot believe that anyone could argue that these records were secret or sensitive. I say that not only because of the long period of time which has elapsed, but because one of my less happy actions at IRD was to appoint to this secret department an official who showed at interview a most remarkable grasp of Soviet propaganda. This was Mr. Guy Burgess Therefore I cannot believe that secrecy is a reason for withholding these documents. I have now applied to the Russian archives for material on IRD.
I do not want to give an impression that I doubt the good intentions that have gone into this White Paper. In small detail it makes some steps forward, but all my experience suggests that it could be more liberal; it could be better administered and it should and could release for historians and others a much better flow of hitherto secret public papers.
6.3 p.m.
Lord Irvine of Lairg: My Lords, the Government say in the White Paper,
"in furtherance of the policy of greater openness"
they intend to place the emphasis
"firmly on release rather than retention"
of public records. That is both a necessary and a desirable policy goal. But the Government's approach to achieving that goal falls short of providing adequate means for ensuring that public documents are retained only when genuinely necessary in the public interest. The White Paper states,
"In future more information will be released through changes in the criteria governing decisions to withhold material for longer than 30 years".
However, no proposals for either the amendment or repeal of the Public Records Acts of 1958 arid 1967 are forthcoming.
The judgment of my party is that the need to secure freedom of information is of such importance that it must be safeguarded by statute. The Government's proposal to secure that freedom by changes in the guidelines or criteria surrounding the existing law provides no basis for challenging the exercise by the noble and learned Lord the Lord Chancellor of his

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discretion in relation to the release of public records. Moreover, it provides for only limited independent scrutiny of decisions to withhold records from the public domain. The shortcomings of the present system were highlighted most succinctly by the late Lord Devlin. He said,
"the danger of the system is that it installs, as judges of what ought to be revealed, men whose interest it is to conceal".
Whilst the temptation to suppress potentially embarrassing or "inconvenient" disclosures can never be eliminated, the imposition of a clear and comprehensive statutory framework would minimise the risk that records will be unjustifiably withheld from the public domain. Moreover, the introduction of some independent form of scrutiny would help to ensure that politicians and administrators cannot exercise their discretion in a self-serving way.
It was with this aim in mind that the committee under the chairmanship of Sir Duncan Wilson recommended in its report published in 1981 that the advisory council which currently assists the Lord Chancellor should play a larger role in providing him with an independent source of advice on questions of extended nondisclosure and retention of records by government departments. In particular, the Wilson Committee recommended that a sub-committee of Privy Councillors should be set up to scrutinise applications relating to information considered to be of a most sensitive nature.
The Government rejected this important recommendation of the Wilson Committee. It stated in their response that:
"The evaluation of the sensitivity of public records … requires an intimate knowledge of current policies and developments which Advisory Council members … cannot be expected to have".
That is very patronising. I would say that the evaluation of the sensitivity of public records requires a degree of independence and objectivity which the policy-makers cannot be expected to have. Whilst the Government's paternalist philosophy prevails, the British people will have no adequate safeguard against the abuse of the present system by self-serving Ministers and civil servants. Moreover, this philosophy is the very antithesis of open government to which so much lip-service is currently paid by the Government.
We say that in the field of freedom of information, the British people deserve more than just a re-hash of the old regime of paternalism and secrecy. A comprehensive statutory review of the procedure for release of public records should form part of a new Freedom of Information Act. Three basic provisions of such an Act would break the traditional mould. The first would give statutory force to the criteria to be imposed by the Lord Chancellor in deciding whether to retain records beyond the 30-year period. The second would require reasons to be given for the retention of any records beyond a period of 30 years; and the third would give an enhanced statutory role to the Advisory Council, in order to introduce a greater element of independence into decisions relating to the retention of public records.
By contrast with these proposals, the Government's approach amounts to little more than a change in
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emphasis in the present system. Yet this is the system which led to the following official memoranda being listed in January 1989 as closed for a whole century: prison reform and lengths of sentence (1913–17); forcible feeding in reformatory schools (1910); the sterilization of mental defectives (1911–30); imprisonment and forcible feeding of suffragettes (1913); imprisonment of Emily Pankhurst (1913–17); industrial unrest and strikes (1918); experiments on animals with poison gas (1913–16); instructions to police on sedition charges against socialists (1912–18); Home Office practices in dealings with criminal lunatics (1913); coal–miners' strike (1919); flogging of vagrants (1919); decisions against prosecuting James Joyce's Ulysses (1924); Fascist marches (1936); and police reports on the activities of the National Council of Civil Liberties (1935–41). The list goes on.
Even under the Government's new proposals, there will be no obligation upon government departments to justify the withholding of historical records of this nature. Were they to choose to do so, no doubt the Government would seek to justify many of the retentions that I listed by reference to their guideline (at paragraph 9.21 on page 67 of the White Paper) that documents should be closed for 100 years if they contain,
"personally sensitive information which would substantially distress or endanger individuals or their descendants".
However, in practice, what is absolutely apparent from the subject matter of those records which are withheld is that it is the avoidance of embarrassment to the department or the Government of the day which is the overriding consideration. The mere theoretical possibility of distress to family members, so many years afterwards, cannot be allowed to override the public's general right to know how it has been governed in those critical areas.
It is an irony of this traditionally secretive approach that many of the documents withheld from the public in the United Kingdom are sent, under bilateral arrangements, to other countries which do possess freedom of information legislation and where, as a result, they become immediately open to inspection. British historians are forced to travel to Washington to inspect documents which, although stored in the Public Record Office here, are not available for inspection by the British public.
I also observe that there is no discussion whatever in the Government's White Paper of the possibility that some documents might be released before the period of 30 years has elapsed. What the White Paper says wholly uncritically about the 30 year rule (at paragraph 9.5 on page 62) is as follows:
"A thirty year period is now the standard adopted by the countries of the European Community … Retention of the overall 30 year period therefore seems appropriate and sensible".
That shows a remarkable affection for Europe. That reasoning exposes the Government's lack of rigour in addressing the question of freedom of information. We should not simply look to our immediate European neighbours and copy them. We should start from the principle that the public has a right of access to public documents, and then restrict that right only in so far as

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demonstrably necessary and justifiable. In that, we would be better to take a lead from the United States rather than our fellow European Community members.
The Government's ad hoc approach is based on the fallacy that individuals must simply take it on trust that politicians and administrators will act at all times in good faith and in the public interest. We shall have to await the outcome of the Scott Inquiry into British arms dealing with Iraq to see whether such trust might very recently have been misplaced. But, in any event, if the traditions of paternalism combined with secrecy which have pervaded British government administration for so long are to be overturned, the Government should be prepared to legislate against them. If they are not, the next Labour Government will fulfil their commitment to put a freedom of information Act on the statute book.
6.13 p.m.
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, I am grateful to my noble friend Lord Teviot for giving me this opportunity to explain the measures which are presently being taken to ensure that the Government's policy on public records, reflected in the recent White Paper Open Government, is carried forward. I believe that that is what the Question is about. I could not have expected every speaker to restrict himself to the Question. Therefore, I shall deal later with some matters which went somewhat wide of the Question.
The Government's policy, as stated in the White Paper, is that all public records should be released to the public unless there are truly compelling reasons why that should not be done. I believe that the recommendations contained in the relevant chapter of the White Paper, Chapter 9, illustrate the Government's commitment to that principle.
The Public Record Office, an executive agency for which I am responsible to Parliament, has a fundamental role in that context. It is responsible for advising individual government departments on which records, out of the vast amount of records which the business of government creates, should be preserved. It makes arrangements for the transfer of those records to its custody and is responsible for providing the public with access to these records once they have been so transferred.
The Public Record Office also has a crucially important role to play in the consideration of whether any of those records should properly be withheld from public scrutiny. The recommendations contained in the White Paper aim to enhance that role to ensure that all those responsible for the process by which documents are sought to be so withheld discharge those duties in accordance with the Government's policy. In considering the matter, and with a certain degree of experience as to how it operates, I am of the view that the most important change that could be made is made in introducing the concept of the harm test, under which the actual damage that would be caused by the release of an individual record must be established before it can be withheld. That test has thus been introduced and is the touchstone for all those, including myself, who are involved in any decision to withhold that record.
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No public record can be withheld from the public without the approval of the Lord Chancellor of the day. I have a very pronounced interest, therefore, in ensuring that the system works to deliver its goal of releasing documents rather than withholding them. The recommendations contained in Chapter 9 affect every part of the process. I will, if I may, first mention the recommendations which affect the Public Record Office most directly, then mention a number of other initiatives which will carry forward the principles behind the White Paper.
There are two recommendations of the White Paper which explicitly involve the Public Record Office. Those are the requirements that guidance should be drawn up for the benefit of reviewers in departments: first, to enable them to assess the element of substantial distress which might give rise to a proper application for closure; and, secondly, core guidance drawn up and disseminated to all departments to facilitate the changes resulting from the White Paper.
Clearly, the sorts of elements which will prompt an application based on substantial distress may be different from department to department. It is, therefore, important that each department issues correct guidance geared to the needs of its own reviewers, and that must be agreed with the Public Record Office so that all those involved are aware of the basis on which such an application is made. The Public Record Office is presently in the process of drafting such guidance for each department, and I expect the exercise to be completed shortly. The guidance will be reviewed over time to take account of the fact that what is considered a valid cause of substantial distress may change from time to time.
The core guidance disseminating the implications of the White Paper for all departments has already been drafted and circulated among departments. Again, it has been vitally important that the Public Record Office has approved the draft. The aim of the guidance is to inculcate into the minds of every person involved in the process by which applications for closure or retention are made the idea that unless the harm test r. referred to earlier is satisfied the application should not proceed. On its way from the initial decision by a reviewing officer to the approval of the Lord Chancellor such an application must go through a number of stages. I think that it is worth reminding the House of the process so that it is clear what I mean.
Each government department has a departmental records officer whose responsibility it is to select those records which are to be preserved and to identify those which may be released and those which should properly be closed at the Public Record Office or retained within the department under the provisions of the Public Record Acts. An official of the Public Record Office is responsible for providing guidance and advice to each department during the selection process. The department concerned must satisfy the Public Record Office with its justification for making an application for closure or retention. I suggest to your Lordships that it is clear that the Public Record Office and its officials have no responsibility for the kind of policy decisions that are the subject matter of other departments. The

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Public Record Office assesses whether the application is justified and, if so, includes it in a submission to my Advisory Council on Public Records, a body wholly independent of government, which will then advise me whether to accept the application.
The Public Record Office must bear in mind that the Advisory Council on Public Records, which is chaired by the Master of the Rolls, will in its turn be scrutinising the justification for the application and the council will not accept it if not satisfied. Once the advisory council has advised me that it accepts the application, I in turn scrutinise the justification for the application, and only if I too am satisfied with such justification will I sign a formal instrument allowing the records in question to be either retained within government departments or transferred to the Public Record Office where they are closed to the public for a specified period.
As I have said, it is in inculcating the need adequately to demonstrate the actual harm that would arise from release of the records at every level of that process that the greatest progress will be achieved in ensuring greater release of records. The need to justify always to the next appropriate level every application for closure or retention will ensure that any temptation to err on the side of what may appear to be safety, to the detriment of release of the records, will be avoided.
I have already mentioned my Advisory Council on Public Records and I should like to return to that subject. To date I have relied on the council, which is wholly independent of government, to advise me on applications from departments for the closure of records at the Public Record Office but not on applications for records to be retained within departments. That was the original structure. From now on, as a result of the recommendations of the White Paper, the advisory council will advise me also on applications for the retention of records within departments. I regard that as an extremely important step forward and, in so far as being liberal can be regarded as a seal of approval, I consider it to be a liberal step as well.
In addition, the council will now have an important role in considering requests which have been made to departments by historians, or indeed other members of the public, for the release of documents where those requests have been refused by the department concerned.
My right honourable friend the Chancellor of the Duchy of Lancaster, with my support, extended in the summer of 1992 an offer to historians to let him know of records which they would like to see released, an invitation to which, I may fairly say, they have not been slow in responding, and indeed I understand that a great deal of material has been released as a result of those requests. Where, however, a department believes that there is good reason to continue to close or retain the records in question, it is now intended that the advisory council should be able to consider whether the records should continue to be closed or retained and advise me accordingly. In the case of those records which have been closed in the past, of course, the council will in effect be reviewing its earlier advice that a given record should be closed.
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Remaining with the subject of the advisory council, I should like to take this opportunity to announce to the House an important change in the way in which the council will now operate. It has been a criticism often levelled at the council in the past that its members have not been allowed properly to assess the case for withholding records because they have been unable to inspect the records themselves. Indeed, the proposal that the council should be allowed to see the records was rejected by the Government, after careful consideration, in their response in 1982 to the report by Sir Duncan Wilson, to which the noble Lord, Lord Irvine of Lairg, referred, during the tenure of my noble friend Lord Teviot as a member of the advisory council.
However, I am glad to say that the Government have now re-examined that matter and they have decided that from now on, where the council is unable to satisfy itself in any other way that an application for closure or retention is justified, the chairman, or a member of the council nominated by him, will be able to inspect the records himself. Having regard to the amount of records involved, that is important. It will have an important effect upon the whole scrutinising process.
It is unavoidable that there will always be a small number of matters that the Government must properly keep from any public scrutiny. For that reason the council will not be allowed physically to examine records which it is sought to withhold for reasons of security and intelligence. In such an instance it will remain open to the council, as it is now, to request that the Cabinet Secretary should examine the records and advise me accordingly. For all other records—a great many, as I have said—however, the power will be there. Extending the remit of the advisory council in that way is, in my view, an effective step and answers criticism that it is hampered in carrying out its duties. I believe that it will lend considerable authority and credibility to government decisions to withhold records only where that is absolutely necessary.
The White Paper proposals relating to public records represent a real and carefully considered commitment to more open government, the results of which are already becoming apparent. A great amount of material has already been released. I could not take down with complete accuracy all that the noble Lord, Lord Irvine of Lairg, read out, but if I am not mistaken those documents were closed for 100 years in 1958 or so. They have all now been released. The present policy has demonstrated just how effective it can be in releasing documents previously withheld.
I agree with the noble Lord, Lord Mayhew, that it is important that the reviewing process should continue. The figures in miles given in the White Paper relate to the selection process, not to scrutiny or sensitivity. The organisation of selection is a major element in the work of the records section of the nearly 150 organisations covered by the Public Records Act. In the White Paper the Government are giving an impression of the total amount of material that has to be considered. A mile of records means what it says. If one is responsible for providing bookshelves over the years, yards or miles are an important economic indicator of what is involved. No

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doubt it could be dealt with in other ways, but that is a reasonable way of indicating the volume of public records in question.
During the past year or so while this matter has been under consideration, many previously withheld records have been transferred to the Public Record Office. The backlog is being reduced. It is not growing.
The noble Lord, Lord Irvine of Lairg, was intent on telling us what would be a better policy. The better policy is to create a new Act of Parliament containing a number of mechanisms which, as far as I can make out, are all intended to secure the same policy that I have sought to explain. It is true that he would seek to add the possibility of action at law to the existing possibilities, but in my judgment that is unlikely to be more effective in producing results than the system which the White Paper has indicated.
My noble friend Lord Teviot mentioned the meeting of 25th November 1992, with its good atmosphere and good results. There will, as he said, be another meeting on 25th November of this year. The Public Record Office will be represented. The keeper and officials will be attending that meeting of historians to review progress and to see what more can be done. I express willingly the Government's commitment to the preservation of the nation's history and to giving the Public Record Office the necessary facilities to achieve that. The arrangements that we have put in place, with emphasis on the identification of the harm in the harm test to which I referred, will ensure that where at all possible public records are made available unless real harm can be demonstrated.
The noble Lord, Lord Mayhew, was interested in the institution which he set up and which he had a natural desire to write about. Many of the documents of the department are covered by the intelligence and security problem. It is right that, like all records maintained within departments, these records are reviewed at least every 10 years and subjected to the test of whether actual damage would be caused by their release. Arrangements for such reviews will require that they occur at least every 10 years. If particular attention is drawn to the documents it may be possible for the review to take place more quickly. That happened in relation to matters drawn to the attention of the Public Record Office by historians to whom reference has been made. Within that 10-year review period the continuing sensitivity of the records must be established under the test of actual damage and those which do not meet the test will be released. I hope in time to enable the noble Lord, Lord Mayhew, satisfactorily to complete the work that he would like to initiate. The period of 10 years is the maximum and I have every confidence that the maximum will be sufficient—but perhaps it will not be necessary.
The noble Lord, Lord Irvine of Lairg, drew attention to the possibility of records which are closed here being
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available elsewhere. I should be grateful if he would indicate the records that he has in mind. I have sought to ascertain to what extent that happens and if he can help me by giving particular examples I should find that useful.
Lord Mayhew: My Lords, perhaps the noble and learned Lord will allow me to give one example. The publication of material about the information research department of the Foreign Office, the organisation of which I spoke, was first published in America under the Freedom of Information Act. That is a good example of what was said by the noble Lord, Lord Irvine.
The Lord Chancellor: My Lords, I am grateful. I have sought examples but hitherto they have been few and far between. When the noble Lord says that the information was published under the Freedom of Information Act, I suspect that as far as the United States was concerned nothing was considered to be important in retaining those records. I am grateful for that example.
The noble Lord, Lord Mayhew, also referred to ministerial memoirs. I am not sure whether it would be profitable for me to become deeply involved in that subject. I believe that the principles set out in the White Paper for the discharge by executive government of its responsibilities for the nation's records are sound principles. I did not understand the noble Lord, Lord Irvine of Lairg, to suggest the contrary. He was more concerned with the machinery by which those principles would be enforced.
Accordingly, I claim that what has been done in the White Paper, in particular Chapter 9 in relation to public records, is a very considerable step forward. It has already produced considerable results and. I believe that it will continue to do so. As a consequence, only documents the release of which would cause identifiable harm will continue to be withheld from the public either by retention in their departments or by closure in the Public Record Office.
I renew my gratitude to ray noble friend for raising the Question and enabling us to have a discussion on what I believe to be an extremely important subject.

London Docklands Development Corporation Bill [H.L.]
The Queen's consent signified, and Bill reported from the Unopposed Bill Committee with amendments.

European Economic Area Bill [H.L.]
Returned from the Commons agreed to with amendments and with a privilege amendment; the amendments ordered to be printed.
House adjourned at twenty-five minutes before seven o'clock.