Sitting of 15 December 1975

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
DEATH OF A MEMBER
Mr. Speaker: I regret to have to inform the House of the death of Maurice Edelman, Esquire, Member for Coventry, North-West, and I desire on behalf of the House to express our sense of the loss we have sustained and our sympathy with the relatives of the hon. Member.

OFFENCES (MOTOR VEHICLES)
Address for Return,
showing the number of offences relating to motor vehicles in England and Wales, the number of persons prosecuted for such offences, statistics of court proceedings and the number of alleged offences in respect of which written warnings were issued by the police, together with the number of persons concerned, during the year ended the 31st day of December 1974.—[Dr. Summerskill.]

ORAL ANSWERS TO QUESTIONS
  TRADE

    Paper and Board
    Mr. Peter Bottomleyasked the Secretary of State for Trade what applications in respect of the dumping of paper and board products he has received in the last month.
    The Under-Secretary of State for Trade (Mr. Eric Deakins): My Department has received no formal applications for action against either dumped or subsidised paper and board products.
    Mr. Bottomley: I am grateful to the hon. Gentleman. Are the Government aware of the importance of effective and timely measures against dumping? Will the hon. Gentleman assure the House that any applications to prevent it will be dealt with promptly?
    Mr. Deakins: I can give that assurance, certainly.
    Mr. Ovenden: Is my hon. Friend aware that there are proposals to construct tissue mills in Spain and Greece and that unless action is taken to prevent possible dumping from those sources the jobs of many workers in the British paper industry will be in danger? Will he seek to open negotiations with our Common Market partners about action that can be taken against these two countries, should the need arise, as they both have special trading arrangements with the EEC?
    Mr. Deakins: I am aware of the industry's concern about this, and I can assure my hon. Friend that my officials and those of the Department of Industry are closely in touch with the home industry and the trade association. We have had talks covering the possibility that some imports from our non-traditional suppliers may be either dumped or subsidised. I understand that the industry is looking more closely at some of the details that we shall require before deciding whether to pursue a case under the anti-dumping legislation.

    Open Trading
    Mr. Tim Rentonasked the Secretary of State for Trade what international discussions he proposes to have regarding the achievement of the Rambouillet commitment to the maintenance of an open trading system.
    The Secretary of State for Trade and President of the Board of Trade (Mr. Peter Shore): We shall continue to play a constructive part in the international organisations concerned with trade and we shall, in particular, work for substantial measures of liberalisation in the GATT multilateral trade negotiations.
    Mr. Renton: Following the Prime Minister's talks at Rambouillet and his own recent speeches, will the Secretary of State confirm that he is personally opposed to import controls and assure the House that if extensive import controls are introduced later on, he, at least, unlike his colleague the Secretary of State for Industry, will have the courage to stick to his guns and resign?
    Mr. Shore: I shall ignore the latter part of that supplementary question—
    Mr. Renton: Why?
    Mr. Shore: I have no doubt that my right hon. Friend the Secretary of State for Industry will have an opportunity to say what he thinks about the matter and, indeed, about the remarks of the hon. Member for Mid-Sussex (Mr. Renton).
    As for my own position, in principle I am not opposed to the use of import controls. There are special circumstances, well understood and well entrenched in international economic law, when import controls are useful and helpful, but I make no bones about it that at present the great need for the world is to increase and rivive world trade, and, with it, world production. That is where the stress and thrust of policy must be.
    Mr. Higgins: We can all agree with the last part of the right hon. Gentleman's remarks, but will he give an absolute assurance that, on import controls, the Government will take no action that will infringe any of our international obligations?
    Mr. Shore: I have explained already that international economic law provides a number of opportunities and circumstances
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    in which it is accepted that import controls can be used. I do not think that I need go beyond that.

    Import Quotas (EFTA Countries)
    Mr. Ovendenasked the Secretary of State for Trade if he will seek to renegotiate the agreements between the United Kingdom and its former EFTA partners in respect of duty-free import quotas.
    Mr. Deakins: No, Sir. The present system has been in effective operation for only two years. It is intended to balance the interests of United Kingdom manufacturers and the needs of industrial users. Although the recession in the industry is greater than we expected in 1972, the arrangements still look generally right.
    Mr. Ovenden: Is my hon. Friend aware that in respect of paper products imported under this quota system the industry tends to regard the competition that it faces from Scandinavian producers as unfair because British producers have to pay about 14 per cent. more for their pulp than do their competitors in Scandinavia? Is there not a case for reviewing quotas to ensure that they reflect the state of home demand? If home demand falls, the size of quotas given to our Scandinavian competitors should reflect that. In any discussions that my hon. Friend has, will he bear in mind that we have lost 20,000 jobs in the industry over the past eight years and that the Scandinavians are now taking three-quarters of the British market for newsprint?
    Mr. Deakins: The prices that we pay for pulp are not fixed arbitrarily by the Scandinavians, because we also import pulp from Canada. They are world prices, and they cannot be rigged by any one country.
    I know that the level of the duty-free paper quotas is a matter of particular concern to my hon. Friend the Member for Gravesend (Mr. Ovenden) and to other hon. Members who have constituency interests in this matter. The opening of duty-free quotas for our former EFTA partners was a discreet act of policy in 1972, designed to maintain the bulk of the duty-free trade that we had built up in our membership of EFTA. Although there may be felt to be some disadvantages

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    from the point of view of imports, there are positive benefits to British exporters if they continue to have duty-free access for most of their manufactured exports to the EFTA markets.
    On my hon. Friend's third question, there are provisions for a limited review of quotas. This was to have taken place this autumn, but, in view of the uncertainty of the economic situation in both Britain and the world as a whole, we have decided to postpone those discussions until early next year.
    Mr. Moate: Is it right that the rest of the EEC should be so highly protected while Britain carries the brunt of Scandinavian competition? What consideration has been given to trying to persuade our EEC partners to speed up the harmonisation process so that the burden is shared fairly?
    Mr. Deakins: The harmonisation process will be completed by 1st July 1977. We are transiting upwards in our duties on paper and board imports, and the EEC countries are transiting downwards. We shall both meet at 8 per cent. on 1st July 1977, and thereafter there is a timetable for phasing out these duties by 1984.

    Cost Escalation Insurance Scheme
    Mr. Stanleyasked the Secretary of State for Trade whether he is satisfied with the working of the Cost Escalation Insurance Scheme.
    Mr. Shore: The scheme has assisted in the successful negotiation of exports totalling nearly £130 million, and a large volume of potential business is at various stages of negotiation, but I am well aware of industry's views on the need for changes in the present arrangements and as a matter of urgency I am considering them again carefully, in the lght of our experience to date and of all other relevant factors, including cost.
    Mr. Stanley: Will the Secretary of State say when the review will be announced on the work of the scheme? When does he expect it to be completed? In view of his somewhat equivocal reply a few moments ago about import controls, will he at least agree that as a matter of general principle it is far better to remove our balance of payments deficit by encouraging British companies in the export
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    market than to see the illusion of security behind import controls?
    Mr. Shore: The House will agree that if we could solve our balance of payments problem through the expansion of exports, that would be the preferable solution. No one would doubt that. However, it is important to remember that it is clear that we can do that only if world trade is expanding. That is the point that we have emphasised over and over again. On the question of the scheme and the review, I hope that I shall be able to complete the review and make a statement before the Christmas Adjournment.
    Mr. Powell: Is the right hon. Gentleman aware that the only way to eliminate our current account deficit on the balance of payments is to eliminate the surplus on our capital account?
    Mr. Shore: I think that there could be a relationship between the two. The right hon. Gentleman has put his proposition in a very interesting way. I shall consider it further, but at present I shall not be tempted to confirm or deny his proposal.
    Mr. John Davies: When reconsidering the position of the scheme will the right hon. Gentleman bear in mind that the French scheme, which is of a more flexible nature than ours, has had very material advantages for French exporters—advantages of a kind that we have not yet experienced?
    Mr. Shore: Yes, I am aware that certain features of the French scheme are undoubtedly more generous than those that we introduced in the United Kingdom. Of course, as a consequence the French scheme is much more expensive than ours. I am certainly looking at all the relevant factors, including certain features of the French scheme.

    Motor Vehicles
    Mr. Laneasked the Secretary of State for Trade what estimate he has made of the potential growth of British motor vehicle exports to the West Indies.
    Mr. Deakins: My Department keeps industry informed of export opportunities in the individual countries reported by our commercial posts in the area.
    Mr. Lane: Is the Minister aware of the strong efforts being made by our

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    Japanese competitors? In view of the great good will in the West Indies towards this country, will he assure us that the Government will give all possible support and encouragement to British manufacturers to increase their stake in this market in the years ahead?
    Mr. Deakins: I can certainly give the hon. Gentleman and the House that assurance. Recently a Society of Motor Manufacturers and Traders' mission of component makers was in the area, and we now await with great interest its report on the opportunities in this market. Japanese competition is growing, but the British motor industry has a long association with this area, and we hope that that association will help it to maintain its trade.
    Mr. Les Huckfieldasked the Secretary of State for Trade whether he will make a further statement on motor vehicle exports and imports.
    Mr. Shore: In the first 11 months of this year, import penetration of the United Kingdom car market was 33·4 per cent. compared with 27·1 per cent. in the corresponding period in 1974. During the period from January to November 1975, exports of passenger motor cars were £451–3 million, compared with imports of £473–6 million. This compared with the corresponding period of 1974, of exports of £355–4 million and imports of £2919 million. The composition of our car imports has changed in recent months, with the Japanese proportion falling and others rising.
    Mr. Huckfield: I thank my right hon. Friend for that information. Does it not indicate that in passenger cars there is still a disparity between what we export and import, on the wrong side of the balance of payments? Does my right hon. Friend agree that as most of the importers have built up substantial stocks of vehicles in this country in possible anticipation of import controls, and as British Leyland appears to have seriously underestimated its sales potential, this only serves to underline the Government's case for saving Chrysler?
    Mr. Shore: The House will not expect me to anticipate anything that may be said later about Chrysler. Clearly, the question of the capacity of the British motor car industry and the question of
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    increasing our own output sufficiently to meet demand is of the utmost importance, and particularly so at the present time. As my hon. Friend notes, this year we have a deficit of about £22 million in our exchange in trade in passenger motor cars, and this represents a considerable and adverse change from what it was last year. This again emphasises the need for continued effort by the British motor car industry, in some cases, clearly, with the help of the Government, to get our motor car industry back firmly on its feet. With regard to other vehicles and components, and so on, we still have a favourable and, indeed, increasing trade balance.
    Mr. Maxwell-Hyslop: When the right hon. Gentleman considers the pressure for import controls will he bear in mind that the Fourteenth Report of the Expenditure Committee shows clearly that Ryder assumed BLMC sales to EEC countries increasing by 95 per cent. by 1985, and that if he takes any action that causes a counteraction that aborts that 95 per cent. increase in sales, widespread unemployment will be caused within BLMC and much of the public investment in it will fail to achieve the objects for which it was put in?
    Mr. Shore: I am certainly not in any way going to write down the possibilities of a considerable increase in BLMC exports to Europe, but the hon. Gentleman knows that if one considers BLMC products as a whole one finds that it is in markets other than Western Europe that the company has achieved, and in my view will continue to achieve, greater success.

    Concorde
    Mr. Jesselasked the Secretary of State for Trade how many complaints he has received about noise from Concorde.
    The Under-Secretary of State for Trade (Mr. Clinton Davis): 2,832 complaints have been received either during or since the recent endurance flying programme. This figure includes both complaints received by the Department direct and those received first by the British Airports Authority and by British Airways.
    Mr. Jessel: Why do we have to rely on the Americans to enforce British noise regulations at Heathrow?
    Mr. Davis: The hon. Gentleman is seeking to anticipate the hearings that will start in the United States on 5th January. I am quite certain that the Americans will apply a fairness of judgment in arriving at their decision.
    Mr. Stonehouse: Has my hon. Friend any breakdown of complaints received from abroad where Concorde is flown into foreign airports?
    Mr. Davis: No, Sir.
    Mr. Adley: As my hon. Friend the Member for Twickenham (Mr. Jessel) is concerned about landing noise in his constituency—
    Mr. Jessel: No, take-off noise.
    Mr. Adley: —will the Minister confirm not only that, for instance, the Boeing 707-320C is noisier than Concorde, but that in 1976 there will be four movements a week of Concorde through Heathrow and 550 of the Boeing 707-320C?
    Mr. Davis: The hon. Gentleman is quite right. At the Casablanca trials the landing noise of the Boeing aircraft to which he has referred was 120 EPNdbs, compared with the landing noise of Concorde of 116·7 EPNdbs.
    Mr. Adleyasked the Secretary of State for Trade if he will make a statement on current negotiations concerning Concorde in which his Department is involved.
    Mr. Clinton Davis: Negotiations are being vigorously pursued so that the scheduled services can start as planned, and statements will be made at the appropriate times.
    Mr. Adley: Does the hon. Gentleman agree with the Wall Street Journal that the anti-Concorde industry in the United States is involving itself in what that paper has described as the "meanest kind of politics"? If that is so, and if New York should decide to ban Concorde for spurious environmental reasons, does the Minister agree that British trade unionists would be entitled to consider retaliatory action against the Port of New York Authority, perhaps by ensuring that goods exported from that port by air or sea were subjected to appropriate political delays on entering this country?
    Mr. Davis: It is far more profitable that we should deal in facts rather than in epithets on this important issue. We are hopeful, as I have said before, that we shall get a fair hearing in Washington, starting on 5th January. As a result, we have reason to believe that we shall not have to deal with the question of retaliation.
    Mr. Adley: I hope that the Minister is right.
    Mr. Stonehouse: Will my hon. Friend take this opportunity of denying that the first commercial flight of Concorde from this country will be delayed by disputes over aircrew pay?
    Mr. Davis: I have no reason to believe that we shall not be able to commence our flights as arranged on 21st January, contemporaneously with Air France.
    Mr. Biffen: In the current negotiations concerning the flight routes for Concorde, have overflying routes been requested from India? If so, what answer has been received?
    Mr. Davis: We are at present continuing discussions with the Indian Government. I do not think that it would be profitable to go further than that at this stage.

    Patent Law
    Mr. Englishasked the Secretary of State for Trade whether he proposes this Session to bring in a measure to reform United Kingdom patent law on the lines proposed in Command Paper No. 6000, or whether he will bring in during the Session a short Bill which would enable Her Majesty's Government to ratify pending international patent conventions by the promised dates.
    Mr. Clinton Davis: I am aware that ratification by the United Kingdom of the European Patent Convention at the end of 1976 is important for British interests, and my right hon. Friend intends to introduce a comparatively short Bill to enable this as soon as circumstances permit. Further legislation will be necessary to enact the White Paper proposals for patent law reform and to permit ratification of the Patent Co-operation Treaty and of the Community Patent Convention, which is being signed in Luxembourg today. Due to

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    pressure of parliamentary business it will not be possible to introduce this more comprehensive legislation during the present Session.
    Mr. English: I am grateful for my hon. Friend's answer. He says "as soon as circumstances permit". Can he be more precise and say that it will be in time for us to have English representatives in the European Patent Office at Munich? Obviously "as soon as circumstances permit" is a parliamentary term. After eight years of discussion on this subject there must be something wrong with our system if everybody else is setting it up and we are not there.
    Mr. Davis: As I have indicated, we hope to be able to introduce legislation, if at all possible, within the current Session. But this is not, as my hon. Friend will recognise, entirely within the control of the Department of Trade. I am very much aware of the need for this legislation and of the handicaps which will arise, especially in relation to our representatives at the European Patent Office, if we do not have this legislation.
    Mr. Ronald Bell: Will the Minister beware representing as reforms what are lamentable necessities? Is it not a fact that the Banks Committee's recommendation is basically to import into patent law the German concept of obviousness, which is generally regarded in this country as impracticable, and to separate the enforcement into validity litigation in, say, Germany, and infringement litigation in the country in which the alleged infringement has taken place? Is this not really the legality of Bedlam?
    Mr. Davis: I do not accept the hon. and learned Gentleman's views. The Banks Committee put forward a variety of propositions which we would seek to enact in a comprehensive Bill. This would have included a number of controversial aspects. The hon. and learned Gentleman has referred to one of them. We also have to take into account the question of a code for employees' inventions and, as I have indicated, a number of other controversial matters.
    Mr. Lee: In this important matter is there not a need to use the powers for Crown use? Is it not true that, either because the Government have not been energetic or because the 1949 Act is
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    not clear, those powers have not been used anywhere near the extent to which they should have been used, and that this has been noticeable in regard to proprietary medicines?
    Mr. Davis: My hon. Friend has touched upon another aspect of the Banks Committee's proposals, dealing with the compulsory licensing of pharmaceuticals. I cannot accept in its entirety the indictment that has been levelled by my hon. Friend. However, he has made an important point, and we would clearly be anxious to legislate on this matter at the earliest opportunity.
    Mr. Costain: Is the Minister aware that it is three years since the Banks Report was published? Surely the House is entitled to debate this matter before legislation is introduced. Will he use his best endeavours with the Leader of the House to see whether time can be made available for a debate?
    Mr. Davis: I shall draw the attention of my right hon. Friend to the hon. Gentleman's observations.

    Airfield Strategy (Consultative Document)
    Mr. Tebbitasked the Secretary of State for Trade when he expects the consultation on the consultative document, Airfield Strategy for Great Britain, Part I The London Area, to be completed.
    Mr. Shore: It is essential that adequate time is allowed for all interested organisations to put their views, and I envisage that the consultations will last about six months.
    Mr. Tebbit: I am grateful to the right hon. Gentleman for that answer. Will he tell us whether he intends to deal with the first part—on area—onducting consultations, or at least reaching conclusions on consultations, about the remainder of the United Kingdom airports? May I urge upon him the necessity to leave time after the consultations to go through all the statutory procedures that will be necessary to ensure that London is adequately served by airports in the early 1980s?
    Mr. Shore: I hesitate to answer the second part of the hon. Gentleman's question because I am not quite sure at

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    the moment what all the statutory procedures are. If they are laid-down procedures, which it is incumbent upon us to go through, I shall certainly not wish to depart from them.
    As for the order in which we carry out these consultations, I think that the House generally would wish us to launch as soon as possible the first consultation document, which is what we have done. That mainly covers London airport problems but it also touches on the regional question, because that has a relationship with the London area. I am hoping to launch the second consultation document early in the new year. Therefore, there will be an opportunity, as it were, for people to relate their comments to both as we proceed. It is possible for us to complete these consultations before we finalise the consultation programme on the second document, but I am not envisaging any great policy announcement on the one before I have all the views on both.
    Mr. Wigley: Is the right hon. Gentleman aware of the great potential of Rhoose Airport, in Glamorgan, which is vastly under-utilised at this time? Will he assure the House that in that context no decisions will be taken which could affect that airport, by way of running it down before the overall strategy has been worked out?
    Mr. Shore: Rhos Airport does not come within the direct scope, authority or financing of the Department of Trade. Therefore, I cannot give a categorical assurance on that matter. I hope that all those who are today managing substantial airports, of which Rhoose is certainly one, will take account of the consultation exercise that is now being started and not seek, as it were, to make major decisions within their areas until those consultations are completed.
    Mr. Heffer: Is my right hon. Friend aware that Liverpool Airport is costing a lot of money and that the Merseyside County Council is, in substance, keeping it going? The longer there are no decisions on the matter, the more costly it will be for local authorities and ratepayers in that area. May we have a quick decision, so that the local authorities will know precisely where they stand? We believe that Merseyside has great potential, but we cannot move one way
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    or the other because of the present situation.
    Mr. Shore: I understand and sympathise with my hon. Friend's concern. We have something of a dilemma here. On the one hand, there is an undoubted need for a decision as early as possible, but, on the other, in this area, with all the sensitive local feeling that exists, I believe that we must allow people adequate consultation.

    Air Tickets (Discounts)
    Mr. McCrindleasked the Secretary of State for Trade if he will seek additional powers to dissuade airlines and others from discounting scheduled fares on airline tickets.
    Mr. Clinton Davis: The recent court actions have demonstrated that the Government have strong powers to enforce approved fares and rates of commission. Efforts are being made by the travel trade and airlines to stamp out illegal discounting. We have, however, made it plain that if such efforts are not successful we intend to use these powers. I can assure the hon. Member that if we find that additional powers are required we shall have no hesitation in seeking the authority of Parliament to obtain them.
    Mr. McCrindle: The Government were no doubt right to have relied so far on the efforts of the airlines in what is known as "Operation Clean-up". Does the Minister agree that if cheaper air travel is ever to become universally available it is necessary to eliminate the illegal discounting that is taking place? To that end, will he assure me that he will keep a very close eye and car on developments in this matter and will not hesitate to intervene at Government level should that prove necessary?
    Mr. Davis: I am obliged to the hon. Gentleman for enabling me to forecast what his supplementary question was to be from an article which appeared in The Times this morning. I can give him the assurance for which he asks.

    Civil Aviation Policy
    Mr. Warrenasked the Secretary of State for Trade when he will publish the White Paper on civil aviation policy.
    Mr. Neubertasked the Secretary of State for Trade when he now expects to publish his White Paper on his review of civil aviation policy.
    Mr. Shore: I expect to publish this White Paper early next year.
    Mr. Warren: I thank the Secretary of State for that reply. In the time accruing from the delay in publication of the White Paper will the right hon. Gentleman consider two basic problems that arise from his statement last July, to see whether it is possible to correct them? The first is that the abandonment of dual designation for British airlines on routes overseas deserves compensating rights being given to this country by the Governments of countries whose airlines are to get extra business opportunities from this policy. The second is that the abandonment of Sky-train deserves to be rethought, because it is contrary to the wishes of the public, particularly those polled in the Minister's constituency and that of his hon. Friend.
    Mr. Shore: The question of dual designation is at the heart of the policy review and of the statement that I made in July. Various arithmetical exercises are still being conducted regarding Sky-train and its effects. However, the fact remains that it is extremely difficult to see how it could fit in with a policy which, for broader and, I think, generally acceptable reasons, has led us to abandon dual designation.
    Compensation from other countries for dual designation, or the abandonment of it, is a matter for individual negotiation, but in certain cases compensation has, in a sense, already been taken up by capacity sharing on certain routes.
    Mr. Neubert: Are we to assume that the delay in publication of the White Paper is due to continuing disagreement by British Airways about the proposed transfer of routes? If so, will the Secretary of State prevail upon British Airways to forgo its petty resentment of the original transfer of routes, which amounted to no more than 1 per cent. of its revenue at the time the second force airline was established and to accept that a reasonable exchange of routes, particularly within designated spheres of influence, would be in the interests of
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    both the fare-paying passenger and, in the long run, the taxpayer?
    Mr. Shore: No. I think that it would be wrong to single out British Airways and in any sense attribute, as it were, petty calculations and considerations to its consideration of the problem. On the contrary, British Airways is thinking carefully about it. Indeed, it has a duty to do so. Equally, I am sure that British Caledonian has thought and still is thinking carefully about what is involved for it. I know that both airlines are approaching the question in a constructive way, and I am hopeful for their success.
    Mr. Tebbit: May I say how glad we are that the Secretary of State is at least continuing to do the arithmetic on Skytrain, which implies that his mind is not totally closed to the concept of licensing it? That will be a great encouragement to many of us and to many would-be travellers.
    Secondly, may I urge on the right hon. Gentleman the need to consider the matter, to come to conclusions and to publish his White Paper as soon as possible, so that both British Airways and British Caledonian can get on with the business of running their airlines?
    Mr. Shore: I would not wish to be misunderstood about what I said with regard to Skytrain. I said that I do not see how it can fit in with a policy of the abandonment of dual designation. I hope that the discussions between British Airways and British Caledonian will come to a conclusion and I hope, further, to announce the results and, indeed, more broadly, the new policy statement in the new year.
    Mrs. Bain: Does the right hon. Gentleman accept that great uncertainty has occurred since his statement in the House in July, and that the non-publication of the White Paper has led to a great deal of uncertainty for British Caledonian Airways, which he has recognised is an efficient airline? Will he accept that his statement in July overturned all the long-term plans of British Caledonian and that it has, as yet, no indication of what its replacement opportunities will be? Will the right hon. Gentleman give the airline an indication of what is to happen to it?
    Mr. Shore: As with all matters that are difficult and require considerable negotiation and discussion, delay is involved, but that is, I hope, the way in which we reach agreements and conclusions. We reach them basically by people talking over the problems and trying to come up with reasonable solutions. Perhaps my statement did cause uncertainty, but all I can say is that events caused far greater uncertainty to British Caledonian and the airline industry generally than did any statement that I made.

    USSR
    Mrs. Renée Shortasked the Secretary of State for Trade what changes have taken place in Anglo-Soviet trade as a result of the agreement signed after the Prime Minister's visit to Moscow earlier in the year; and which industries are likely to benefit.
    Mr. Shore: Our exports to the Soviet Union have increased in value by almost 100 per cent. this year compared with last year. My discussions with the Soviet Minister of Foreign Trade last week confirmed that there are good prospects for British companies in a wide range of industries, including, in particular, the chemical, petrochemical and agrochemical industries and the textile machinery industry.
    Mrs. Short: I am sure that the whole House will be grateful to my right hon. Friend for the efforts that he is making in this area. I understand that the Chamber of Commerce delegation, on its return from Russia, confirmed the statement that he made this afternoon. Will he say what effect this increased trade, which we all very much welcome, is likely to have on West Midlands industries, particularly the engineering industry, which has received considerable blows latterly and in which unemployment is at a high level?
    Mr. Shore: As my hon. Friend knows, it is in the area of electrical and mechanical machinery and engineering products generally that the Soviet demand is likely to be felt most, and it is in those areas of the country, including the Midlands, where we make engineering goods of all kinds that the benefit is likely to be felt. I emphasise again that the prospects are reasonably good. There has been a most
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    welcome increase in our exports this past year.
    Miss Fookes: Will the right hon. Gentleman say what was the original value that has increased by 100 per cent.? Will he also say whether he feels it is worth the risk of hundreds of so-called inspectors snooping round British factories?
    Mr. Shore: If one compares exports during the 10 months from January to October 1974 with those for the 10 months from January to October 1975, one finds that the figure increased from £86 million to £170 million. In a sense, it is small in terms of total trade. I have always felt that the magnitude of our trade with the Soviet Union, given the size of our country and theirs, is far too small.
    With regard to the hon. Lady's latter remark, the Soviet Union uses a fairly long-established system of purchase in this country. The system was used during the period when Conservative Members formed the Government but it was uncommented upon then, either by the hon. Lady or by many of her colleagues, and I find it odd that it should now become the occasion for a lot of sheer prejudice and abuse.

    Textiles
    Mr. Maddenasked the Secretary of State for Trade how many requests he has received since 1st January 1975 for the introduction of selective import controls on textiles.
    Mr. Deakins: About 265. Of these, about 225 have been requests for general controls on textiles and clothing imports, while about 40 have related to particular products.
    Mr. Madden: Does my hon. Friend accept that that reply shows the extensive agreement within the textile industry that import controls would be helpful and useful to the industry? Does he further accept that there is great anxiety in the industry and eagerness for a reply to two questions? First, when will the Government act on import controls for textiles? Second, when they act, will those controls be wide ranging and effective?
    Mr. Deakins: All of us in the Government are impressed with the joint

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    approach of the textile industry, as with that of other sensitive industries, in the matter of safeguarding employment. We are well aware of the anxiety, But I remind my hon. Friend and those who think as he does that we already have a considerable number of import controls on textiles, which were detailed the last time that my hon. Friend asked a similar question, on 3rd November. As for the other questions, may I, with respect, ask my hon. Friend to await the statement which I know he and the whole House are expecting later this week?
    Mr. Nicholas Winterton: The Secretary of State earlier mentioned the 33 per cent. import penetration of the British car industry. Is the Minister aware that the textile industry has been penetrated to the extent of 60 per cent.? Will he hurry up in coming forward with an announcement of quantitative controls? Will he, further, consider a long-term regulator for the British textile industry? Such a regulation is urgently required.
    Mr. Deakins: The multi-fibre arrangement under GATT, which the Community is negotiating on our behalf with a number of lciw-cost suppliers, is the real long-term regulator, because it involves the concept of burden sharing. As the House will know, this country has borne more than its fair share of textile and clothing imports from low-cost countries, and that burden will be gradually shared out between us and the other members of the Community. As for imports generally, and import penetration, in most textile sectors imports have been falling this year and, in the main, so has import penetration. However, imports of woollen and worsted yarns and fabrics and of man-made fibre cloth have risen. It is a mixed picture. In clothing, import penetration in knitwear and hosiery has risen, but the figure in other types of made-up clothing has remained fairly steady.
    Mr. Richard Wainwright: Is the hon. Gentleman aware that there is no valid meaning in the term "the textile industry," since it consists of many separate and distinct industries, and that there is a danger of damaging the export prospects of certain textile industries by generalising on the basis of others?
    Mr. Deakins: That is certainly a consideration that the Government and my Department have very much in mind.
    Mr. Skinner: Why does my hon. Friend not refrain from answering all the questions which these other countries throw up arising out of our desire to protect the jobs of British workers? As my hon. Friend was an anti-Common Market campaigner, like me, what does he think of the argument that although we have to suffer wide-scale import controls on nearly all our basic foodstuffs we are running away from the question in terms of textiles and all the other things that involve his Department?
    Mr. Deakins: I agree with my hon. Friend about the need to protect the jobs of British workers. Where I think he and I, and perhaps other hon. Members, would differ slightly is on the question whether import controls, whether general or selective, would, on balance, protect more jobs than they would lose. On the few occasions so far on which we have applied special import controls—I could quote a couple of examples, if my hon. Friend would like them—we have lost as many jobs as we have gained, and we have lost them in areas that should be developing British industry for the future rather than in industries which are at present contracting.
    Mr. Higgins: Is the hon. Gentleman aware that what is urgently required is faster and more effective action against dumping, and that there is considerable dissatisfaction with the help that his Department gives to those who are seeking to establish the facts in a specific case? Second, referring to the unsatisfactory answer that his right hon. Friend gave to Question No. 2, will the Minister, lest there should be any doubt about it, again confirm that on import controls the Government will take no action that will be contrary in any way to our international agreements?
    Mr. Deakins: On the second part of that question, I think that my right hon. Friend gave a perfectly satisfactory answer. As for import controls generally, and the concern that has been expressed, we have met the CBI to discuss these matters and the anti-dumping measures that we can take to help. I assure the

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    hon. Gentleman that I think that we have satisfied the representatives of British industry—the industrialists in particular—that the anti-dumping measures that we are taking and the attitude that we are adopting in the Department of Trade are different from what they were in previous decades, and that we are now acting as speedily as is possible under the terms of the GATT Anti-Dumping Code and our own legislation of 1969.

    London and County Securities Ltd.
    Mr. Skinnerasked the Secretary of State for Trade when he expects the report on London and County to be published.
    Mr. Clinton Davis: We are unable to say when we expect to be in a position to publish the inspectors' report in this matter, but it will be as soon as possible.
    Mr. Skinner: Will my hon. Friend be a little more forthcoming on the question whether or not the investigators have taken into account the way in which the Crown Agents, acting for another Government Department, lent money to London and County Securities Ltd., especially taking account of the fact that parliamentary advisers, in the shape of the leader of the Liberal Party, were in a position to advise that the law was being broken by the lending of such money in violation of the Moneylenders Acts? Will he give me an assurance—
    Mr. Speaker: Order. That appears to me to be a reflection on a right hon. Member. That can be done only by a motion.
    Mr. Skinner: I might get around to that one day.
    Will my hon. Friend assure me that this report is not being held up in any way because the Prime Minister has occasioned the Chancellor of the Duchy of Lancaster and possibly Lord Goodman to rewrite it before it comes out, as they seem to be doing in the case of most other Government Department matters?
    Mr. Davis: I must repudiate wholly the allegations made by my hon. Friend—
    Mr. Skinner: It happens everywhere else.
    Mr. Davis: It would, of course, be quite improper of me to comment on the report in part. Indeed, it would be not only improper but contrary to the legislation that covers these matters. As I have told my hon. Friend, we shall publish the report at the earliest opportunity, but there are very good reasons at present for not doing so.
    Mr. Cyril Smith: Will the Minister give us an idea of what he means by "the earliest opportunity"? Is he aware that many of us have been waiting for this report for a considerable time—
    Mr. Pardoe: Hear, hear.
    Mr. Smith: —and would strongly support the request of the hon. Member for Bolsover (Mr. Skinner) that it be published early? Is he also aware that some of us are tired of the sick innuendoes that are constantly made by the hon. Member for Bolsover about this report, and that many of us have good reason to believe that if the report were published quickly those innuendoes would be proved to be baseless?
    Mr. Davis: The hon. Gentleman has not hidden his naked ambitions very well. "As soon as possible" means precisely that.
    Mr. Pardoe: You have had it for months now. Get on with it. Do your job.
    Mr. Davis: The great desperation of certain Members of the Liberal Party is certainly a revelation to the House.

    Speke Airport
    Mr. Steenasked the Secretary of State for Trade what progress he has made in his consideration of the Civil Aviation Authority report as it affects Speke Airport.
    Mr. Clinton Davis: The advice from the Civil Aviation Authority on Airport Development in the Central England Area is being taken into account in the preparation of a consultation document on regional Airports.
    Mr. Steen: Is the Minister aware that an efficient airport is of tremendous value in encouraging industrial development and investment and that any phasing down of Speke Airport may have a disastrous effect of the employment situation on Merseyside?
    Mr. Davis: The question of phasing down Speke Airport or the expansion of that airport in anticipation of the consultation process to which my right hon. Friend the Secretary of State referred earlier is not a matter for my Department, as the hon. Gentleman well knows. I hope that the consultation process will be fruitful and that as a result we shall obtain a national airport strategy at long last.
    Mr. Heffer: In view of the fact that my hon. Friend the Minister visited the airport some weeks ago and that a decision has still not been taken on this matter, will my hon. Friend take note of what I said earlier and what the hon. Gentleman has now said? A decision must be taken on this, so that the people of Merseyside know the future of the airport.
    Mr. Davis: The fact that we have not had—indeed, have never had—a national airport strategy causes great concern. It is right that in embarking on discussions of this character, which will have a longterm effect, all interests concerned should be consulted and play a part in the process. That is important. The penalty for this is delay, but that is a regrettable but inevitable consequence.
    Mrs. Chalker: Will the Minister undertake to have detailed consultations with the Department of the Environment over its future planning of roadways in the area, which may crucially affect the Civil Aviation Authority's report on Speke Airport?
    Mr. Davis: My hon. Friend the Under-Secretary of State for the Environment and I shall be carrying out a joint consultation exercise. Therefore, I can give the hon. Lady that assurance.

    Newspaper Industry
    Mr. Aitkenasked the Secretary of State for Trade when he expects to receive the study on the immediate problems of the newspaper industry which he has requested from the Royal Commision on the Press.
    Mr. ShoreI understand that the Royal Commission is aiming to provide the report on the immediate problems facing national newspapers by the end of January 1976.
    Mr. Aitken: Is the Secretary of State aware that by the end of January the newspaper industry as a whole will be facing a number of unprecedentedly severe problems—not only financial problems, because virtually every newspaper is losing money, but also human problems, in that a large number of redundancies look like being inevitable if the new printing technology that will save the newspapers is implemented? Against that background, will the Secretary of State be fast and flexible in his response to the recommendations of the Royal Commission, so that the impending crisis can be averted?
    Mr. Shore: The hon. Gentleman speaks with considerable knowledge of the industry. I have been made aware of the serious problems that have faced the industry, particularly the national Press, over the past year. I asked the Royal Commission to present an interim report because I was worried about the scale of the problems and the timing of the difficulties in relation to the longer-term consideration by the Royal Commission. We hope to receive a report from the Royal Commission by the end of January and we shall give it the closest attention as soon as we receive it.
    Mr. Ioan Evans: Is my hon. Friend aware that although there was opposition to setting up the Royal Commission, there is now a general recognition that it should have been set up? My hon. Friend will be receiving a report early in January on the immediate problems. When can we expect the full report to be published? One of the main problems to which the Royal Commission was asked to address itself was the concentration of the ownership of the Press into a few hands.
    Mr. Shore: My hon. Friend knows very well that the long-term and in many ways most important questions affecting the Press require the accumulation and sifting of a great deal of evidence, and it will take the Royal Commission some time before it can produce its final report. Therefore, it is all the more important to make sure that if measures can be taken in the short term they should be taken so that we can at least be certain that we have a substantial national Press to report upon in a year or so's time.

    Nation Life (Liquidation)
    Mr. Gowasked the Secretary of State for Trade whether he is having discussions with the liquidator of Nation Life to see whether his charges can be reduced.
    Mr. Clinton Davis: No, Sir. The liquidator's remuneration is primarily a matter for the creditors and the committee of inspection representing them. My Department would not intervene unless it became apparent that the amount ultimately fixed was, in the circumstances, unnecessarily large.
    Mr. Gow: What is the Minister's estimate of the present charges that will be made by the liquidator in this case?
    Mr. Davis: It is not possible for me to answer that, because the answer depends upon the amount of the assets that are realised. As the hon. Gentleman will know from his professional experience, the fee is on an ad valorem basis, on the realisation of assets.
    Mr. Skinner: Will my hon. Friend give no aid or comfort to the idea, put forward by the accountant acting on behalf of the William Stern Group, of operating not under the bankruptcy procedure but under the Deeds of Arrangement Act 1914, which would have meant that the proposition would have allowed William Stern to have £20,000 a year to live on and to pay only two-thirds of any money over and above that which he earned in any one year? Will he also take into account the fact that if we reduce the liabilities we shall reduce the amount of money that could be obtained by the Crown Agents and other Government Departments, which are attempting to get back £400 million worth of taxpayers' money, which was lent wrongly in the first place?
    Mr. Davis: I am sure that the liquidator will take into account what my hon. Friend said.
    Sir John Hall: Will the Minister say what is likely to be the fee charged by his Department and what relation that has to the actual costs borne by his Department?
    Mr. Davis: I have already indicated the basis upon which the Department's
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    fees are charged. If the hon. Gentleman wishes me to go into the details, which he obviously does, no doubt he will table a Question to that effect.
    Mr. Higgins: Is the Minister aware that there is grave concern in the House about the basis on which the fees are charged and that a pro rata basis may be appropriate for a medium-sized company but is inappropriate for a small company, and amounts to very large sums when a company the size of Nation Life is involved? We have now been waiting for some weeks for a satisfactory response in answers to Written Questions. Will the hon. Gentleman give the House an assurance that he will examine this matter and review carefully the extremely heavy burden that the total of charges being made imposes on Nation Life policyholders?
    Mr. Davis: As in the debate on this matter, the hon. Gentleman avoids the main functions of the Department as a whole in this area. They are designed for the protection of creditors at large, not simply in one case but in a large number of cases. They cover the receipt of investments, payment out of funds, and supervisory and advisory functions, and they deal with the statutory audit and the statutory duties of the Official Receiver. All these matters have to be covered. It is no use the hon. Gentleman using, as he did on the previous occasion, the word "distasteful" when he ignores the essential nature of the functions that have to be undertaken.

    Television Sets
    Miss Fookesasked the Secretary of State for Trade what steps he intends to take to assist firms manufacturing television sets.
    Mr. Shore: Assistance will continue to be available for our growing exports of televisions. I am also keeping a close watch on imports, and I have announced my intention of introducing surveillance licensing on imports of colour television sets and receivers.
    Miss Fookes: It seems that the right hon. Gentleman is seeking to give a somewhat vague set of aids. Will he, in addition, put pressure on the Chancellor of the Exchequer to end the 25 per cent.

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    rate of VAT, which is having a marked effect on the work of those employed in our television factories?
    Mr. Shore: I assure the hon. Lady that I am in close touch with my right hon. Friend the Chancellor. All matters relevant to the success and health of the British television industry are discussed between us.

MOTOR INDUSTRY REPORTS (AVAILABILITY)
Mr. Peyton(by Private Notice) asked the Leader of the House whether, in order that they may be of some practical value for tomorrow's debate, he will publish before the House rises today the CPRS Survey of the motor industry and the Government's answer to the Expenditure Committee's Report on British Leyland?
The Parliamentary Secretary to the Treasury (Mr. Robert Mellish): In the absence of my right hon. Friend, I have been asked to reply.
The CPRS Report will be available for the debate tomorrow. [HON. MEMBERS: "When?"] As to the Government's reply to the Select Committee's Report, I explained on 4th November that the Government had to decide the Chrysler issue before replying, and I now hope that it will be possible to make the Government's observations as soon as possible.
Mr. Peyton: First, when will the CPRS Report be available? I asked that it should be available today, and the right hon. Gentleman evaded that. Second, the Government's reply to the Expenditure Committee's Report has been awaited for a very long time, the need for both documents has been repeatedly acknowledged by the Government, and promises have been made. The right hon. Gentleman will, surely, be aware that there is a grave danger that both he and the Government will be taken as treating this problem and those involved in it in the motor industry with scant regard and treating Parliament with frivolity.
Mr. Mellish: Only the right hon. Gentleman could have made such a silly observation as that. Plainly, the Chrysler situation, with its grave impact upon thousands and thousands of jobs—[Interruption.]—hon. Members should listen—
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warranted the most careful consideration by the Government. They have now given that careful consideration, and my right hon. Friend will make a statement tomorrow in the debate.
As regards the CPRS Report, I have to say that it will be available in the Library tomorrow at 11 o'clock, and publication of it will be as soon as my right hon. Friend has made his statement. On the question of the Select Committee's Report, it has been said again and again in the House—and I repeat it now—that the Government intended to make their statement on that Report after the Chrysler issue had been decided. The statement on Chrysler will be made tomorrow. It follows logically, therefore, does it not, that the Government's statement will be made after the Chrysler issue has been decided?
Mr. Peyton: Does the right hon. Gentleman mean that there will be only one copy in the Library, or what does he mean? I hope that he will clear that up. Perhaps I may add this: the right hon. Gentleman may think that he can hector his own Back Benchers, but the time has come when he should treat Parliament with proper respect.
Mr. Mellish: Again, the right hon. Gentleman is living up to his usual standard of stupidity when he refers to me in those terms. He says that I hector. I do nothing of the sort. He asks whether there will be only one copy. Of course there will not be only one copy. I said "copies", in the plural. As far as I am concerned, that is the answer to the question.
Mr. Duffy: Will the Patronage Secretary accept that, although I have hitherto always been in total sympathy with him, this reply is not good enough? [Hon. Members: "Hear, hear."] We are to have a report from what is, in effect, a Government Department but not the reply to a Report of a Committee of the House. Will the Patronage Secretary agree that Back-Bench Members will wish never again to see the Government delay a reply to a Back-Bench Committee's Report simply because it may be a little inconvenient or embarrassing, and will he bear in mind that a discourtesy to a Select Committee of the House is a discourtesy to the House as a whole?
Mr. Mellish: The cheers which my hon. Friend got from the Opposition were what he evidently sought. I put this to him: the Select Committee's Report was upon the car industry, and it made certain severe criticisms. That Report must be debated in the House—that I understand and accept—but I hope that my hon. Friend will understand that when the matter of Chrysler came up, as it did in these past few weeks, it was imperative that that matter should be settled before the Government gave observations in reply to the Select Committee on the overall position of the car industry. I should have thought that that was logical, honest and decent, and ought not to be described in the terms which my hon. Friend suggests.
Mr. Richard Wainwright: The right hon. Gentleman tells us that the CPRS document is to be put in the Library tomorrow morning. Will it be the Report precisely as originally received from the CPRS or a revised version resulting from the CPRS being told to have second thoughts?
Mr. Mellish: What a nasty mind the hon. Gentleman has. The CPRS Report will be as it was given to the Government. [Interruption.]
Mr. Speaker: Order. Before we have further exchanges, may I remind the House of what is said in "Erskine May"—that good temper and moderation are the characteristics of parliamentary language?
Mr. Peter Walker: The CPRS Report as originally produced reached the Government some months ago. Last Thursday I asked the Leader of the House to put a copy in the Library on Friday so that hon. Members and, if necessary, the Press could know its contents before the debate. How comes it, since that Report has been in the Government's hands for some months and the Leader of the House was requested last Thursday to put a copy in the Library on Friday, that it can be made available in the Library only at 11 o'clock on the day of the debate?
Mr. Mellish: I can only tell the right hon. Gentleman that, after discussing the matter and making a decision, the Government decided to make this copy available tomorrow at 11 o'clock. The right hon. Gentleman will know that
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that is not an uncommon practice for Governments. There will be plenty of time to read the Report before the debate.
Mr. William Hamilton: Reverting to the matter of Select Committee Reports, does my right hon. Friend realise that it is not usual for any Government Department, of any party, to make a reply to any such Report within about six months, and that one of the Departments most blatantly to blame in this regard was a Department of the Government when the right hon. Member for Yeovil (Mr. Peyton) was a member of a Tory Government in his day? We had to wait months before we got replies from his Department. Will my right hon. Friend look into the speed with which Departments give replies to Select Committee Reports since one often has to wait six or seven months?
Mr. Mellish: I am much obliged to my hon. Friend. Anything he may have to say about the past performances of the right hon. Member for Yeovil (Mr. Peyton) would never surprise me.
Mr. Maxwell-Hyslop: On a point of order. Mr. Speaker. Many hon. Members who wish to take part in the debate tomorrow will be in Standing Committee or Select Committee in the morning and will not be able to go to the Library before one o'clock. Unless there are literally hundreds of copies in the Library, they will not be able to read the Report before Question Time begins at 2.30 p.m. Since the Librarian comes under your direction, Mr. Speaker, I must ask you to protect the rights of Members by issuing an instruction to the Librarian that, when he receives the report at 11 o'clock, he ensure immediately that 500 copies—no, 650 copies—are produced so that all hon. Members may obtain a copy and have an opportunity to read it before the debate begins. That is the only step which it lies within your power to take, Mr. Speaker, so that hon. Members may be properly prepared for the debate tomorrow afternoon.
Mr. Speaker: I shall consider the hon. Gentleman's suggestion.
Mr. English: Further to that point of order, Mr. Speaker. Are you aware that the whole Expenditure Committee has

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laid on the Table a Report criticising the delay in replying to all its Reports—the point made by my hon. Friend the Member for Fife, Central (Mr. Hamilton)? But I fail to see how the delay in replying to one Report is related to Chrysler when none of the Reports we have laid since—
Mr. Speaker: Order. I do not detect a point of order in what the hon. Gentleman is saying.
Mr. Amery: Further to the point of order, Mr. Speaker. I think that there is a widespread feeling on both sides of the House that it is rather unsatisfactory that we receive the information so very late, both as to what the CPRS thinks on the matter and as to the statement the Government will make about the Chrysler dispute. Would it not be possible for the usual channels to consider reversing the order of Wednesday's and Tuesday's business? Wednesday's business is of a general character, about unemployment, and there is no need for special preparation as there is for Tuesday's business on the motor car industry. May I put this suggestion to the House?
Mr. Speaker: The right hon. Gentleman has made his suggestion. We cannot debate the matter further today.
Later—
Mr. Maxwell-Hyslop: I beg to ask leave to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a specific and important matter that should have urgent consideration and take precedence over the Orders of the Day, namely,
"the need to provide the House of Commons with the fullest possible information relevant to tomorrow's debate on the motor vehicle industry, including the CPRS Report, before the House rises today".
In the exercise of your discretion, Mr. Speaker, I submit that the urgency of this matter justifies your ordering its consideration at 7 p.m. today. The issues involved have already been substantially ventilated in the course of Question Time, so I can be brief.
To the best of my knowledge several matters are to come before the House tomorrow which are concerned not just with one company—Chrysler—but with the whole British motor vehicle industry, the various component parts of which are
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inter-related, each part being affected by Government action in respect of any one of them. It is, therefore, of crucial importance that hon. Members should have time to read and consider the contents of a Report produced—at great public expense—by the Central Policy Review Staff so that both Government and Parliament can take fully into consideration the factors which appear in that Report before arriving at any policy decision.
Many hon. Members will be unable to give consideration to the Report—or even to read it—if they have to queue for an unspecified number of copies in the Library tomorrow, not when it becomes available at 11 o'clock but when their other parliamentary duties permit them to do so. Those who are serving on Standing Committees or Select Committees will not be able to do so until one o'clock. We do not know how many copies will be there provided or even whether we shall be allowed to remove them from the Library into the Chamber for reference during the debate.
This matter is of public importance because it represents a watershed in public policy on which the House must make its decision, and the contributions to the debate tomorrow need to be made on the basis of the fullest possible information rather than on the basis of hunch guess and hearsay.
Mr. Mellish: On a point of order, Mr. Speaker—
Mr. Speaker: Order. I must first give my ruling. I listened carefully to what the hon. Member for Tiverton (Mr. Maxwell-Hyslop) said and also to the earlier exchange. All I have to decide is whether I think it appropriate for this matter to be debated today under Standing Order No. 9. I am afraid that the answer is "No".
Mr. Mellish: On a point of order, Mr. Speaker. I am anxious to help the House. I understand that the phrase "put copies in the Library" is a formal term, but I undertake to see that copies are put in the Vote Office at 11 o'clock.
Mr. Peyton: Further to that point of order, Mr. Speaker. May I thank the Parliamentary Secretary to the Treasury for having been reasonably helpful and even moderately courteous.

CHRYSLER UK LIMITED
Mr. Heseltine(by Private Notice) asked the Secretary of State for Industry if he will make a statement on the terms of the Chrysler deal in order that the House may have time to consider it before tomorrow's debate.
The Secretary of State for Industry (Mr. Eric G. Varley): No, Sir. My discussions with the Chrysler Corporation are not yet complete, but I shall be in a position to report their outcome to the House tomorrow.
Hon. Members: Resign.
Mr. Heseltine: Will the right hon. Gentleman think again about how he can make available to the House in advance of the debate the terms that he is so confident of reaching with the Chrysler Corporation, so that the House may have the opportunity of reading those terms rather than listening to them dribbled out in the course of his speech?
Secondly, what steps does the right hon. Gentleman intend to take to ensure that the House will give its authority to the Government to enable the Government to conclude a deal with Chrysler before the end of the year?
Thirdly, does the right hon. Gentleman understand that the House accepts that any Government are entitled to privacy in conducting controversial negotiations? Will he therefore explain why his colleagues have leaked the substance of the deal to the Press, which is far better informed than is the House?
Will the right hon. Gentleman also explain to his colleagues that their bickering and in-fighting, all of which has also been substantially leaked to the Press, have already destroyed, in advance of anything he may say tomorrow, what little credibility his Government's industrial strategy has left?
Mr. Varley: I do not think that it would be helpful to anticipate the answers to any of the questions the hon. Gentleman has asked. I can tell him only that the detailed heads of agreement are still under discussion with the Chrysler Corporation and are subject to further exchanges between the Corporation and my Department. I do not expect that they will be completed until later today. There
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is very little that I can add to what I have already said.
Mr. Les Huckfield: Does my right hon. Friend accept that many of us, on the Government benches at least, appreciate that the statement is possibly the most important on industrial policy that this Government have yet had to make, and that therefore it is appropriate and correct that it should be comprehensive and final? Nevertheless, will he also accept that many of us, particularly those representing Chrysler constituencies, would like to press upon him the urgency of giving us some information so that we may tell our constituents exactly where they stand?
Mr. Rost: Read the newspapers.
Mr. Varley: I hope to be in a position to make a comprehensive statement to the House tomorrow, but I cannot go further than that. I hope that my hon. Friend will not think that I have been discourteous. I have taken big steps to keep my hon. Friends and Opposition Members informed as much as possible. [HON. MEMBERS: "Oh."] As the hon. Member for Henley (Mr. Heseltine) acknowledged, it is necessary for the negotiations to take place. They must take place in a confidential atmosphere, and that is what is happening.
Mr. Alexander Fletcher: Who is the target for the softening-up process in reports in the weekend Press about Chrysler? Is it a matter of softening up Parliament, the Labour Party, or the rest of the British motor industry?
Mr. Varley: The hon. Gentleman trivialises the matter. We are dealing with a most serious industrial problem involving the livelihood of 25,000 people working directly for Chrysler and many more who work in supplying industries. It does not help to be mischievous in the way that the hon. Gentleman is.
Mr. Moonman: In making the comprehensive statement that he has promised, will my right hon. Friend relate it to two other matters associated with Chrysler—how the deal affects and impinges on the Government's general industrial policy and how far it affects the motor car industry in terms of marketing and production? Some of us also represent constituencies other than Chrysler constituencies.
Mr. Varley: In my speech tomorrow shall of course relate whatever we have to say on the Chrysler Corporation and the Chrysler UK situation to the Government's industrial strategy and the whole of the motor car industry.
Several Hon. Members rose—
Mr. Speaker: Order. There is an important statement to be made, and then we are to have a debate in which many hon. Members want to take part. We cannot have the Chrysler issue debated today as well as tomorrow. I shall allow one more question from each side.
Sir J. EdenIs it not clear from what the hon. Gentleman has already said that his solution for Chrysler is likely to present a complex picture to the House? Does he not agree that in those circumstances it would be more courteous and helpful to the House as a whole if he gave hon. Members the opportunity to consider the terms of the proposal he has to make before inviting them to debate those proposals?
Does the right hon. Gentleman agree that it is very important that the Chrysler decision, whatever it may be, is put into the context not only of the CPRS Report but of the Government's views on the Report of the Select Committee on Expenditure? Is he not aware that it would be impossible to do justice to these matters and to their importance to the country if he were simply to make a statement during the course of the debate? [HON. MEMBERS: "Too long."] Will the right hon. Gentleman do his best to ensure that the debate is postponed by at least 24 hours to enable hon. Members to give proper consideration to these matters?
Mr. VarleyThe timing of the debate is not for me, but for my right hon. Friend the Leader of the House and, I expect, the usual channels. I have already given an undertaking that there will be a comprehensive statement and that it will be related to the CPRS Report, which will be made available tomorrow. I should be very surprised if I did not also refer during the debate to the Report of the Select Committee. If we manage to reach an agreement with the Chrysler Corporation it will certainly require further parliamentary procedures, and there will be further opportunities to debate the matter.
Mr. Raymond Fletcher: May I make my right hon. Friend aware that I would resign the Labour Whip this afternoon if I believed everything I have read in the weekend Press? The fact that I do not believe everything I read in the Press, although I write for it, enables me to stay on this side of the House. May I also make my right hon. Friend aware that it is the custom of the House to debate information that is conveyed to it in the course of debate? Those hon. Members who wish to be acquainted with the facts should attend the damned debate.
Mr. Varley: I am much obliged to my hon. Friend. He is right in the advice which he gives and his advice should be taken. Right hon. and hon. Members would be very foolish to believe everything they have read in the newspapers.
Mr. Heseltine: On a point of order, Mr. Speaker. I hope that you will not think that I am trespassing on the rules of order, Mr. Speaker, but quite clearly during the course of the right hon. Gentleman's replies I heard him refer to making a statement tomorrow and making a speech tomorrow. It would be for the convenience of the House if we knew which he meant.
Mr. Speaker: That is not really a matter of order.
Mr. Crouch: Further to that point of order—
Mr. Speaker: I have said that it is not a point of order. I have allowed the House considerable latitude this afternoon in asking about ministerial statements and answers which are nothing to do with the Chair.
Mr. Crouch: On another point of order, Mr. Speaker. It cannot have escaped your notice, Mr. Speaker, that this afternoon we have had two statements from the Government Front Bench which have treated the House with scant courtesy. We have read in the Press this weekend a blueprint—I am referring to yesterday's edition of The Sunday Times—of the Chrysler solution, yet the Secretary of State has said—
Mr. Speaker: Order. First, that is not a point of order. Second, I hope that each side will treat the House with courtesy.
Several Hon. Members rose—
Mr. Speaker: I call the Secretary of State for Social Services.

NATIONAL HEALTH SERVICE AND PRIVATE PRACTICE
The Secretary of State for Social Services (Mrs. Barbara Castle): With permission, Mr. Speaker, I would like to make a statement on private practice and the National Health Service.
The House will be glad to know that this morning I met representatives of the medical and dental professions on the Government's proposals for phasing private practice out of NHS hospitals. As a result of this meeting they are ready to call the Central Committee for Hospital Medical Services and the BMA Council, and the Council of the Hospital Consultants and Specialists Association together later this week and to submit proposals to them for urgent consideration. It is hoped that they will be accepted and normal working resumed.
As the House will be aware, the Prime Minister and I met a representative delegation of the professions on 3rd December at which the professions expressed anxiety that the Government's proposed legislation on phasing out private practice from NHS hospitals could render nugatory the practice of private medicine in this country, which the Government have always said that they do not intend to abolish. At that meeting outline proposals were put forward by Lord Goodman which were regarded as the basis for urgent exploration. The Prime Minister undertook that these proposals would be examined and that the professions would be informed of the Government's response.
Since that time a process of clarification has been taking place with me through Lord Goodman and proposals have been evolved which the Government hope will lead to an end to this dispute. If the professions as a whole agree these proposals and normal working is resumed, the Government will embody these proposals in their legislation.
Under the proposals, a copy of which has been placed in the Library, the professions make clear their continuing opposition to the phasing out of private practice and reserve their right to try to
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influence Parliament's decision on the point of principle, but they acknowledge that this may become the will of Parliament. It is proposed that the legislation would embody two principles: first, that private beds and facilities should be separated from the NHS and, secondly, an expression of the Government's commitment to the maintenance of private practice in this country through the renewal of the provision in the National Health Service (Amendment) Act 1949 which maintains the right to private practice by entitling doctors to work both privately and in NHS establishments.
These two commitments will be related through the establishment of an independent Board set up by the Government. The Board will have an independent chairman, two members drawn from the medical profession and acceptable to it and two members appointed after consultation with NHS staff and other interested parties.
The criteria under which pay beds and facilities would be phased out in the legislation will be the reasonable availability of alternative facilities for private practice. It is accepted that there are some pay beds and facilities which on this basis and on the basis of their under-use could be phased out without delay.
The Bill will therefore contain a schedule giving details of 1,000 pay beds which will be phased out of the NHS within six months of Royal Assent. The schedule will be drawn up on the criteria which I have mentioned and after consultations with all concerned.
The phasing out of the remaining pay-beds would be determined by the independent Board which would be guided by the following criteria; that there should be a reasonable demand for private medicine in the area of the country served by a particular hospital; that sufficient accommodation or facilities existed in the area for the reasonable operation of private medicine, and that all reasonable steps had been, or were being, taken to provide those alternative beds and facilities. This would be kept under continuous review. Where all reasonable steps were not being taken, that would, after due warning, be in itself grounds for withdrawing pay beds and facilities in the hospitals concerned.
One of the factors the Board would bear in mind in deciding whether private

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facilities for specialised operations, treatments and investigations should be phased out would be the willingness of the NHS to make such facilities reasonably available on an occasional basis in specified circumstances and at an appropriate charge. The Secretaries of State would have to be satisfied that there would be no disadvantage to NHS patients and that such patients were admitted on the same basis of medical priority as NHS patients.
As stated in the Queen's Speech, the regulation of the private sector following the separation of pay beds will be the subject of further consultation with the professions. In the meantime the Government need to be satisfied that developments in the private sector do not significantly endanger the service the NHS gives to its patients and will enter into consultation with the medical profession as to how this can be achieved by voluntary means. The consultations would cover the point whether any reserve powers that it might prove necessary to take in the legislation might be exercised by the independent Board.
The Government believe that the smooth phasing out of pay beds would be facilitated if, pending their withdrawal, a system of common waiting lists were to be introduced. The professions have expressed reservations on this matter, but it is proposed that the legislation should instruct the Board to examine this and make recommendations to the Secretaries of State within six months of Royal Assent to the Bill.
I hope that in the light of these proposals—with which the Secretaries of State for Scotland and for Wales associate themselves—the professions will now accept that this is a matter for Parliament and end the damaging industrial action by senior medical staff. The issue of private practice in National Health Service hospitals has long been one of great controversy, not least within the service itself. These proposals will ensure that the policy of separation is achieved, but in a way which should allay the fears of the medical profession and provide an enduring settlement.
Mr. Norman Fowler: May I endorse one thing that the right hon. Lady said—namely, that this is an issue to be decided in Parliament? Is the right hon. Lady aware that the arrangement which
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she has announced does nothing to reduce our opposition to her policy, which is both wrong in practice and indefensible in principle?
I ask the right hon. Lady two questions. First, does she not understand that as it still remains her declared aim to abolish pay beds, the fact that execution is to be independent or delayed is irrelevant to the main issue? Second, will she confirm that her licensing proposals remain? If they do, how does she justify a position in which the State can intervene to control the size of the private sector and prevent it from developing and flourishing?
I hope that the right hon. Lady understands that we shall continue to fight her all the way on these proposals in Parliament.
Mrs. Castle: I cannot say that I ever expected anything else. Naturally, I recognise the right hon. Gentleman's right to fight these proposals just I and my colleagues have the right to put these proposals to Parliament, because we believe in them.
The hon. Gentleman has totally misunderstood the purpose of the exercise embodied in the proposals I have spelled out to the House. The Bill will make it clear that pay beds are to be separated from the National Health Service. It was always my intention that this should be done in such a way as not to damage the interests of those who wished to pursue private practice and who had not got readily available facilities to hand outside the National Health Service. These proposals will enable facilities to be phased out as the opportunities for alternative facilities build up, although it is clear from what I have said that if the opportunity to build up alternative facilities is not reasonably taken the beds will be phased out.
I have always made clear that my proposals concerning licensing are, as the Gracious Speech said, a matter for further consultation. It is widely accepted that it would be wrong, pending the phasing out, for private developments to take place which threatened the well-being of the NHS, which remains the backbone of the health care of our people. This matter is being further considered in consultations and the possibility is being examined of any reserve powers we might

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have to take being placed in the hands of the Board.
Mr. MacFarquhar: Can my right hon. Friend confirm the impression I have gained from her statement, namely that in the great metropolitan areas where the resources and the demand for private medicine exists in large amount, pay beds will be phased out rather quickly, but that outside these areas, where there is not much demand and few resources for totally private medicine, pay beds are likely to persist for a long time?
Mrs. Castle: The schedule for phasing out the beds will take into account the criterion that there should be adequate and reasonably suitable alternative facilities available. My hon. Friend is right to say that we are likely to find that London is more plentifully supplied with alternative private facilities than are some other areas of the country. As for the length of time it will take to phase out pay beds altogether in areas where private facilities barely exist outside the National Health Service, that remains to be seen. The independent Board will be examining these positions in the light of the criteria I have mentioned.
Mr. Michael Morris: Is the right hon. Lady saying with regard to the licensing proposals—to use her own words the "further consultations" that she is having—that she is withdrawing the relevant paragraph from her consultation paper? Secondly, is she also saying that the directive that went out to certain area health authorities saying that practitioners in health centres would no longer be allowed to undertake private practice is also being reconsidered?
Mrs. Castle: I have said, and the Gracious Speech makes it clear, that the licensing proposal is a matter for further consultations and that those consultations have not yet begun. They will take place on all the possible ways in which we might give reasonable safeguards to the National Health Service so that its ability to provide a service to its patients is not undermined.
As for the hon. Gentleman's question about the circular concerning health centres, this misrepresentation of the position has already been scotched in the
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House in the answer to a Question by my hon. Friend the Minister of State not long ago. There has never been a circular on the lines the hon. Gentleman suggests. As I made clear in my speech to the conference of Family Practitioner Committees not many weeks ago, family doctors can continue to see their private patients in health centres. I have made this clear to the House before and there is no need to withdraw anything.
Mr. Penhaligon: Can the right hon. Lady tell the House whether the hospital consultants with whom she has been having consultations are prepared to recommend acceptance of this document?
Mrs. Castle: The wording I have read out to the House more adequately reflects their point of view. They will put these proposals for urgent consideration—[Interruption.] Unlike some Tory Members I do know something about negotiations. When the representatives whom I met this morning expressed a willingness to put those proposals for urgent consideration they insisted that it would be wrong for them to pre-empt the decision of the bodies they represented. I respect their judgment of the right way to handle their side of the discussions. I made clear in my statement that the Government's willingness to embody these proposals in their legislation is conditional upon the proposals being endorsed by the medical and dental professions as a whole and normal working being resumed. We must wait and see what the expressions of views are at meetings to be held later this week.
Mr. Raphael Tuck: Is my right hon. Friend aware that the setting up of this independent Board will come as a great relief not only to myself but to a number of my hon. Friends whose names I am not at present even allowed to mention? Is she further aware that her proposals for phasing out pay beds may, as I said last Friday, decimate the medical population of this country with disastrous effects?
Mrs. Castle: I must tell my hon. Friend that the remit of the Board will be to phase out pay beds but to do that in an orderly way, using the criteria to which I have referred.
Mr. Monro: In view of the right hon. Lady's indignation over pay beds, may I

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ask her to confirm that the last pay beds provided in Scotland were approved by a Labour Government?
Mrs. Castle: I am sorry, but I have never been Secretary of State for Scotland.
Mr. Bryan Davies: Will my right hon. Friend accept that many of us on the Labour Benches will view this compromise with a degree of anxiety? Will she further accept that she is vesting this independent Board with powers which ought more appropriately to be located in her Department, which is backed by the views of the people as represented in Parliament? Is there any chance that these independent members of the Board who are not nominated by the medical profession may be drawn from those sectors of society which neither wish nor have the resources to take advantage of private medicine?
Mrs. Castle: It would certainly be the Government's intention to secure a balance in the membership of the Board. I point out to my hon. Friend that the Board's activities remain under the control of Parliament in the sense that the criteria by which it must be guided will be laid down in considerable detail in the legislation. These criteria will be matters on which the House can adjudicate and deal with in any way it wishes.
Mr. Paul Dean: While welcoming the possible help that the proposed independent Board may be able to give, may I ask the right hon. Lady to recognise that one of the fears in this situation is that the licensing system will be used as a way of getting rid of private practice altogether? In view of this genuine fear may I ask the right hon. Lady to consider the possibility of the Board having some function in this respect?
Mrs. Castle: The question of licensing is a matter for further consultation, as the Gracious Speech made clear. The legislation for phasing out pay beds will go ahead at the earliest possible date. Licensing remains to be further considered. As I said in my statement, one matter which we shall cover in the consultations is whether any necessary reserve power to prevent damaging developments to the National Health Service should be embodied in the independent Board.
Mr. Cryer: We realise that my right hon. Friend has had many difficulties with the medical profession, which wants to keep its hands on the lucrative bodies of private patients. There are two items which cause special concern. First, will not the Board be effective only as a machine for delaying the abolition of private beds within the National Health Service? Secondly, my right hon. Friend said that the ending of separate waiting lists will be considered by the Board six months after legislation. That means that the scandal of queue jumping by people who have money will not be brought to an end as soon as it might be. Does not my right hon. Friend feel that it is for her Department to make the decision? Is not my right hon. Friend concerned that the Board will be waiting to establish the amount of investment in private practice and, given our economic circumstances, is it not wrong for investment to take place in the private sector?
Mrs. Castle: I do not share my hon. Friend's anxieties because the legislation will make clear that the remit of the independent Board is to phase out pay beds. The principle of separation will be accepted and embodied in the legislation, but it will be related to the opportunity for the development of alternative facilities for private medicine outside the NHS. It has always been my intention, in areas where alternative facilities do not exist, to allow a reasonable period for phasing out pay beds to give an opportunity for the facilities to be built up if there is a demand for them. I am merely embodying that approach in a different form.
I agree with my hon. Friend on the desirability of common waiting lists, and wish that we could get the profession to accept the principle. At the moment we have not been able to do so, but a reference to the Board, with a time limit, will be helpful in showing us ways in which common waiting lists might be introduced. I do not think that six months is a long time. We cannot set up the Board until Parliament has decided whether it is to operate.
Mr. Crouch: I accept that the Board is a compromise towards finding a solution to this difficult problem, but the right hon. Lady is giving to the Board a remit to separate the National Health Service into two health services. Is she prepared

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to go into the negotiations with an open mind and not see, as a result, the division of the health services into two?
Mrs. Castle: No, I am sorry, but I do not accept the hon. Gentleman's view. It has been the policy of the Government and we fought two elections on it. I know that there is disagreement about the policy but we stand by it. No one would expect us to do anything else, and I am not prepared to abandon that policy.

PRESS (GOVERNMENT INFORMATION)
Mr. Ridley: On a point of order, Mr. Speaker.
Mr. Speaker: Order. Has this anything to do with the supply of documents, or is it a different point of order?
Mr. Ridley: It is a different point of order, Mr. Speaker, which may well concern privilege. I wish to ask your advice on the possible reference of a matter to the Committee of Privileges.
It will be within your recollection, Mr. Speaker, that two journalists were recently censured by the Committee of Privileges—indeed, the matter is to be debated tomorrow night—for having leaked a confidential document of this House in the Press. It now transpires that the whole of the negotiations over the Chrysler matter, together with the inner dissensions among Cabinet members and the different points of view taken by various members of the Cabinet, have been leaked to the Press in the Sunday newspapers. This is not quite the same because it is not a matter concerning a Committee of this House. However, it is a matter concerning the Government, and for the Cabinet to leak these matters to the Press without first informing the House about all of them is a far more grievous breach of the privileges of this House—
Mr. Speaker: Order. The hon. Member is trying hard and ingeniously, but what the Government do is not a matter for the Chair. This can come within the ambit of privilege only if it refers to the proceedings of a Committee of the House. The hon. Member's point is a legitimate one to make in a speech in a debate, but it is not a matter of order, and I must so rule.

RATE SUPPORT GRANT
4.21 p.m.
The Secretary of State for the Environment (Mr. Anthony Crosland): I beg to move,
That the Rate Support Grant Order 1975, a copy of which was laid before this House on 5th December, be approved.
With this, I understand we can discuss the second motion,
That the Rate Support Grant (Increase) (No. 2) Order 1975, a copy of which was laid before this House on 5th December, be approved.
The first order relates to the rate support grant settlement for 1976–77 and this will inevitably be my main theme this afternoon. But let me first say a brief word about the increase order.
This applies to grant for the financial year 1975–76. Exchequer grants for that year were originally determined at November 1974 prices. We now have to adjust those grants to take account of changes in costs since then. I have decided to accept for grant increases in costs totalling £1,739 million. The grant for 1975–76 was 66½ per cent. and that percentage applies also to the increase order.
We shall therefore pay a further £1,042 million in grant, bringing the total of rate support grant for 1975–76 to £5,747 million. The additional grant will be distributed on the same formula as was used to distribute the original 1975–76 grant.
I turn now to the year ahead, 1976–77. I need not dilate this afternoon on the general economic background. It is widely agreed that in the present economic crisis the prior claims on our resources must be, first, the balance of payments and, secondly, higher investment. This means that public expenditure cannot maintain the growth which it has had in recent years.
This growth has been particularly marked in the field of local government current spending, which has increased at a rate far exceeding the growth in our national resources. If we take the last three years, in 1973–74 it increased by about 8 per cent. in real terms compared with a growth in gross domestic product of 2½ per cent. In 1974–75, it rose by 10 per cent., GDP by only 2 per cent. This year the growth in spending will be much

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less—of the order of perhaps 5 per cent.—but at a time when, in the wake of the world recession, GDP is actually falling.
Hon. Members opposite will no doubt raise this afternoon their usual chorus of protest at this growth in public spending, which it has become fashionable to blame on waste and extravagance in local gov- ernment. I do not take this view. Of course we can always find individual examples of extravagance, but by far the greater part of the growth has been due to the demands of the public and the encouragement of central Government. Let me quote a typical ministerial speech:
"This is the decade of the personal social services … We have now surging social service departments and a higher growth trend than almost any other part of the public sector though not enough … This is … a tribute to you".
This was said by a Secretary of State for Social Services—but not my wicked right hon. Friend the Member for Black- burn (Mrs. Castle). The date was October 1973 and the speaker was the right hon. Member for Leeds, North-East (Sir K. Joseph). No doubt he has had a public conversion since then. But I hope that today we shall be spared little homilies against "spendthrift" Labour Governments.
However, the point is not to apportion blame. The critical point is that this large disparity between our rate of economic growth and the rate of growth of local spending cannot now continue. Originally, we hoped that there would be room for some growth in local authority current spending next year. In his Budget Statement, the Chancellor provided for an increase in 1976–77 of about 1–1- per cent. But later information has shown that local authorities are spending somewhat more this year than was allowed for in last autumn's RSG settlement.
Spending this year is likely to reach the level which we had planned for next year. I cannot hope in present circum- stances to find additional money for local government next year. This is why I have had to call for a standstill next year in local government spending.
I take no pleasure in doing so. The great bulk of local spending is on essen- tials. It is on schools, social workers, play spaces, parks and emptying dustbins. It follows that the implications of a standstill are unpleasant, even harsh.
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To achieve a standstill, authorities will have to take a long, hard look at all their present policies. They will have to define their priorities rigorously and ensure that every penny is spent to best effect. Even given the maximum attention to priorities and to efficiency, a standstill will still have some unpalatable implications for services.
The Government will give help and guidance in the forthcoming circular on the rate support grant settlement. But in the last resort the decisions are for the local authorities themselves. They, and not the Government, best know their own local circumstances, and they and not the Government must take the final decisions on priorities in the light of those circumstances.
In deciding how to implement the standstill, local authorities will, I am certain, seek to minimise the effects on their existing staff. There will be cuts in some services in order to accommodate inescapable commitments in other services, but I see no reason to expect significant redundancies if authorities use natural wastage whenever they can. They will need to have close and continuing consultations with employees' representatives at local level, and at national level I have instituted, for the first time, regular meetings with the TUC local government committee to discuss the manpower implications of Government policies.
But total staff numbers must not increase. In partnership with the local authority associations and the trade unions, we shall be scrutinising the quarterly returns of manpower which are provided for the Joint Staff Watch. While it is too early to draw firm conclusions from the returns so far available, it seems that some expansion may still be occurring. Future returns will provide a more reliable guide, a more reliable basis for judging how the employment situation is developing—and we may need to give further advice in the light of those future figures.
Mr. Eldon Griffiths: As the right hon. Gentleman is anxious to see the numbers employed in local government not increase—and I am sure that he speaks for both sides of the House—will he be very careful to see that the Government do not lay upon local authorities increasing duties which make it inevitable that its numbers will

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increase? In particular, will he put off the operation of the Community Land Act, which will inevitably add to the numbers he says he wishes to reduce?
Mr. Crosland: We have discussed this matter again and again and the hon. Member knows that I shall not suggest that we should postpone the Community Land Act.
The basic responsibility for keeping staff numbers down to the essential minimum lies with individual authorities. All this places a heavy burden on local authorities. They feel deeply the need for the services which they provide for the community. Their whole instinct is to expand these services. So I appreciate all the more the loyal and responsible way in which they have responded to our call for economy in the wider national interest. In my view, local government has not been given sufficient credit for its reaction.
I turn to the RSG settlement itself. I have already discussed the expenditure base. "Standstill" means no increase next year on the estimate of current expenditure being incurred this year. Translating this year's expenditure base into the relevant expenditure terms which we use for the Order, we have arrived at a figure of total relevant expenditure at November 1975 prices of £10,461 million.
We then had to decide on the grant percentage. Last year, local government faced an unprecedented financial crisis. There was a danger of rate increases of a quite intolerable severity—a national average of perhaps 70 per cent. or 75 per cent. We met this unprecedented crisis by paying an unprecedented rate of grant. The 66½ per cent. grant was six points higher than it had been in the previous year—as large as the increase in the whole of the previous seven years during which the present system had been operating.
The situation next year will be very different. Local authorities should budget for a standstill in current expenditure, not for growth. Because of the Government's counter-inflation policy, they can expect a sharply declining rate of inflation—I shall say more about this when I come to cash limits—and authorities' general financial situation is
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much healthier now than it was a year ago.
In these circumstances we have decided to reduce the grant percentage to 65½. That brings the aggregate Exchequer grant to £6,852 million at November 1975 prices—still an increase of £1,418 million on last year's settlement. Specific grants amount to £643 million, national parks supplementary grant is £3 million and transport supplementary grant is £285 million. When these are deducted from the aggregate Exchequer grant, we are left with the rate support grant itself, which for 1976–77 will be £5,921 million.
So much for the total, I turn now to the distribution of the grant. Connoisseurs of rate support grant orders will have noticed that next year's distribution formula is the longest and most complicated ever. This is not the result of wilful obscurantism on the part of the Government. Rather, it is a recognition of the enormously complex variations in the needs of individual authorities, and in the resources available to them to meet those needs.
For next year we had three particular aims: first, to give London a fairer share of the cake; secondly, to reflect more fully social needs and the needs of expanding areas; thirdly, to keep the fluctuations in grant distribution within tolerable limits. With hindsight, I accept that London was hard done by in the 1975–76 settlement. Rate rises in London were certainly well above the national average. In this rate support grant settlement, for the first time, we are taking full account of London's actual expenditure in determining its share of the needs element.
But we also have to take account of London's very high rateable resources—about £100 more per head of population than in the rest of the country. We have therefore had to make a compensating adjustment to London's needs element share. But because the London ratepayer has to pay his bills on very much higher property values than those which apply elsewhere, we have limited the amount of that adjustment to only one-third of the advantage in rate revenue which London authorities enjoy as a result of their extra rateable value.
This process of adjustment has, I regret to say, become known by the ugly and

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emotive term "clawback". It has even been suggested that London is positively to be taxed for the benefit of the rest of the country. I should therefore make it plain that the net result will be an increase in London's share of the needs and resources elements of rate support grant from 12·4 per cent. this year to about 14 per cent. next year.
Next, there is the distribution of the needs element between individual authorities. Here we use what are in effect two separate formulae, one for London and the other for the rest of the country. Each formula derives from a statistical analysis of the spending of the authorities concerned. Each includes for next year new indicators of social needs, related to overcrowding, poor housing conditions, numbers of single parent families—outside London—and, in London, numbers of children in care. We have also introduced a factor related to the number of new housing starts in an authority's area.
I am sure that these new formulae more accurately reflect the true social need of different areas. They will lead, for example, to a further redistribution of grant away from the prosperous Home Counties towards the hard-pressed urban areas while protecting the remote rural areas. But, because they are new and different, their immediate adoption in full could have meant large and disruptive changes in the sums payable to individual authorities. For that reason, and at the request of the local authority associations, only one-third of the total needs element will be distributed on the new formulae. The remaining two-thirds will be allocated in proportion to the sums which authorities are receiving in needs element for this year.
I should say a brief word about the resources element. This is the part of the grant which compensates for differences between local authorities in their rateable value per head. In the light of the views of the local authority associations, we have decided to devote the same proportion of the total of the needs and resources elements to the resources element as in 1975–76—that is, 32i per cent.
For the domestic element, as for the resources element, all the local authority associations have asked us to make no
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changes for 1976–77. As right hon. and hon. Members will know from their constituency correspondence, there has been growing concern about the rate burden on the non-domestic ratepayer, particularly the small shopkeeper. By keeping domestic relief to its present level we have ensured that a greater proportion of the grant than last year will benefit the non-domestic ratepayer.
I now turn to cash limits. As the House knows, cash limits will be applied to grants to local authorities in 1976–77. The effect will be to introduce a ceiling on the grants paid to local authorities under increase orders. For next year the ceiling will be £480 million. In other words, if costs rise in such a way that, under the normal increase order procedure, authorities would get additional grant of up to £480 million, they will get it. But if costs rise to such an extent that, under the normal procedure, they would get more than £480 million, the cash limit will bite.
This limit of £480 million for 1976–77 is based on the Government's intention, as stated in the counter-inflation White Paper, of reducing the rate of inflation to 10 per cent. by the late summer of next year and to single figures by the end of that year.
In fact, we expect that the rate of inflation in local authority costs will be not more than about 11 per cent. for the period from average 1975–76 costs to average 1976–77 costs.
Mr. Graham Page: Has the right hon. Gentleman allowed for the rate of inflation in the rate support grant itself, and, if he has, at what rate? If not, is he relying entirely on the increase orders to take account of inflation from 1975–76?
Mr. Crosland: What I am saying applies entirely to the increase orders. The sum of £480 million is a ceiling on the increase orders. The main rate support grant order covers only the period up to the present time. It does not look forward to inflation in the coming year. That is entirely a matter for the increase orders.
Mr. Graham Page: Is the right hon. Gentleman saying that he has taken no account of inflation in the main order, but is relying on the increase orders to take that into account?
Mr. Crosland: As usual, future inflation is taken account of by the increase orders. There has been no change in the practice that has operated since the right hon. Gentleman was responsible for these matters.
Mr. Timothy Raison: Surely inflation taking place between now and the end of this financial year is reflected in the order for next year, and surely the rate increase orders relate to inflation after the next financial year begins.
Mr. Crosland: Perhaps I may finish this part of my speech in the hope that I shall clear up these matters, although I confess that I find them as complex as anyone in the House.
The cash limit I have announced however, does not amount to 11 per cent. of the total amount of grant to which it is related. It amounts to only 7 per cent. The reason for the difference between 11 per cent. and 7 per cent. relates to the different time periods involved: 11 per cent. is a full-year effect. But the cash limit must be related to price changes from now onwards which will affect local authorities' expenditure next year.
The main rate support grant order is determined at the level of November 1975 prices. I think that answers the question of the right hon. Member for Crosby (Mr. Page). As such it already includes, for example, the full-year effect of the recent £6 settlement for local authority manual workers. There is thus significantly less than a full year's pay and price movement to be taken into account. In technical terms, and I think his will answer the question put by the hon. Member for Aylesbury (Mr. Raison), the cash limit includes the grant proportion of the estimated effect on expenditure in 1976–77 of cost increases from November 1975 to March 1977, which equates to an increase in expenditure of 7 per cent. above the settlement figure.
If local authority expenditure increases because of changes in Government policy or the introduction or enactment of new legislation, the cash limit will be reviewed. Equally, if inflation, as it affects local authorities, turns out to be substantially higher than is implied by the cash limit, the Government will again be prepared to review the position. But I regard this as highly unlikely.
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The House will note that cash limits apply to Government grants and not to expenditure. The hon. Member for Aylesbury has been reported as wanting us to go further. He asked me to "grasp the nettle" by putting cash limits also on the share of expenditure paid out of rates as well.
I cannot accept this proposal for two reasons. First, it would represent a fundamental erosion of local government autonomy. I prefer to work through co-operation and consensus, not compulsion. Secondly, I do not believe that it would be as effective as our present proposals. I agree with the Economist which said on 29th November that our
"blend of financial control with respect for the existing system of local government may work better than more dramatic, and superficially attractive alternative".
I shall not attempt to prophesy the likely rise in rates next spring. I was over-optimistic last year, because the assumptions which I laid down were not fulfilled. Most authorities overspent and many appear to have rebuilt their balances to an unexpected degree. I will say only that rate increases next spring will be very substantially lower than those this spring.
The reaction to this year's settlement has been subdued but not, I think, basically hostile. For example, the Daily Telegraph reported on 22nd November:
"Sir Meredith Whittaker and other local authority leaders stressed the determination of councils to co-operate with the Government".
Sir Lou Sherman said:
"I believe we shall all play the loyalty game. If there are a few maverick authorities throughout the country the finger of scorn will be pointed at them".
As to the likely rise in rates, Sir Robert Thomas is quoted as having said
"If the Government's estimates are borne out this would put increases below 10 to 11 per cent."
Sir Lou Sherman was quoted as saying:
"I hope that London increases will be kept down to single figures."
I invite the House to stand back for a moment from the details of the 1976–77 rate support grant settlement and consider the wider background against which we are debating this Order. A year ago, the RSG settlement was in effect a rescue operation. We were in the middle of the most severe inflation. Local authorities' finances were in disarray following

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the improvement advice and inadequate provision offered by the previous Administration. Expenditure had been rising at a rate far above that allowed for and this reflected not the delinquency of the local authorities, but the irresponsible profligacy encouraged by Mr. Anthony Barber, as he then was, and his ministerial colleagues. That was our inheritance.
In the past 12 months we have sought to improve the situation in many different ways. To begin with, we have enormously strengthened the whole relationship between the Government and local government. The Consultative Council on Local Government Finance has been established, and there is now a continuing series of meetings which provide an opportunity for exchanging ideas and understanding each other's problems.
I think that local government leaders would agree that the Council has been an outstanding success, the more so since circumstances at the time could not have been less propitious. The Council was born in a period when the message of a Labour Government had, sadly, had to be the pressing need to restrain expenditure. So again I pay willing tribute to the co-operation that we have received from local authorities and their leaders on the Consultative Council.
Mr. Raison: I acknowledge that the idea of setting up the Consultative Council is useful. But what is the right hon. Gentleman doing about the Prime Minister's contribution to the debate when he suggested there should be anti-council watchdog bodies?
Mr. Crosland: This is not something which the Prime Minister has invited me to do anything about. At Eastbourne the Prime Minister was trying to throw out to local authorities an idea for more public participation. I have no doubt that some people will have gone away to brood over this interesting proposal. That is the whole object of throwing out ideas. We look forward to debating this matter with the Opposition, because we know that they are all for public participation and democracy.
There is no area of similar size where we can point to a comparable achievement of changing from a rate of growth in expenditure of over 10 per cent. per
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annum to a virtual standstill in the space of two years.
Next, we have brought the rates situation under control. The exceptionally generous RSG settlement last year, our joint success in restraining expenditure, followed now by a fair settlement this year, mean that, after the chaos and crisis of the years 1973 and 1974, local government finances are now in a far healthier condition, and the public can face next year's rate increases with reasonable equanimity. The whole picture has been transformed from the one which we inherited in February 1974.
Mr. Max Madden: Another body which has been looking at the problems of local government finance is the Layfield Committee of Inquiry, which was set up by the Government. Is the Committee to report by the end of the year, as originally intended?
Mr. Crosland: My hon. Friend must have second sight. Perhaps I can proceed immediately to read the next sentence of my speech, which I will address personally to him.
Lastly, by setting up the Layfield Committee, whose report I expect to receive early in the New Year, we have focussed attention on the long-term future. There has, I think, been a change in public consciousness in recent months on the issues of local government finance. Last year, there was an enormous out- cry about rates, but we are coming to recognise that it is far too simple an approach to be concerned only about the level of the rates. Indeed, there is a common misconception about the rate burden. As a percentage of personal disposable income, rates have stayed remarkably constant over the past 40 years. The average domestic rate bill was 2·71 per cent. of personal disposable income in 1938, 1·92 per cent. in 1955, 2·24 per cent. in 1964 and 2·49 per cent. last year—still lower than in 1938.
Mr. Julian Ridsdale: There are 24- million people drawing rate rebates and 2 million on supplementary benefit. Therefore, there must be 25 per cent. of ratepayers contracting out of paying rates. Has the right hon. Gentleman taken this into account?
Mr. Crosland: The figures I gave represent the domestic rate bill actually

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paid, allowing for rebates. But I will ask my hon. Friend to refer to this matter when he replies to the debate.
The issue is not simply one of a tax base for local spending. It is also, and even more, one of the use of resources. Now, as at periods in the past, the debate about local government is about how resources should be used—what should be the total level of expenditure and what the priorities between different services. It is on these matters that we have, I believe, made good progress over the last year.
Previously, the Government put out figures for spending on local services in the annual public expenditure White Papers, but then did little, if anything, certainly not enough, to relate them to the reality of what local authorities were spending on the ground. This year we have kept much more closely in touch with local authorities.
The 1976–77 settlement has for the first time been directly related to the Government's public expenditure plans, and only minor modifications have been made to the figures which were laid down as long ago as the April Budget. We want to build on this advance by involving local authorities in our expenditure planning for future years, so that the previous gap in thinking and planning between central and local government can be narrowed still further.
The belief that expenditure and not financing is the crux of the matter is also reflected in our decision to introduce cash limits. Once again, local authorities will know where they stand. They may not all like the consequent restrictions on their grant, but this is a financial discipline which can operate while preserving the essential freedom of local government to decide its own priorities.
I believe that this Order is both a fair settlement for the year ahead and a further step in the right direction for the long term, and I commend it to the House.
4.51 p.m.
Mr. Timothy Raison: Every year this debate becomes more important and more melancholy. I think that no one could grumble about the rather funereal nature of the Secretary of State's speech. There was but one moment of light relief, and that was
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when he talked about the Prime Minister's proposal. His attempt to provide some reassurance to ratepayers in the latter part of his speech seemed rather unconvincing. He tried to do the same thing last year, and at least he has had the grace to acknowledge that he was wrong then. I shall be surprised if, in a year's time, we are congratulating ourselves on an easy year for the ratepayers.
The House recognises that there is a grave situation for local government finance. We have to recognise also that the present system is quite unacceptable in many areas. Last year, as the right hon. Gentleman acknowledged, it was the domestic ratepayers who were the most unhappy this year, the commercial and business ratepayers are equally miserable. They feel unprotected now that they no longer have any vote in local elections. There is real hardship among many smaller businesses. One of my hon. Friends made some attempt to remedy that with a Private Member's Bill in the last Session, but it was not successful. I hope that the right hon. Gentleman will take the matter very seriously.
The Secretary of State said—and I do not dispute it—that rates do not account for an increased proportion of incomes compared with pre-war, but we must recognise that the rate of increase in the rates has made them peculiarly intolerable, and on top of that there is the well-known fact that they are capricious and unfair in their incidence, and that fundamentally they are not related to people's incomes.
We also have to recognise another factor. I believe that the way that the rate support grant is used as an instrument of redistribution between areas ignores the fact that the apparently richer areas—the so-called prosperous Home Counties of which the right hon. Gentleman spoke—contain plenty of poor people. One of the difficulties about any kind of system of distributing resources on a geographical basis rather than on an income basis is that it is going to be unfair. A poor person is a poor person in Buckinghamshire or in Manchester. It does not give consolation to people with low incomes in those parts of the country where the standard of living is alleged to be higher to be told that they are going to have to pay through the nose in terms of rates.

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No doubt it is right to aid the inner cities, but the right hon. Gentleman will acknowledge that the Conservative Government made an important step towards this through the rate support grant. But the poor, everywhere, get a raw deal.
Mr. Joseph Dean: Anyone who is involved knows that under the Conservative Government there was no method to correct the imbalance in the formula which mitigated against the stress areas for which the hon. Gentleman claims to be appealing. I was in a deputation that went to see the then Secretary of State for the Environment, but our case was completely rejected. It took his successor, my right hon. Friend the present Secretary of State, to take steps to correct the balance, although it is still heavily not in favour of the stress areas, the big cities.
Mr. Raison: I cannot accept that point of view.
Mr. Joseph Dean: The hon. Gentleman should check his facts.
Mr. Raison: Perhaps my right hon. Friend the Member for Crosby (Mr. Page) will correct the hon. Gentleman if he catches the eye of the Chair. But my right hon. and learned Friend the Member for Hexham (Mr. Rippon), as Secretary of State, introduced into the rate support grant positive help for the inner cities. There is no doubt of that.
Another problem, which may not have been sufficiently recognised, is that the annual reallocation of elements in the rate support grant also contains difficulties. For one thing, there is the risk of political jiggery-pokery in relation to elections. Secondly, the fact that it changes each year adds to the feeling that the system is unfair. This year it is London's turn to gain, and once again, also, the metropolitan counties.
I do not grumble that London has benefited in this grant, but the position is now getting very difficult in the non-metropolitan counties like Buckinghamshire. The idea that we have a period of nil growth ahead of us is just a sick joke. In the non-metropolitan counties, we are having an inevitable reduction in services. In particular, there is little alleviation for those areas that have increasing populations. They have to provide additional schools, roads and services of all kinds.
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Some small help is given on the housing side, but Buckinghamshire has shown clearly that this help in no way meets the problem that it has to face in coping with a drastically growing population.
Although the system has something to do with the current crisis, as the right hon. Gentleman said, the problem goes deeper. It is two-fold. It consists, first, of the Government's failure to control inflation and, secondly, some profligacy on the part of local government and considerable profligacy on the part of national Government. It has become increasingly plain over the past 12 months that the Government's economic policy from March 1974 onwards was irresponsible to the point of wickedness. After all, the energy crisis began in September 1973 and the Barber cuts came in December 1973. Yet, from the moment they came to power, the present Government let things rip. They made no attempt to restrain pay and the electorate was repeatedly bribed that summer, and public borrowing became astronomic.
I believe that these things are the cause of the present crisis in local government, which is, of course, a crisis not just about the rates but about spending generally. We felt during the summer that the Secretary of State was beginning to be more realistic about all this. He made his famous speech in Manchester about the party being over, but even that is not wholly true. He is still pursuing extravagant ways of providing housing with far too little regard for realities. He is still pursuing the Community Land Act. It is no wonder that many Labour local authorities have given the impression that they are still oblivious to the crisis facing the country.
A year ago the Secretary of State said, in the corresponding debate,
"I intend to do everything within my power to ensure that the Government do not urge expenditure on services with one hand while restricting expenditure with the other."—[Official Report, 12th December 1974; Vol. 883, c. 793.]
Does that apply to housing, land, consumer protection, to secondary education? Evidently it does not. These are all areas in which the Government have encouraged additional local authority spending.
The truth is that the Government, including the Secretary of State, have been thoroughly ambivalent about this problem. At one moment, the Secretary of

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State talks about the desirability of the maximum possible public expenditure. Then he switches to his "The party's over" theme and goes back to the revisionist point of view, which he made public in what was rather nicely described over the weekend as his "Epistle to the Costa Ricans".
It is time for forthrightness. The Secretary of State told us clearly that we could not allow public expenditure to be maintained at the ever-increasing rate of the last few years, and that both national and local government would collapse if it went on.
Mr. Crosland: Will not the hon. Member for Aylesbury (Mr. Raison) be forthright himself and explain to the House why, during the last three years of Conservative Government, local spending rose from 8 per cent. to 10 per cent. and it took a Labour Government to bring it under any kind of control?
Mr. Raison: If the right hon. Gentleman thinks that it has been brought under control, he must be living in cloudcuckoo-land.
These Orders are alarming documents. They reveal an alarming situation. Ihe Secretary of State gave us the figures. He told us that the Rate Support Grant (Increase) (No. 2) Order 1975 showed how revenue expenditure for 1975£'6 had soared by £1,739 million on last year's original estimate. Can he really be satisfied with that?
The Rate Support Grant Order 1975, which is the one covering next year, shows how relevant expenditure is to rise to £10,461 million. In that, the rate support grant, together with the specific and other support grants, is to be nearly £9,000 million. These are vast sums of money, yet, as we know there will be no growth in real spending and the grant is to be reduced by 1 per cent.
How do the Opposition view the right hon. Gentleman's proposals? We have to say again that this is a very tough settlement in many parts of the country. In my own county, it looks as though the size of the grant will be £1 million down on last year. But it had to be tough. We accept that. Perhaps it should have been tougher. We also accept the introduction of cash limits, for
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which, after all, we have been clamouring for some time. The real test of cash limits will be how they operate in practice. The country is not clear about what the Government mean in Appendix E of the Report, where it says that the limits will be reviewed
"if the pace of inflation generally or the rate of cost increases affecting local authority expenditure were substantially higher than those implied in the cash limit."
What will happen to the limits after the pay policy runs out in the late summer of next year? After all, the present policy covers only part of the year. The House recognises that next year's pay settlement in local government will be of crucial importance. It may still depend on bargaining. The present situation is still meant to depend on bargaining. If so, the Government must not destroy the position of the local authorities, as they did this year by making it clear that despite what had been said the £6 pay limit was in reality an entitlement and not a maximum.
Incidentally, it is an irony that the Rate Support Grant Report talks of
"the Government's policy, agreed with the TUC,"
rather than referring to the Act of Parliament which embodies that policy.
Again, what happens if the Government's target of single figure inflation by the end of next year is not reached? What can the local authorities expect? How should they budget? Do cash limits mean anything? I hope that the Secretary of State for Wales will return to these matters later in the debate.
I come, then, to my second major doubt. From the Report it looks as though the Government are seriously playing down the difficulty and gravity of the situation, so that local authorities will underrate the size of what has to be done or will find themselves being treated as scapegoats for the failure of the Government.
In my view, the Association of County Councils was right to say in its memorandum on the rate support grant:
"The tone of the report does not indicate sufficiently the severity of the reduction in the standards needed to achieve the financial objectives."
Likewise, the Association of District Councils said:
"… the report glosses over the severity of the settlement, particularly for district

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councils, where a cut-back in real terms of between 5 per cent. and 10 per cent. is implied."
I am talking primarily of the non-metropolitan areas, but I believe that this may be true overall.
The Government should be giving a clearer, braver lead. They should not hide the actual reductions in services that will take place in many areas by their general statement about a standstill and no increases in services. They should give the facts, for example, about what they expect to happen to our teaching forces. Are we likely to see substantial numbers of unemployed teachers?
At the same time, the Government should give a much clearer lead about the other side of the coin, which is the vital necessity not to pile it all on the rates. They reject the notion of a statutory limit on next year's rates. Therefore, they must exercise far greater pressure on local authorities to hold down rate increases. It is not enough to rely on elections, because many parts of the country will not be holding elections next year.
I hope that the Secretary of State will be prepared to go further in saying what he regards as an acceptable rate increase next year. He will have to tell Socialist local authorities that piling more on the rates does not even help the poor.
The Secretary of State has often said that rates are a regressive tax. The Prime Minister now recognises that there are limits to taxation. Equally, the Secretary of State said, in that same "Epistle to the Costa Ricans", that
"The increase in taxes on ordinary working people has without doubt both disappointed expectations and contributed to inflation."
We have reached the stage at which the tax burden cannot be increased without causing an explosion on the part of those who have to pay these taxes. It is not selfish to seek to hold down rates; indeed, the reverse is now true. The local authorities must economise and must realise that the burden carried by the economically productive or wealth-producing sector of the community is altogether excessive.
I return to the Rate Support Grant Order. As I have said already, it indicates a bleaker outlook than the Government's tone suggests. It is interesting to see
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where the reductions in the Order, compared with the current year, are being suggested—first local transport finance and, secondly, housing.
It is clear that transport will feel a very sharp squeeze in the next few months. It is inevitable. The notion that transport can be regarded as an ever-expanding social service is one which is proving hideously expensive. But what pressure will the Government bring to bear on authorities like South Yorkshire, which threatens to transfer the burden on to the rates instead of increasing the fares, in flat contradiction to Government policy? A very close watch will be needed also on counties like the West Midlands and the GLC, which, after all, came to power only a short time ago promising free public transport for everyone. That now seems to be a far-off dream.
The other area in which there is some reduction in the Order is housing. Again, I do not grumble at the implication that housing subsidies, through the rate support grant, should be trimmed. I take it that this refers to the contribution that can be made by the rate to housing revenue accounts. However, it is now clear that the relation between the size of housing subsidies and the rate of new council building is almost nil. The recent Shelter report made that point very forcibly.
What certainty have the Government that local authorities will achieve the standstill on maintenance and management that they are asking for, or, for that matter, will put up rents by 60p? I recognise that the bulk of housing subsidies do not come through the rate support grant, but are a separate realm of finance. The Government must recognise that new housing imposes big costs on local government through services needed for providing the infrastructure which goes with new housing. Therefore, will it all just be piled on the rates?
The Secretary of State must make it clear that if councils are irresponsible over this, they can do grave damage to the whole repute of local government. People will be bound increasingly to question their unlimited rate-raising powers in the short term, quite apart from the long-term question that the Layfield Committee is now considering.

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There are other areas in which severe cuts are implicit in the Rate Support Grant Report, notably the environmental services in some areas at least. Perhaps I may quote one small example. The encouragement to raise cesspool emptying charges will certainly cause difficulty. This is a peculiarly unfair burden on the poorer people in country areas where sewerage is not provided. There is some compensation, in that there is rate relief, but the poorer people get less rate relief than those who live in larger houses. I hope that the Government will look carefully at the possibility of doing something to help those who have to have their cesspools cleared.
This raises another matter of great importance, although I recognise that the Government cannot say anything about it—namely, the whole question of what the Government are to do about the Daymond verdict in the House of Lords, because that will have an important bearing on local government finance.
I have one puzzle about the services listed in the Report. Why is there no mention of the substantial increase in town and country planning? The relevant expenditure for town and country planning was to have been £139 million in the current year, and the estimate for 1976–77 was £201 million, which is a substantial increase. Why is that increase taking place? Can it be that it has something to do with the Community Land Act? Perhaps the Secretary of State for Wales will tell us.
Will the Government now say something about the argument put forward by the Association of District Councils that part of the needs element should be paid to district councils? It seems that the association has argued this case with considerable force, and I do not think it fair that the matter should be shelved until after the Layficld Report has been published.
Will the Secretary of State for Wales give details about exactly what happened to the heavy local government borrowing that the Secretary of State spoke about in the debate last year?
I go back to the picture as a whole. I said earlier that the fundamental need is to control spending at national and local level, and, of course, it is. There
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is no question—I agree with the Secretary of State—that this represents a very difficult task for local authorities. They have been encouraged to spend. They have manned up to spend. Now we recognise that this has got to stop.
The Camdens, the Wandsworths, the GLCs, the West Midlands and others, to whom the Press has drawn largely legitimate attention recently, have to realise that the everlasting increase in municipal activities and spending is damaging the nation as a whole and damaging in particular those people whom they quite genuinely seek to help.
Everywhere there is a terrific responsibility on councillors and officials. It is they who have to do the job and it cannot be handed over to fantasy creations like the Prime Minister's watchdog anti-councils. Local government will have to make its own decisions. Indeed, the whole justification for local government is that decisions should be made locally. I recognise that the hardest of all decisions to take, whether it be in local government, industry, or anywhere else, is the one which entails cutting the size of staff. Such a decision represents a human problem which all of us want to duck, but it is something which has to be faced.
However, I believe that local government is entitled to ask for understanding from the public and for fair play from Government. Our criticism of Government today is fundamentally that they are not making the realities of what the Rate Support Grant Order entails anything like clear enough. We might ask, what about their own example? It is all very well talking, as the Prime Minister did the other day, about Chiefs and Indians in local government. There is no doubt that the Chiefs have proliferated, although I believe that some councils are now seriously looking at their organisation to see if they can produce more economical staff structures. It is a great pity that the Government, when they came to power, suppressed the work that the Pay Board was then doing in scrutinising local government staff.
What about the Chiefs and Indians in the Department of the Environment? There is no lack of either there. I believe that there are now well over 70,000 Indians in the Department and nine or 10 ministerial Chiefs, starting, of

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course, with "Big Chief Clay Crossta-Rica" who spends most of his time, fortunately, in Tokyo, the Caribbean or some far away place, but every now and again we see a puff from his cigar and no doubt the braves are summoned to his wigwam in Marsham Street and given a lecture. Then we have not quite so "Big Chief Silkin-Glove" who spends most of his time trying to grab the land from the other braves. There is also "Medium Chief Free-House", who is keen on municipalising wigwams, and "Medium Chief Gilbert", who spends his time propelling canoes, so far as he can, on to the rocks. Heaven knows what they all do, but we all know that they cannot resist inflation and control expenditure effectively. Hence, we have the present plight of the ratepayers and the country generally.
I do not propose to ask my right hon. and hon. Friends to vote against these Orders because local government has to be financed. However, I ask them to subject the Government policy in this area to the most searching examination.
5.18 p.m.
Mr. Jack Ashley: I wish to offer some criticism and a few constructive suggestions to my right hon. Friend during my brief contribution. I do not want to raise party political issues, as did the hon. Member for Aylesbury (Mr. Raison). I did not realise until today how seriously in trouble the Opposition are. If in a debate of this kind they have to fall back on party political platitudes after a constructive speech by my right hon. Friend the Secretary of State, they are in desperate need to recover some degree of popularity with the ratepayers.
I am surprised that the hon. Member for Aylesbury, who is highly respected, should indulge in the platitudes and bromides which we heard today about the failure to control inflation, extravagance by local authorities, the need for restraint on public expenditure and councils becoming scapegoats. The Opposition must make up their mind. A number of their criticisms are self-contradictory. If anyone is seeking scapegoats, it is the Opposition.
But I should like to leave the party political aspects on one side and put my point of view to the Secretary of State.
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This Order is not only legitimate but realistic, because it takes account of our grave economic circumstances. In line with my right hon. Friend's understanding and knowledge of economics, the Order conforms to the requirements of the economic situation. There will be hardship in consequence of the Order, and some of us are extremely unhappy about the hardship involved. I have no doubt that the Secretary of State is as concerned as anyone. Nevertheless, had he been extravagant at this stage, he would have been attacked far more vehemently by hon. Members on both sides and many of us would have been most unhappy.
I congratulate my right hon. Friend on this Rate Support Grant Order and on his wise and intelligent contribution. But I am concerned about the need to encourage local authorities to share the burden of cuts sensibly and appropriately between the various sectors and to ensure that short-term economy does not lead to long-term waste.
Today I speak primarily for the all-party group on disablement. That group, which has been actively helped by Mr. Peter Mitchell, who has done a great deal of research on this problem, is very concerned about the rate support grant and its allocation. I believe that my right hon. Friend could do a great deal to help us.
The personal social services are in a special position, primarily because they deal with people in need and because it is a developing service. Any slamming on of the brakes creates difficulties for the people concerned, and it is particularly difficult to undo any damage which may be done.
Local authorities have many buildings—I could detail them, but I will not do so in view of the time—for adult learning centres, hostels for the mentally handicapped and children's homes in different parts of the country. Those buildings will remain empty as a result of the future effects of cuts which the Secretary of State has had to impose.
I do not want any cuts to be made in domiciliary services—I appreciate that my right hon. Friend does not want to cut those services either—and I do not want to shift resources from domiciliary services into buildings. Nevertheless, I do not want the buildings

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to be left vacant. Therefore, I suggest that the Secretary of State, possibly with other Ministers, should initiate urgent discussions with the voluntary societies and organisations to consider ways of utilising those buildings during this difficult economic situation.
This regrettable situation has been created by the missing £5 million. That is the shortfall of the requirement necessary to continue the services now being developed. The Government are to pay £180 million to preserve 50,000 jobs in Chrysler Limited. I am not happy about that, but I would not be too happy about mass unemployment either. Yet they cannot afford this additional £5 million for vital facilities for thousands, if not millions, of old and disabled people.
I am afraid that the Government go much further than cutting cash. My right hon. Friend has suggested ways in which local authorities can economise. For example, he suggested that they should cut the provision of telephones for the old and disabled. That is a mistake. I should like my right hon. Friend to reconsider that suggestion. Other senior Ministers—I do not want to name them—have said that it is incumbent upon local authorities to make provision for the requirements of the Chronically Sick and Disabled Persons Act. Of course it is. Local authorities have a legal requirement to meet the needs specified in that Act. But if the Secretary of State is recommending fewer telephones for the old and disabled it can mean-4 realise he does not mean this—recommending local authorities to flout the law because they have this mandatory requirement to meet the requirements of the Act. I hope that that proposal will be reconsidered. Any cutting of the lifelines of old or disabled people would be strongly resisted by the members of the all-party group on disablement. Therefore, I ask my right hon. Friend to look at this matter again and to give me some indication of his thinking through his right hon. and learned Friend the Secretary of State for Wales who I understand is to reply to the debate.
Some social factors do not appear to have been given sufficient attention in the needs element of the rate support grant. I warmly welcome the new factors for one-parent families and new houses,
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which show that the Secretary of State has a social conscience and is aware of existing and future needs. However, I regret the apparent reduction in the allowance for old people living alone, and they represent one of the main deserving groups in our society, apart from the severely disabled.
I suggest that my right hon. Friend should introduce special weighting for the disabled based on the numbers on the disabled register. I realise that it is not a precise register and that there are some shortcomings in it. Nevertheless, this is a long-overdue reform. If my right hon. Friend could institute this reform, he would go a long way towards helping the disabled, who are in great need. I should appreciate some indication in the winding-up speech whether my right hon. Friend will consider this suggestion, which I believe would go a long way towards meeting this problem.
For the moment we are left with weighting for old people living alone, which probably gives a reasonable reflection of areas with high concentrations of old and disabled. I recognise and accept that these areas are likely to make heavy demands on social services departments, but the vital social need factor is to be reduced from £249·42 to £17729. The Government are thereby cutting assistance to areas with a high proportion of old and disabled people. That aspect gives rise to great concern.
I hope that the Government, instead of acquiescing in this cut, will show their concern by considering some of the proposals that I have put forward. I apologise for focusing almost entirely on the old and disabled, but I am particularly concerned with them. I know that hon. Members on both sides of the House who are closely associated with the old and the disabled would greatly appreciate my suggestions being considered by the Government.
5.28 p.m.
Mr. Jasper More: Local government is under great criticism—perhaps it has never been under greater criticism—but we in this House ought to recognise that no real service is done by criticism if it is only generalised.
I believe that there are good and bad councils. The Secretary of State for the Environment has told councils, "The

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party is over". It is time that he had the courage to pinpoint some of the councils which are disgracing the national record of local government and to which that ought clearly to be said. It may also be that the Government should have the courage, when faced with a particularly flagrant example of local council irresponsibility in spending, to say that they will take over the administration of that council and run it centrally until a better state of affairs can be secured.
Constant criticism based on untypical and fringe examples could destroy public confidence in any form of local government. Is that what the criticis want? Should not the Government offer more positive support to the generality of local government, while criticising the specific examples of waste? I believe that a well-run local authority, responsive to its ratepayers and responsible financially to them, can be much more responsive than a nationally organised administration.
The Minister spoke about the problems of London. I want to declare my conviction—and I think that this corresponds with what has been said by the County Councils Association—that the Orden is not fair as between the metropolitan and non-metropolitan counties. Great difficulties will be put on the non-metropolitan counties by the limitations and reductions which the Order implies. I ought to declare an interest as a serving county councillor in the non-metropolitan county of Shropshire, where we have our special difficulties. These are not confined to us but relate to a definite class of non-metropolitan county.
We are faced with the position in Shropshire that we have an increasing population due specifically to the creation in our midst—which I may say we welcome—of the large new town of Telford. This brings with it constantly increasing responsibilities to the county council and to local government generally in the provision of services, and the problem of counties such as Shropshire is not recognised in the Order before us.
I now propose to say something about the mechanics of the control which the Government are apparently seeking under the Order. They are seeking to control authority expenditure in total and, secondly, they are trying to influence the standards of individual services.
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They seem to be seeking to achieve the first object by means of the second one, because they offer no other advice on how any individual authority should determine what is its fair share of the national cake.
The implications as expressed in the Order are of limited value in helping any individual authority with its own problems, and I cite again the case of a new town, to achieve the right balance between, first, the need to help the Government to meet their objectives of a standstill in total local government expenditure and, secondly, the need for that authority to provide a reasonable level of service.
Surely what is required if we are to retain a meaningful discretion in local government is less advice by Government on details of individual services and a move towards a clearer definition of total resources which an individual authority can reasonably deploy at its discretion according to its own priorities.
In his celebrated speech at Eastbourne the Prime Minister referred to Chiefs and Indians, and the Secretary of State today urged us to brood and think about that. I did a certain amount of brooding and thinking about it before coming to this debate, and I say that the Prime Minister is fundamentally at fault in suggesting that local government expenditure can be improved or contained by an admixture in its administration of ratepayers and serving officials. Surely the essential in local government is to pinpoint the responsibility on to the councillors.
In this House we try to exercise some control over Government expenditure by means of our Expenditure Committee. We have today had a not very happy example of how the dedicated work of our Expenditure Committee can be treated by the Government. Nevertheless, the system is there, and I believe that it is a good one, because we have this group of Members reviewing Department by Department what has been done, how much has been spent, and how far the policy implications have been justified in the event in terms of expenditure.
Surely that ought to be the model of what should happen in local government. I am sure that some local authorities already have a system of that kind. May I say in criticism of the Prime Minister

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that that is what local authorities should aim at? They should have responsible expenditure committees made up of their own councillors. If the problem of Chiefs and Indians really does exist, that is the best way of getting it ferreted out.
5.36 p.m.
Mr. Sydney Irving: Like the hon. Member for Ludlow (Mr. More), I am a member of a local authority—indeed, I am chairman of the finance committee—very much involved in the difficulties and problems facing local government. I understand the experience and the sympathy that the hon. Gentleman brings to this subject, and I very much appreciated listening to him.
This is the first year in which the Consultative Council has been in operation and I think that it has been a welcome innovation that everyone involved in it believes to have been successful. Its operation has, however, highlighted two difficulties. The first is that of communication during discussions—that is, discussions with the grass roots of local government—as to what is to be kept confidential and what can be discussed during the discussions themselves. The result of this confusion this year was a great deal of speculation during the discussions as to what was being discussed, especially about cash limits, some of which turned out to be wrong and, indeed, unnecessarily alarming. It may be that there is no satisfactory answer to this problem, but I hope that the Secretary of State will give some attention to it next year.
Secondly, there is an urgent need for longer-term planning of local government finance. Most authorities have had virtually to complete their estimates in the main essentials before the publication of this Order. Indeed, I think that even now it is not easy for a local authority to be precise about what rate support it will get even after the Order has been published, and this is not satisfactory.
It is clear that in every way local government does not get the close examination that it deserves, and the result is that much of the criticism this year has been ill informed. How many people even in local government know some of the basic facts about the finance of local government? Do they, for example, know that it carries a debt burden equal to two-
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thirds of the total National Debt? The debt burden for local government is £25,000 million. The National Debt, which has been going on since the South Sea Bubble, is between £35,000 million and £40,000 million. A good part of the servicing of this debt arises because of the manipulation of interest rates by successive Governments for reasons that had nothing to do with local government. Is it not time that some of this debt was written off? The debt of nationalised industries since the war has been written off to the tune of £3,000 million. I think that it is the turn of local government to have some consideration in this respect.
How many people know how small a proportion of total tax is constituted by rates? Sir Harry Page, who needs no introduction to people in local government, has produced some evidence before Layfield in which he says that if the total fiscal revenue is set at 100 per cent., direct taxation provides 49 per cent., indirect taxation provides 41 per cent. and the residue of total fiscal revenue from all other sources, that is rates, is only 10 per cent. Of that 10 per cent., only half is domestic rates. This is a very small percentage of the total.
He also indicates something which I am sure many people do not understand. He says that at no point in the scale—and it operates regressively—does the amount of domestic rates exceed about 7 per cent. of the total income. Indeed, when it comes down to people with high incomes where they may be paying 50 per cent., 60 per cent., or 70 per cent. of their total income in tax and surtax, the amount that they pay in rates is only about 2 per cent.
Local government has been attacked for extravagance. Neither the unions nor the local authority associations know of any survey by the Department of the Environment in this respect. Indeed, they welcome the Prime Minister's statement that staff numbers are to be closely studied. The whole of local government deserves better consideration. We have about 40 Select Committees of this House but the area in which more money is spent than in any other—local government—has no such consideration. It is long past time that we had a specialist committee devoted entirely to local government.
Most of the criticism of local government this year has been on the assumption

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that rates have risen faster than prices or incomes. The Secretary of State has given some figures. A valuable paper was produced by Professor Foster, the head of the Centre for Urban Studies of the LSE, in which he demonstrated that rates as a percentage of disposable income in 1938 were 2·53, whereas in 1974 the percentage had dropped to 2·49. The estimate of relevant expenditure for 1975–76 will probably be within 1 per cent. of the agreed figure. So much for extravagance in local government. Certainly there may be some abuses which we should root out and there is an inequity in the way in which the rates are levied, but local government should be examined on the basis of fact and not surmise.
The Budget would have allowed a very small amount of growth, but, as the Secretary of State said, the small margin of potential overspending has pre-empted this. This limitation does not allow for any normal progression of existing services. To achieve that would have required another 2 per cent., or about an additional £200 million, in this Order.
Therefore, a standstill in fact means a cut-back in total expenditure, which unhappily is bound to fall more often than not on the personal services. We have to accept this as part of the necessities of our present economic situation, but I hope—I understand the Government's difficulties—that the ratepayer will recognise the problem and not blame local authorities for the outcome.
Unfortunately, the grant distribution formula does not sufficiently recognise the extra responsibilities of non-metropolitan authorities, particularly in respect of population. Therefore, the non-metropolitan counties will face a larger increase than the metropolitan areas, especially London. I therefore cannot rejoice with the Secretary of State in the shift in the formula in favour of London, especially in respect of the transport support grant, which will have serious consequences for bus services.
Bus fares have risen, certainly in the outer London areas, those just beyond the GLC area, by 50 or 60 per cent. in the last 12 or 18 months. The Secretary of State promised, when the transport support grant was computed last year, that he would correct the imbalance between London and the non-metropolitan
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areas. During this last year there has been a serious deterioration in services, as well as a dramatic increase in fares. Districts have had to pay, as mine does, about £100,000 for half-fare concessions for pensioners, while the GLC has been able to provide a concession of free fares—not only in GLC areas but running, as in the case of my constituency, right outside its area.
While the GLC can pay London Transport, from taxes and rates, about £70 million, the London country buses get only £50,000 of the transport support grant. If that situation is not corrected, there will be a continuous decline in services, which will be serious for pensioners and everybody else as well.
This unfavourable comparison with London has properly been the cause of serious dissatisfaction to pensioners, members of local authorities and others. Now the concession is to go up again with effect from 1st April, changing from a half-fare concession to an off-peak concession as well. It is long past time that the concession given to a pensioner was uniform nationally, the same for everyone, where-ever he lives.
It would add further to the feeling of unfairness that pensioners have if the non-metropolitan authorities had to accept not only a half-fare concession but an off-peak concession and possibly a charge as well, if the GLC were able, despite the more favourable formula which has been introduced, to continue with its free concession. I therefore urge the Minister to consider the consequences for pensioners and for bus services outside London and to act to avoid a further decline in the service.
Mr. W. R. Rees-Davies: The right hon. Gentleman is on to a very good point. However, does he not recognise that if, for example in Kent, particularly in the coastal resorts and the poorer areas, we tried to give a uniform, flat-rate advantage by way of concession to old-age pensioners, we should need a great deal more subsidy than many other parts of the country? Is he advocating that the Government grant should be balanced so as to give that even level throughout the country?
Mr. Irving: That is exactly the point that I am seeking to make—that the imbalance between the rural areas and the

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outer metropolitan areas should be corrected by an additional amount on the transport support grant, which would make possible a uniform concession throughout the country.
Councils face serious difficulties in providing against inflation. They will have to finance any inflation over 11 per cent., except in the event of inflation being substantially higher than expected, in which case the Government has undertaken to consider increasing the £480 million at present fixed. This could mean that certain prudent authorities will levy a higher increase than they otherwise would, contrary to what the Government wish to see, if the Government had given a different undertaking—say to provide 65 per cent., or even less, of any additional expenditure caused by inflation.
If the Government are to require this 01 local authorities, between £480 million and whatever interpretation is put on the phrase "substantial increase", then it can be done in certain of the counties only by some form of redundancy. In many of the counties particularly, not so much in the districts, there is no other way of cutting back expenditure in a short time. That result would be singularly unfortunate.
The Daymond judgment on sewerage charges cannot be dealt with in this Order, but it is nevertheless urgent. The regional water authorities will now levy the total amount on the general ratepayer. There are two points to be borne in mind. First, it would be unfair to the general ratepayer to have to bear this burden, which would be an additional burden in a time of economic difficulty. But second, it would be a total departure from the principles which have informed the way in which rates are levied at the moment. Therefore, both to secure relief for local authorities against the burden which will be imposed on them by regional water authorities and also to adhere to sound principles of rating—that one does not pay exactly and precisely according to the service one gets; one pays for education, for instance, whether one has children or not—the Government should ensure that a similar principle applies also to sewerage charges. If the decision is to stand in this way, some of the very people who have been given relief by the Daymond judgment will
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suffer, because it will then be imperative for regional water authorities to charge out the whole cost of clearing the cesspools, which will be infinitely higher than it is at present. I hope that the Government will give attention to this matter.
Local government is going through a very difficult time. I hope that nothing will be done because of economic difficulties that will do permanent damage to local government. It is still the most advanced form of electoral participation we have and is still, with all its problems, the finest system in the world.
5.50 p.m.
Mr. Wyn Roberts: This is not the first time that I have followed the right hon. Member for Dartford (Mr. Irving). As I shall be referring indirectly to a great many of the points he made, I shall not deal directly with any of them now.
I wish to speak about Wales. The announcment of the amount of the rate support grant has aroused less excitement among Welsh local authorities this year than in previous years because their expectation has been less. The authorities are fully aware of the country's economic predicament and of the need to reduce inflation, which has added so much to their costs. They are also aware that the Government are diverting resources—resources that might otherwise have been available to them—to the Welsh Development Agency, the Welsh Land Authority, nationalisation and so on. They are not surprised, therefore, by the percentage reduction in the award for 1976–77, which will undoubtedly mean a reduction in services and probably some increase in rates.
We have to recognise that the public will have difficulty in understanding the combination: why should they pay more and get less? That will be the question which they will be addressing to many hon. Members. I hope that the Government will have the courage to explain that their percentage contribution to local authority expenditure has been reduced and that reductions in services coupled with rising rates are, therefore, pretty well inevitable.
I understand that a circular is to be issued shortly to local authorities spelling out the likely impact of the present grant arrangements. The Association of

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County Councils has this to say in its brief to Members:
"The Association maintains that the inevitability of significant reductions in levels of service should be clearly acknowledged by the Government, and such policies as the likely level of unemployment of teachers and the insufficiency of certain services, such as Personal Social Services, Highways and Transportation, and many environmental services, clearly stated."
The Association of District Councils says much the same thing. It pleads that:
"Ministers and Departments recognise the severe limitations imposed by the Government and avoid exhorting local authorities to spend outside the limits implied in the settlement."
I go further and urge the Government to make all this known to the public. Last year the circular to local authorities in Wales was issued two days before Christmas and had very little publicity on that account. Perhaps it was not intentional, but I stress again that the Government must have the courage to make the contents of this year's circular known to the public so that people do not demand of the authorities services that the authorities are in no position to supply.
The implications of the grant are briefly outlined in the White Paper of 5th December "Local Government Finance". On education it says that there will be no scope for any improvement in staffing standards and there will have to be significant economies within the existing services.
In Wales we already have significant unemployment this year among teachers. How many more will be unemployed next year and what are the Government proposing to do about it? Some retraining for other jobs will be necessary. Would it not be wise to postpone secondary school reorganisation and to devote the £2 million set aside for this to teacher retraining or to improving the quality of education in Wales, which I regret is no higher than that in other parts of the United Kingdom?
There will also have to be savings in personal social services and in local transport services, which means higher bus fares. The settlement does not allow for any extension or improvement in concessionary fare schemes. There is not a single Welsh Member of Parliament who is not faced with increasing
1014
demands for concessionary bus fare schemes.
In housing, there is to be a standstill in management and maintenance expenditure. On maintenance, perhaps the Government should consider allowing tenants to do what they can in this sphere. Many council tenants come to my surgeries and complain of inadequate maintenance. When I ask them why they do not carry out these simple jobs themselves, they say that they are not allowed to do so.
I urge the Government to make the facts known to the public. I should have thought that it was in the Government's interests to do so and an important aspect of their attack on inflation. I am certain that it would be very wrong for the Government to seek a little temporary, even bogus, popularity by making a song and dance about the increase in their grant in purely money terms. This would only lead to the public to expect more and better services, which the Government know very well the local authorities cannot provide.
Inflationary expectations must be broken in local government, as elsewhere. Indeed, these expectations have played a major part in adding to the cost of local government. I am pleading for an honest presentation of the facts. Local authorities are not popular these days. They are subject to severe criticism. Reorganisation is often blamed by the Labour Party and others for defects which are more correctly attributable to inflation and the imposition of additional duties by central Government.
I have been examining allegations of overstaffing, for example, in Wales. In Wales there has been an increase in full-time and part-time employees in local government between June of last year and June this year of 5,800. When we analyse this increase, which is generally attributed to reorganisation, we find that the two largest elements in it are the increase of 2,359 in the number of teachers and lecturers and 2,392 in the number employed in construction. Both could be justifiable increases in view of the raising of the school leaving age and the increase in council house building, which we have been hearing about from the Government.
It is only fair to consider the causes of staffing increases in other sectors of local government and their costs. There is no

1015
doubt that central Government have imposed heavy additional burdens on the local authorities which have necessitated staff increases and increased costs. The proper implementation of the Chronically Sick and Disabled Persons Act, for example, has introduced a whole range of new responsibilities. I am told that during the past five years there have been no fewer than 67 Acts of Parliament affecting local government.
Mr. Dafydd Wigley: The hon. Gentleman gave increases of staff between June 1974 and June 1975. He will be aware that the full reorganisation of local government was in effect from April 1974, and staff had been taken on in the year prior to that. I suggest that his comparison does not bear out what he tries to draw from it.
Mr. Roberts: I think that there could be some argument between us about that. Most of the people who went into the reorganised local authorities in Wales were already serving in local government in Wales. I am by no means exonerating the local authorities completely. All I am trying to do is to say something on their behalf.
I have, for example, already drawn to the attention of the Welsh Office the comparatively high cost of consumer protection in Wales, and I hope that the Welsh Office is looking hard at that to make sure that our high costs are justified. The Welsh counties spend £552 net per 1,000 of population on consumer protection, compared with £452 per 1,000£100 less—spent by metropolitan counties in England, and, what is more, £183 less is spent by the English non-metropolitan counties. These are significant differences in cost, and they must be looked into.
The defence of local government is not a popular cause today, but local authorities are nevertheless entitled to fair criticism, and I do not consider that the central Government, who have imposed some of the additional duties on local authorities, have shouldered their fair share of the responsibility for rising costs and increased expenditure. It is all very well for the Prime Minister to say that there are too many Chiefs and not enough Indians—I suppose that any Sitting Bull could say that—but he cannot rid himself
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of his responsibility in the matter quite so easily.
The key question now, it seems to me, is whether the Government have allowed sufficient rate support to enable the local authorities to avoid significant rate increases next year. The people of Wales could not bear such increases, and 1 am sure that the rest of the country is in a similar situation. Obviously, the Government have favoured the urban areas in their distribution of grant. The extra £120 million given to London is viewed with as much disfavour in Wales as it is in other non-metropolitan areas. It will mean an extra 1p or so on the rates, and the 1 per cent. reduction in the total grant will mean another 1p on the rates simply to maintain a standstill position.
Apart from those factors, the Welsh authorities' share of grant is, I understand, about the same as last year, with Clwyd losing and Powys gaining. My own county of Gwynedd is in a better position this time on the transport supplementary grant, and we are grateful for that.
Perhaps the Secretary of State will tell us more about how Welsh local authorities are likely to fare, but I hope that he will not succumb to the temptation to tell us that things are better than they are. Everything in the garden is not lovely by any means. I hope that he will tell us also what level of rate increases he expects from the Welsh local authorities next year, and that he will put a realistic ceiling to them, because, as I have said, people cannot take further substantial rate rises in either the domestic or the commercial sector. Many business people have already been bankrupted by this year's rate increases, and more will be driven out of business altogether if we have further substantial rate increases.
The Secretary of State will be aware that the Government's proposals for devolution are totally unacceptable to Welsh ratepayers because the Assembly will have power to levy a surcharge on the rates, and however much the Government protest that the power need not be used except in the event of expenditure exceeding the block grant or in the event of general agreement on the worth-whiteness of additional expenditure, this proposal for a surcharge on the rates will never be accepted.

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I understand that a Plaid Cymru Member, who is not here at the moment, is already talking about a special tax on tourism and a special Welsh wealth tax. I assure the hon. Member for Caernarvon (Mr. Wigley), who is here, that these ideas do not advance the cause of devolution one bit.
There is one other point to be made in connection with devolution and local government, and this concerns the suggestion, which has been made in several quarters, that in the event of the Welsh Assembly coming into being, one tier of local government will be done away with. The Secretary of State should make his views known on this issue, for there is considerable uncertainty and anxiety in local government circles, and it may be positively harmful if it is not dispelled.
There are hard times ahead for local government and for those it serves. The authorities must face that fact and cut back, as the Government have done in the rate support grant which allows for only minimal growth in real terms. Local authorities would be very unwise to try to raise more out of the long-suffering ratepayers, who are still suffering from the current year's high increases, coupled with the general recession which has adversely affected local trade.
I hope that the Government agree with that view and will say so unequivocally in their circular to the authorities and in public statements by Ministers. The time for soft talk and illusory promises is past. There must now be straight talking and a firm call to ecorlomy. I assure the Government that it will be appreciated by the public, who have been deceived and lulled into a false expectation of continuing betterment in local government services for far too long. The authorities, too, must match that spirit and not seek from the ratepayers what they have failed to get from the Government. The ratepayer's pocket is emptier than they think.
6.8 p.m.
Mr. John Cartwright: It is inevitable, I suppose, in a debate about rates that we spend a fair amount of time on our individual local situations. I am sure that the House will not be surprised to hear that, as a London Member, I greatly welcome the Secretary of State's partial conversion to the case
1018
for giving London a better share of rate support grant, though inasmuch as it was not a total conversion to the London case. I shall return to London's situation a little later.
The Secretary of State made clear that the 1976–77 Order enshrines what might be called the nil growth strategy for local government, and that view has been echoed in virtually every speech since. I believe that many of us on this side of the House understand and accept the need for that sort of approach, but what worries us is the lack of sensitivity in a policy of total standstill. For example, it does not recognise social changes and population movements and growth such as were referred to by the hon. Member for Aylesbury (Mr. Raison).
I have in my constituency a substantial new town development known as Thamesmead. We have thousands of people moving in, and even more to come during the next 12 months. We cannot say to them "We are sorry, but because there is a standstill in local government expenditure, we cannot give you the services which you need and must have".
If we are to do anything about the worsening condition of the inner city areas and the great urban centres, we shall have to spend more money rather than less, and in these circumstances a policy of standstill will simply worsen the decay of many of our inner city centre areas.
Secondly, the policy of total standstill does not recognise the momentum in local government spending, particularly capital spending, where decisions taken two or three years ago begin to affect revenue expenditure only in the current year or the year to come. That is particularly true of the social services capital programme. I am glad that my right hon. Friend made clear that local authorities had undertaken substantial programmes of capital spending on social services as a result not only of public pressure but of considerable pressure from Minsters of both parties. If local authorities, because of the running costs of the facilities, leave old people's homes standing empty or nurseries unused, as is happening now, that is a waste of resources which many of us do not accept and which many ratepayers will not understand.

1019
Thirdly, the policy of standstill does not recognise the duty of local government towards what might be called the casualties of the economic crisis. This Government were elected on a clear pledge to protect those most in need as a result of the harsh winds of our economic difficulties. We should realise that local government has a particular role to play in meeting that need. It will mean that the bread and butter services, such as home helps, meals on wheels, lunch clubs, day centres, and all the services for the disabled, handicapped and deprived will have a bigger burden to carry rather than a lesser one.
Given that some services must be allowed to develop and grow against a background of standstill and nil growth, some local government services clearly will have to be cut and will have to decline. The fact that local authorities have recognised this says a great deal for the realism and patriotism of our colleagues in local government. Local councillors were not elected to preside over a decline in the services for which they are responsible. Most were elected on a clear programme of trying to improve services. The fact that they accept the limitations of our economic difficulties is a great tribute to them.
Many of us are concerned about the risk to local government, in the face of some of the pressures applied, that there will be unselective cuts in services across the board. We want to see a great deal more time and effort given by local authorities to determining their priorities. It is a far from easy matter. I spent a great deal of time as a leader of a London borough trying to sort out problems of priorities in local council spending. My right hon. Friend is right when he says that priorities should be determined locally in the light of the particular problems facing an individual local authority. It is vital to urge local authorities to ensure as far as possible that the inevitable cuts fall on those services which are not essential for people most in need.
When we talk about public concern over local government spending and the level of rates, we should bear in mind the considerable resentment caused by precepts, particularly those of undemocratic, non-elected bodies. The fact that the Metropolitan Police Receiver has
1020
power to levy a rate without any democratic involvement or public control over what he does with the money has caused a great deal of criticism in London local government for a long time. In many parts of London the precepts imposed by the police and the water authorities constitute a significant proportion of the rate collected. Many ratepayers blame the local authority for something that is totally outside local government control.
The criticism from London representatives over the past few years has been based on the fact that London spending was previously excluded from the formula on which the needs element of rate support grant was calculated. It was generally accepted that London had a much-higher-than-average need for local government spending, but it was argued that London's much higher rateable resources were enough to offset that greater need to spend. Now, as a result of a decision by my right hon. Friend, London's higher levels of spending have been included in the analysis, though not totally. The London local authorities maintain that about £80 million has not been taken into account in the regression analysis, and that that represents a rate of about 4p in the pound.
Having included the London spending situation in the analysis, my right hon. Friend has now denied London the full benefit of that decision by deciding to claw back—to use the Department of the Environment's delightful term-33⅐ per cent. of London's need element payments. The only reason we are given is that 16 London boroughs have resources above the national standard, as measured by the rateable value per head of the population, and the Grants Working Party believes that those extra resources are available "to some extent" to be shared by other London boroughs. But many of us have argued for a long time that rateable value per head of the population is a very unrealistic test of resources or ability to pay.
That view is supported by a great deal of the evidence to the Layfield Committee. The Department of the Environment said, for example:
"Rateable values of comparable properties vary greatly across the country—far more than do average incomes. A three-bedroom Parker Morris house in Outer London, for example, has two and a half times the rateable value of a similar house in West Yorkshire."

1021
I do not believe that anyone would suggest that average earnings in Greater London are two and a half times those in West Yorkshire. There is a great deal of evidence to Layfield, provided by professional bodies and individuals, indicating that the use of rateable value per head of population as a test of resources available to local authorities is very unsound.
There is also concern in London that the claw-back arrangement will hit every London borough, whether or not it has the excess resources that I have mentioned. There are eight districts outside Greater London which have a rateable value per head of the population above the national standard, and also above that of 13 of the London boroughs, yet they are not to suffer the claw back which is the fate of the London boroughs. All the remaining authorities outside London whose resources are below the national standard will receive resources element to bring them up to the national standard. Only the 17 London boroughs with below-standard resources are to be penalised by having some of their needs element grant removed.
The rates paid in London are already much higher than the average for the rest of the United Kingdom. In 1975–76, for example, the average rate payment in Greater London is £138·87, compared with an average for England and Wales of f92–86. The situation worsened considerably over the past year. In 1974£75 the London average was 28 per cent. above the average for England and Wales. In 1975–76 it has worsened to 50 per cent. above that average.
I accept that the gap will be narrowed as a result of my right hon. Friend's action, but London ratepayers are hit in two ways. Their higher rateable values mean that they pay higher rates, but because they have higher rateable values they are to be denied their fair share of the needs element. This places them in something of a Catch 22 situation.
I question whether there was a substantial need for the claw-back, based on the share of resources which would have gone to Greater London if there had been no claw-back. London's share of the resources element and the needs element would have been about 16·6 per cent. of the total for England and Wales without
1022
any claw-back being applied. The claw-back reduces the share to 14 per cent. There is an improvement on what we have had in the past, but when we bear in mind that London's share of total local government spending represents about 20 per cent. of the figure for England and Wales it is clear that even an allocation of 16·6 per cent. would not have been an excessive share of the rate support grant.
The need for a higher level of spending in London has been argued very often in the House. The case rests on the obvious fact that land costs and building costs are very much higher in London. There are precious few green field sites in the London area. We have to face the problems of urban decay and renewal and a monumental traffic problem in the Greater London area. London's social service problems and the incidence of housing stress are much greater than the average for the rest of the country. That is because within the population of Greater London a greater proportion of the elderly, the disabled and children need care.
There is almost an Oliver Twist situation in that London has been given something but it still asks for more. The local government leadership in Greater London accepts that to have a sudden, sharp variation in rate poundages due to sudden changes in the rate support grant would clearly be unwelcome, it accepts a phasing-in of changes as reasonable and acceptable, but it does not accept the idea of an arbitrary claw-back based on unsound decisions relating to ability to pay on the part of local authorities.
We welcome what my right hon. Friend has done for London as a reasonable compromise, bearing in mind the great difficulty now being faced by the nation, but we shall never really be satisfied until London's case is met in full. We can only hope that the justice of London's case will be fully met by the Layfield Committee.
6.23 p.m.
Mr. Peter Fry: I begin by making three general points. First, the Secretary of State quoted the percentages of income taken up in rates. Perhaps it has escaped his notice, although it has not escaped the notice of the rest of the country, that other

1023
taxation has increased considerably since 1938. Any extra taxation is regarded with disfavour.
My second general point relates to the Secretary of State's rather proud statement that he hopes that rates will not increase by more than 25 per cent. this year. Most people will consider such an increase to be totally unacceptable this year after the increases that they have seen in recent years.
My third general point relates to the £120 million that is drawn by claw-back to London from the non-metropolitan counties. One major concern is that the £120 million will not encourage retrenchment on the part of some local authorities, but will encourage them to spend more. There is concern that they will regard it as an extra subsidy. If the public statements of the Wandsworth Council are to be taken at face value, that is the likely outcome. Many non-metropolitan counties have done their best to reduce their spending in the light of advice from the Government, and it seems that they will suffer more.
I have to ask myself how the rate support grant will apply to my own county, Northamptonshire. It is somewhat ironic that Northamptonshire will receive a little less because certain moneys are to go to London. Northamptonshire and its ratepayers have done much in recent years to assist in solving London's problems. We know that the new towns will attract some help, but I must point out to the Secretary of State that although we have an expanding town in the county, we shall receive no extra help. If the expansion of Wellingborough takes place, a greater strain is likely to be put on the ratepayers.
I find it totally inexplicable that the right hon. Gentleman should recently refuse to allow Corby to expand when a massive amount of money has already been injected to provide the necessary infrastructure. As the same time, the right hon. Gentleman has given the go-ahead for Wellingborough's expansion, involving millions of pounds of ratepayers' and taxpayers' money. Those two decisions make me think that the right hon. Gentleman does not understand the Problems of my county.
I shall address the major part of my remarks to the transport implications of
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the rate support grant. At first sight the figures do not look too unpromising. We see that the transport supplementary grant in cash terms is to be only £1 million less over the next year than we shall vote for the current year. The figures for current expenditure for this year and next year indicate that we can expect a shortfall of some £55 million. Allowing for inflation, that will mean a real reduction. The Government must come clean with the public and show quite clearly how serious that reduction will be.
There is a tendency to gloss over certain significant matters in the Secretary of State's report. It is true that he lists five main policy implications for local authorities. First, it is suggested that there should be a reduction in expenditure on highway maintenance. That is a popular idea for all Secretaries of State, but the House should put matters into perspective. In 1968 there was a 15 per cent. cut in highway maintenance and even now the great bulk of local authorities have not fully made up for that cut. The further cuts being suggested by the Government would probably have taken place in any event, but the fact that they have been highlighted in the report will probably make them even greater.
Further cuts in highway expenditure could be quite serious. Of course, we are all aware that savings can be made. For example, perhaps road sweeping could be reduced. Perhaps the provision of road signs need not be so extensive. Grass-cutting may not be so necessary. Those reductions could be made without too much harm, but there is serious danger in delaying attention to secondary roads for too long.
One county surveyor has estimated that 12 months' delay could double the cost of repairs. In that same county only 60 per cent. of all highway expenditure is used for surface dressing—not complete resurfacing. It seems that 40 per cent. of the total highway maintenance allocation is used on "wallpapering" cracks. With increased commercial vehicle traffic, the cost of maintenance is continually increasing.
The engineers say that two results will emerge unless carriageways are strengthened towards the end of their life. The first result will be a need for much more patching of roads. In the end, the roads will consist

1025
of more patches than original surface. The large-scale patching which takes place is a waste of money in the long run as it does nothing to add to the strength of the carriageways. The second result is that if we have a severe winter—there are already indications of that—carriageways reaching the end of their life will be susceptible to water and frost damage. When the roads have to be repaired owing to extreme damage, we shall discover that the cost will be four times as much as the bill which would now have to be met.
In the short term, less expenditure on structural maintenance will mean a rapid increase in the cost of patching and reconstruction. I make these points not because I do not appreciate that there has to be a cut-back in transport expenditure, not because I think that transport must not take its share of the cut-back, but because I believe that there are some areas in which cut-backs are acceptable and others in which they are dangerous, merely storing up further trouble. Certain areas of highway expenditure are just such a case. Instead of presenting us with airy-fairy general advice, the Secretary of State might have examined some of the more expensive urban road improvements with a view to considering whether some of them could be cut back, thereby ensuring that our inter-urban communications remain at a relatively high standard.
The second policy implication mentioned in the Secretary of State's report is an increase in car parking charges. Not many of us will be opposed to a sensible, economic, pricing system. There are many factors that have to be borne in mind. The first is that the motorist has already had a high level of taxation imposed upon him. Second, if the charges are increased by too much, there is a danger that this will have a detrimental effect upon some shopping centres. Shops and businesses which have moved into these centres and which already pay a large amount in rates and rent will not be pleased if they discover that their area is being boycotted by the motorist who will not pay excess parking charges. There are already some city centres suffering from that effect.
The most serious implication of this rate support grant is its effect upon bus services. The Secretary of State said that increases in bus fares should be at a rate in excess of the general movement of
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prices. In other words, the increases should be more than the general increase in the rate of inflation. He went on to say that these increases should apply particularly where bus fares had not been raised to keep pace with past costs. As the Association of District Councils has pointed out, it would not only be authorities like South Yorkshire—which has failed to increase its fares in the way that it should have done—that will be affected. There is every likelihood that increased bus fares will result in increased passenger resistance. That will lead to fewer passengers, greater losses and, inevitably, fewer services.
As the Association of County Councils has said, although the Secretary of State's report highlights the increase in bus services, it does not point out that it is difficult for passenger transport authorities to avoid reductions in bus services, particularly in the more rural areas, which have already suffered heavily. If the fears of the Association needed any confirmation, an examination of last year's supplementary grant for transport shows that the metropolitan boroughs did far better than the rural areas in the allocation of money. There was an increase of 7 per cent. between 1974–76 for the metropolitan boroughs compared with a reduction of 11 per cent. in the non-metropolitan areas for the same period.
There is, therefore, a danger that the rural areas will lose out yet again. If the aims of the Government's Circular No. 171/74 are to be achieved, there will need to be a progressive policy of reducing Government subsidy. The figure suggested was £50 million at November 1973 prices. If that policy is to be realised there are three options for public transport. The first is that there should be higher fares. As I have suggested, this can only lead to a loss of passengers and a reduction of services.
The second option would be a high additional subsidy from the rates. Even the present Government are rapidly coming to the conclusion that this is not the way to deal with the local transport problem. Third, there could be an attempt, at least, to deal with the problems of local public transport. This is something about which the Government have talked but about which they have done almost nothing in the 21 months since they came into office.

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The fourth policy implication about which the Secretary of State talks is that of holding down administrative costs to current levels. While I do not believe that there will be any quarrels about this from the Conservative side of the House, hon. Members and the country at large must realise that if there is to be proper co-ordination of public transport, we need at county council level at least much more urgent and greater attention being paid to the problem than has hitherto been the case. There is not yet sufficient expertise to deal with the complicated and differing problems of local transport. It will be cheaper in the long run to ensure that the co-ordination of public transport is prepared with the advice of officials who have not only the relevant qualifications but the necessary seniority in the local authority hierarchy. This will be much better than the present rather longwinded muddle and delay involving increasing fares and rate-borne subsidies.
The fifth implication in this report is a reduction in capital expenditure as compared with the levels allowed for in the 1975–76 statement. The Department of the Environment in its Circular No. 43/75 on the transport supplementary grant submissions asks local authorities not just to consider the present year, but to look ahead to a five-year, fully-costed transport programme. One would imagine in those circumstances that the Government had some idea of what their plans were over the next five years. Amazingly, we are still awaiting the White Paper on transport and any statement on rural transport. This has been much heralded, but it is taking a long time to appear. If the Government expect local authorities to do their planning five years ahead, the least the Government can do is to have their own programme similarly organised.
It is becoming increasingly clear that subsidies alone are not the answer. We have already heard of local authorities which promised free fares. As my hon. Friend the Member for Aylesbury (Mr. Raison) pointed out, these are now almost forgotten. Other local authorities are also producing schemes which, frankly, are ludicrous and which will cost enormous amounts of money. Let me give an example. I recently visited Nottingham where a much-heralded new traffic control and transport scheme has been brought
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into operation. Basically it is a "park and ride" scheme. Motorists are encouraged to leave their cars and travel into the city in specially provided buses, thus reducing congestion.
The only trouble with this wonderful scheme was that for the first two months of its operation, the city authorities having allowed for nominal bus fares, each double bus journey cost the ratepayers £12·84. It is a ludicrous scheme bringing no credit on local government control of public transport. Having achieved this wonderful result, the Nottingham County Council decided to alter the scheme. Now, instead of charging fares, a fiat fee of, I think, lop for car parking is charged for all of the occupants of a car who leave the vehicle in one of the car parks and use the buses. The only trouble with this is that if three people decide to use a car, they can show a considerable saving of money by using the normal bus service, because the fare in that event is about 13p or 14p. Not surprisingly, not many people are taking advantage of this scheme.
There is a need for the Government to address themselves to the whole problem of public transport. So far they have manifestly failed to come out with any new ideas. Surely, at this time in our economic affairs we deserve more than pious hopes and promises from the Secretary of State. There is a danger that public transport will collapse. So far there has not been a squeak from the Government. We have had these rather misleading and unhelpful comments about the rate support grant. We Conservatives do not believe that there has to be a definite subsidy. We believe that there has to be a constructive and coherent policy. We are still waiting for that policy.
6.40 p.m.
Mr. Stephen Ross: There is general, if reluctant, acceptance in local government circles of the Secretary of State's decision on the level of the rate support grant. There is disappointment at the reduction by 1 per cent. down to 65½ per cent., there is suspicion that the allowance of 11 per cent. for inflation is not enough, and there is disappointment at there being no increase in the domestic element.

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Councillors and officials are well aware of the country's problems and economic position and are fully prepared to play their part, as they always have been. This debate is in danger of developing into a defence of local government. There is resentment about the attacks that have been made upon councillors and officials, and I am glad that the Secretary of State referred to it. No doubt there are instances deserving of adverse comment, but monthly league tables in the Press detailing councillors' expenses are unnecessary. Ill-considered attacks made upon them by the Press and, at times, in the House lower morale, whereas it is important that morale in local government should be maintained.
When the new local government structure was set up, councillors and officials had high ideals. There are many faults in the system, which I will not enumerate. I do not agree with the structure and I wish that we did not have it, but, as we have it, we must make the best of it. Most new authorities set out with high hopes and it must be part of our job to support them in a particularly testing time and not to avoid taking the responsibilities which lie within the House.
To illustrate some problems faced by local authorities I need turn no further than my local weekly newspaper, which this week reports the meeting of the county public protection committee. Its draft budget for next year is £1,407,560, which includes £97,000 for future pay awards. The budget was found to be £19,560 above the allocation. The committee set about reducing the budget. It was thought that £15,300 might be saved on the fire brigade pensions reserve account, but, following a draft Home Office regulation, which, by including war service, allowed firemen to retire earlier, the committee had to put back that figure to avoid running into heavy deficit.
A further £5,000 is needed for new bulk measuring equipment for the trading standards department—no doubt at the behest of the Department of Prices and Consumer Protection. A further £3,000 is needed for equipment to combat oil pollution, which is vital for an island in the English Channel. A further £3,000 is needed for a commitment under the new health and safety at work legislation. Those may be small sums, but they illustrate how regulations and legislation coming
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from this place make the task of councillors more difficult. In the end, the committee resolved that it could not cut any more from an already restricted programme.
The Secretary of State has issued guidelines on the implications of expenditure cuts for local authority services. We should try to give priority to social services and education. It is right that we should give prior place to the old and the young. I am pleased to inform the Secretary of State that the Hampshire and Isle of Wight police force has already taken action by instructing some of its desk policemen to get out on the beat.
I am concerned about local transport services, especially concessionary fares and in this I support the right hon. Member for Dartford (Mr. Irving). In my constituency there have been two, if not three, sharp increases in fares this year. It now costs £2 for a husband and wife with two teenage children to travel six miles and back. Yet we are talking seriously of putting up fares still further. All that does is to drive people away from public transport.
In my constituency old-age pensioners get little in concessionary fares. It amounts to about £6,000 or £7,000 and represents four or five vouchers a year. Those old-age pensioners look across the water to some of the bigger Hampshire towns and to London, where people may travel free between 10 a.m. and 4 p.m. and after 7 p.m. Even the small allowance given to old-age pensioners in my constituency is threatened with withdrawal. They are envious of their counterparts and think that something should be done. The Government must take action over what is becoming a major grievance in my constituency and in other parts of the country. Let us have a national standard of aid which applies fairly throughout.
I gather that the metropolitan transport authorities are concerned about the future of their services. They consider that £285 million is inadequate to cover their increased costs. We look to the Government to make their overall public transport policy clear and to do it soon, and in that I echo the words of the hon. Member for Wellingborough (Mr. Fry). We are all concerned about the rumours circulating in the newspapers, rumours

1031
which appear to put "Beeching" completely in the shade. Fares are already high enough. If they go up again, more and more people will cease to ride on the buses. The high fares have already had a disastrous effect on inter-city travel.
I take the point that it is no use calling for cuts in public expenditure which we all know must be made, if we are not prepared to indicate where the cuts should fall. Savings can be made through natural wastage, by not replacing officials as they retire. There must be flexibility within local authorities and officers must be prepared to move around. Some salary scales are completely out of line, as is made abundantly clear by comparisons given to me this weekend. The Secretary of State must be firm and say that there must be no re-grading to enable staff to get more than the £6 limit. Officials must stay within their present grades.
I come back to what was said by the hon. Member for Aylesbury (Mr. Raison). When the new local authorities were set up, the establishment and the pay scales all seemed to come down from on high. We had a fulcrum. We could put officials two or three points below or above the fulcrum. These matters were fixed under the previous Conservative Administration and it is a bit late now to talk about the Pay Board.
We were all keen advocates of the Bains Report and followed it like sheep. There is one good idea in the Bains Report, and that is the performance review sub-committee. A few authorities—one a Liberal authority—make much use of that suggestion. Local authorities could play a much more constructive role if they all made full use of performance review techniques, that is to say, comparing performance one year with another. I echo the view that there is no need for lay watchdogs in local government.
It must be clearly understood that most cost increases are the fault of legislation passed by successive Governments. It is unfair to pass the buck to officers and councillors of local authorities. The cut-backs, which are inevitable, must clearly be shown to be due to Government policy and not to the defects of local government.
6.48 p.m.
Mr. John Forrester: There is much in what was said by the hon. Member for Isle of Wight (Mr. Ross) but I must resist the temptation to follow him along the road of whence came the orders from on high at the time of local government reform. I am attracted to the hon. Gentleman's views on concessionary fares, which follow closely those of my right hon. Friend the Member for Dartford (Mr. Irving). I hope that the Secretary of State will be able to make order out of the chaos of the concessionary fares scheme and perhaps introduce a national scheme.
The one thing on which both sides of the House might agree is that the debate is taking place at a time of almost unprecedented economic difficulty. Most of us will agree that it is essential for public expenditure to be contained, if not reduced.
This has not stopped us individually from disagreeing with one or more of the Government's proposals for expenditure reductions, and no doubt between us we shall have disagreed with everything in the Orders tonight.
A major problem is that people have rising expectations. They expect better educational facilities, more health facilities and better care for the old, the sick and the disabled. Politicians are as responsible as anyone for creating this atmosphere of over-optimistic expectations. We must grasp the nettle and get to grips with the reality of the problems facing us. We must not be afraid to tell Mrs. Smith that if she has a telephone installed, the hole outside Mrs. Jones's house will not be repaired.
I had some sympathy with my right hon. Friend the Secretary of State when he talked about an intermission in the saturnalia, but it should be an intermission for Parliament as well as for local authorities. There has been a feeling in local government for some time that successive Governments have passed legislation, some of it essential, much of it highly desirable, but a lot as change for change's sake, and if the Government want local authorities to contain their expenditure, it is imperative that Parliament does not add to their burdens. If

1033
in this very difficult period the Government feel it is essential to improve certain services, we should consider whether they ought not to foot the whole bill.
With the financial difficulties in industry and the small increase in personal taxation due to the £6 pay limit and unemployment, it would be very difficult for the Chancellor of the Exchequer, despite his good intentions, to play Santa Claus. It is incumbent upon Parliament to restrain its exuberance for reforms, at least until the inflationary spiral is over or the economy has turned the corner.
Local authority treasurers and most councillors have come to terms with the new situation. They should be congratulated and encouraged when they deserve it. They have received a fair amount of criticism recently and much of it has been unjustified in view of the relationship between Parliament and local authorities. I have brooded long and reflected hard on the suggestion that local authorities should have their accounts audited by self-appointed, non-elected pressure groups, and I could not disagree more with such a suggestion.
It would be immensely helpful to local authorities if the RSG formula could be adjusted to take account of responsible attitudes shown by individual authorities. This would be far more effective than lecturing the spendthrifts and then subsidising their profligacy. It is particularly discouraging for local councils when the rules are changed in the middle of the game. There may be compelling arguments for altering the formula, but this should only be done after adequate notice. Very often local authorities have spent several months working out the plans and details of their budgets.
The reduction from 661 per cent. to 651 per cent. is a blow to the prudent as well as to the spendthrift councils. A 1 per cent. reduction in the total grant means that 3 per cent. more of the expenditure will have to be borne by the rates, and this comes on top of the decision, albeit agreed with the local authorities, not to increase the domestic rate element. There will have to be severe cuts in local government services if we are to meet the rate increases sought by the Secretary of State.
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1 recognise and sympathise with the problems of London and other metropolitan conurbations, but we must not lose sight of the fact that there are major cities in the shire counties with similar problems. There are very strong arguments for paying part of the needs element direct to district councils.
When recommendations are being made for saving money, can we be sure that the Government are not adopting a Jekyll and Hyde posture? In one of the Orders local authorities are urged to cut the opening hours and reduce the maintenance of recreational facilities. Expenditure is to be reduced by about £10 million. However, the Minister of Sport would rightly urge us to use these facilities even more. There seems to be a contradiction here. What criteria will be used to decide what charges the market will stand for these facilities? Will the imposition of charges mean that the facilities become the exclusive property of the better-off?
In Stoke-on-Trent we have an excellent record of land reclamation. Inevitably, this means an increase in the annual charges for maintenance by the parks and recreation committee, which looks upon this work not as a luxury, but as an essential rejuvenation of the area for the future. I hope we can be assured that the support received from the Government in the past will be continued.
The Government are also recommending increases in cemetery and crematoria charges. In order to achieve the figures suggested, these increases would need to be very large. The death grant now paid by the Department of Health and Social Security is inadequate for even a modest funeral, and many old people have insurance policies geared to the charges of a past era. If increases in cemetery charges result in a demand for higher death grants, local authorities may win, but the Government will lose.
Last year, in Stoke-on-Trent we decided not to increase car parking charges. It was our modest attempt not to add fuel to the inflationary spiral. Whatever the merits of increased charges, we must be sure that they do not add to the pressure for wage increases and so defeat their object.

1035
I appreciate that it is not easy to find ways of saving money. Those who suggest that it is possible to save £1,000 million overnight are barking up the wrong tree. We must be absolutely certain that when we ask local authorities to reduce services—for example, to make fewer dustbin collections—we are not at the same time increasing health hazards that will in the future cost more than they save.
7.0 p.m.
Mr. Arthur Jones: I agreed very much with the hon. Member for Stoke-on-Trent, North (Mr. Forrester) about the degree of unanimity in the debate. The Secretary of State for the Environment must welcome this general recognition that expenditure by both central and local government must be significantly reduced. I also agree with the hon. Member about what he described as the over-optimistic expectations by us, down the years, of local government services, an attitude which has arisen from the decisions and policies of consecutive Governments in the post-war period. To some extent we are now paying for that approach at a time when our economic circumstances make those expectations unrealisable.
I congratulate the Secretary of State on his measures this year to contain local government expenditure. In the debate on the rate support grant last year he said:
"the Government are determined to give a lead to authorities in indicating where they consider the cuts in the rate of growth of services might fall."
I do not think he has done that to the extent some of us expected, and perhaps that is understandable, for a variety of reasons. But he told the country during the year that on local government expenditure "the party is over", and I am sure that other hon. Members, like me, will remember that phrase.
In last year's debate the right hon. Gentleman also said:
"We simply cannot afford a continuation of the massive short-term borrowing which local authorities were forced into this year. We must re-establish the principle that current expenditure is met from the general rate fund and not from borrowing."—[Official Report, 12th December 1974; Vol. 883, c. 793–4.]
1036
He has not discussed the question of capital expenditure and the loan consents which are required by local government for that type of expenditure. We have yet to see the full implications of what he said then. The proposals for 1976–77 are a start, but there is a very long way to go, with inescapable reductions in the scope and standard of services.
This means that if targets are to be reached in the context of the recent wage awards of £6 per week for manual workers in local government and the as yet uncommitted increase for next year, the wage content of services will have to be reduced, with a consequent loss of jobs.
The £480 million limit on the amount available to meet pay and price increases rightly carries with it the warning that there is to be no bailing out of councils which wilfully over-spend. I hope that the Secretary of State has the courage, when the crunch comes, to stand by his present policies. A note of caution to this effect was referred to in a leader in The Times on 1st August last. It said:
"Many local councils … will probably doubt the credibility of his threat. They will question his ability to maintain such a stead fast policy of economy in the face of many claims for more. Indeed, his earlier retreats on the cuts in housing rehabilitation grants and the increases in council house rents show how difficult it is for a Minister—particularly a Labour Minister—to resist such claims."
The level of central and local government public expenditure is unacceptable. The present standards of our services are maintained only by substantial borrowing at home and overseas, and it is Government Departments which must accept the responsibility for the increasing scope and higher standards now being provided. I was very impressed by the point raised by the hon. Member for the Isle of Wight (Mr. Ross) in this context. As he said, so much of the increased local government expenditure arises from the demands upon local authorities by central Government Departments. As I see it, they are not co-ordinated, and that sums up the burden of my contribution to this debate. This is a reflection on the Government and the Treasury, both of whom have failed to play their proper role of ensuring that the level of expenditure is commensurate with the realities of our increasingly adverse situation.
During the first day's debate on the Gracious Speech the Prime Minister

1037
actually claimed credit for the outrageous increases, totalling no less than £3,200 million, in last year's expenditure by central Government. While congratulating himself and the Government on the one hand, he none the less criticised local government for similar feats of increased expenditure in its sphere of activities. He failed to point out—and I find this quite unacceptable—that much of what has been spent locally has been spent in accordance with the requirements and edicts of central Government Departments.
In its comments on this year's rate support grant, the Association of County Councils says:
"One important point which should be emphasised is that despite many widely publicised prognostications of 'enormous' overspending—and often wild criticisms—as far as can be seen at this stage local government expenditure in 1975–76 may not exceed the agreed relevant expenditure by more than 1 per cent. This is in real terms and does not include inflation."
I agree with what was said concerning criticisms directed at local government, many of which are quite irresponsible. Here we have a definitive statement from the Association of County Councils, and if central Government were able to tell the same good story our affairs would be in a very different shape today.
Hon. Members on both sides of the House who are interested in Treasury Questions will be aware of the apparent lack of overall control on expenditure. I believe that the evidence is overwhelming that present arrangements are totally inadequate in our current economic circumstances. There is a report in the Daily Telegraph today that Messrs. Phillips and Drew, stockbrokers, have made a research study of local authority borrowing. It draws the conclusion that
"local authority financial activities are much more closely controlled and determined by central government than is generally recognised."
What is true of current expenditure applies also to capital expenditure incurred by central Government Departments by way of loan consent. Here, clearly, is a complete Treasury responsibility. There are a number of pieces of evidence which were submitted to the Select Committee on Expenditure and its Environment Sub-Committee. In evidence taken before the Committee in
1038
the 1974–75 Session, the statement was made on behalf of the Department of the Environment on 21st April this year, at page 103, that
"The difficulty … with monitoring local authority expenditure is that the local authorities do not really cast up their final accounts until the end of the year, so that they do not themselves know what their precise expenditure patterns have been until some time after the end of financial year in question, and then they have got to be audited."
To my mind that is a quite misleading statement and is not a true reflection of the monitoring of expenditure which continually takes place, certainly in those local authorities of which I have had experience.
Mr. Graham Page: That is an extraordinary statement. Local authorities of course estimate their expenditure. They have to do so for the year in order to come to the relevant expenditure figure. Is it being suggested that the Department of the Environment cannot monitor that? It did when I was a Minister. We certainly monitored the estimates of local authorities.
Mr. Jones: The quotation was of evidence given to the Select Committee on Expenditure. I question the validity of it myself, and I am glad to have my right hon. Friend's support on that score. In my experience it is not a true reflection of the facts. If it were true it would be an entirely unsatisfactory state of affairs in terms of availability of information and budgetary control. On the following page the same witness remarked:
"Much of this is a confused area, and one in which we are very conscious that we do not know enough."
I would be interested to hear my hon. Friend's observation on that. In further evidence, the Chairman, the hon. Member for Nottingham, West (Mr. English), referring to separate departmental responsibility, referred to
"… an extraordinary hotch-potch of systems of control over itself, which surely leads to confusion".
Another witness from the DOE replied:
"I do not think I could deny that there is some confusion otherwise you would not be questioning us."
On page 104 of that evidence, a DOE witness said:
"The philosophy of all governments has been very firmly that the central government should be organised on a functional basis."

1039
The Treasury also revealed its view during evidence taken by the Environment Sub-Committee of the Expenditure Committee in its inquiry into new towns. My hon. Friend the Member for Melton (Mr. Latham), raising the question of expenditure on the London docklands, major inner urban developments and new town designation, asked how the Treasury would seek to involve itself financially. The reply by the Treasury witness was that there were no basic rules or common approach. My hon. Friend inquired:
"Would you say that this is an area of policy when Treasury advice is likely to be decisive or not?"
The reply from the Treasury witness was, "Frankly, no."
We have a situation in which there are departmental demands for massive expenditure, according to these witnesses, but without overall Treasury control. Surely this must lead to what the Director of Applied Economics at Cambridge University, Mr. Wynne Godley, referred to as the missing billions.
The Treasury apparently conceded to him that expenditure rose by about £5,800 million between the November 1971 Treasury White Paper estimate and the January 1975 White Paper. The Prime Minister apparently takes credit for uncontrolled expenditure increases in central Government, talking in terms of failure to control and accountability by local government. Two judgments are being made by the Prime Minister. The evidence to which I have drawn attention points to a state of affairs which is quite the reverse to that suggested by the Prime Minister. According to the evidence, local government expenditure is monitored far more effectively than central Government expenditure.
In support of my proposition that the entire responsibility lies with central Government and lack of Treasury control, I refer to evidence given to the Expenditure Committee on 21st April, page 105, by the DOE representative:
"Of course, we have independence of local Government, but it is an independence which in public expenditure terms is exercised at the margin."
Local government expenditure is open-ended in terms of the demand imposed upon it by central Government, and the
1040
judgment which local councils bring to bear is exercised only at the margin, as the Treasury witness tells us. In this context, it is clear that no amount of buck-passing from Westminster to local councils, nothing achieved by the Consultative Council and no institutions such as that proposed by the Prime Minister to monitor the decisions of elected councillors can or should absolve the Government or Treasury from overall responsibility.
Above all else there is a need to restore financial control—to introduce central control of departmental expenditure and the will to contain and reduce the utterly unrealistic scale of public expenditure.
7.16 p.m.
Mr. Dafydd Wigley: Last year's debate on this subject was very heated—largely, I suspect, because the momentum of change in local goverment was being brought suddenly to a halt. I expected this heat to have increased, but tonight the debate is in a very different key and seems much more subdued, possibly because of the inevitability of the local government situation, but partly, perhaps, because many people in local government have become punch drunk and there is a certain degree of inertia.
One basic question has not arisen in the debate as much as I thought it might—the critical question of whether inflation can he contained at 10 per cent. If that cannot be done, there will be chaos next year. There will be uncertainty, at least about inflation.
I wish to speak of the effects of the Government's proposals in Wales. On broad principles, as a party, with most people in Wales we believe in the need for local government to be local. But so much expenditure in local government is determined by this Chamber and so many resources come from this Chamber that the degree of freedom of action is minimised, and erosion of responsibility arises when this situation occurs. Nothing brings people more to realise the reality of a situation than to have total freedom in decision making together with the responsiblity of facing the consequences The effect of freedom of decision with out responsibility might be a drift towards relaxation from responsibility which could be serious.

1041
The third broad principle is the need for there to be in local government, certainly in its present framework, a degree of equalisation. This is very important in that there may be great discrepancies in personal incomes and in gross national product per county. For example, Wales has 85 per cent. of the United Kingdom income average, the old Caernarvonshire having 53 per cent. of the United Kingdom level in 1972. Such discrepancies need a mechanism for equalisation. It may well be that local government will need finance for such changed mechanism and, if that is accepted, there will be the economic effects of a spin-off in determining the structure of local government finance.
In Gwynedd over the past 12 months we have seen redundancies among road workers—a regrettable situation in an area where male unemployment is between 10 and 15 per cent. It is an area of depressed income which needs economic stimulus, even though the overall situation in the United Kingdom may be one of neutrality. In an area such as Gwynedd, there is need for positive action, even if it differs from action taken in other, more prosperous areas. I suspect that in the present structure there is not sufficient ability to provide some degree of local stimulation in areas such as Gwynedd, even though there may be need overall for a standstill.
We in Plaid Cymru urge a greater capital programme for such things as housing, roads and schools, whereby there would be an opportunity to pump more money into a local economy needing it. But if that is done, there will be greater need for the local councils to have ways of channelling the maximum possible expenditure direct to local firms rather than the money going outside the area and being dissipated generally into the economy. This aspect has not been sufficiently examined in the context of finance for local government.
What has happened in the past 12 months in my area? Twelve months ago, we were perhaps castigating the Government on their proposals, particularly in relation to Gwynedd. It was a hot potato in the Press and elsewhere. Sadly, the record since then has largely borne out these fears. I have referred to road workers being laid off. Bus services have been chopped while fares have been
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increased in proportions previously unknown. If bus services are cut to such an extent in rural areas of low income, where car ownership is a luxury yet a necessity because of the lack of public transport, the effects can be chronic.
Also during this past year the maintenance of local authority housing has been cut. In my part of Wales there is a danger of the local authorities being taken to court as delinquent landlords. They are today's Rachmans. They are not managing to keep up their estates as they should. Streets have not been cleaned, dustbins have not been cleared. New homes for the elderly, ready for occupation, have not been opened.
We have seen local authorities under such pressure looking for loopholes to avoid responsibility for the homeless. We have seen disputes between county and district councils because neither has the ability to face the responsibility for the homeless, a responsibility which may be loose in the letter of the law but which is, nevertheless, a moral responsibility. There is a shortage of money for mortgages. Clearance schemes have been held up, with appalling environmental results. Cuts have been made in the social services—in some cases it is massacre. In this context, a standstill cannot be good for such an area.
If, on the other hand, rates were increased to try to relieve the problem, it could be one last step for many ratepayers. Small businesses are often only marginally in existence now and a further increase in rates could push them over the edge. They are in a situation where a marginal income barely covers basic living costs, and any further increase in costs could make them bankrupt. We face potential depression, and it will become real if pressures increase and there are any miscalculations of the effects of inflation during the next year.
We agree that the new formula is complicated, but it will be slightly better for transport in my area than was the case last year. We welcome that, but it is a qualified welcome because last year was so grim. We hope that this year will not have the same effects on transport as was the case last January.
But in the new formula not enough consideration is given to the effects of sparsity of population on costs. Many

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hon. Members representing rural constituencies have referred to this aspect in the past. Perhaps the Government still do not recognise the complicated nature of on-costs where there is sparsity of population.
Secondly, there is reluctance to recognise the effect of movement of population in terms of tourism. Calculations are made on base populations, but sometimes a town may have 10 times as many people in summer as in winter. This can happen in the city as well as in rural areas. Where it happens, it imposes extra costs and strains on local government. Therefore, there should be an element in the formula to cover that aspect, even if it would render the formula more complex.
Very often rural poverty is not recognised. There is an idea afoot that poverty is an urban feature: it is not. There is rural poverty in my constituency. Bus services and other basic services have been cut. All these factors can have an even greater effect than in city areas.
There is to be an element in the formula for new houses. That is welcome also in areas in need of more housing. But there is another side to the coin. Populations are moving into some countries and out of others. Very often it is the people of working age who move leaving the rest of the community to bear the burden of school and geriatric costs for example. A moving population means additional costs for both donor and receiver authority.
In the past year there have been anomalies in relation to caravans and caravan sites. These have produced numerous problems for local authorities. Fortunately these problems will be alleviated to some extent next year we hope but something must be done because it is extremely serious.
In dealing with the problem of job creation my county council has taken the initiative. If the Government get 50 percent from the European Social Fund towards the cost of some of the programmes they are bringing forward the local authorities too should have the benefit. The money from the Fund should find its way straight through to the local authorities and should not be treated by the Government as miscellaneous income.
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I could not speak about rates without referring to water rates in Wales. I am sure that hon. Members would be disappointed if I did not. Unfortunately, the saga continues. Only last week I heard of a factory which had had an increase of 4,000 per cent. in its water charges because of the new idea of a minimum payment where there are meter charges.
It may be necessary to increase charges to industry in the circumstances, but to do so in one 4,000 per cent. increase is crazy. We have had one such episode after another from the water authority in Wales and it is high time for common sense. I want speedy action on the Daniels Report. I hope that we shall have had action by this time next year so that there will not be any greater burden on water rates in Wales.
Many hon. Members in the debate have referred to Chiefs and Indians. When I was in industry, we used to pay great attention to the relationship between direct employees and indirect employees—those working on the factory floor making the goods and those carrying the burden of costs on their shoulders. That concept should be developed in local government terms, where there can often be an imbalance. We need to ensure that the maximum possible number of people give direct service to the community in relation to the number of people organising them.
The hon. Member for Conway (Mr. Roberts) referred to the Welsh Assembly, and I agree with what he said about the possibility of rates surcharge. One of the greatest pieces of nonsense in recent months is the suggestion of using a system already condemned by the Government and by all parties. Indeed, because the system has sunk to such disrepute the Layfield Committee has been investigating it. For the Government not only to continue to use it but to try to extend its use into this new area is simply not on. The Government will not get that part of their devolution proposals through the House—of that I am sure.
There is also the question of the effect of the Welsh Assembly on local government costs. There may be beneficial spin-offs, but it depends on the Government's attitude towards local government in Wales after setting up the Assembly. The Labour Party in Wales in the 1960s at least had good ideas, which it put to the Kilbrandon Commission, about

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unitary authorities in Wales. Unfortunately, those ideas were not borne out on a United Kingdom-wide basis and have been excluded from the proposals in the White Paper on devolution. I urge the Government to look seriously at the local government structure in Wales in the context of what they are proposing in terms of the Welsh Assembly. It may be possible that such elements as teachers' pay, as part of further education, can be operated on an all-Wales basis and therefore alleviate the burdens on local authorities.
I want also to make the point, in reply to those who argue that the additional costs for the Assembly will fall on local government, that it will be within the Assembly's capability to spend the money that it has for local government as it sees fit. Therefore, equally it could mean 10 per cent. less falling on local government. This is a subject which I notice is carefully avoided in Press comment.
Even though next year may not be as bad as last year in terms of the effect of deterioration, it still may be bad enough to push many areas like my own over the top. The general deterioration of services may become worse as inflation affects these areas and as the cash limits start to bite. In terms of the local public sector there may be no alleviating effects on the local economy because of the lack of financial resources, and the local economic situation may deteriorate because of the cutbacks. Many people now on marginal survival may become marginally unviable, and depopulation may follow.
The outlook is extremely bleak, and tonight's silence reflects the numb anticipation of what is ahead for the ratepayer, the council employee and every citizen concerned with local government services in Wales.
7.31 p.m.
Mrs. Millie Miller: As one who for many years burned the midnight oil trying to keep down rate demands upon local residents, I appreciate the tremendous effort which must have gone into local authority considerations in deciding how to cope with the demands from the Government that the rates and the services of local government be depleted seriously. I was interested to hear the hon. Member for Daventry (Mr. Jones) talking about the response of people from Whitehall, especially from
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the Department of the Environment and the Treasury, and the reactions that they have to local government budgeting. However much knocking goes on in the Press and the media about local government members and officers, there is no doubt in my mind that the hon. Gentleman's point about the way in which local government budgets and is able to account for its expenditure in comparison with this House is relevant in the situation that we face today.
I find it remarkable that civil servants should say that they are unable to monitor local government expenditure because local government itself is not able to do so. Having served for many years on local authorities, I know how at the end of each monthly or six-weekly cycle the borough treasurer is bound to give his council a current report of the state of expenditure of every department of the council. I cannot imagine how it is possible to say that this cannot be monitored.
In recent months, it has become more fashionable to knock local government, and it is very easy to do so from a position where one is sitting above looking down on a situation which is far more complex than many people outside realise.
In relation to London local government especially, I take the point made by the hon. Member for Caernarvon (Mr. Wigley) about additional consideration being given to mobility. Many of the most serious problems of the inner London boroughs have come about because of the movement outwards of population, leaving the inner London area to the social casualties—the old, the disabled and the sick and the large immigrant populations. Providing for them, trying to maintain the structure of existing housing, trying to redevelop housing, especially at a time when the cost of land in central London has escalated beyond all imagining, has been a very serious problem which local government has had to face at times of chopping and changing in Government policies.
We have the position today where many local authorities have co-operated to the fullest extent with the Government in trying to put some control on local government services. But I do not think that we should overlook the effect that this will have on many of the disadvantaged groups. Although we are told that

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there is not to be a cut in education, we know in advance that unemployed teachers will not be employed to reduce the number of children in classes. We know that in the most disadvantaged areas of our urban distncts there will be larger classes than we would have envisaged a year or two ago. We know that disabled children will often suffer as a result of cuts which are made in the social services. We know, too, that the social services are bound to be affected adversely by these cuts especially because, at the time of the Seebohm Report, which was taken on board so enthusiastically by the Government of the day, unlimited funds were poured in without serious consideration of the way in which the social services were developing.
When we talk about Chiefs and Indians, there is no sphere in which this criticism applies more than in local government. Over the past year, I have spoken to many groups of social workers who are completely devastated by the fact that the most junior social workers usually are doing the most challenging work in the field, when those with long experience in field work and in the specialised social services sit in town halls writing reports or carrying round pieces of paper from one department to another.
It is tragic to think that we have to look at the relative values of another 50 social workers and a new telephone for a disabled person. Until now, that has been the pattern of local authority choice. I wonder whether the Secretary of State realises the effect of a telephone on the life of a lonely and isolated disabled person whose family has been uprooted and sent to a suburb, a new town or a development area. Contact has been lost almost completely because of the domestic problems of the family who find it difficult to come back in view of the tremendous increase in fares over the past year or so. Without a phone, the old disabled person is often completely cut off from the community.
If we are unable to provide visiting services, home help services and eventually even meals on wheels for such people, their plight will be even greater. Many of them have told me that a telephone is or would be the one lifeline in maintaining contact with the rest of the community. For us to be looking at savings
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at this level seems to be the complete antithesis to what we talk about when we say in the Labour Party manifesto that the broadest backs will bear the greatest burdens.
The other liberating factor in the lives of old people in London—the greatest improvement since the introduction of the old-age pension—has been the introduction of concessionary fares. Although the Secretary of State talks about new concessionary fares areas as being his targets for savings, I fear that there may be a move to reduce expenditure in existing areas. Here again this service has provided the freedom to elderly people to travel about and to visit their families, assuming that they are mobile enough to do so.
Another aspect discussed by the Secretary of State in his suggested economies was a reduction in expenditure on the collection of waste. If there is one topic which arouses anger whenever the subject of waste collection is raised it is the common practice of commodities which could be salvaged and re-used being thrown into the communal dustbin never to emerge again, after individual housewives have taken great care to separate them. I wonder whether this is not another item concerning which the Government are acting as Jekyll and Hyde, where, instead of making sure that waste is used to the benefit of the population and re-used to save on imports, the Government are telling local authorities to reduce waste collection and thus we have additional expenditure instead of benefits.
I wish to refer briefly to London. I know that London local authorities greatly appreciate the help which, for the first time, has been given to them this year. It is a step forward which we should acknowledge and for which we should thank the Government and on which we should congratulate them. However, there are still problems, and certainly the claw-back proposal will cause great difficulty for London local authorities. It is all very well to talk about rateable resources being so much higher in London, but it must be remembered that rateable resources do not pay the rates. We have already heard that a family in outer London in a constituency such as my own is paying two and a half times as much

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in rates as a family in a comparable situation in Yorkshire.
In London many of the problems of this claw-back have already been acknowledged but there are others which have not yet been recognised. I am disturbed that local authorities such as my own, when economising and, as they say, taking into account the needs of the ratepayers, choose to go not just for nil growth in local government expenditure but for a 3½ per cent. cut in services. I consider this is a very serious matter because already we know that with nil growth services will be seriously reduced. If a local authority chooses to go for a 3½ per cent. cut in existing services, there will be devastation, especially in some of the personal social services.
I have heard of other authorities where the appeal for economy has given them the opportunity to get out an axe which they have had in store for some time. They have been waiting for the opportunity to cut back on services which mean so much to the poor people in the community. I doubt whether even the ratepayers in the London Borough of Redbridge, which has gone for this 3½ per cent. cut in services, will be prepared, as the Secretary of State said in his opening speech today, to accept with equanimity the rate increase for next year. I suspect that they will still think that the rate increase is inordinately high. We know that this is a salutary period for everyone in the community and not least for the elected councillors who put forward programmes which they hoped would lead to better social services.
I wish to refer to something which happened to me. In the early 1960s I gave evidence to the Herbert Committee on the reorganisation of local government in Greater London. One of the questions which was put continually to all the borough representatives who gave evidence to that Committee was whether the reorganisation of London government would not eventually result in a better calibre of member. In 1967 there was another enquiry into the management of local government. During that inquiry the same term was used—"a better calibre of member". One aspect has often puzzled me. There are people in Whitehall who consider themselves in a position to judge the calibre of members of local government. However, those
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same people are incapable of realising what happens when they urge local government to provide more housing, to buy more houses and to provide better social services, thereby trying to boost their own ego with the introduction of new aspects of spending. There is nothing more inhibiting to people of "a better caliber" than for them to offer better services to the local community and subsequently to find that, because of changes of Government policy, their own policies are completely destroyed.
I do not think there is any hon. Member—certainly there is no Labour Member—who is happy about reductions in local authority services. I hope that we shall bear this in mind when proposing how to cope with the forthcoming Session's legislation. If we are to pass more legislation in line with our policy of social reform, the money to pay for it will have to come from specific Government grants.
7.46 p.m.
Mrs. Jill Knight: I should like to follow the trend partly set by the last two speakers. I wish to depart from the broad and lofty uplands of local government finance and the rate support grant to talk for a moment about the way in which these matters affect people's lives.
I should like to refer to a particular problem affecting Birmingham. In that city there are groups of parents who had planned that their children would start primary school directly after Christmas. Those children are the "rising fives", the children who will be five before the end of the term in which they plan to start.
The tragedy for many people in my constituency is that their children were offered places in primary schools. As the people who run the schools are enlightened and gentle, the children were invited to the schools to see where they would sit in the classroom and sometimes they were invited to attend assembly. Some children have even attended the Christmas plays and parties of one kind or another. Their parents have spent what to some of them is quite a considerable sum on fitting them out with school uniforms.
Now, just a week or two before the term is due to begin, those parents have abruptly been told that their children will not be allowed to start school. I do not

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know whether hon. Members can appreciate how much this means to a small child looking forward to beginning school and to that child's mother, who may have accepted a job on the understanding that the child would be attending school. It also means a great deal to the father who has had to pay for the uniform. By the time the child actually starts school in the summer or in the autumn of next year, he will have outgrown that uniform. It is not surprising that a considerable number of parents are writing to their Members of Parliament about this matter.
The local authority says that it is not its fault. It says:
"the Government has taken powers to allow reduction of rate support grant for expenditure above accepted levels. A rate support grant statement as late as November 21 and a Government circular quoting specifically the need to confine expenditure in schools to children of statutory school age and above, i.e. those who were five the term before they were admitted has been received. At this time of the financial year with the Birmingham share of rate support grant not yet clear, with four months of the financial year yet to run, and with the size of the education budget not known, decisions cannot be taken to admit children who would still not be accepted for grant purposes in the summer."
The places are vacant in the classrooms. There is no question of extra expenditure by permitting the children to take up the places which they have been promised. In the light of this I find their rejection difficult to accept, and so do the parents.
At the request of some of the parents, I asked the Secretary of State for Education and Science—he was here earlier, but has now left—whether he would see a deputation about this matter. Understandably, the right hon. Gentleman passed the matter to his Under-Secretary of State who has responsibility for primary schools. The letter that I received from the hon. Lady filled me with joy, because in it she said that there was to be a joint circular on the rate support grant settlement for 1976 and 1977 before Christmas, that that would contain guidance to local education authorities on the admission of under-fives, and that it would supersede former guidance. The hon. Lady also said that if they still wished to see her after they understood about this new guidance, she would receive them in the New Year. The inference was clear.
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When I heard that there was to be this debate today, I rushed into the House in a fervour of anticipatory optimism to hear what the Secretary of State had to say. Alas, from his lips dropped not one word that would please my constituents or solve their dilemma. Could I have missed some vital circular which had been produced?
Having heard the Secretary of State to the end of his speech, I rushed out to the Vote Office and received a heavy handful of orders of one kind or another emanating from the Department of the Environment and concerning local government finance. I scrutinised them carefully, but not one was the necessary circular. So I approached the Library and asked whether there was any knowledge of a circular there. But so far the Library has had no information about the circular.
Will the Secretary of State for Wales, who is to reply to the debate, give guidance to my constituents about what to them is the important matter of the education of their children? I shall not be surprised if the right hon. and learned Gentleman has children of his own. I know that he will appreciate that parents want to know about this urgent matter. School starts very soon after Christmas and parents will want to know where they stand in the light of local government finance cuts.
I was very alarmed when the Secretary of State said that ratepayers need not worry because the increase that they would be asked to pay next year would not be as great as the increase they faced last year. I should jolly well hope not! They will have to pay the inflated amounts which they now face, which worry them very much. Apparently, there may even be an increase on that. I do not know whether I misheard the Secretary of State, but the thought that there are to be more increases, even though they may not be large, is gravely worrying.
Like most hon. Members, I have to stay in London while Parliament is sitting. I have a small place in a street about five minutes away from the House. I should like to draw attention to one matter where I consider that, as a ratepayer, my money is being grossly, flagrantly and repeatedly wasted. There are parking meters in my street. At least

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ten times this year the parking meter outside my house, as well as others in the street, has been vandalised.
I made inquiries about the cost of repairing a parking meter. Apparently, it is £40 a time. There are 10 or 12 meters in my street. The meter outside my house has been vandalised 10 times this year. That means that £400 has been spent on repairing that one meter. There being 10 meters in the immediate vicinity which have been vandalised, that amounts to £4,000 in one small street. There are many thousands of similar streets in London.
I put a Question to the Home Department on this matter. It was smartly passed to the Department of the Environment. I asked
"how many parking meters have been vandalised in the inner London area in the last year?"
The answer was:
"Parking meters are the responsibility of local authorities, and in London information of this sort is held only by the boroughs."—[Official Report, 1st December 1975; Vol. 901, c. 455.]
I am sorry to say that that information is not available. If more hon. Members realised how much of the ratepayers' money was being spent day after day, week after week, on the repair of vandalised parking meters, I am sure that they would in a body demand that the Department of the Environment did something about it.
Of those two matters, 1 hope that the right hon. and learned Gentleman will appreciate that by far the more important matter to me and my constituents concerns their children, and I hope that he will deal with it. Will he also consider the example where money is being grossly wasted?
7.58 p.m.
Mr. Michael Morris: Before making my annual plea for special help for the New Town of Northampton. I should like to look at a number of the broader aspects involved in the rate support grant.
It would be churlish of hon. Members not to recognise that the Government have taken the first step along the road to getting some degree of control over local government expenditure. I welcome the improvement in the grant mechanism and particularly the basis of relevant expenditure.
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That is probably as far as my praise will go this evening.
It is interesting to reflect whether the 7 per cent. or the 11 per cent., whichever basis one takes, will be attained in the coming year and to consider what will happen when it is not, because that level is unlikely to be reached.
Rumour has it that if, compared with the 7 per cent., inflation were to go up by 8 per cent. or 9 per cent., it would be tough cheese on the local authorities, that if it is 10 per cent. and they yell hard enough, they may get some help, and that from 11 per cent. onwards, it will be OK because the Secretary of State will cave in.
If the Government are in earnest about wanting to control local government expenditure, they need to make two things clear. First, they must say that all local authorities must estimate at a constant 7 per cent. Otherwise, we shall get a situation throughout the country where the clever boys will vary the amount that they anticipate they will have and juggle their balances accordingly. There is something to be said for having a good director of finance, but it would seem fairer if the Government were to indicate that all local authorities should calculate on the 7 per cent. level.
Secondly, if the Government are serious, they should set a 7 per cent. maximum and say that if, by bad luck or bad management on their part, the level becomes higher than 7 per cent., nevertheless they look to local authorities to hold down to the 7 per cent. The Government have missed a golden opportunity to make these so-called cash limits binding.
The time has come for the Government to ask themselves whether they really believe that local government expenditure can continue at an increasing level as a proportion of GNP. Even with the nil growth that is being forecast for the coming year the proportion of GNP going on local government expenditure will increase. I do not believe that the present level of about 19 per cent. is any longer acceptable to the community. I challenge those hon. Gentlemen who insist that the public are demanding more and more expenditure on one thing and another. I do not believe it. In the 1950s and 1960s local government expenditure as a

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proportion of GNP was about 10 per cent. We must get down from 19 per cent. to perhaps about 15 per cent.
I believe that those hon. Members who reflect the true views of the public feel that local government expenditure is still given too high a priority in relation to total Government expenditure. There have been many rumours in the past few days about defence cuts. At Question time today the Secretary of State for Trade said that it would be expensive to improve the export credit guarantee system to allow for cost escalation and therefore, by implication, it was out of court. Those two areas, defence and export incentives, are far more important than the vast majority of local government expenditure, and if they are being cut, it is only right to look to local authorities to have their provisions cut.
One cannot help but have enormous sympathy for those who are having to implement local government expenditure. The majority of hon. Members who have spoken in this debate have served their time in local authorities and we all know that too often the Government are concerned with the minutiae of what local government is doing and take little or no interest in some of the vast areas of expenditure.
If the Government are concerned about getting public spending down or controlled, they must begin to tackle the areas of waste. One of the areas of waste that is beginning to rear its head again is direct labour. Those who have been in local government remember all too clearly the 1950s and 1960s. We remember the Salfords, the Coventrys and the Liverpools. It is 15 years since those days, and it is not surprising that this area of waste is rearing its head again.
One can find many examples of excessive direct labour costs. There is the example at Norwich of the loss of £213,000 on four housing schemes. There has been overspending by Sedgefield District Council, Durham, of £241,000 on the modernisation of 124 homes. The Sunderland leisure centre has nearly doubled in cost to £3·8 million and is running 13 months late. Glasgow—dear old Glasgow again—hoping to have completed 2,000 homes in the past year has completed just over 350, and when asked in
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evidence the housing convenor admitted that he had not the slighest idea of what each house was costing. Those are tips of the iceberg, and when ratepayers hear Ministers suggesting that direct labour should be increased in the months ahead, they shudder at the thought, because they know that although there are some efficient direct labour departments, the majority are not adequately controlled and are a passport to waste in Government expenditure.
I am sorry that the hon. Member for Ilford, North (Mrs. Miller) has left the Chamber, because she has a lot of experience of Camden. I was interested to read the article in the Observer of 30th November. Having at one time been the leader of a neighbouring borough, I had always thought that Camden spent over the top but I had not kept up to date with how far ahead it was in the league table compared with everybody else, and perhaps I may mention one or two figures.
It is interesting to see that in Camden the housing subsidy to each council tenant is running at £850 per year compared with the national average of 237. Rent arrears in Camden are £65 per dwelling compared with the national average of £6. Management costs—and it is interesting that in the Order the right hon. Gentleman suggests that housing maintenance and management is an area where more should be put on the tenant—are £174 compared with the national average of £47. The paint costs the same, and the bodies cost the same. It is difficult to see how Camden can have such excessive figures. To top it all, if someone wants a new flat in Camden he can have one for £73,000. Unfortunately, I cannot afford a flat at that price.
I hope that that is the pinnacle of spending by a Labour-controlled inner London authority. I hope, too, that the right hon. Gentleman in his monitoring through his Department will ask the leaders of the London Borough of Camden and, indeed, the London Borough of Wandsworth, which has tossed in the gauntlet, to explain what they have done. I hope that he will take them to task and tell them that they are letting down not just other boroughs, but the whole of local government by this profligate spending.
We are promised in the months ahead the West Midlands County Council Bill.

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It is full of interesting prospects. The local authority there, keen to look after ratepayers' money, has decided that local traders are letting everybody down and therefore it will take over certain areas of activity. I do not believe that the Government can sit idly by and let that Bill come before the House. The Secretary of State should tell the local authority that the Bill is totally unacceptable, and chuck it out.
I suggest to the right hon. Gentleman that he ought to think again about the £20 million transfer on social services. We have the situation that the Government, having got to the final stages of negotiations, but still a bit short of the pleas from local authorities, tell them that for the year ahead £20 million can come out of social services capital and be put into social services revenue. From any financial accounting basis that is unacceptable.
What is even more extraordinary, and where the whole edifice collapses around the Secretary of State's ears is that at the same time the same Department has issued a circular saying that £32 million should be spent to encourage employment on environmental buildings, and of that figure £4 million should be for social services buildings. We thus have the extraordinary situation that capital expenditure is to be cut by one office while another office a floor higher up in Marsham Street says that the figure is to be increased. The whole arrangement is totally cosmetic and idiotic.
It would be right in terms of waste again to say to the right hon. Gentleman that the numbers in local government are still increasing. It is worth reflecting that from 1963 to 1974 the figure increased from 1·9 million to 2·7 million. The really worrying aspect is that some months ago the right hon. Gentleman said from the Dispatch Box that there would be a nil increase in staff. I think that the increase amounts to 27,000, but I quote from memory. These are astronomic figures when there is supposed to be no increase in staff. If it was 27 it would be believable, but not that sort of number in thousands.
I have quoted four specific areas of waste with which I hope the Government will deal. I am afraid that we in this honourable place ask too much of local government. In the past five years, we have
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passed 67 different Acts affecting local government—a horrific number for any local authority to get hold of. They include Acts dealing with land compensation, fair trading, safety at sports grounds and so on. There is also the implementation of earlier legislation which has not come to total fruition—like the Fire Precautions Act 1971. There are also the circulars in which the Secretary of State and his Department are so prolific. As one who receives them, I find it difficult to keep up with the number produced. There are also orders and other statutory instruments.
We forget too easily that the worrying aspect for anyone in local government is that every local authority is bound to implement this legislation. There is no evading or forgetting it. A council can be taken to court for failing to comply with the law. I rather wish someone would do just that. The time has come when a Select Committee or some other appropriate body should take a look at all these Acts and take evidence from local authorities as to their priority and relevance to local government needs. That would be a salutary lesson for all of us. I am not expressing a party political or partisan point of view. There is great concern throughout the House that we are overloading local government nad leaving it to take the can back.
I could not miss this opportunity of critically examining how the rate support grant affects an expanding county such as Northamptonshire. I am worried by the fact that £120 million is being transferred to help London particularly. There have been reports to the effect that this is no more than political bribery. There have also been reports that this is the final compromise figure reached in Cabinet, whose members could not agree how much was appropriate to bolster London, most of whose boroughs are Labour-controlled.
But it is strange that any Government could give extra support to London when some of the expanding counties are helping to alleviate London's problems. We in Northamptonshire willingly take people from London and give them decent new homes, with resulting enormous deficits on the housing revenue account. We are taking our share of disabled and other disadvantaged people, yet we are discriminated against in comparison with

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London. I am enormously disappointed by what I can only see as an expensive political bribe, which is not even likely to work very well.
The RSG has become a fairly sophisticated piece of machinery. So many factors are built in that one or two more would not hurt, and I have one suggestion to make. The area health authorities can anticipate incoming population on a weighted basis. The Department of Health and Social Security can organise this so it should not be beyond the wit of the Department of the Environment to find out how it does it and to put it into the rate support grant. That would help the expanding counties more than anything.
If the Secretary of State wants money transferred from housing maintenance, how about allowing development corporations to sell their houses? A plea to this effect has been made to the Department. Most of the chairmen are not of my political persuasion, but they are supporting this suggestion. Everyone wants the corporations, specifically that in Northampton, to be able to sell their properties. The only person holding up the process is the Secretary of State for the Environment. There would be an enormous gain in sheer capital from such a sale.
I have spoken against a background of the domestic ratepayer in a place such as Northamptonshire not being happy about next year. I suppose that a rate increase of 15 or 25 per cent. is better than the 50 to 100 per cent. increases of last year and the year before. But, even so, the ratepayers are looking this year and in future for next to no increase. Until we have a Government prepared to get hold of Government expenditure, particularly the desire to produce more and more legislation, a Government prepared to take real control of capital expenditure—which always has income and revenue implications a few years ahead—our ratepayers will be disappointed.
8.17 p.m.
Mr. J. W. Rooker: I would follow two points made by the hon. Member for Northampton, South (Mr. Morris). First, I agree that local authorities have to implement a great deal of legislation, but one of my concerns in Birmingham is that they do
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not have to implement it all. For instance, they do not have to implement the Chronically Sick and Disabled Persons Act. But smoke control orders under the Clean Air Act, desirable though they may be, are implemented ad nauseam, creating a good deal of spin-off work for many small builders, while the disabled cannot get telephones and other aids and are told they must get rid of their coal fires. I question the priorities here. It is our fault for passing legislation, giving local authorities enabling powers and not discriminating in favour of socially important legislation.
A good deal of criticism can be levelled at direct labour departments, but I understand, both from one or two national figures and from a technical college in my constituency which is the specialist college for the building industry, that half of all apprentices in the industry are from direct labour departments. This is significant, because it is the lack of trained and skilled manpower which has brought about the rise in lump labour and the decline in the numbers available to do skilled work, which has itself raised wage rates astronomically. This had added to the present inflationary situation and caused much anger in the building trades. At present local authorities are taking on a responsibility which ought to fall to industry.
I do not accept the criticism of local direct building departments. In Birmingham we have resurrected a scheme which was abolished by the Conservatives some years ago and it is going great guns. There are not the problems in Birmingham that the hon. Member for Northampton, South identified in other parts of the country.
I wish to raise some points which are important to the ratepayers of Birmingham. First, I shall deal with the situation in the housing department. Birmingham has been unique in the past two years in preventing old people from dying of the cold. It is as simple and as crude as that. The local housing department set up a scheme known as the "HARP scheme" a heating and rent payment scheme—in which pensioners who were tenants of the local council could pay their heating bills with their rents. When the scheme first started 20,000 pensioners joined it. It was not envisaged at that time that there would be an astronomical increase in energy costs. The result is

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that in the first 18 months many thousands of old folk have been prevented from dying because they have been freely allowed to use their electricity and gas during the winter. This cannot be denied and the social services department of the council would support that claim.
The basic idea of the scheme is that a pensioner pays a set amount, which is included in the rent, and can use as much energy as is required. During 1975 the price of the scheme more than doubled. I am sure that the hon. Member for Birmingham, Edgbaston (Mrs. Knight) will confirm that. Now many of my constituents have dropped out of the scheme altogether. Many people have abused the scheme. I have been to the homes of constituents who have said "It is free, we can leave the heating on all day". It is a tragedy that people have left the scheme and transferred to another scheme which is not so beneficial.
As a result of the ratepayers of Birmingham have to foot a bill of £700,000 due to the astronomical increase in energy costs. I understand that at present the district auditor is questioning this amount. I hope that the Minister who is responsible for this area of Government policy will take cognisance of the fact that Birmingham is not renowned for its militancy in local government. Far from it. I only wish that some of my colleagues on the city council were a little more militant. I assure the Minister that the problems of Clay Cross will be minuscule compared with the problem in Binning-ham if there is any trouble with the auditor over that £700,000.
The city council seeks to put matters right but the result is that more people will die in Birmingham this year due to lack of warmth than died last year. This can be put down to the rise in energy costs and the fear that the city council has rate problems especially over the use of rate revenue in this scheme.
I agree with the point that the hon. Member for Edgbaston made about the rising fives—the youngsters who are being told that they cannot start school in January. Some of my constituents have received letters telling them. "Bring little Sandra along on 6th January, make sure she has some plimsolls, and can she go home for dinner the next week?" The very next day they have received a letter
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from the headmaster or the headmistress saying, "Please disregard the letter we have just sent you. Due to Government cuts you cannot bring little Sandra along". This is an area of contention and I am sure the hon. Lady will have come across those letters.
I take issue with her on two points. First, it is not the rising fives, who are the problem. It is those who became five between January and April. We are told that they are likely to start school in January. At present there is an area of haze around this aspect.
Mrs. Knight: The hon. Gentleman is right when he says that there is an area of haze around this. Some of my constituents say that their children will be five and a half by the time they begin school and many will be five in the term beginning in January. I understood that those children were called the "rising fives". Perhaps it is different in some areas of Birmingham, but I presented the case as clearly and as accurately as could, and this is what affects my constituents.
Mr. Rooker: The hon. Lady is right in some respects. For the two years 1972 to 1974 I was a co-opted member of the Birmingham education committee, not a city councillor. It was during that time that the policy was instituted of children starting school not simply in the term in which they became five but in the term before, which is the pre-rising fives. That is where the problem lies. I have come across children who are rising five who will not be taken into school.
I want to make a strictly party political point because this is the place in which to make it. The policy was instituted in 1973 by the Labour-controlled city council after six years of inaction by the Conservative-controlled city council. It was only when I joined the education committee that this issue ever got off the ground because in the previous six years even the rising fives did not get into school. I accept that the statutory obligation is not to accept them at school until the term after they become five There are children in Birmingham who will be five and a half before they start school. I deplore this as much as does the hon. Lady.
Mrs. Knight: I was not stating that it was right or wrong that they should not

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be going to school. What is wrong—I think the hon. Gentleman will agree—is that a promise was given that a certain number of children would start school. If that promise had not been made the situation would not have arisen. That has been my argument.
Mr. Rooker: I agree with the hon. Lady 100 per cent. That is the argument. However, she has said that it does not matter whether it is right or wrong that they should not be going to school. It is wrong that they should not be going to school. The promise has been made. The places are available in the school, as are the staff.
The chief education officer has told me that it is not quite as simple as that, because resources have to be reallocated and it is difficult to explain the situation to the public. He was saying that I was too thick to understand what the local government officials were planning to do. They were planning to take reception classes which now have 12 pupils and to disperse those children into other classes. That will leave the school with a spare member of staff and, come the summer, that member of staff can go to another class and the authority will not need to employ as many staff as it would otherwise employ. That is a way to cut the number of teachers in the local education service. I deplore that way of going about it. It is not an open way—not open with parents, not open with the local representatives, and certainly it does not seem to be open with the teachers.
I am assured that, in the event, the situation in Birmingham will not be as bad as both the hon. Lady and I have been given to understand by our constituents. However, that remains to be seen. The children have been told that they cannot start in January. If they cannot start at Easter, there will be an uproar, and rightly so, the promise having been made to both the children and their parents. My right hon. and hon. Friends will have seen letters on this subject—I know that they have received letters from the hon. Lady—and a good many Questions have been put from this side of the House. The chairman of the Birmingham education committee is extremely concerned about it. The Department is well aware of the problems and
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of the representations which have been made.
I have referred specifically to one or two matters directly related to Birmingham, and I turn now to another aspect of the effort to reduce local government expenditure. In my view, local government must set an example, and if any town council chairman, lord mayor, mayor—or whatever he may be called—has the effrontery in 1976 to hold a function remotely resembling a lord mayor's ball or dinner, I hope that the ratepayers will rise up in wrath. They will be right to do so.
Birmingham's record here is good. We are basically a fairly puritanical part of the country—I think that the hon. Lady will probably agree—and there is not all that much flummery in the Midlands. But there is a hell of a lot of flummery in other parts of the country, and I think that the call should go out in a circular from the Department that there be no more of it. There are hundreds of circulars issued all the time. The last one I looked at was No. 88, which told local authorities to chop back in 1976, but that was a few weeks ago and I strongly suspect that there have been another couple of dozen since then. As I say, a circular should go out saying that mayoral functions should be abandoned in 1976, to set an example.
Coming back to my own patch—as I say, I think that Birmingham is not guilty in that respect—I turn to the West Midlands County Council Bill, to which the hon. Member for Northampton, South referred. There is a point here which can usefully be made in the present context. The hon. Gentleman did not make it, and, oddly enough, the traders do not make it, either. The traders are dead against the Bill on the trading clauses, but they keep very quiet about anything in it which will benefit them.
A great part of that Bill is directed to the idea of a grand prix formula 1 motor race round the centre of Birmingham. It so happens that I am in a minority among my hon. Friends, the 10 Labour Members representing constituencies in the area, in being opposed to it.
Mrs. Knight: I am opposed, too.
Mr. Rooker: I did not know that the hon. Lady was against it. I thought that

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she favoured it because it was good for traders. However, I am opposed to it, and I shall take every step open to me in the House to take that provision out of the Bill. I shall do so not just because it will be a charge on the rates—it will be argued that it is not—but because, quite frankly, it seems to me to be provided just for the 38 night club owners of Birmingham, not for the ratepayers of the city. I can only say that here at this point, but when the Bill comes forward a lot more will be heard about it.
My right hon. and hon. Friends concerned with the environment and with education will have to pull their socks up. We have been told about cuts of £3,700 million and my hon. Friends and I will not support them. We shall use every endeavour in this place to oppose them, and we hope to be joined by some hon. Members opposite who will not choose an occasion when there is no Division but will join us when there is a Division and help to stop some of the cuts which they are constantly calling for but about which they complain when the cuts actually take place.
8.33 p.m.
Mr. John MacGregor: I hope that the hon. Member for Birmingham, Perry Barr (Mr. Rooker) will forgive me if I do not take up his points of detail in relation to Birmingham since, although I visit his city quite frequently, I am not as familiar as he is with circumstances there. However, I shall return later to one of the themes which he introduced at the beginning of his speech when I speak about the position of under-fives in Norfolk.
I shall first take up three major matters which have been themes in the debate and then raise one or two smaller points of practical detail. The first major matter can be dealt with briefly since it has been much discussed already. I refer here to the distribution of the rate support grant and the formula which is used, as well as the bias given towards London this year. I acknowledge that the Secretary of State must always labour under a difficulty when he tries to reach a formula fair for all parts of the country. Nevertheless, I am greatly concerned that the switch from the rural areas has continued since this Government came to power and is still continuing. The Secretary of State said—these were his words—
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that the balance this year was to protect the remote rural areas. In tact, the real problem concerns not just the remote rural areas but rural areas with substantially increasing population.
In this connection I take my example from Norfolk. This year we have a 0·8 per cent. increase of population and we are one of the fastest expanding parts of the country now, yet we have a declining needs element. This is bound to put great pressure on the rates. I do not accept some of the projections which the Government have been bandying about, and I noted that the Secretary of State did not give any figures today, saying simply that he would not make any forecast, but I fear that some of the forecasts will prove too optimistic, at least for non-metropolitan counties in an expanding position.
I give but one example. I am glad to say that this year we have succeeded in obtaining a fairly big increase in our allocation for the education capital building programme. Despite the difficulties that it will face in financing it, the Norfolk County Council intends to make full use of it. It is necessary, because without it we should very soon face a shortfall of roofs over heads of about 17,000, particularly in the primary schools.
I reiterate the point made by my hon. Friend the Member for Northampton, South (Mr. Morris)—that much of this expenditure is to help London with its problems, to cope with the London overspill that we are absorbing. The problem is the cost of financing a fast-expanding education programme to meet this growing population. Simply to meet this year's increased allocation will mean a roll-forward of the programme for next year, which will increase our local authority expenditure by 2·7 per cent., before taking account of next year's growth through increased pupils coming into the schools next year. That gives some idea of the difficulty in the provision of services to meet a fast-expanding population.
As my hon. Friend said, there is one way in which the problem can be at least partly dealt with. That is by reflecting in the rate support grant formula the fact that the population is increasing so fast. I acknowledge that the Secretary of State has done a little by making the formula not relate to the population of two or three years ago, but it would be much

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more sensible to throw it forward. If area health authorities can do it, so can local authorities and the Department of the Environment. It would do much to cope with the problem of the fast-expanding rural areas.
The other two major matters that I wish to touch on concern reining in public expenditure rather than increasing it. I am well aware that we must all be positive and constructive in the present economic situation. I am as fully conscious as anyone of the dangers of the present level of public expenditure and the need to cut it back.
My second point has been taken up by many hon. Members, but it needs to be said time and again in the House. It is that we are as responsible as anyone for the increased local authority spending, because of the new duties we are constantly imposing on local government. There was a fair degree of hypocrisy recently from both the Prime Minister and the Secretary of State for the Environment in blaming local authorities for the expansion of staffs and the enormous increase in their spending programmes. They said that without recognising that even as they spoke the House was imposing further burdens on the authorities. There is no need to look at major items, such as the Community Land Act, among the 67 Acts passed in the last five years to find examples. A simpler example is to be found in a proposal which was supported by both sides of the House and which has effects on local authority spending programmes.
My county council of Norfolk is accepting in its expenditure programmes this year a 2 per cent. growth to meet increased population needs, because of our particular problems, and, above all, the fact that we have a higher than average population increase to cope with. That is a 2 per cent. growth above what the Government's present direction suggests. Yet two items alone which could by no means be described as essential could well pre-empt most of that 2 per cent. growth.
First, I am told that to meet the provisions of the Health and Safety at Work Act etc. which was passed last Session, and which we all support, the county council should be spending another £1
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million next year. It now has to provide two men on bulldozers in the rural areas where previously there was only one man. That is desirable for safety reasons, but there have not been all that many problems in the past, and we should ask whether this is the right time to make this extra imposition. I am told that the provision of toilets for road gangs as a result of the Act will also result in quite an increase in expenditure. In the past the men went behind hedges. That seems a simple, small example, but it will preempt much of the growth.
The second example is the increments to local authority staffs. I am critical of the inclusion of increments in the pay policy anyway, but in relation to local authorities the position is even worse. The increments concern mainly teachers. They will provide a heavy extra burden on our budget next year. Partly because of the increased pay scales in the recent teachers' award, the increments will add about 1 per cent. to the total expenditure of Norfolk County Council next year. The key point is that the incremental part of any wage and salary increase has to be set against growth. With the two items that I have mentioned we have already eliminated most of the growth that was available. Cuts will have to be made elsewhere.
Much of what we are doing in the House is desirable, but the question we must always ask is "Can we afford it?". It is clear that something must go, and the cuts come down to local authority level. We are reaching the point where it will be right to support local authorities that say that in the following year they will not be able to meet all the statutory impositions that we bring about without making more drastic cuts elsewhere. The alternative is for local authorities to cut back on existing desirable services.
I am worried about one part of the report on the Order which suggests in Appendix E that the Government have not learned their lesson and which casts considerable doubt over the seriousness of the way in which they are approaching cash limits. Appendix E is about cash limits, and in paragraph 5 it says that the
"cash limits on grants to local authorities … will also be reviewed"—
I am talking of the Secretary of State's own cash limits in the rate support grant

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increase and not about local authority spending—
"(i) if new legislation is enacted, or brought into operation, after November 1975 which entails an increase in local government expenditure or (ii) if changes are made in Government policy which entail an increase in local government expenditure …".
In other words, there is the distinct possibility that if the Government add to local authority services, they will meet at least part of that addition through an increase in the increase order. That casts doubt on the seriousness with which the Government approach cash limits. Even more, it casts doubt on whether they have taken on board the fact that we are imposing too many burdens on local authorities.
In the coming year, and perhaps the year after, we should do better to impose a moratorium on new duties to be imposed on local authorities. If we applied such a test every time we tried to impose new statutory duties on local authorities, we might well be doing the best thing possible for the ratepayers.
Another major topic, raised by my hon. Friend the Member for Aylesbury (Mr. Raison), is the importance of pay. In the opening paragraph of Appendix E the importance of pay in terms of local authority expenditure is recognised. It is important largely because of the dominance of the labour-intensity aspect of local authority services.
We all know that the Government's pay policy this year made it clear that the £6 was a limit and would not necessarily be met if individual employers could not afford the full £6. We could well argue that this year local authorities should have fitted into that pattern classically. With the heavy burden on local authority expenditure, it must be questionable whether they could afford the full £6.
However, I am fairly certain that in the year ending 1st August 1976 we shall see everyone in the public sector receiving the full £6. That will cost the Government £650 million, local authorities £740 million and nationalised industries £580 million. That is a total of additional expenditure in the coming year of nearly £2,000 million. I recognise that for the Government and in terms of the public sector borrowing requirement part of that sum will come back in increased
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taxation, but that does not help local authorities. In addition, there are increased pension contributions.
There is no question but that pay settlements will add considerably to the expenditure of local authorities in the coming year. Therefore, there is a need to cut back on desirable services, such as telephones for elderly pensioners living in remote areas and for the disabled.
A further fact, perhaps outside the scope of the debate but relevant to the situation, is that many outside employers who were unable to meet the full £6 without seriously risking their profitability and capacity to invest came near to agreeing settlements below £6, but manual workers in local authorities enjoyed a £6 settlement, which came through very quickly and which torpedoed the whole arrangement. They immediately received the full £6.
There is a danger that what we are doing in the public sector is increasing the problems of companies in the private sector and leading to unemployment. I very much agree with my hon. Friend the Member for Aylesbury, who said that next year's pay settlement would be of crucial importance. I hope that the Minister will make it clear that when the time conies—and I recognise that it is not now—the Government will stand firm behind the principles of their pay policy after 1st August next year. They patently did not stand firm this year and support local government employers, who tried to keep down the expenditure burden in pay negotiations and settlements. Next year, if the Government are to stick by some of the projections they have made in this Order, they will certainly have to stand firm after 1st August.
There are three points of detail which I wish to raise. The first concerns education. Here I refer particularly to the under-fives. My authority was greatly concerned about this matter and it has been in correspondence with the Secretary of State for Education about its growing programme, to which I have referred. Originally, it was told that there would be no general increase. Subsequently, it was informed that there would be, as is clear in the Order an expectation of a 2 per cent. increase in real terms—in volume terms—in education expenditure in the coming year.

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There are two points which arise here. The first is that the Government originally said that it was in the area of the rising fives and under-fives that some cut-backs would have to be made. My authority has been concerned about this, as I am, because I am a firm and fervent supporter of nursery education and of a further expansion of education for the under-fives and rising fives. I should like to see greater flexibility in the school leaving age so that more resources could be concentrated on that area.
My authority ultimately succeeded in preserving its programme for the rising fives and under-fives despite its growing primary and secondary school-building programme. It managed to ensure that the under-fives and rising fives would get the school places promised to them. That was as far as it could go, given its other education problems.
On 3rd December, my authority received a letter from the Secretary of State for Education in which he said, dealing with the 2 per cent. growth:
"Moreover, further consideration may reveal scope for increasing the admission of under-fives to primary schools, although probably at a slower rate than in 1974–75 and the current year."
To do something of that sort when at the same time the Secretary of State for the Environment is urging local authorities to cut back in every possible way is totally unfair to the local authority concerned.
The Secretary of State for Education clearly did not know the circumstances of the local authority. It will, therefore, either have to cut back elsewhere yet again, or it will have to make it clear that that particular sentence does not apply to it. The Government are trying to have it both ways, with one Department saying "cut back" and the other Department saying there may be scope for more expenditure.
If some authorities are to have an increasing programme about the 2 per cent. limit, others with fewer education needs will have to cut back if the objectives of the Secretary of State for Education and, indeed, those of the Secretary of State for the Environment are to be achieved. I see no indication that the Government have any plan for achieving a cut-back to enable the growing areas to move ahead of the average areas. I
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hope that the Minister can comment on that.
My second point of detail relates to concessionary fares. Like many hon. Members, particularly those with scattered rural areas in their constituencies—in which some authorities have operated concessionary fare schemes—I am greatly concerned about old-age pensioners. I wish to know what paragraph 27 in the Order report means. After saying that the availability of concessionary fares at peak periods adds to the general difficulties of travel at those times and to costs and resources, it goes on to say:
"The Government therefore consider that that aspect"—
that is peak periods and concessionary fare schemes—
"should be critically examined. The settlement does not allow for all the expenditure forecast on the basis of no change in such schemes, or for the extension, improvement or introduction of schemes in 1976–77."
That is a somewhat euphemistic turn of phrase. I hope that the Minister will make clear that it means that there is no scope for introducing new concessionary fare systems and that existing ones will have to be cut back.
I finish on a topic which has greatly concerned me since I became a Member of Parliament—the impact of rates on small businesses. I had the good fortune to win the Private Members' Ballot last year and I chose rate relief for small businesses as the subject of my Bill. I could see that many small businesses and shops, especially, though by no means exclusively, in rural areas, were finding that with their turnover not increasing, and a squeeze on their margins in every other direction, the rate burden was beginning to endanger their existence, particularly because of the dramatic increase in that burden as a proportion of their total expenditure over the past two or three years. To come down to the level of rate increases we have been talking about in the debate will be no solution for small businesses, many of which will probably tip over the edge.
The Government were unable to accept my Private Member's Bill on the ground that we should wait for the Layfield Report. I have since had much evidence from small businesses that this is a continuing and growing problem. We are all clearly aware that a considerable time

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will elapse after the publication of the Layfield Report before we get a substantial rate reform—if rate reform is the outcome of the report. There will have to be time for Government debate, debate in the House, formulation of Government policy and pushing legislation through the House. The measure will be major and may take four years. There are many small businesses that cannot wait that long. I hope that the Government will accept that there is a need in the interim for a measure of relief to assist small businesses in the same way as domestic ratepayers are assisted.
The problems of local government finance and control over expenditure may lead us to start thinking what was unthinkable two years ago. We shall certainly have to stop adding to services, we shall have to find a new way of continuing existing services and we shall have to establish new priorities. Given the momentum of local authority programmes and the revenue implications of new capital expenditure programmes, this may be the only way to continue our local government operations as a whole without intolerable burdens on our citizens and on the businesses from whom come the resources for local expenditure.
8.53 p.m.
Mr. Graham Page: My hon. Friend the Member for Norfolk, South (Mr. MacGregor) referred to the effect of the rate increases over the last few years on small businesses. That is of vital importance. Small businesses employ more people than Chrysler employs, and if they are hit as severely as they have been hit this year by rate increases, there will be a serious threat not only to the businesses but to their employees. I hope that the Minister will take to heart what my hon. Friend said about small businesses.
My hon. Friend offered solutions to the problems of local government expenditure and local government revenue. I have offered mine many times to the House. They are simple solutions such as removing the cost of education, fire services, police and courts from the back of the ratepayer to the taxpayer, abolishing rates and replacing them by local income tax and obliging local authorities to hive off more of their functions to contract so that they need not employ
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such a large establishment. We have been told today by the Secretary of State that the Layfield Report is expected early in the New Year, and I shall wait patiently for it. I am sure that I shall be justified by that Report and I hope that the Government will act quickly on it.
We go through this ritual annually of debating these Orders, but our debate can have no effect. It is very depressing to debate an Order for 3} hours or more when the debate can have no effect. The Rate Support Grant Order is the culmination of a procedure which goes on behind closed doors. Some time in the early summer, officials of Government Departments concerned and officials of local authority associations—not even the officials of local authorities—meet to decide what is to be the relevant expenditure of local authorities for a year from the following April. They chew this over behind closed doors and we know nothing about the figures they are discussing. Eventually, in the late autumn the figures are presented to the Secretaries of State in each Government Department concerned and the statutory meeting takes place. Once again, we are told nothing about it.
Why is there such secrecy about these matters? Why should they not be debated? After all, the meetings are called to decide the relevant expenditure of local authorities for the following year. It is not like deciding a tax. At the end of the statutory meetings, the Secretary of State decides what percentage of relevant expenditure is to be met by the rate support grant. Why should there not be a public debate through the summer and the autumn on the anticipated expenditure of local government.
The Under-Secretary of State for Wales (Mr. Alec Jones): Defective as the system is today, it is exactly the same system as that which operated when the right hon. Gentleman was a member of the last Conservative Government.
Mr. Page: My answer is "So what?". One learns in Government. When one is given the responsibility of ministerial office, one finds out what is happening. I complained about this matter behind those closed doors when I was a Minister and I do not mind disclosing the fact now. I have always wanted to reform this process and I hoped the things I said at

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that time would have percolated through to this Government and we would have had some reforms.
The only contact between the Government and local authorities on the subject of expenditure is in these discussions between officials about the grant. We have been told that there is now a consultative council and some nice things have been said about it. I still have to see what will be produced by the council. I am told that discussions are taking place and that there is now real contact between the Government and local authorities. I hope something comes of it because up to now the only contact on local government finance has been in these secret and phoney discussions behind closed doors. Furthermore, there is still no contact between local authorities and hon. Members on the finances of local government. We need a Select Committee of this House to deal with local government matters, particularly local government expenditure. This suggestion was made by the right hon. Member for Dartford (Mr. Irving) earlier in the debate.
This is the only debate we have about local authority finances. When we do have it, all that we discuss is revenue. What is the extent of local authority borrowing, and what is the interest charged on that borrowing? The hon. Member for Dartford mentioned a debt figure of £25,000 million. The last official figure that we have on this subject is for the year 1972–73 which showed that the debt of local authorities in England and Wales was £17,000 million. It was reported in the newspapers recently that local authorities in the United Kingdom owed a total of £24,000 million in the form of capital debt. The significance of that figure for the ordinary ratepayer is that it needs servicing to the extent of £2,300 million a year. That figure is equal to the domestic rate. I know that the rate support grant takes account of two-thirds of that, but it is a subject which should be debated fully in this House, and we never got the chance to discuss capital expenditure by local authorities.
If the House had a Select Committee dealing with all local government expenditure and finance there would be a report from the Committee which the House could debate. At present we are discussing
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only half the problem. The more capital expenditure there is, the greater the revenue commitment. If the Secretary of State gives a local authority permission to borrow and spend £1 million, he is agreeing to something which will be a call on revenue expenditure for years. We never debate the allocation of capital expenditure and borrowing to local authorities. We should have a commit-mittee which could examine this topic from the local authority point of view and report to the House.
A great deal of local authority debt could be written off. It is suggested that that might encourage local authorities to borrow and spend more, but I do not accept that. If there is justification for repeatedly writing off the debt of nationalised industries—and requests from those industries to that effect are granted—it could be done for local authorities. That would save a great deal of revenue expenditure from falling on the taxpayer and on the rate support grant. At least the local authority debt to the Public Works Loan Board could be written off. That is merely a paper entry. The local authorities must pay interest on the debt, and some of it is met by the rate support grant. If that were wiped off it would lift a burden from the ratepayers' shoulders and the authorities would be dealt with fairly as compared to the nationalised industries.
I reiterate that we do not debate sufficiently the revenue and capital affairs of local authorities. We should be the watchdogs by means of the normal Select Committee procedure, not by means of some stupid little committee set up, as the Prime Minister suggested, by the local authorities, an undemocratic body consisting of local people who would criticise the democratically-elected councillors.
The rate support grant debate as we know it, and have known it for many years, is unreal. We should have a better procedure in the House to debate local government finance. We should not be kept in secret about the figures as they come out during the year, nor should we be kept in secret about the borrowing estimate. There should be a public debate while these figures are being considered by Government Departments and local authority associations. It should not come before us, as it does now, as a

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fait accompli. Hon. Members could contribute far better if there were a debate before the rate support grant proposal was put before us.
9.6 p.m.
Mr. George Cunningham: I want to speak very briefly, although I understand that the debate is not limited to 10 p.m. Could you confirm that, Mr. Deputy Speaker?
Mr. Deputy Speaker (Mr. Oscar Murton): That is in fact the case. The debate may continue until 11.30 p.m.
Mr. Cunningham: The House tonight is authorising expenditure of just under £6,000 million. Anyone either participating in our proceedings or watching them might well say that there must be a better way of authorising the spending of this sum than by means of a debate in the Chamber without any previous debate in any Committee of the House. I am delighted to follow the right hon. Member for Crosby (Mr. Page) who has stressed this point very strongly.
We have a Committee of the House which could perfectly well take up these Orders and give them a preliminary going over before they come to the House—namely, the Environment Sub-Committee of the Expenditure Committee. This is certainly very much an expenditure matter, but because Committees of the House prefer to indulge in quasi-academic studies of a long-term nature, rather than the nitty-gritty business of scrutinising this Order and others like it providing for massive sums of money, it has never even passed before the eyes of members of that Committee. It is time the House got round to making better use of its Committees than is the case at the moment.
These days a large part of public expenditure is represented by salaries paid by local authorities. Traditionally, we have taken the view that the numbers of staff in local authorities and their salary levels are not matters in which the Department of the Environment ought to intervene except, from time to time, when we are struck by an economic crisis. It is impossible, over five or 10 years, for the Department of the Environment to effect any change on that basis. The Government cannot suddenly get the local
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authorities to sack the staff that they took on last year, or expect them to accept salary levels which are less than those negotiated last year. In the end, we shall have to accept that there needs to be constant and continuing scrutiny by central Government over local government staff salaries. The Department of Education and Science exercises a veto over the total value of any increase in teachers' salary levels. So far as I know, the Department of the Environment does not exercise any such veto over increases in salaries at local level. We shall have to change our general traditional approaches to this matter.
I am sure that all London representatives are extremely grateful that my right hon. Friend has broken with tradition and has, for the first time in recent years, brought the needs of London, which are special and greater than those of the rest of the country, more fully into the formulae for the distribution of the needs element. That will bring to London this year about £110 mililon.
But there is, it seems to me, an odd by-product in that for the inner city areas outside London the distribution of the needs element is being done by means of a needs formula related only to the pattern of expenditure outside London. The London peculiarities are not being allowed to affect the formula for distributing the non-London part of the needs formula. The consequence is that the inner city areas outside London will not get an increase in their allocaton such as they would have got if the weighting for inner London had been allowed to take its effect in the formula for distributing the non-London needs element.
It seems strange to me that at a time when everyone at least pays lip-service to the need to help inner city areas—my right hon. Friend does more than that—something is being done which is good for London but has a by-product of penalising particularly the inner city areas outside London as compared with the other areas outside London.
I accept that other factors are operating which might operate against the non-metropolitan areas as opposed to the metropolitan areas but there is this fact operating, too. The inner city areas outside London would have done better if the formula for distributing the needs

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element outside London had had the London ingredients in it.
I want to say particularly one thing, and only one thing in essense, about the situation within London itself. The £110 million coming the way of London is, as everyone recognises, less than London would get by a normal application of a needs formula, and it is only a first tranche or application of what one hopes will be a full application of these procedures in later years. The £110 million represents an average over the whole London area of a 5·4p rate. When the remaining negotiations with the London authorities on London rate equalisations are concluded and we know exactly how much each London borough is to get at the end of the day, if the inner London areas get an advantage compared with last year lower than 5·4p, I shall not say that the exercise has been a failure, but it will be decidedly curious if, having done something in order to bring into the formula the particular needs of inner city areas, the inner city areas of London benefit less than the outer city areas of London.
My right hon. Friend has to accept that here is a conflict between the idea of giving preference to the inner city areas and the concept of equalising rates in the pound as between inner and outer London. This is not the occasion for a full discussion of the London rate equalisation scheme. Unfortunately, there is no occasion for a full discussion of the London rate equalisation scheme. What I have to say about it I said in my Adjournment debate last Friday, and I shall not repeat it now. But I impress on my right hon. Friend that it will look particularly odd if, having done this marvellous thing for London, which is particularly intended for the benefit of the inner city, at the end of the day the outer city should derive greater than average benefit while the inner city derives less than average benefit.
9.15 p.m.
Mr. Keith Speed: This has been an interesting and wide-ranging debate which has shown a remarkable degree of unanimity on all sides of the House about a number of aspects of the way in which local government and local government finance are run. It is fair to
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say, too, that most hon. Members have not altogether shared the degree of optimism with which the Secretary of State finished his speech in commending the Order to the House.
A fair degree of suspicion has been voiced about the effects that these cuts will have upon services. I have no wish to go through them again, because many hon. Members have given their own interpretations and pointed out that paragraphs 17 to 34 of the report accompanying the Order spell out the dramatic reduction in some services, and this could be underlined substantially when, as inevitably will happen, local authorities have to make some tough decisions in the months that lie ahead.
My own interpretation is that there will be substantially lower standards, especially in non-metropolitan areas. These standards will hit rural transport, the old the disabled, the handicapped and, of course, education. The Association of County Councils estimates that it is a real cut-back of about 2 per cent. in the standards of services, and I presume that the Secretary of State does not disagree with that.
The hon. Member for Islington, South and Finsbury (Mr. Cunningham) was on to one or two technically valid points as regards London. But my interpretation of the RSG is that it is not only London but metropolitan areas generally which will get more grant and will be able to maintain their present poundages and to avoid a reduction in services very much better than the non-metropolitan areas.
This was a matter raised by a number of my hon. Friends, among them the Members for Wellingborough (Mr. Fry), Ludlow (Mr. More), Norfolk, South (Mr. MacGregor), who were concerned about the way in which this trend has been going on over the last couple of years. Certainly London has had a rough time this year, but we have to be careful not to throw out the baby with the bath water and to make matters that much more difficult for the non-metropolitan counties.
I can speak with intimate knowledge only of my own county of Kent, but I know that many non-metropolitan counties have been indulging in very sensible budgeting to ensure that they have not been over-spending in the past year. They

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have been criticised roundly for doing so. But the effect of their sacrifices will be largely lost because they will lose out compared with the metropolitan areas.
I do not think that anyone mentioned—although the hon. Member for Stoke-on-Trent, South (Mr. Ashley) hinted at it—the effort that voluntary organisations could make to meet the shortfall in services. This is quite important, and, in a time of national economic crisis, we should not underrate what can be done in rural transport, if we could get some of the present laws on transport altered and made more flexible, and in social services for the young and old. Both East and West Sussex County Councils are doing a great deal already in this direction. I hope that officers of the Department of the Environment will look at what is being done, because it might form the basis for advising other local authorities of what can be done. It might make all the difference between maintaining and not maintaining a service, and I shall do all that I can to encourage it.
I regret that I did not hear the whole of the speech of the hon. Member for Birmingham, Perry Barr (Mr. Rooker) but I gather that there will be a revolution in Birmingham if the so-called free heating scheme comes to an end. For the hon. Gentleman, apparently, the party is not over indeed, it has not even begun. However, I am sure that he will find his answer next May when the electors of Birmingham return a Conservative metropolitan district council there. [Interruption.] The hon. Member laughs. I beg a pint of best "Fed" across the Table of the House that the Conservatives win back Birmingham next May. [Interruption.] I am glad that the Deputy Chief Whip takes my bet. I shall be happy to collect it at the end of the first week in May.
I turn to the subject of cash limits. We got ourselves into a muddle about them earlier in the debate. It is a very complicated subject, but I shall try to be as clear as I can about it. The going figure for the rate of inflation is 11 per cent. from mid-1975 to mid-1976. That is the figure which is used for calculations. As the Secretary of State said, this means for local authorities a 7 per cent. increase in costs which, in cash limit terms, is an increase of £480 million.
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The Government's present anti-inflationary policy comes to an end in July 1976. That is when the £6 limit ends. If I have done my sums correctly, one then extrapolates the 7 per cent. increase in cost. I think that at one point during his speech the Secretary of State said that the 7 per cent. continued into 1977. That suggests to me that the next maximum weekly payment which will be allowed under whatever follows the July 1976 termination of policy, will be £4·50 and not the present £6.
I shall not go into the matter in detail. However, if I am right about the 7 per cent. and 1977, as £6 is the present limit under the present policy and as the Government must have something in mind unless the whole arrangement is to end in 1976, that suggests that in any new policy the new norm will be £4·50 a week and not £6, because we know that that figure comes to an end next July. It may be that the Secretary of State cannot give me an answer tonight, but I am sure that many hon. Members would like to know the basis of these figures.
Another point concerning cash limits is that some hon. Members think that it has gone a long way down the line and they are worried about what will happen to local authorities if inflation is greater than the Government and the right hon. Gentleman think it will be. I confess that I fear that these cash limits are not, in fact, cash limits. If one reads paragraphs 4 and 5 of Appendix E of the report one finds that one could drive a coach and horses through the cash limits, if that was what one wanted to do. The appropriate paragraphs have already been read so I shall not read them again. Although we talk about cash limits, I do not think we have reached the situation where one says to local authorities that unless there is something totally cataclysmic or the Government introduce legislation which will put a tremendous extra burden on them, there will be no more rate increase Orders. At the end of the day that is what cash limits is all about.
It is clear that both sides of the House agree not to go along with the Prime Minister's speech about Chiefs and Indians which he made at Eastbourne

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a week or two ago. If central Government are properly limiting public expenditure and the local authority section is being limited, but imperfectly, the answer is not to have special watchdog committees, which I believe would be an extraordinary amalgam of elected councillors, ratepayers and officers. That would undoubtedly generate a new bureaucracy. The answer is to ensure that the councillors do the work properly and that central Government take their share of the responsibility by not adding burdens.
My hon. Friend the Member for Ludlow and the hon. Member for Isle of Wight (Mr. Ross) mentioned performance review committees. At the end of the day who is running the local council? Is it the officers or the elected members? I am old-fashioned enough to believe that it is, and should be, the elected members who look at what their officers are doing in performance reviews and who monitor their staff levels so that they realise how many staff they are engaging and how many staff they are employing. At the end of the day they can make policy decisions in accordance with that information. We must not try to introduce all kinds of red herrings by suggesting that a new kind of committee will solve the problem. Councillors, like Members of Parliament and Ministers, are elected to do their job. Why was the manpower watch which was set in train by my right hon. Friend the Member for Crosby (Mr. Page) at the beginning of 1974 abandoned? Why were the references which he set in train to the Pay Board on local government pay settlements also abandoned? As the right hon. Gentleman knows, both those proposals were introduced before February 1974. It is extremely unfortunate that they were both abandoned.
We are entitled to say to the Government, "All right, cut back on local government expenditure, cut back on local government staff in certain circumstances, but what is happening in central Government Departments?" For example, what reductions have there been in the staff of the Department of the Environment? I have great affection for that Department, having served in it as a junior Minister. I know that the staff there are second to none. However, we
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are talking not about the wholesale sacking of civil servants but about the non-replacement of people who retire, resign or are transferred to other Departments. The Secretary of State knows that in that way substantial reductions in staff can be effected over a period.
But that has not been the situation. The staff has grown and is growing. Staff costs in the last six months, according to a Reply which I had, added an extra £45 million in that Department alone. Therefore, it is fair to ask the Government when they will practise what they preach to local government by cutting back in their own Departments. That seems a reasonable proposition. Councillors throughout the country, including councillors not of my political persuasion, have made the same point to me.
One aspect which came through the debate generally which I wish to underline concerns the abysmal lack of knowledge about local government throughout the British public as a whole. That point came as much from the right hon. Member for Dartford (Mr. Irving) in an excellent speech as from anybody else. That matter could be tackled by using extra year at school to educate young people, possibly under the heading of Civics, about the set-up of local government and who is responsible for drains, housing, roads, and so on. At the same time we could tell them how to go about getting a house, whether buying with the aid of a building society or by a local authority mortgage, or renting from the council. There is an enormous area of what should be fundamental knowledge for good housekeeping, let alone good citizenship, which our educational system seems to be ignoring—with one or two notable and honourable exceptions. If we are to get a better understanding of local government in this place and in the public as a whole, our schools must do more in helping to get this message across.
The burden of central Government was mentioned by many hon. Members, particularly by the hon. Member for Ilford, North (Mrs. Miller) and by my hon. Friends the Members for Conway (Mr. Roberts), Norfolk, South and Daventry (Mr. Jones). I estimate that the duties of local authorites are 80 per cent. determined by central Government one way or

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another by various statutes and regulations. We have a plethora of Acts, regulations and circulars which increase manpower and expenditure. The hon. Member for the Isle of Wight referred to this matter.
I choose at random three Acts of Parliament—first, a Private Member's Act, the Chronically Sick and Disabled Persons Act; second, a Conservative measure, the Fair Trading Act; and, third, an Act passed by the present Government, the Children Act. All three are excellent Acts of Parliament. I do not criticise any one of them. However, all of them lay an enormous, almost open-ended, burden in terms of both manpower and money on local authorities, and not one of them specifies what those burdens are. All political parties are guilty in this matter. We must discipline ourselves in future, first to see what the effects of legislation will be and, secondly, to spell out the manpower and economic consequences for local government. In the new régime of, I hope, even tougher cash limits, we must make it clear that the resources will be made available rather than have this wishy-washy open-ended commitment with which responsible local government finds it almost impossible to cope.
We have had the Community Land Act and other current legislation cited. These are perhaps controversial measures to which I should be greatly opposed. But even non-controversial Acts play their part in making the lives of responsible councillors and officers almost impossible.
The question of small businesses was raised particularly by my right hon. Friend the Member for Crosby and by my hon. Friend the Member for Norfolk, South. This rate support grant, and indeed what has been happening during the past couple of years, gives little help not only to the small shopkeeper, although he is perhaps the hardest hit, but also to the small professional partnership, warehousing or manufacturing firm. Earlier this year my hon. Friend the Member for Norfolk, South introduced the Local Government (Rate Relief for Small Businesses) Bill, which the Minister for Planning and Local Government dismissed sharply in this place one Friday afternoon.
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The situation is now more critical than it was then. We have the problems and nonsense of multi-rate VAT which hits many shops. There are rules, regulations, price lists and higher taxation, to say nothing of the unpredictability of the increases in rates. They go up by 60 per cent. one year and by perhaps 30 per cent. the next year. Small firms have great cash flow problems, and they are not allowed by law to pay their rates by instalments.
If one looks at the redevelopment of town centres, one finds that often there is a small shopkeeper who would like to stay there, and perhaps can just afford the rent but the new rates mean that he goes out of business altogether or is forced out of town and out of the main shopping area. If, at the end of the day, we want our new town shopping centres to be nothing but multiples, there is no need to change the system, but I believe that the small shop, giving individual service, is good for the consumer as well as being good for the shopkeeper. I put it to the Minister that unless we tackle this problem as a matter of urgency, many of these small businesses will not be around for long. The time scale of four years mentioned by one of my hon. Friends is realistic.
Mr. A. P. Costain: Has my hon. Friend come across the small shopkeeper who lives above the shop premises and is particularly concerned because his income is often below that which would allow him to get a rate rebate if he lived in normal domestic premises?
Mr. Speed: There are many anomalies in the situation. When rates were going up by only 5 per cent. or 6 per cent. the situation was not too bad, but with the present dramatic increase in rates, and without the benefit of the domestic rate relief, the survival of many of these shops is seriously at risk.
Reference has been made to the West Midlands County Council Bill, which we shall no doubt discuss at some stage, as we shall the Government's attitude to municipal trading. One of my hon. Friends said that he hoped that the Government would come out against the Bill. I do not think there is a cat's whisker of a chance of that, because earlier this year

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the Minister for Planning and Local Government supported his hon. Friends below the Gangway when they wanted to extend the powers of local government to go into undertaking, taxi driving, soliciting and estate agency work. [Laughter.] Hon. Members can take that whichever way they like.
I believe that we have to make up our minds whether we want to see the extension of municipal trading. The chances are that if it happens it will be at the cost of the ratepayer. The very people paying for the services will be those paying the maximum rates, the shopkeepers and the traders themselves, and they will be subsidising their own competition. The Opposition are vehemently opposed to any such extension.
My hon. Friend the Member for Northampton, South (Mr. Morris) raised the question of direct labour in an admirable way and gave a number of examples of wastage. It is the poor old ratepayer who picks up the tab at the end of the day. The Chartered Institute of Public Finance and Accountancy made an independent Report and recommendations on this subject. We know that the Government have set up an inter-departmental working party, but why cannot they now accept the main recommendations in that Report and have open competition, proper accounting and separate trading and profit and loss accounts so that everyone can see whether the operation is running properly? We are all supposed to believe in open Government, and the same considerations should apply to local authorities running direct labour departments.
A number of Conservative-controlled local authorities have responded to my invitation to accept the CIPFA Report, and I hope that Labour-controlled local authorities will do the same. Hope springs eternal, and I hope that even now the Secretary of State will endorse the main recommendations of the CIPFA Report without prejudging what may come out of the proceedings that he has set in train. I hope that the Minister who replies to the debate will give us that endorsement.
A number of ideas have been put forward on the general question of policy for the future of local government finance. I find myself in considerable sympathy
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with my right hon. Friend the Member for Crosby and the hon. Member for Islington, South and Finsbury in their criticism that this is a crazy way in which to discuss the expenditure of great sums of money and when they ask why there is so much secrecy. Is it not possible to have a Select Committee of the House, be it a Sub-Committee of the Expenditure Committee or some other Committee, to look into these matters before they are debated? That would need to be thought through, but at this moment both my hon. Friend and I are in fairly considerable sympathy with these proposals.
I believe that the House as a whole thinks that the time is coming when we shall not be able to go on having just this one debate a year—at least we had the papers a few days before hand, rather than on the morning of the debate itself—after which we all forget about local government finance until the next year, while the officials of the local authority associations beaver away for the next instalment. We must change that, and in that respect these suggestions are valuable.
There is concern about the rating system, although some hon. Members felt that it was a good system. I do not share their enthusiasm for it. Equally, we are concerned about curbing overall expenditure. Local government expenditure now accounts for nearly a third of public expenditure. No Chancellor of the Exchequer can give an open-ended commitment on this front.
Similarly, we should not only be looking at how we can curb overall expenditure but at the same time giving a genuinely greater freedom to local authorities. One example that I have been given which the Secretary of State, too, must have heard is that even on minor matters like home improvement schemes, the councils pore over details, so do his officials, and they go backwards and forwards with an enormous waste of time and effort and massive duplication. We should look at every statute which lays duties on local authorities and ask ourselves whether this is now necessary or shall we give them more power and trust than we have before.
When will Layfield report? We were told that it would be early in the New Year. That is fine, but when will the general public and hon. Members be able

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to see that Report? The Secretary of State may get the Report in January, but if he hangs on to it for two or three months, it could be Easter or Whitsun before the public see it. A more precise date would be helpful.
Reform is in the air on local government finance, on the controls of expenditure, on new methods of revenue raising, on new calculations on the formula from central Government, on local government help and certainly on a more open way of making these calculations known and on a better way for this House to monitor these affairs. I welcome that very much.
As several hon. Members have said, this settlement may result in the unemployment of teachers. Figures of up to 10,000, including those trained teachers unable to enter the profession, have been bandied about. Presumably some research has been done by the Department of Education and Science and it would be helpful to know what it is.
One of the ideas for local authorities to save money is to increase the trade charges for refuse collection. One could argue that traders already pay considerably higher rates than domestic ratepayers, yet the latter get their refuse collection free. But what about commercial organisations competing with local authorities, as happens to good effect in the United States and Germany? Are the Government's minds closed to that idea, which at least would monitor the efficiency of local authority refuse collection?
Another suggestion is that part of the burden of maintenance should be passed on to council house tenants. Why not pass on the whole burden and encourage councils to sell their houses to tenants, where appropriate? This surely is an extension of the Government's own suggestion.
I reinforce the question the hon. Member for Stoke-on-Trent, South asked, namely, does the Secretary of State expect that newly-built schools, old peoples' homes, community centres and other local authority buildings will be unable to open as a result of this settlement? If so, are there ideas for ensuring that the buildings do not stand empty and idle? After the settlement is it possible for the Secretary of State to say whether the demostic rate bill as a proportion of average earnings will be higher outside
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London than in London? The hon. Member for Woolwich, East (Mr. Cartwright) raised this matter.
I understand that the Government are still using the 1971 census data to decide the distribution of the grant. All hon. Members hope that it will be possible to update the data sooner rather than later because clearly those figures are four or five years out of date and the whole situation has changed fairly dramatically since 1971.
On 21st November the Secretary of State was reported at, I presume, a Press conference as saying that he would be surprised if many authorities increased their rates by more than 25 per cent. He did not say that today, but I presume that it is still his view. If that is so, we shall have lower standards. The party may be over for local government and the country may have to face the hangover shortly. Until central Government are prepared to cut back on their staff, policies and programmes, they are not in the strongest position to put those views forward to local government. We still have a long way to go until central Government are prepared to do what they are telling local authorities they must do.
9.41 p.m.
The Secretary of State for Wales (Mr. John Morris): My hon. Friend the Member for Stoke-on-Trent, North (Mr. Forrester) summed up the debate when he said that we all agreed that there should be restraint, but we disagreed about particular restraints. This is what has happened throughout the debate. We have all agreed that there should be containment, but, when it comes to a particular issue—and I do not blame any hon. Member for this—we all have a particular hobby horse to ride and want to ensure that cuts or restraints do not affect it.
The hon. Member for Aylesbury (Mr. Raison) opened the debate for the Opposition with, if I may use as neutral a description as possible, a rather restrained speech. At the beginning of his remarks I was not sure whether he was taking the line that we were too tough or not tough enough. At the end of his speech I was not sure whether he was taking either of those two courses. Having listened carefully to him I was no wiser.
I do not want to do the hon. Gentleman any injustice, but at one point he

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seemed to attacking our housing provision and at another he seemed to imply that we were causing a reduction in housing expenditure. This continued throughout his speech—he was not sure on the one hand, whether we were profligate or, on the other hand, Scrooge-like. He seemed to impale himself on the fence of righteousness. He wanted to contain public expenditure, but he did not want the unpopularity that would come if he endorsed the level of rate support grant that we proposed. The posture was a painful one and did not carry the argument very far.
It would have been wiser, better and more statesmanlike if the Opposition had had the courage—that word has been bandied about from one side of the House to the other—to support what we are doing, to indicate that our suggestion is what the country can afford and that we are proposing the right balance. But, no, we had none of that. We had a speech from the hon. Gentleman which left us regrettably no wiser as to what stance the Opposition were taking. I quite understand why the hon. Gentleman said at the end of his speech that he could not recommend his right hon. and hon. Friends to vote against the proposal.
I turn to other issues raised in the debate. The hon. Member for Ashford (Mr. Speed) referred to the Layfield Report. It has already been indicated that the Government hope to receive that report early in the New Year. I assure the House and the hon. Gentleman that it will be published as soon as practicable after my right hon. Friend the Secretary of State has received it. We hope and intend that there will be no undue delay.
Mr. Raison: The other day we had an instructive experience of the way the Department of the Environment works. A report was completed by the Pilcher Committee on 12th August, a report about the commercial aspects of the Community Land Bill, and it was specifically completed in a hurry by 12th August so that it would be ready for the concluding stages of that Bill. It was not published until after the Bill was passed through Parliament. That was an absolute disgrace, and that is why we do not trust the Department.
Mr. Morris: I give an assurance to the House, and then I hear an hon. Member on the Opposition Front Bench say, from a sedentary position, "I do not believe it". I take that very much amiss, and in my short experience of the House I have never hitherto heard such a thing said from the Opposition Front Bench. However, we all live and learn in this world. The hon. Gentleman is responsible for his own words. I have given an assurance to the House, and I noticed that the hon. Member for Ashford seemed to nod in welcoming that assurance—a rather different attitude from that of his hon. Friend. I say no more about that.
The Order before us comes at a time of exceptional difficulty for local government and for the economy generally. Over recent years, there has been extremely rapid growth in expenditure by local government. This must be recognised, and our proposals come before the House in that context. As my right hon. Friend said in opening the debate, this growth has been a great deal faster, especially in some areas, than that of the economy as a whole, and if we forget those facts for one moment, we fail to understand the Order.
To say that, however, is by no means to say, as some commentators are altogether too ready to say, that local government has been profligate or irresponsible. On the contrary, I believe that, in general, the standards of financial responsibility which obtain in local government are commendably high, and, as the representatives of local government justly point out, the increase in local government expenditure is at least in part a necessary consequence of policies pursued by the central Government—the hon. Member for Ashford referred to this—which involve new duties and responsibilities for local authorities. This happens whichever political party is in power.
The period of rapid growth is now over, and the overriding need is to contain expenditure at its present levels. This process of containment itself presents formidable difficulties, not least the need for a rigorous and often painful reexamination of priorities. I am happy to add to my right hon. Friend's tribute to local authorities for the success they have already achieved this year in cutting the rate of growth of their expenditure by half. I shall come back to the figures later.

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As my right hon. Friend said, that achievement is something for which local government has not been given enough credit, and I hope that the commentators to whom I referred a moment ago will take due note of it. I am confident that local authorities will now set about completing that achievement by coming down to nil growth—in other words, a standstill in 1976–77.
My right hon. Friend referred also to the important rôle played this year by the Consultative Council for Local Government Finance. I, too, welcome this development. From what I have seen of its working, I am sure that we have here the makings of a much better mutual understanding between central and local government in the years to come than anything we have had in the past. I have its counterpart which works as a direct channel for me in communication with local authorities in Wales. I believe that these are important steps forward by which we can understand one another much better, seeing the needs of central Government, on the one hand, and where the priorities of local government lie, on the other.
Several of my hon. Friends, notably my hon. Friends the Members for Stoke-on-Trent, North and Stoke-on-Trent, South (Mr. Ashley), spoke of the needs of the disabled. My hon. Friend the Member for Stoke-on-Trent, South said that we should include a factor related to the number of disabled people on the register in the already complicated formulae for these settlements. We can certainly look at the matter again for 1977–78. There is always room for improvement in this very difficult formula. However, there are possible dangers. No doubt it would encourage authorities to keep their registers up to date, but I am not sure that they would always show the same zeal in removing from the register people who should no longer be there.
My hon. Friend also deplored the decrease in the weighting for elderly people living alone. We have now added several completely new indicators of social need—I shall not go through them at this late hour—and I can say that in total we have a better balanced and more comprehensive coverage of social needs. I do not take the dogmatic view that there is
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no room for improvement in the years ahead in what has always been a difficult matter—the drawing up of formulae that would meet as many contingencies as we should like.
The help given by the right hon. and learned Member for Hexham (Mr. Rippon) to urban areas was mentioned as if it had been an enormous achievement which put right all the difficulties of local government finance. It is true that the right hon. and learned Gentleman took steps to improve the needs element formula in its application to inner cities, but what he gave with one hand he took away with the other by his extraordinary proposal for a variable domestic relief scheme which would have deprived inner city householders of the whole benefit of the changes in the needs element. It is no wonder that we could not go on with that.
The hon. Member for Aylesbury mentioned the view of the Association of District Councils that a share of the needs element should be paid to the non-metropolitan districts. If he had carried his studies a little further and had bothered to ask the Association of County Councils for its view, he would have discovered that it was strongly opposed to the idea. The fact is that this is an issue on which local government opinion is, not unnaturally, deeply divided—and not on party lines. My right hon. Friend therefore decided that it would be wrong to make any change in the payment procedure, which has been used for the past few years, a matter of some weeks before the Layfield Committee is to report.
Mr. George Cunningham: Will my right hon. and learned Friend draw to my right hon. Friend's attention the fact that boroughs within London are likely to be divided in that kind of way, and that it is appropriate to hold up any further redistribution between inner and outer London just a few weeks before the Layfield Committee reports on the basis he has just mentioned?
Mr. Morris: My right hon. Friend has heard those remarks. It is a question of the need to pay the money.
I turn to the observations by the hon. Members for Aylesbury and Ludlow (Mr. More) on the needs of growth areas and new town areas. The counties concerned

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are discussing with my right hon. Friend the Minister for Planning and Local Government whether there is a case for a special contribution from the Exchequer under the New Towns Act. We are not yet persuaded of the existence of any undue extra burden. There is nothing exceptional about the level of rates levied in those areas, even if they have gone up sharply in recent years. The discussions are continuing. I would have expected a more generous response from Conservative Members to the inclusion, for the first time, of a formula relating to new housing stocks. It will not revolutionise the finances of the areas concerned, but the authorities will be better off than they would have been without the change.
We have been asked whether inflation is allowed for in the Order. The main Order is based on November 1975 prices. Wage and other cost increases that occur later will be covered up to the cash limit in the later increase order for 1976–77.
I tried to follow the last few remarks of the hon. Member for Ashford on cash limits. I tried to follow his arithmetic as best as I could. Perhaps I was not all that successful. If I have not been successful, I blame myself rather than the hon. Gentleman. I cannot accept what the hon. Gentleman was seeking to put before the House.
I can assist to the extent of saying that the cash limit calculation of £480 million includes an assumption on pay increases after the present incomes policy comes to an end in August 1976. Pay increases which do not start until after August 1976 will not have much of an effect on the total cash limit figure. The assumption made about pay increases after August 1976 is that the increases will be between 5 per cent. and 10 per cent. We cannot say now what that will mean in terms of a money rate increase. I do not think that I can add to the hon. Gentleman's assumption or comment on the way in which he put his case.
Accusations have been bandied about regarding responsibility for local government expenditure in the past few years. The House should note when the increases occurred. In 1971–72 the increase over The previous year was 4·9 per cent. In
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1972–93 there was an increase of 8 per cent. The increase for 1973–740 was 8·8 per cent. and in 1974–75 it was 10 per cent. We estimate that the increase for 1975–76 will be approximately 6 per cent. That is an indication of what has been achieved. The figures I have quoted indicate when the rising trend took place and who was responsible for it. I hope that those figures deal with the issue of responsibility once and for all.
The hon. Member for Aylesbury asked about the increased provision for town and country planning, an increase of about 2 per cent. I can assure the hon. Gentleman that it has nothing to do with the Community Land Act. The cost of that Act is not relevant expenditure. It does not receive rate support grant, and my right hon. Friend the Secretary of State for the Environment has already made it clear where we stand on that Act. I believe that the hon. Gentleman has tabled a question on this issue. Perhaps he has not yet received his Written Answer.
Mr. Raison: Will the right hon. and learned Gentleman explain how an increase from £139 million to £201 million can be 2 per cent?
Mr. Morris: I have some figures which have been prepared for me. The outturn for 1975–76 is £196 million. For 1976–77 the RSG settlement is £201. That explains the 2 per cent. Perhaps Opposition Members will laugh on the other side of their faces when they examine the figures I have put before the House.
Mr. Graham Page: The figure in the previous rate support grant was £139 million and it is now £201 million. The outturn, as the right hon. and learned Gentleman has said, is £196 million. How can he explain the large increase between £139 million and £196 million?
Mr. Morris: I can give the right hon. Gentleman an assurance that the figures I am giving compare like with like. My right hon. Friend is, perhaps, trying to meet the problem in a different way with the figures he has given. If I am wrong, I shall be the first to correct my error. The increase is minimal, about 2 per cent.
Mr. Rees-Davies: One important matter raised by the right hon. Member for Dartford (Mr. Irving) was that of

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fares concessions for old people. Does the Minister intend to deal with whether we might be able to even out the concession and subsidies for old-age pensioners? The concessions are so much larger in London than in Kent and other counties. What is the Government's attitude towards ensuring that there is a levelling-out of these concessions, which would be of the greatest importance to old people?
Mr. Morris: This is a question of great importance in many parts of the country, which are at different stages in the development of concessionary fares. I attach great importance to this subject, for I was one of the architects of the Transport Act 1968, which removed a host of anomalies surrounding the issue. As we all know, concessionary fare schemes had been growing rapidly but, because of financial considerations, there has recently been no room for expansion. I hope that when we leave this period—when there is not such pressure on public expenditure—we can approach this subject in a new light.
There is a Scottish debate to follow and in fairness to my Scottish colleagues I will not take up more of the time of the House save to say that last year we had a discussion about super-sparsity and sparsity. I hear that in my absence tonight the hon. Member for Caernarvon (Mr. Wigley) raised the subject. No doubt he will have noticed that there is no super-sparsity in the 1976–77 formula. He will also have noticed that next year authorities will get £2·18 for every acre in excess of 1·5 per head of population instead of only 63p as in 1975–76. This has been generally welcomed. The overwhelming
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number of counties benefit substantially from it.
I emphasise a point made by those with long experience of local government—namely, that local government is not merely a machine for providing services. Rather it is the embodiment of a living democratic institution in an era when such institutions are under considerable pressure. I believe, as do my right hon. and hon. Friends, in the importance of the British local authority—
Mrs. Knight rose—
Mr. Morris: I know what subject the hon. Lady wishes to raise. The circular about which she is anxious cannot be issued until the House has approved the Orders. We hope to issue it shortly after Christmas. It will give guidance about the rising fives, which the hon. Lady mentioned, as did my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker).
In enabling local government to face these stresses, the rate support grant settlement is soundly and fairly designed to meet the needs both of local government and of public expenditure policy as a whole. I commend the Orders to the House.
Question put and agreed to.
Resolved,
That the Rate Support Grant Order 1975, a copy of which was laid before this House on 5th December, be approved.
Resolved,
That the Rate Support Grant (Increase) (No. 2) Order 1975, a copy of which was laid before this House on 5th December, be approved—[Mr. Crosland.]

RATE SUPPORT GRANT (SCOTLAND)
10.5 p.m.
The Secretary of State for Scotland (Mr. William Ross): I beg to move,
That the Rate Support Grant (Scotland) (No. 2) Order 1975, a copy of which was laid before this House on 4th December, be approved.
The Order which is before the House for approval is of considerable significance for Scottish local authorities and ratepayers. It makes unprecedented amounts of Exchequer grant available to the authorities and, at the same time, raises serious questions about local authority spending which I shall develop in my speech. A new feature of the Order is that it combines an increase Order for the current year's grant, that is, 1975–76, with a main Order for 1976–77. This becomes possible because of changes brought in by the Local Government (Scotland) Act 1975.
The main features of the Order are described in the Report—House of Commons Paper 17—which accompanies the Order. The tables at the end of the Report show clearly how the revised amount of grant for 1975–76 and the proposed grant for 1976–77 have been arrived at.
Perhaps I may start my commentary by recalling last year's rate support grant settlement. Notwithstanding reservations expressed by the local authorities about some aspects of the settlement, it was universally agreed to be generous in the circumstances. It was an agreed settlement. The object was to get the new local government system off the ground, and a liberal view was taken of the grants necessary to meet the extra demands which reorganisation was placing upon the new regional, district and islands councils. This year "generous" is not the keynote of the settlement. The right term to describe it may well be "tough".
The background is, of course, the present severe economic climate which affects every sector of our national life. The implications for the public sector and local authorities are summarised in paragraph 5 of the Report. The demands made upon the national resources by public authorities must be reduced drastically over the next few years if we are
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to achieve the required shift into exports and investment.
Let us not underestimate the amount of the claim upon our resources. Relevant expenditure amounts to about £1,200 million for Scotland—a considerable sum. So restraint on spending by local authorities in the years ahead has to be of a stringency hitherto unheard of, certainly in recent times. That is necessary in the interests both of Government and of ratepayers. We have to try to keep down the level of expenditure and the level of the rates.
The 1976–77 settlement involves setting a level of relevant expenditure lower than authorities would have wished, recognising that keeping to this level will lead to keeping rates increases within bounds. It is the only way.
May I take first the target of expenditure? As is explained in paragraph 7 of the Report, the estimate of reckonable expenditure—excluding loan charges—made for the purposes of last year's settlement, and therefore at November 1974 prices was £654 million for the financial year 1975–76 lasting only 104 months because of the changes in the financial year brought about by the Local Government (Scotland) Act. That is equivalent to £746 million for 12 months.
This £746 million was not considered at the time to be a low figure, and it allowed for measurable growth in local authority services. But what happened in the event? The target level was left completely behind, with budgeted income for 1975–76 equivalent to an annual expenditure of £810 million. That is about 8½ per cent. in excess of the target.
There are several factors which could have contributed to this situation. The new local authorities faced difficulties in drawing up their budgets, through uncertainty about the balances they were taking over, and having to determine their rates at short notice, and at a time of high inflation. These factors were referred to by my right hon. Friend the Minister of State in the Scottish Grand Committee debate on 1st July, when he pointed out that by severe restraint it would be possible to ensure that not all the £810 million which had been budgeted for would actually be spent.

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He referred then to the message ht ilad already given to local authorities that, if expenditure in the current year was excessive, it would make the task of the authorities in 1976–77 even more' difficult.
In the event, I have allowed a higher figure of relevant expenditure for 1976–77 than was planned following the April Budget. The figure, as explained in paragraph 9 of the report, is £780 million at November 1974 prices. Of course, there is a very substantial addition to this to bring the figure up to November 1975 prices and to take account of loan charges, so that the actual reckonablt expenditure on which grant is to be computed will be £1,200 million.
Even so, it allows for no increase in spending in real terms. The Convention of Scottish Local Authorities agrees with us on the principle that, having regard to the huge growth in 1975–76, the rate of expenditure should not be allowed to grow further in 1976–77. There is only a small difference between us—just about 1 per cent.—as to the figure that should be taken as the amount of relevant expenditure. No one must be in any doubt that the situation is now so tight that any authority which exceeds its share of the relevant expenditure will be doing so at the peril of the ratepayers.
As regards what is each authority's share, the Government will be issuing guidance in the course of this week. Of course, the guidelines are not sacrosanct, and the authorities concerned can discuss them with the Scottish Office. But they do provide a basis against which the spending plans of individual authorities for 1976–77 can be judged, and if necessary trimmed back, and it is important for authorities to use them in this way instead of settling their budgets without reference to the overall limitation of expenditure which is so essential at present.
I accept that the effect of the settlement will be severe so far as local authority expenditure is concerned. It may be asked why, in those circumstances, the Scottish Office has not given specific guidance about the policies that should be followed in each of the local government services, in order to achieve economies. In a sense, we have given such advice and paragraphs 13 to 18 of the
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Report indicate the kinds of measures which we think will have to be taken. But we have refrained from going into detail, because the Convention has asked us to leave the means of achieving the savings to individual local authorities. I agree with this approach.
In some services there will have to be painful cut-backs, but priorities vary from one area to another and the final pattern can only be decided locally. Moreover, there may well be savings that are achieved not by restraint but by greater efficiency. It is to be hoped that the situation will act as a spur to authorities to seek better value for the same money or even for less money. The Convention's plea to me—and it could have been made to hon. Members as well—was that the Government should take care not to exert pressure upon local authorities to expand services at this time, in any field. Of course I accept this unreservedly. My officials understand this, but I am taking steps to reinforce the message.
Let me turn now to the effect of the settlement on the rates. Rate increases in 1975–76 have been shattering. They were fully discussed in the debate in Scottish Grand Committee on 1st July, when my right hon. Friend announced that the increases looked like averaging 30 per cent. for the 10½ months year, equivalent to 50 per cent. for a full year. This remains the best estimate that can be made. There are, of course, various factors at work affecting rates rises in particular areas. There have been very high increases where balances had been used to keep the previous year's rates to a particularly low level.
There is, however, no evidence that the Government got their sums wrong in working out the rate support grant settlement last year. The principal cause of the general rise in rates was overbudgeting, and this was a feature in almost every authority.
The same thing must not happen again in 1976–77. The new authorities are now in a more secure position than they were last May. They know how much their services cost to run. They may, because of overbudgeting, have some balances to cushion them. They have an assurance that the grant rate, as provided for in this Order, will be maintained. But if spending goes over the top—and the only people responsible for this and who can

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fully control it are the local authorities themselves—it will reflect directly and savagely on the rates.
Over the next few years we must all of us accustom ourselves to a regime of strict discipline. With local authorities the discipline has to apply not just to budgeting and rate-fixing time but throughout the year. Cash limits, which we have introduced for the first time, reinforce this lesson. In a time of inflation, authorities need to maintain a watch not simply over the initial volume of resources committed for the year but over movements of prices during the year, just as any business undertaking must unless it is to have a deficit at the year's end.
In the past, increase Orders on the rate support grant have tended to insulate local authorities from the effects of price movements, especially with grant at the high percentage which it has now reached. There is the feeling that the Government will make up inflationary costs as we go along. But the cash limit changes that. It means that the Government make a realistic assumption about pay and price rises in the course of the coming year and fix a limit to the grant accordingly.
Mr. Teddy Taylor: I have carefully read the reference to cash limits on page 9 of the White Paper. It mentions inflation after the Government's policy for pay and prices. Will the right hon. Gentleman tell us what is not stated in the White Paper—what rate of inflation has the Secretary of State taken into account in calculating the figure of £55 million for cash limits?
Mr. Ross: Roughly speaking, we start on the basis of the £6-a-week pay awards up to July. On prices we have taken the average price increases during 1976–77 as likely to be about 7·5 per cent. to 9 per cent. above those for November 1975.
As is explained in paragraph 30 of the Report, the limit for 1976–77 is determined at £55 million of a total rate support grant of £823 million. I hope that the hon. Member will not give indications to local authorities that they should budget for even more. If he does he cannot complain if rates go up, because rates are based on the budget. This follows very careful calculations of the effects of pay and price rises already in
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the pipeline and likely to come into effect during 1976–77.
That is not the whole story. Cash limits on grant will have the desired effect only if local authorities do two things. First, they must adopt similar assumptions about inflation when drawing up their own budgets and beware of the danger of the approach of the hon. Member for Glasgow, Cathcart (Mr. Taylor). We have been encouraged by the extent to which this seems to be happening. Secondly, they must monitor expenditure constantly so that, whatever happens, they do not overspend.
The effect of the grant settlement is summarised in paragraphs 20 and 21 and Appendices E and F to the Report. Provided that local authorities do what is asked of them, the proposed settlement, which provides grant totalling £884 million, should enable rate rises next year to be kept within modest dimensions.
For the distribution of grant in 1976–77, our proposals follow last year's very closely. Appendix E shows that £43 million has been reserved for the domestic element, enabling relief of 27p in the pound to be given to domestic rate poundages.
In the distribution of the needs element, which is provided for in the schedule to the Order, we have, in accordance with local authority advice, proposed only cautious changes from the current year's distribution to avoid further uncertainty and upset for local authorities' budgets. We made provision for £6 million last year for those local authorities who would be detrimentally affected by the reorganisation of local government. This year we have tapered it and £3 million is being allocated for that purpose.
I am aware that there is unrest in some quarters over the absence from the formula of objective factors determining the distribution of grant to the districts. Any radical changes in this respect must, however, be deferred to 1977–78. Meantime, there will be a thorough examination to determine what the problems are and how they can best be overcome. I repeat the warning that I gave last Scottish Question Time, that it is not easy to find a solution to this problem and isolate the objective factors that cover all districts. No doubt hon. Members will have constituency points to raise on the distribution and my right hon. Friend

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the Minister of State will deal with these when replying to the debate.
I commend the Order to the House as a measure which is in tune with the needs both of the national economy and of the ratepayers for 1976–77. It has not proved to be one of the easier settlements with which I have been concerned, but it has been developed in very thorough consultation with the Convention and there has been substantial agreement on the main principles involved. In fact, over the past year, one of the most satisfying developments that I have witnessed has been the regular, frank and productive contact I have enjoyed with the Convention of Scottish Local Authorities. This is something that we must build on in the difficult times ahead.
10.22 p.m.
Mr. Alick Buchanan-Smith: Normally when we debate the rate support grant the Secretary of State for Scotland tells us how generous the Government are being towards Scottish local authorities and how much money he has got from the Treasury for Scotland. In contrast with earlier debates, this is a very much more sombre and serious occasion. His speech was marked with calls for discipline and for strict control of expenditure, and calls for the ratepayers of Scotland to be prepared to accept cut-backs in the services that they enjoy.
I think the right hon. Gentleman is right to be realistic and I do not criticise him for that. The first and foremost task of any Government at the present time is to get the economy straight. But we cannot do that or get back on the road to prosperity unless we have discipline in public expenditure. To that extent I commend the Secretary of State for what he said. I also commend him for his realism, for once, in moving this Order. Tonight he has accepted more than during any Question Time, or in any other debates, the true effects of increased local government costs and the hammering which ratepayers have received over the last year.
The right hon. Gentleman referred to the rate increases as "shattering", and we agree with that word. On 10th December he told my hon. Friend the Member for Glasgow, Cathcart (Mr. Taylor) that the average rate burden per
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household per month had increased to £10 a month in 1975–76 compared with £6·90 in 1974–75, with £5·90 in 1973–74, and with £5·50 in 1972–73. He was right to use the word "shattering".
What may of us also find shattering is the relative complacency of the Labour Party in face of these dramatic increases. A Labour Party political broadcast on 29th April said:
"Average Scottish householders pay about £150 a year in rates. It is not very much, is it?"
I think it is very much. The right hon. Gentleman has now admitted as much. It is cynical to say such things in a party political broadcast when the ratepayers have been hammered so much.
A great deal of the increases is not due to increased services but is a direct consequence of the inflation this country is suffering in common with others. The Government must take some responsibility for the degree of inflation. In the last General Election campaign the Chancellor of the Exchequer spoke of a rate of inflation of about 8 per cent. but subsequent figures showed that it was very much higher. The failure of the Government to control inflation perhaps more than any other single factor is responsible for the higher rates, and the blame lies fairly and squarely on the Government for failing to manage the economy properly.
In the assumptions on which the order is based, is the right hon. Gentleman allowing sufficiently for the normal tasks of local government even giving the stringency he suggests? I believe that economies have to be made, but they must be sensible economies, fairly applied and in the right areas. One must be straightforward with the public about them. Economies must be based on realistic assumptions of what the local authorities and the ratepayers have to face. Are the assumptions on which the Order is based realistic and correct?
Subject to certain conditions, I believe that if we are to control public expenditure, cash limits is one way of doing it. But the cash limit of £55 million in the Order seems to assume an inflation rate of about 61 per cent., assuming that the £55 million extra has some relation to the expected rate of inflation. The right hon. Gentleman has suggested

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that the price inflation the Government have in mind is 7½ to 9 per cent. He therefore has in mind a rate of price inflation which seems to be in excess of that which underlies the £55 million cash limit.
Even if those two figures do not bear a strict relationship, it is even more disturbing to look at the actual rate of inflation during the six months to November of this year, because it was running at 14·9 per cent. That is why I ask again whether the cash limit of £55 million, indicating an underlying assumption of an inflation rate of only 6·5 per cent., is realistic, given the present rate of inflation.
Another factor giving me cause for concern is that the £6 pay limit runs out in July 1976, and we do not know what will happen afterwards. I hope that the country shares the optimism of the Secretary of State about a future pay policy and that, when the present £6 pay limit runs out, wage increases will be contained within the 6·5 per cent. inflation rate underlying the Government's estimates.
Then I remind the House that cost increases for 1975–76 seem to be about 23 per cent. In addition to price increases, that figure takes account of some increases in services. Therefore, given first the rate of price and wage inflation and, second, increases in services, I question whether the assumptions underlying this grant are realistic and will turn out to be correct.
I hope that the right hon. Gentleman does not think that I am toying with statistics, because I assure him that I am not. I said just now that I supported cash limits. If we are to be serious about public expenditure, they are one way of helping to bring it under control. But if the right hon. Gentleman is serious about cash limits, presumably he will hold to them. The problem is that, if inflation goes ahead at a higher rate than appears to be assumed in the Government's calculations and the right hon. Gentleman is not prepared to increase the cash limits, the burden of the increased inflation will fall entirely on the ratepayers. If the Government fail in this direction, for reasons totally without the control of the local authorities and much more related
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to how successful the Government are in managing our economic affairs, it is the ratepayers who will suffer.
In the circumstances that I have described, any increase above the cash limits will fall on the rates. But, bearing in mind that under the rate support grant formula ratepayers are responsible for only about 25 per cent. of the total revenue expenditure of local authorities, if there is expenditure in excess of the cash limits, the ratepayers will be responsible for it 100 per cent. Therefore, for every 1 per cent. increase in inflation, an additional 4 per cent. increase will fall on the rates.
I believe that some of the Government's assumptions could easily be wrong. They are based on far too optimistic an outlook of the way in which the economy is likely to run in the period ahead. The ratepayers of Scotland could be in for a very hard time—possibly as hard a time as they experienced over the past year.
I re-emphasise that there has to be economy. We must see economy in public expenditure and public administration at all levels.
Let us examine the administrative costs of local authorities in Scotland. I am not at present especially concerned with what happened after local authority reorganisation, but I shall come to that later. I should like to refer to the Annual Rating Review of the Chartered Institute of Public Finance and Accountancy. From that publication it appears that the average administrative cost per head of population across all the Scottish local authorities is about £4·58 per head. If that is the average, it is interesting to see how much better other authorities are doing, and to express the hope that through economy of administration the local authorities which are not performing administratively so well will mark up towards the standard of the best.
I take pride in the fact that the two regional authorities in my constituency, Tayside and Grampian, come top of the list. Compared with a national average of £4·58 per head of population, Tayside turns in an administrative cost of £2·66 and Grampian £2·67. That demonstrates how in some regions of Scotland the costs per head are much higher than in others. Of course, in some areas, such as the Highland Region, the cost is as high as £10, but one accepts that there will be

1109
higher relative costs in some areas. However, I hope that in some areas in central Scotland economies can still be made so that other local authorities can try to mark up to the standard set by the Tayside and Grampian Regions.
I hesitate to make party political points in a debate of this nature, but I draw to hon. Members' attention that the controlling party in the Tayside and Grampian Regions is the Conservative Party. That shows that to have Conservative local government is to have good housekeeping. The two go together. I hope that other Scottish authorities will mark up to the standard set by the Tayside and Grampian Regions and have good control over the management and economy of their authorities.
When the Minister of State wound up the debate on 28th January, as reported at column 346 he seemed to shrug off the fear which many of us had regarding extravagancies which were claimed for the new authorities. There are tremendous differences between areas of Scotland. Some can be quite well explained and others not so well.
I hope that when the Minister winds up the debate he will not talk in terms of generalities. I appreciate that 11 months ago it was difficult to do otherwise. I hope that the Minister will say whether he is still as optimistic this year as he was last year that certain extravagances were not taking place and that the process was carried out efficiently.
I should like to refer to the guidance given to local authorities about the kinds of economy which they can make. The right hon. Gentleman told us that the Convention did not want specific guidance. I appreciate his desire to give a certain amount of discretion to local authorities to decide how their policies are applied. At the same time he has talked in terms of strict discipline. I feel that his guidance, despite the circulars which have been issued, might be more specific than appears in paras. 14 to 18. Paragraph 15 talks about compensating savings. Paragraph 17 talks about continuing passenger transport services at about the present level. Is that in real terms or money terms? If it is in money terms, it means a falling off of transport services.
In paragraph 18 there is reference to the slowing down of expansion arising
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from the reorganisation of local government. I should like to know more specifically what is meant by the general phrases outlined in this paper.
Finally, I turn to rural areas. There is probably almost more concern in rural than in other areas. I can illustrate this point in two ways. First, there is concern about the formula for distribution. Underlying the whole of local government reorganisation was the hope of evening out the differences between urban and rural areas, and allowance for moving towards that hope was made in last year's Rate Support Grant Order and is made in this Order. But I wonder whether we are trying to move too fast. One need look only at the questions asked by my hon. Friend the Member for Bute and North Ayrshire (Mr. Conic) on 1st August as reported in column 673 onwards, and the answers he was given to see that high rate increases would be faced by people in rural areas. I understand the objective to which the Secretary of State is moving, but I must ask whether we are moving towards it too fast.
Secondly, I am worried about the transport situation in rural areas. I believe that local authorities are paying subsidies of about £6 million on 300 bus routes in Scotland. If the Scottish Transport Group and other bus companies are to maintain proper transport services in rural areas, more rather than less money will have to be devoted to them. Fares have gone up by 30 per cent. Add to that other costs which bear heavily on country areas—postage, telephones, fuel, and so on—and we can begin to appreciate the problems facing people in those areas. The kind of comment that I hear in rural areas with transport problems, and so on, is that people are seeing a levelling down of services but a levelling up of rates. This is a matter of considerable concern to the people in rural areas.
I believe that the Secretary of State is trying to be brave in controlling Government expenditure by urging economies—
Mr. George Thompson: Will the hon. Gentleman give way?
Mr. Buchanan-Smith: No. This is a short debate. There will be an opportunity for other hon. Members to speak. I am just about to finish.

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I believe that the right hon. Gentleman is trying to be realistic in urging local authorities to be more careful about their expenditure. At the same time, the Order must be criticised because the assumptions on which it is based are unrealistic. To that extent I believe that local authorities, and eventually ratepayers, may be misled into thinking that things are not as bad as in fact they are, only to find that they turn out to be worse. This situation is the result of the Government's failure to manage our economy properly. Therefore, the responsibility for the problems facing ratepayers rests firmly with the Government.
10.44 p.m.
Mr. Iain MacCormick: I am sure that the Secretary of State would be insulted if I said that I did not propose to criticise him.
The hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) talked at some length about statistics. The one statistic of the debate that impinges on my mind is that he spoke for 20 minutes and said almost nothing. He said almost nothing because he was trying to defend the indefensible. The hon. Gentleman was trying to defend a framework which he and his colleagues set up and within which the unfortunate Secretary of State for Scotland is now having to work.
All of us must be aware that these days there is an almost national feeling of uproar about the increases in rates that people all over the country are being forced to pay. Indeed, it was not so long ago that we had representatives from ratepayers' associations in Scotland down here spelling out their message and telling us that is was impossible for them to meet the new burdens being placed upon them. I am sure that there cannot be a Member present who does not agree that the increases have been shattering. I spent most of my Summer Recess going round every village in Argyll. People cited instances to show what they thought of the local government set-up and how they viewed the rate increases that were to come mainly as a result of the machinations of members of the Conservative Party over the years prior to their fortunate demise from power.
Mr. Hamish Gray: I hope that the hon. Gentleman
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was fair enough to point out to his constituents in the villages that he visited that the leader of his party did not vote against the Bill when it went through Parliament.
Mr. MacCormick: I hope that the hon. Gentleman is careful to point out that at least one reason why my hon. Friend the Member for the Western Isles (Mr. Stewart) was not as adamant as I was in his opposition to the Bill was that he was able to wrest from the grasping Conservatives the privilege in the Western Isles of an all-purpose authority which we in Argyll regrettably failed to get. However, enough of that.
If we are thinking in terms of the Order, we ought to be thinking of the role of the Government in two ways. First, we have to turn our attention to the whole framework of local government. I am sure that no one in the House would seriously claim that the reorganisation of local government has not played a most important part in what is happening in Scotland now and, indeed, in the dissatisfaction of the people there, whether they live in a council house, on a farm, or in an ordinary private house. Clearly, the Government have a role to play, and they cannot escape from their complicity in the creation of a system of local government that does not fit in with how our people feel, or into the framework in which they have to live.
Secondly, I do not think that the Government—and here my criticism is perhaps rather muted—can escape responsibility for the way in which the rate suppport grant is allocated between district and regional councils. I do not think that one can talk seriously about disputes between district and regional councils unless one considers the basic mistake, which was the original division of responsibility between district and regional councils.
The other day I was reading the debates on the subject of local government that took place before I became a Member, and I was impressed by the fact that certain hon. Members saw Argyll, or the islands of Argyll, as closely connected in terms of problems and geography with other areas of Scotland that had become all-purpose authorities. I have always thought that Argyll, where

1113
many parts of the mainland are virtually islands, ought to have been an all-purpose authority on its own. I shall return to that theme later in a sense that will scarcely please the principal Opposition party.
The districts are the areas that impinge most upon the lives of ordinary people. The most important aspects are the anomalies that arise in these areas. Before the reorganisation of local government, the people of Argyll paid a variety of different rates because they had a variety of different amenities and services provided in the different communities. I have received letters from all over Argyll about the effects of the present rates.
I have here a letter from the Seil and Easdale Islands Residents Association, which says:
"We do not receive sewerage or lighting and the standard of roads is totally inadequate for the volume of traffic they carry."
I have also a letter from a gentleman who farms in the Isle of Shuna. He has to pay not only for sewerage and lighting that he does not have but for roads that he makes himself—and he does not even have a ferry service on which he can rely. But he is being forced to pay the same rates as anyone else in the district and the region.
Mr. Harry Gourlay: Surely the hon. Gentleman is not saying that people should pay only for the services of which they get the benefit. I have no family yet I pay for education, which is probably the main burden on the rates in Kirkcaldy. I do not use the library and I probably use less water than other people, yet the same applies. I hope that the SNP is not advocating the reverse.
Mr. MacCormick: Far be it from me to suggest that the hon. Member washes less often than other people. Far be it from me also not to thank him for helping to support my large family. But the point is that democracy should mean small individual authorities deciding on what they want through elected representatives and then deciding what the price for those services should be. If some authorities want to be lavish, let them go ahead, but that does not alter the argument.
Mr. Thompson: I have no desire to hold up the spate of Argyll rhetoric—in
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fact, I would urge it on—but would not my hon. Friend accept that in areas like Dumfries and Galloway exactly the same feelings are being manifested? Would he not further agree—
Mr. Deputy Speaker (Mr. George Thomas): Long interventions in a debate which can go on for only about another 40 minutes are not too helpful when several hon. Members still wish to speak.
Mr. Thompson: In that case I shall not continue.
Mr. MacCormick: I sympathise with my hon. Friend, who has made his point so clearly.
The picture has been clearly painted by the Secretary of State and quite unclearly by the hon. Member for North Angus and Mearns—a picture the local government set-up accepted unwillingly by the Labour Party and put forward by the Conservative Party with such enthusiasm only two years ago. I have here a letter on the official paper of the Scottish Conservative and Unionist Party, in which my prospective opponent in Argyll asks me to bring in a Private Member's Bill to stamp out the disgraceful legislation introduced in 1973 by the Conservative Party.
Anyone with any sense knows that that is not possible. But is it not disgraceful that a member of that party should be begging me to undo what his party did, and what, indeed, the previous Member for Argyll was chiefly responsible for—taking Argyll out of the Highland Region, where the Wheatley Commission recommended that it should go, and putting it in Strathclyde?
Mr. Malcolm Rifkind: Since the hon. Member has gained a high place in the Ballot for Private Members' Bills, why does he not bring in a Bill to give Argyll the local government system he believes it should have?
Mr. MacCormick: I am surprised to be asked a question such as that by the hon. Member for Edinburgh, Pentlands (Mr. Rifkind), because it is scarcely appropriate for an hon. Member to introduce a Bill that would have such huge financial implications. It is quite incredible that a Conservative Member should rise and ask me, a humble Back Bencher to undo what the great might

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and power of his own party perpetrated two and a half years ago.
10.55 p.m.
Mr. Robin F. Cook: I have this at least in common with the hon. Members for Glasgow, Cathcart (Mr. Taylor) and North Angus and Mearns (Mr. Buchanan-Smith)—I share their woeful confusion as to how the cash limit has been derived for these purposes. My right hon. Friend the Secretary of State said that the Government were taking an estimate of 7·5 per cent. to 9 per cent. inflation from 1976 to 1977. According to the White Paper "Attack on Inflation", we are anticipating reducing the rate of inflation to a single figure by the end of 1976. We shall have to reduce it far into single figures early in 1977 if we are to have an average rate of 7·5 per cent. over that year as a whole.
Moreover, my confusion has deepened because I heard the previous debate on the English rate support grant and if I understood my right hon. Friend the Secretary of State for the Environment correctly—and I may have misunderstood him, or he may have got it wrong—he claimed that the figure of 7·5 per cent. referred to inflation from November 1975, when the figure was struck, until March 1976, when the period begins.
Mr. William Ross: Yes.
Mr. Cook: I am grateful to my right hon. Friend for clarifying that point.
If that is the basis on which the cash limits were derived, I should be grateful if the Minister would indicate whether there is any room for increasing that cash limit in the light of inflation after March 1976. If it is the case that the cash limit will be permanent, irrespective of what happens to inflation after March 1976, we shall be in grave difficulties. There is little likelihood that local authorities will be able to cope within that cash limit if there is a greater rate of inflation than we now anticipate.
I dislike the idea of cash limits and I suspect that within the next 12 months they will be greatly discredited. The very first time a local authority is unable to open a new retirement home which it has built because of a cash limit, or the very first time a local authority closes
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down a community centre because it cannot staff it because of a cash limit, the whole idea will be widely discredited and unpopular. The gravamen of my remarks is directed to the fact that the figures before us will involve not simply nil growth, but in certain areas a cut in services.
It is a fact that the Scottish Convention of Local Authorities considers that the figures put forward in this Order will involve it on average in a reduction of services. However, even if it is wrong and the Government are correct, we shall have a nil growth in services on average. It is inescapable that in some services there will have to be an increase in expenditure. Some services already have inescapable commitments to expenditure. Therefore, there will have to be cuts in other services to make room for the increases.
I want to deal in particular with the consequences of such a cut in services in the Lothian Region. I have been supplied by the Lothian Regional Council with the documentation of the exercise it has gone through in the past month on what the level of the rate support grant will mean for the level of services within that region. I may sound critical of some of the proposals the region makes in these documents, but I wish to make it clear pathy with the Lothian Region in the position in which it is placed by the from the outset that I have great symgrant levels that have been set. It is making the best of bad job.
The hon. Member for North Angus and Mearns said that he would not seek to make party political points in the debate. Equally, neither shall I, but the thoughtful and considered response of the Labour administration of the Lothian Region contrasts sharply with the more brutal and atavistic response of the Conservative-controlled district council in Edinburgh, which has arbitrarily imposed a 33 per cent. cut on all capital projects, including housing projects, which are almost entirely financed out of Government funds.
The proposals by the Lothian Region involve a cut of about £4 million in expenditure over the coming year. Much of that cut will have a serious effect on the services that the region can supply. For instance, there is a cut of £75,000 in expenditure on cleansing, to be achieved

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entirely by a reduction in services. It is a cut of over 20 per cent. in the total level of expenditure on the service. I cannot but fear that the cut in standards will be disproportionately greater than the cut in expenditure. Those hon. Members who criticise local authorities for excessive and extravagent over-spending should remember that when we finally get down to cutting expenditure, one of the first consequences is that streets remain unswept for longer periods.
There is a proposed cut in the purchase of school books of 5 per cent. on money levels calculated in real terms. Allowing for the effect of inflation, that means a cut in real terms of 30 per cent. to 40 per cent. next year. In the coming year 30 per cent. to 40 per cent. fewer school books will be bought in the region. That will have inescapable, sharp consequences for the quality of the education service in the area.
What I find striking is not simply the serious effect of such cuts, but the fact that the savings effected at local level go against the very policies we are trying to follow at national level. My first example is community care. I was present for the debate on the rate support grant last year, when I heard a stirring speech on community care by my hon. Friend the Member for Glasgow, Queen's Park (Mr. McElhone), who has since moved to a more prominent position. In view of his elevation, it is perhaps timely to repeat what he said a year ago:
"It seems all too easy, when a person lives alone and becomes disabled, to place him in a geriatric unit. I prefer the provision of more community services, an extension of the home nursing service and the home help service."—[Official Report, 28th January 1975; Vol. 885, c. 300.]
In that he is very much in tune with current thinking on community care. I hope that that is the policy he will be pursuing in his Department.
When we come to the effect of a cutback in expenditure at local authority level, and particularly Circular 64, which suggests that local authorities should review the charges they make, we are at once faced with a potential increase in charges for community care services. For instance, in the Lothian Region there will be increased charges for meals on wheels of 66 per cent. and for home help of 33 per cent., in addition to a cut of £100,000
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in the money available for the home help service. The cuts can result only in less demand on the community care service, and in the fullness of time even greater demand on the institutional services, which can be provided only at even greater cost than if we were to meet the need within the community through community care.
The other area of contradiction between what we are trying to achieve nationally and what we can do locally is the fight against unemployment. Here contradictions abound. We are advising local education authorities to provide courses for unemployed youths, and yet the Lothian Region finds, because of the money made available to it, that it has to impose a policy of not filling staff vacancies in the further education service, and that severely limits its ability to provide further courses for unemployed youths. We have made available no less than £30 million through the job creation programme to encourage youths to work on environmental programmes to improve local areas. On the other hand, the cut-back in local authority funds will mean that the Lothian Region will be unable to maintain its cleansing standards. In addition, it will have to cut £50,000 from its budget for rehabilitating derelict land.
Perhaps worst of all, it is proposing to cancel the £500,000 which it would normally spend on contracts for road maintenance. I am very much inclined to query whether that is a prudent saving. The documents that have been prepared suggest that the present level of road maintenance in the region is the minimum necessary and that it is only just containing the situation. To cut back on the money spent on road maintenance will mean that in the medium term we shall be faced with considerable expenditure on repairs to make up the backlog on maintenance that should have been done on an on-going basis.
Whatever may be the long-term effect of this saving, the short-term result will be immediate and obvious—namely, greater unemployment. That will apply particularly in the construction industry. It already has one of the highest levels of unemployment within the region and, indeed, throughout the United Kingdom.
We now come to the nub of the problem. My right hon. Friend the Secretary of State said that it was necessary to have

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restraint so as to encourage resources to go into the export industries and investment. I accept those priorities. I accept the need to divert resources to both those areas of the economy. If it were the case that we were freeing urgently required resources and diverting them to other areas of the economy, I could see some sense in the restraints that we are seeking to impose on local authorities. If we had a dynamic, thrusting private industry which wanted construction plant to provide factories and wanted men currently employed sweeping roads to work in those factories, if it wanted more printing capacity so as to turn out school books, for example, I could see some sense in the cuts that will inevitably flow from the Order, but that is not the case.
When I look around the region, I see record unemployment. I see a record number of plants working at two-thirds, or three-quarters' capacity. If the resources currently employed by the Lothian Regional Council are freed, they will not be used by dynamic private industry. The result will be more unemployed men, more idle construction machinery.
When I see the many unemployed men in my area I find it hard to understand why we cannot find men to sweep the streets, or why, when many a printing press is running at half capacity, we cannot find the capacity to print the school books that are required. I am struck by the happy thought that the surplus capacity indicates that we have the resources to maintain the public services, and in so doing to carry through a modest reflation of the economy.
It may be that I am being far too simplistic. It may be that I have made some obvious and foolish error in my deductions. I do not know whether that is so, but I know that as the consequences of the cut-back in local authority services become more obvious to the ratepayers, more and more ordinary citizens and more and more of our supporters in the constituencies will ask the questions that I have been posing. I very much hope that my right hon. Friend will answer them tonight.
11.9 p.m.
Mr. Hector Monro: First, we should place on record that it is most unfortunate that every year the most important measure affecting Scotland has
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to be truncated into a one and a half hour debate. Few of us can develop the arguments that we should like to put forward. That criticism applies to all Governments over generations.
The debate on 4th December was a prelude to tonight's discussion. It was helpfully answered at short notice by the Under-Secretary of State for Scotland, the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing). On that occasion there was the conspicuous absence of the SNP. At least tonight it has decided to grace this important debate by its presence.
I am the first to agree with the right hon. Gentleman's stricutres on the importance of controlling local authority expenditure. Such expenditure must be kept to a minimum in the coming year. I feel that the right hon. Gentleman did not place sufficient emphasis on inflation. There is no doubt that inflation has been the principal cause of the staggering rise in rates in this financial year and will be the reason for further rises next year. It far exceeds in importance the problem of over-budgeting.
Does the Minister of State expect that from March 1976 onwards we shall have an inflationary rate of little more than 7 per cent. for the succeeding 12 months? I do not accept that. If these figures have been drawn up on that sort of budget, we shall inevitably be a long way out in 12 months' time, particularly bearing in mind the complete absence of information about what may happen to salaries and wages after next summer.
I accept that local authorities had a perfect right to run down their reserves to cushion rate increases in the past two years. This has, however, magnified the increase this year. I am critical of the distribution formula of the transitional grant award this year and that which is likely to be awarded under the order next year. The Government are open to severe criticism here.
My local authority of Dumfries and Galloway lost £2·75 million in the current year. Even allowing for the £750,000 transitional grant, the local authority is out of pocket by £2 million. This has had a significant effect on the rates levied in the area this year and on those to be levied next year. I argue the case not for more Government aid, but for a redistribution of what is available from the

1121
Government. If the Government will not think again about Dumfries and Galloway and other rural areas which have been placed in such an unfavourable position compared with the urban areas of central Scotland, they will lay themselves open to severe criticism. Unless the Government have second thoughts, rates will rise dramatically next year.
Even if there is a complete standstill on expenditure the regional rate in Dumfries and Galloway will rise by 40 per cent. Some ratepayers will be paying 450 per cent. more than they paid in 1974–75. I find it difficult to accept the proposition that there will be a complete standstill in developing services such as social work and in the emphasis which we all want to see in bringing employment to their areas by the regional authorities.
Why should residents in rural areas of Scotland be so harshly treated jus because they live in the countryside? I can only conclude that it is done for political reasons, so that those in urban areas do not pay so much. This is the second year in succession that this has happened. My hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) rightly said that in the countryside we had fewer services, additional costs, poorer road transport and the heavy burden of bus subsidies. There is also the prospect of rail services being cut yet again. In terms of amenity, we have much poorer television reception. All of these add up to general grievances to be set against rate increases. I hop-: that the Secretary of State will heed this warning from the rural areas tonight.
I accept that there must be restrictions on local authority expenditure, and it is right that restraint should be the order of the day. The rating review of 1975–76 highlights what various areas can achieve if they make an effort. The rate-borne expenditure per head in Scotland averages £56. In Dumfries and Galloway it is £3898. That shows that we are well down the expenditure league, in fact, eight out of 12 compared with other regional authorities. As my hon. Friend the Member for North Angus and Mearns said, it is the independent and Conservative-controlled authorities that have maintained their rate expenditure much better than those in the central belt of Scotland.
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I should have liked to speak about expenditure on roads, but there are only a few minutes left and two Front Bench speeches to come. In the outlying areas of Scotland the rate support grant formula leaves a great deal to be desired, and it costs the ratepayers dearly in Dumfries and Galloway.
11.16 p.m.
Mr. Teddy Taylor: My hon. Friends the Members for Dumfries (Mr. Monro) and North Angus and Mearns (Mr. Buchanan-Smith) did the House a service by telling the Secretary of State that the best way to achieve prudence and economy in local government would be to have many more. Conservative-controlled councils. We cannot achieve that overnight and, therefore, we have to look for other remedies
Mr. MacCormick: Has the hon. Gentleman seen the headline in the Glasgow Herald which suggested that the majority of Labour-controlled district councils wanted to see the scrapping of the regions?
Mr. Taylor: For the fifth time in recent months the hon. Member for Argyll (Mr. MacCormick) has said that the new regions and districts are a disaster, that they have put up the rates of his poor constituents in Argyll, and that something should be done. That is why, when the hon. Gentleman was successful in the Private Members' Ballot I was staggered that, instead of doing something to help his constituents who have no roads and no sewerage, he wanted to introduce a Bill to make divorce easier. If he thinks that making divorce easier is more important to his constituents than reforming local government, we must look at his priorities as closely as we look at the Government's priorities.
The most interesting speech came from the hon. Member for Edinburgh, Central (Mr. Cook) who made the kind of speech the hon. Member for Glasgow, Queen's Park (Mr. McElhone) would have made if he had not been unfortunate enough to become a Minister. As a Minister he is carrying out policies he would have deplored when he was on the Back Benches.
Scottish ratepayers are facing a critical position. Their rates went up in real terms by half in the last 12 months. In

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considering the Order we must determine whether it will help to alleviate the burdens which face Scottish ratepayers. There is ample evidence that, instead of helping to reduce the rise in rates, the Order will do exactly the opposite and that we shall have another disastrous rating year in 1976 as a direct consequence of the Order and other Government policies.
First, we are changing from the 10½-month year to the 12-month year, which immediately involves an increase. Secondly, there is a substantial reduction in the amount of Government assistance to local authorities in percentage terms. This has been expressed as a simple reduction from 75 to 74 per cent., but the Secretary of State must be aware that the cut may be substantially more if the rate of inflation is greater than he anticipated in putting a cash limit of £55 million on increase orders in 1976–77. It would have been more honest if a much lower figure than 74 per cent. had been fixed and if increase orders had been allowed to follow their normal course.
For the first time in my memory, it has not been possible for local authorities to agree with the Secretary of State on relevant expenditure. Obviously, this will have have severe implications for ratepayers. But the major factor which could hit them hard is the cash limit on increase orders.
The Government are not limiting the amount of money to be spent by local authorities; they are limiting the amount of money they will provide. They are doing it by fixing their own figure of relevant expenditure and they saying that if inflation goes over 7½ to 9 per cent. this can only have the consequence either that the nil rate of growth must be ended—meaning fewer dustmen in Edinburgh, Central, for example—or the rates must go up savagely. There is no alternative.
I fear that the Government know that the figure of 7½ per cent. is bogus and will not be reached as an average figure for the forthcoming year, and are simply ensuring a transfer of the burden of local government spending from the Government to the hard-pressed ratepayers, some of whom have had a disastrous year.
If the Government believe the figure of 7½ per cent., has the Minister of State obtained assurances from the National
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Coal Board, the Post Office, the Gas Corporation and other Government organisations and nationalised bodies that their increase in prices in the year will be kept to 7½ to 9 per cent.? If he has not, the only consequence must be a substantial cut in local government services, or a substantial increase in local rates. It is wrong to fix this arbitrary figure and say that if increases occur beyond it, the Government will not pay a penny.
If there is a change of Government policy, the local authorities can be safeguarded against general increases in prices over which they have no control. But I fear that instead there will be a further savage rise in rates. In terms of priorities, it is strange that the Government say that we have to impose these limits on local authorities while spending hundreds, perhaps thousands, of millions of pounds on expensive nationalisation schemes, which will further put up the cost of living.
What representations has the Minister of State had from the Strathclyde Region district councils, which feel that they have been shamefully let down? The district councils, although bearing 16 per cent. of the relevant expenditure, are only getting 6 per cent. of the needs element. They accepted last year's arrangement under protest on the strict assurance that a different system would be introduced for 1976–77.
What is the Government's attitude towards the calculation of local authority rents? While calling for restraint, the Government will be giving new guidance about increases in the rents which should be charged. Increases this year have been even greater than those under the housing finance legislation to which the Labour Party so objected.
What about the effect of Government policy on council spending? Are they prepared to give guidance to local authorities about the use of direct labour and works departments? There has been a surprising and revealing report by the Accountants' Association which suggests that a great deal of money is being wasted by local authorities in this regard.
Secondly, will they reconsider their education policy, particularly in Edinburgh, as it affects the grant-aided schools? It is clear that substantial additional spending by local authorities will accrue, because a large number of additional pupils

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will be landed on the State sector. Their education will have to be paid for by the ratepayers and the cost added to the total of local authority spending.
Are the Government prepared to reconsider their policies on the sale of council houses to sitting tenants? The extra capital that that would produce would reduce the incidence of interest payments upon local authority loans.
We do not see the Order as helping ratepayers in Scotland. The Government are simply cutting the amount of Government grant and are hoping that their calculation of inflation will prove correct. If, unfortunately, as we believe, their calculations prove wrong, it will simply mean another difficult and disastrous year for Scottish ratepayers—a situation to which we are accustomed whenever a Socialist Government are in control.
11.27 p.m.
The Minister of State, Scottish Office (Mr. Bruce Milian): I was interested to note that during the debate there was virtually no mention of the rate of grant in the rate support grant Order for 197677 until the speech by the hon. Member for Glasgow, Cathcart (Mr. Taylor). In all the circumstances the figure of 74 per cent. is extremely fair, given last year's figure of 75 per cent. or the increase over the previous year of no less than 7 per cent., and that took account of special circumstances.
We warned local authorities at the time that they should not expect a similar level of grant for 1976–77. The figure maintains the 8·5 per cent. differential between Scotland and England which the last Conservative Government had whittled down, first, to 8 per cent. and then to 7½ per cent. From that point of view, theretore, this Government's record compares favourably with that of the last.
If I understood the hon. Member for Cathcart correctly, he wanted a lower percentage of rate support grant for the current year. I do not know whether that is official Conservative policy. We tend to have difficulty about knowing to what extent the hon. Gentleman is speaking on behalf of Conservative Party policy. Since he believes that the rate should be lower, I hope that he will tell local authorities in Glasgow and Strathclyde.
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He also said that he was not in favour of cash limits, yet the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) seemed enthusiastic about cash limits. He almost suggested that his Government had thought about them, but had somehow mislaid that particular proposal in their rush to do certain things before the last General Election.
Mr. Teddy Taylor rose—
Mr. Millan: If the hon. Gentleman wishes to intervene, perhaps he will say whether he is in favour of cash limits.
Mr. Teddy Taylor: 1 was merely pointing out that the figure of 74 per cent., as described by the Minister, will not amount to 74 per cent. if the implications of paragraph 30 are followed through. It would have been more honest for the Government to make that plain, instead of pretending otherwise.
Mr. Millan: The hon. Gentleman has not answered the question. He is apparently not in favour of cash limits, but he is in favour of reducing the amount of grant. It is useful to have those facts on the record.
The basis of the cash limits was explained by my right hon. Friend and will be further explained in a circular which will go out to local authorities tomorrow. The basis is, on the wages front, a continuation of the present £6 limit to the end of July 1976, with the expectation that pay increases for the following 12 months will be of the order of 5 to 10 per cent. The basis also assumes that other costs will rise by between 7 per cent. and 10 per cent. This kind of calculation, based as it is not on average costs for 1975–76, but on the costs at November 1975, gives an average of 7 per cent. This has been explained to the Convention of Local Authorities and it has not disputed that, with the qualifications in the covering memorandum, 7 per cent. is the correct figure.
It is true that the level of local government expenditure on which the grant is calculated has not been agreed with local authorities. The figure on which the grant is calculated is £780 million and they were arguing for £793 million. However, £780 million is considerably greater than the figure in the previous year's public expenditure White Paper

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for 1976–77. In real terms, that was £754 million.
For 1976–77 we are providing a realistic figure, given what amounts to a standstill in local government expenditure. In the current year, local authorities have over-budgeted, and if strict economy is observed by authorities between now and the end of the year, actual expenditure could be considerably less than the figures for which local authorities budgeted. I can tell the hon. Member for North Angus and Mearns that, given extreme care and economy, the £780 million will be adequate for local authorities' services, but that does not mean that there will not be some very difficult decisions for local authorities to make.
My hon. Friend the Member for Edinburgh, Central (Mr. Cook) mentioned that we wanted authorities to exercise the strictest economy and added that if there were certain services on which expenditure must increase, it followed that there were others on which expenditure, in real terms, must decrease. We have made no attempt to disguise that fact. We have mentioned it in the White Paper and on other occasions in the past. I do not have time to go into the economic arguments, but I have to tell my hon. Friend that there are not many people in the country—and certainly not in local government—who believe that the way out of our current difficulties is by reflation through increasing public expenditure.
We have to ask local authorities, disagreeable though it is because of the services they would like to carry out for the community, to exercise the utmost stringency over their expenditure for 1976–77. If they do that, any increase in the rates over the next year should be very modest indeed.
I have been asked about the distribution of the grant between rural and urban areas. I think that the previous formula was weighted too favourably towards rural areas. The present formula, confirmed for 1976–77 by the working party, is much fairer, yet it still means that the net expenditure of an individual ratepayer in places like Dumfries and Galloway is very much lower than the average expenditure in Scotland as a whole.
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Hon. Members have also asked how much of the grant is going to districts and regions. There is a difficulty here. The distribution formula provides for the total distribution of the grant to the districts, if at a lower percentage of the total grant than their expenditure bears to total expenditure by local authorities in Scotland.
We have not yet been able to find a satisfactory formula that would bring grants to the district authorities nearer to their percentage of the total expenditure. I note that, although we have seen documentation by the Strathclyde district councils—and, as a Strathclyde Member, I have much sympathy with them—so far there has been no suggestion of the way in which some of these difficulties might be overcome. We have said—and the local authorities agree with this—that in the working party discussions for the subsequent year 1977–78, we shall try to find a solution to this difficult problem.
Taking the Order as a whole, I think that we have produced—
It being one and a half hours after the commencement of Proceedings on the Motion, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted Business).
Question agreed to.
Resolved,
That the Rate Support Grant (Scotland) (No. 2) Order 1975, a copy of which was laid before this House on 4th December, be approved.

FRESHWATER AND SALMON FISHERIES (SCOTLAND) BILL
Order for Second Reading read.
Motion made, and Question put forthwith pursuant to Standing Order No. 67 (Public Bills relating exclusively to Scotland), That the Bill be committed to a Scottish Standing Committee.—[Mr. William Ross.]
Question agreed to.
Bill (deemed to have been read a Second time) committed to a Scottish Standing Committee.

FRESHWATER AND SALMON FISHERIES (SCOTLAND) [MONEY]
Queen's Recommendation having been signified—
Resolved,
That, for the purposes of any Act of the present Session to make new provision with respect to freshwater and salmon fisheries in Scotland, it is expedient to authorise the payment out of money provided by Parliament of the expenses incurred by the Secretary of State in making payments to any organisation approved by him and having as their object or one of their principal objects, the development and improvement of salmon or freshwater fisheries and the making of such fisheries available for letting or fishing by persons authorised to fish.—[Mr. Walter Harrison.]

NORTHERN IRELAND
Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &c.),
That the Appropriation (No. 3) (Northern Ireland) Order 1975, a draft of which was laid before this House on 26th November, be approved.—[Mr. Walter Harrison]
Question agreed to.

NATIONALISED INDUSTRIES
Ordered,
That, notwithstanding the Order of the House of 15th November in the last Session of Parliament relating to nomination of members of the Select Committee on Nationalised Industries, Mr. Iain Sproat be discharged from the Committee and Mr. John Cockcroft be added to the Committee for the remainder of this Parliament.
Ordered,
That this Order be a Standing Order of the House.—[Mr. Walter Harrison.]

EXPENDITURE
Ordered,
That, notwithstanding the Order of the House of 18th November in the last Session of Parliament relating to nomination of members of the Expenditure Committee, Mr. Neville Trotter be discharged from the Committee and Sir John Langford-Holt be added to the Committee for the remainder of this Parliament:
Ordered,
That this Order be a Standing Order of the House.—[Mr. Walter Harrison.]

ADJOURNMENT
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Snape]

CROFTING LAND (BENBECULA)
11.36 p.m.
Mr. Donald Stewart: I am glad to have secured this Adjournment debate on behalf of my constituent, Mr. Donald Macdonald, of 13 Aird, Benbecula. In my view he has had extremely harsh treatment. By a Land Court order dated 14th April 1975, he has suffered a fifth resumption from his holding and the compensation offered in the form of development value is derisory.
For a man whose whole livelihood is based on stock rearing, the compulsory resumptions from his holding are intolerable and it is a gross injustice that he has not received compensation which would cover the loss he has suffered. His holding originally consisted of 4940 acres and a total of 29·42 acres have been resumed. He had to sell six cows last October due to the building work which is due to start. As a self-employed person, he cannot qualify for unemployment benefit and it is virtually impossible to find work in the area at the present time.
The Land Court in its order stated that if some of the money were applied to the installation of a water supply to another part of his holding, he would be able to continue to carry the same head of stock. He has stated to me that the water main is a quarter of a mile from the field and that an estimate for the work has been £3,000, which makes the suggestion quite impracticable.
The Minister has accepted that some land for housing in the Uists has been sold at between £2,000 and £2,500 per acre. He added in his letter of 3rd September 1974:
"This was, however, for small areas of land for individual housing sites adjoining a road and convenient for the necessary services. In valuing land the District Valuer must clearly take into account the cost to the developer of providing roads and services where these do not already exist."
The point is that the piece of land in question does adjoin a road—indeed, it is bounded on two sides by roads—and the services are in close proximity. This factor

1131
has been clearly ignored by the district valuer in arriving at his valuation, and this raises the question of when the district valuer visited the site. My constituent is of the view that he did not do so. What is certain is that he did not make contact with Mr. Macdonald to say that he would be examining his land with a view to valuation.
Against the district valuer's valuation, which amounted to approximately £522 per acre, I submit the valuation of Mr. Malcolm Michie, a Fellow of the Royal Institute of Chartered Surveyors and a partner in a respect firm of chartered surveyors in Oban. I need not give the backup reasons for Mr. Michie's figures, since I have already submitted to the Minister a copy of his report. But, against the district valuer's figure of £522 per acre, Mr. Michie's opinion is for approximately £2,350 per acre, making a total valuation for the 6·42 acres of £15,000.
It is accepted that the compensation which a crofter receives on the resumption of his land is normally confined to his statutory entitlement under the Crofters Acts. Part of the area being resumed is being resumed on behalf of the Ministry of Defence. The Ministry has spent millions of pounds on various developments in Benbecula and South Uist, and it is wholly wrong that a crofter losing land should suffer financially and in his prospects of a living in a case where reasonable compensation would be a minuiscule part of the Ministry's outlay.
I do not blame the Ministry of Defence, because it did not carry out the negotiations. But, naturally, my constituent feels aggrieved when he compares the small figure at which his land was valued against the millions of pounds that the Ministry has spent in the area.
The landlord of the croft in this case is the Department of Agriculture and Fisheries, and the Minister has a direct responsibility because of his duties in the Scottish Office. According to his letter to me of 3rd September:
"In the case of the Secretary of State's estates however, we are operating within the spirit of our crofting reform proposals in anticipation of the necessary legislation and are giving crofters a share, on an ex gratia basis, in the market value of the resumed land as determined by the District Valuer."
I do not think, in all fairness, that consideration has been offered in this case,
1132
and my constituent, with good reason, does not consider that he has had a fair deal. I ask the Minister to reopen the matter with the valuation office with a view to an equitable settlement and to correct a grave injustice to my constituent, Mr. Donald Macdonald.
11.43 p.m.
The Under-Secretary of State for Scotland (Mr. Hugh D. Brown): I am very grateful to the hon. Member for Western Isles (Mr. Stewart) for giving me this opportunity to reply to an Adjournment debate. Mr. Macdonald is lucky to have had his case presented so well and so fairly, and I am indebted to the hon. Gentleman for giving me advance notice of one of the points that he intended to raise. But I have to say straight away that I reject any allegation of harsh treatment of Mr. Macdonald by the Department or district valuer or anyone else.
It is true that I have not the advantage of having visited the site, and certainly I note that it might cost £3,000 to run a quarter of a mile of water supply in Benbecula. On the face of it, that seems a little excessive, but perhaps there are good reasons, and I am sure that the hon. Gentleman will accept the knowledge and experience of the Land Court in these matters. Since the suggestion was made by the court, I assume that it had knowledge of the possible costs. However, perhaps that is a point of detail.
As the hon. Gentleman said, we have had considerable correspondence about the case. He suggested—and he repeated it tonight—that an injustice had been done. But it can be claimed that the Government have acted not only fairly but generously, since the Secretary of State for Scotland is one of the few croft landowners who, despite the fact that there is at present no legal obligation to do so, are already sharing the development value of resumed land with their tenants. I thought that the hon. Gentleman might have made a favourable mention of that. But, first, I should like to go over the general background against which this case is set.
In July last year, my right hon. Friend the Secretary of State for Scotland intimated in the House his main proposals for the reform of crofting tenure which we shall be discussing tomorrow. One of these proposals was that crofter tenants

1133
should have an entitlement to an equal share with the landlord in any gain accruing from the sale or development of land resumed from crofting. In anticipation of legislation, the Secretary of State set an example to other crofting estate landlords by granting to his own crofting tenants, so far as this lay within his powers and on an ex gratia basis, such rights as they would be entitled to when the proposed crofting reform legislation was enacted.
Thus, when the former Inverness County Council and the Ministry of Defence approached my Department for land for housing and other purposes at Benbecula, my Department was able to offer to the six tenants involved a new and additional payment. Mr. Macdonald is the only one who seems to be in dispute. This was to be calculated on the basis that the tenant would be entitled to one-half of the difference between the market value of the land resumed from his croft less the statutory conpensation to which a crofter is entitled in such a situation in terms of Section 12(1) of the Crofters (Scotland) Act 1955 and the crofting value of the land. This seems to us to be a very fair division of development value as between crofting tenant and landlord and, indeed, the formula is not in dispute.
What is being claimed by the hon. Member and his constituent in this particular case is that the market value—that is, the price fixed by the valuation office for the purpose of sales to the Ministry of Defence and local authority—is grossly understated. The Crofting Reform Bill, which is due to be considered as to principle tomorrow, provides exactly for the procedure that took place in this situation, namely, for the market value of the resumed land to be fixed at the amount of compensation payable by the acquiring authority to the landlord.
It has, of course, for long been the practice when land is being conveyed between Government Departments and local authorities possessing compulsory purchase powers for the district valuer to set the price, and I have no reason whatsoever to doubt that it has been done in this case with due regard to all the circumstances and in accordance with the complex code of legislation on the valuation of compensation; and, furthermore, with all the professionalism which the
1134
valuation office is wont to exercise in such cases which are a matter of daily concern to it and of which it has some knowledge. Despite all the knowledge and experience of the district valuers, it is not unusual for people to feel that they are not getting enough for their land. However, it is unusual to suggest that district valuers are departing from the normal practice and are assessing or valuing the land in a new or unusual way that is different from the practice built up over the years.
In the particular case before us the tenant has a number of crofts on the Secretary of State's Benbecula estate. These crofts are worked as one agricultural unit and now extend to 51·85 acres, land having been resumed from the crofts on four previous occasions. When it was proposed in 1974 to resume another 6·42 acres, Mr. Macdonald protested that he would not be able to make a livelihood from the reduced acreage and that the ex gratia payment, based on the compensation to be paid on the sale, was unrealistic. Mr. Macdonald, who is a full-time crofter, acknowledged that this form of payment was ex gratia. I have no doubt that he knew that the payment resulted from the decision taken by the Secretary of State to deal with his tenants as I have described. Had Mr. Macdonald been a tenant on a private estate, there would have been small chance indeed of his receiving any share of the development value. He was not, however, moved by this good fortune.
I confess that I have some smypathy for Mr. Macdonald and can understand his resentment at the continuing demands by Government bodies and local authorities for more and more of the land which he occupies. I can understand, therefore, why he has pressed to get the best possible terms for himself. But I am in no doubt that there is a real public need for this land—the hon. Gentleman did not dispute that point—and therefore that it was right that the due processes to acquire the land were proceeded with. Thus, despite Mr. Macdonald's opposition, my Department applied to the Land Court in November 1974 for an order to enable it to resume the land.
The application came before the full Land Court in Benbecula in March this year. The court was, of course, concerned only, in the first place, to decide

1135
whether the purpose for which the resumption was required was reasonable in terms of Section 12(1) of the 1955 Act and, secondly, to determine the compensation payable under that section. It had no authority to inquire into the question of the crofter's share of the development value of the land and, of course, did not do so. It observed, however, in its note on its judgment:
"In the landlord's application reference is made to ex grotto payments which the landlord may make, additional to the compensation awarded by the Court if the craves of the application are granted. This is satisfactory indeed, but it is not a question for the Court to adjudicate upon."
The court found that the purpose of the resumption was reasonable and held that £224 was adequate compensation under Section 12(1). It also rejected Mr. Macdonald's agrument that he would lose his livelihood if the land was resumed.
I am sure that the hon. Gentleman knows from his own experience that the Land Court is held in high esteem in dealing with matters within its competence. I am surprised that some of the points that he made tonight were not put before the court. I am sure that they would have been given due consideration. The court considered that if Mr. Macdonald were to apply some of the money he received by way of compensation to installing a water supply on another part of his unit, he would suffer no diminution of income.
Mr. Stewart: Come off it!
Mr. Brown: The hon. Gentleman says, "Come off it". I do not know whether there was any argument about where the water supply should be provided. This knowledge was certainly available to the Land Court and the suggestion seemed to come from it. The lay members of the Land Court have a great deal of agricultural expertise. The court also reduced Mr. Macdonald's rent from £12 to £8'50 per annum and, in accordance with its custom, found that he was entitled to expenses.
Since then Mr. Macdonald has concentrated his complaint on the district valuer's valuation of the land. He has claimed that the district valuer's figure is very low compared with other valuations of land in the area. I think we are entitled to assume that the district valuer
1136
would have knowledge of all the transactions that have taken place that have any relevance to the affairs on the island or to this spot, and I fail to see how Mr. Macdonald can think that there is any unfairness in treatment as between one individual and another. Any difference—not unfairness—obviously reflects to some extent where the site is and the value of the site as it is, and I think that perhaps that is something that has not been explained.
Indeed, to some extent that is confirmed by the view of the chartered surveyors who, in their valuation of the resumed land, made an assessment of its worth at £15,000, or approximately £2,350 per acre. Obviously, there was a misunderstanding, or a lack of understanding, about how the district valuer operates and, indeed, about the whole basis of the valuation. The figure decided by the chartered surveyors was based on the development for which the land was being acquired. It was their view that their valuation was reasonable, having regard to the type of development envisaged.
The code that governs valuation procedure is complex. It is founded on common law, statute and judicial decision, and one of its basic principles, I am advised, is that the effect on valuation of the scheme underlying the acquisition of the land must be ignored. Put another way, the district valuer has to ascertain the value that this land would have on the open market, ignoring in this case the actual schemes that are being undertaken by the Ministry of Defence and the local authority. If this development is discounted, there is little demand for land for housing development in the area. Land values are, therefore, relatively low, but the figure given by the district valuer of over £500 per acre is a substantial one compared with crofting values.
In view of the representations made by the hon. Gentleman on behalf of his constituent, the valuation office has made a very careful study of its valuation, but it advises that it can find no good reason for amending it. It assures me that there is not supportable evidence that the private market would pay in excess of the figure determined by the district valuer.
As I had said, I have sympathy with Mr. Macdonald in the losses of land that he has suffered. I think it is fair to concede

1137
that he has been quite generously treated in the past—I am talking about the new house provided by the Department on a previous resumption. Perhaps the thought that the Government should again be so generous has influenced his approach to the current problem. The hon. Gentleman might concede that there is something in that. It happens to so many of us in life. Our expectations are greater than what is realised. Perhaps that is part of the reason behind the complaint by Mr. Macdonald and his disappointment.
We have tried, and I think we have been successful, not only to be fair but to be generous, and I am satisfied that on the basis of the acknowledged principles of valuation Mr. Macdonald has not been treated unjustly or harshly. I hope that with that explanation the hon. Gentleman will be in a better position to understand the basis of the decision and that he will communicate it to his constituent.
1138
I am sure the hon. Gentleman will appreciate that it is a question of the procedure. It is not that it is the Secretary of State's land at the moment. It is a challenge on the basis of the valuation by the district valuer. Strictly speaking, that is not my responsibility, but I do not suppose that the Treasury will worry unduly if I make this comment.
If the hon. Gentleman wants any other information, or if he wishes to discuss the matter further with me, I shall be happy to help him, within the narrow area of responsibility that I have. Although I appreciate that that explanation will not do anything for the hon. Gentleman's constituent, I hope that at least he will now be in a better position to explain some of the detail I have given tonight.
Question put and agreed to.
Adjourned accordingly at Twelve o'clock.

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  Diplomatic Staffs (Pay and Allowances)
EUROPEAN COMMUNITY
  European Parliament
  European Parliament
  Minimum Safeguard Price Mechanism
  Minimum Safeguard Price Mechanism

Preamble
The House met at half past two of the clock: The Lord Chancellor on the Woolsack.
Prayers—Read by the Lord Bishop of Southwark.

RAIL AND AIR DEATHS: COMPENSATION
The Earl of KINNOULL: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is the maximum compensation payment which both British Rail and British Airways can pay to the dependants of a person killed in a rail or air accident.
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, when a fare-paying passenger is killed in a rail accident damages may be claimed at Common Law and under the Fatal Accidents Acts, without limit. In the case of a fatal accident to a passenger on a British airline compensation is payable unless the carrier proves that he took all necessary measures to avoid the accident. Compensation is payable up to a limit of £25,000 in international carriage, a limit the United Kingdom Government are seeking to raise by international action, and up to a limit of nearly £32,500 in domestic carriage; but if it was to be shown that the accident resulted from the intentional or reckless act of the carrier, or his servants or agents, no limit would apply. In all cases the quantum of damages or compensation awarded, subject to the limits when they apply, is a matter for the court.
The Earl of KINNOULL: My Lords, while thanking the noble and learned Lord for that reply, may I ask whether he would agree that in the case of British Airways, although there is a maximum, in practice they rarely pay below that as a minimum? In the case of British Rail, although there is not a maximum, if there is a case to be judged, the solicitors act
1204
ing for the defendants have to fight for a minimum. In many cases compensation is very small—even derisory—and in a number of cases the payments are not paid for three or four years.
THE LORD CHANCELLOR: My Lords, I was not aware of the matters of fact which the noble Earl has described. If he would be good enough to see me and particularise the matters, I will see that the state of affairs he has described is taken up by my right honourable friend the Secretary of State with the authorities concerned.
Lord SOPER: My Lords, would the Government agree that, in addition to a statement about a maximum, is it not an unrewarding and somewhat embarrassing business to try to calculate compensation, and could there not be a minimum which would be automatically recognised and from which perhaps advances could be made up to that maximum?
The LORD CHANCELLOR: My Lords, in the case of dependency, of course, the extent of the dependency varies from case to case depending upon the earnings of the victim and the extent of the dependency. In the case of factors such as compensation awarded for loss of expectation of life, an arbitrary figure has now been laid down by the courts of £500, and the value of that goes to the estate of the deceased. There is no compensation payable under the laws of England and Wales in respect of bereavement, but of course there is in respect of pain and suffering in appropriate cases.

LAMS and LOCAL AUTHORITIES
2.39 p.m.
Baroness YOUNG: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask her Majesty's Government how many local authorities responsible for preparing land acquisition and management schemes under the Community Land Act 1975 have so far failed to do so to the satisfaction of the Secretary of State, and what percentage of the local authorities involved this figure represents.
The PARLIAMENTARY UNDER-SECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk): My Lords, since the date by which Land Acquisition and Management Schemes have to be made is 31st December 1975, and the date for their submission to the Department is 1st February 1976, no authority can, at this stage, be said to have failed to prepare schemes to the satisfaction of the Secretary of State.
Baroness YOUNG: My Lords, while thanking the noble Baroness for that reply, may I ask whether she would agree that, as there are only two more weeks until 31st December, including the Chirstmas period, it cannot be said that all authorities have produced their schemes to the satisfaction of the Secretary of State?
Baroness BIRK: My Lords, the authorities were asked for a progress report by 5th December, and out of 47 county authorities, only six have indicated that they are experiencing any serious difficulty in drawing up their LAMS. I do not think that the noble Baroness has any cause for concern.
Baroness YOUNG: My Lords, would the noble Baroness say what the cost of this exercise has been, and how much of staff time has been taken away from other local authority projects in order to fulfil this obligation under the Act?
Baroness BIRK: My Lords, I cannot believe that the noble Baroness can be serious about this matter. The Act has been passed. Now it is on the Statute Book, everybody, apart from perhaps the noble Baroness, seems anxious to get on with making it work. On the one hand, she has asked whether we have the information—she asked about this continually during the passage of the Bill—and now she asks us about the cost of sending out letters to local authorities, and the cost incurred by the local authorities in replying. In order to make the Act work—the noble Baroness referred to this throughout the passage of the Act—now it is on the Statute Book I should think she should be delighted to know that we have inquired; we have found out what the progress is and we are quite satisfied about it.
The Earl of KINNOULL: My Lords, arising out of that question, could the noble Baroness say whether the Community Land Act can now be purchased from Her Majesty's Stationery Office, and why it was not available when the Act was passed into law?
Baroness BIRK: My Lords, first it had to be printed. I am afraid there were printing difficulties, as is often the case. It has now been published. As the noble Earl is aware, the Act is little different from the Bill as we discussed it during its progress through this House. All the local authorities, and everybody else, are aware of any changes that were made.
Lord HARMAR-NICHOLLS: My Lords, is the noble Baroness aware that the manner of her reply to my noble friend is a little disturbing in the sense that it does not reflect the real concern emanating from local authorities regarding whether or not this can be effective? My noble friend is doing something good at this early stage by putting on record that it is not all sweet and light, which is the impression the noble Baroness gives. It is not a bad thing to have that in mind if this Act is to be carried out as she would wish it.
Baroness BIRK: My Lords, in answer to the speech made by the noble Lord opposite—
A Noble Lord: Question!
Baroness BIRK: —I shall reply to it because I think it is important to do so, although it goes slightly outside the Question of the noble Baroness. Forty-seven authorities were asked about their progress. The vast majority have already made great progress with their schemes and only six have had any serious difficulty in agreeing. This shows that the local authorities have taken this on board and are now busy with their preparations. I consider it to be highly mischievous to give the impression—now that the Act is on the Statute Book—that the vast majority of local authorities, who are trying to make the scheme work, are doubted in this way.
Baroness YOUNG: My Lords, would not the noble Baroness agree that, as her right honourable friend the Secretary of State has already indicated that local

1207
authorities must cut down on expenditure, and has been quoted widely in the Press as saying, "The party is over", it is asking rather a lot of local authorities to bear all this extra expense which they had not expected to incur?
Baroness BIRK: My Lords, at this stage, I do not propose to go through this as though we were still arguing about the passage of the Act which is now on the Statute Book.
Lord SLATER: My Lords, would not my noble friend agree that, in view of the questions that have been directed at her in regard to the Question put down by the noble Baroness, it would seem that following the progress of the Bill through both Houses of Parliament, some Members of this House are questioning the intelligence of those people who are responsible for administering the Act?
Baroness BIRK: My Lords, I think that my noble friend is quite right. The less time we spend on discussing how this is to be done and let the local authorities get on with their task—particularly when I have put the facts to the House—the better it will be.

POST OFFICE: CHRISTMAS POST STATISTICS
Baroness BURTON of COVENTRY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government why, as the figures relating to letters for the customary three-week Christmas period in 1974, given in answer to her Starred Questions of 30th October and 3rd November, were apparently inaccurate and were questioned at the time and in a subsequent letter to the Minister, dated 24th November, no reply to the letter has yet been received; and what are the correct figures for 1974.
The PARLIAMENTARY UNDER-SECRETARY of STATE, DEPARTMENT of INDUSTRY (Lord Melchett): My Lords, I have now replied to the noble Baroness's letter and she will know that the correct statistics for the three-week Christmas period of 13th December
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to 2nd January are 904 million in 1972, 781 million in 1973 and 806 million in 1974. The Post Office statistics for 1973 and 1974 quoted previously relate to the whole of December.
Baroness BURTON of COVENTRY: My Lords, is my noble friend aware that I feel so indignant that it is hard to be coherent about this matter? Is he aware that some seven weeks ago, on 30th October (Hansard, column 608), I was told that these figures would be checked? I wrote again on31st October and 5th November setting out the facts. I then received a letter asking whether I would give the evidence on which I based these serious charges. I wrote and gave that evidence, together with my sources and I asked for a reply; I then heard nothing more. On Wednesday, 10th December, when my patience was finally exhausted, I put down a Question which appeared on the Order Paper on Thursday the 11th. On Friday I received by special messenger at my home from the Department concerned a letter which said, "Let me say straight away that your figures are right. "There was not one vestige of apology in that letter! Is my noble friend further aware that, had I not pursued the matter, the House would have been in possession of wrong information and that Question Time would be quite valueless?
Lord MELCHETT: My Lords, as to the history of this matter before I took on my present job. I am quite happy to take my noble friend's word. As she said, she put down a Question on Wednesday, which was the first that I knew about the matter. She had a reply on Friday, so I hope she will accept that I acted as quickly as I could after she had made me aware of the situation. As to the matter of wrong information—as I said in the letter to her and as I have said today—the statistics were given in the Post Office Annual Report, and it was from that published information that an Answer was given to by my noble friend's Question. It has subsequently turned out to be the case that statistics were given in different Annual Reports on a different basis.
Baroness BURTON of COVENTRY: My Lords, is my noble friend aware that the more we go into this the worse the Department appears? Is he further aware

1209
that I stated at the beginning that a different system of accounting had been used for these figures? Much more seriously, is he aware that I am really disturbed that any Member of this House should be treated in this manner? What is one to do? Is one to be thoroughly awkward, as I have been, pursue the matter and, in the end, get to the bottom of it? Or should one not be awkward, sit down, having received wrong information, and let the Departments get away with it?
Lord MELCHETT: My Lords, if I may say so, my noble friend is not being fair when she attacks the Department about this matter. The Department merely quoted statistics published by the Post Office in their Annual Reports. The facts are that the Department of Industry does not run the Post Office and I am not the Under-Secretary-General of the Post Office; nor is my right honourable friend in charge of the day-to-day running of the Post Office. If we are asked Questions about the Post Office and the Post Office direct us to published information, it is on the basis of that information that we answer Questions put down in this House.
Lord CARRINGTON: My Lords, while accepting the fact that the noble Lord himself has nothing to do with it, may I ask whether it would not be proper for the noble Lord to apologise, on behalf of the Government, to the noble Baroness?
Lord MELCHETT: My Lords, I should be happy to apologise if I felt that there was something for which the Department was responsible and over which we had misled the House. I am afraid that, if my noble friends ask Questions about the detailed running of the Post Office, the only source of information to which the Department can turn is the Post Office itself. The Post Office then refer us to published statistics and we give them in good faith.
Baroness BURTON of COVENTRY: My Lords, perhaps I may put one more query, if the Minister does not mind. Is my noble friend aware that the Post Office gave one set of figures to POUNC, who gave them to me, and they gave another set of figures to the Minister who gave them to the House? One can only accept the figures one is given, and there
1210
fore I think that some retraction is necessary.
Lord MELCHETT: My Lords, I have told my noble friend and have said this afternoon that the figures previously given were based on two periods of time. The Post Office did this, as I understand it, for very good reasons. They felt that, if they based one year's figures on a three-weeks period and the next year's figures on a four-weeks period, that was a more accurate way of saying how many letters had been posted. I am sorry that my noble friend received from these two sources of information figures which contradicted each other. However, I will not accept that the Department was at fault in giving my noble friend those figures.
Baroness PHILLIPS: My Lords, is my noble friend aware that, when the Post Office Corporation was originally set up, the question of whether there was Ministerial responsibility was gone into, and it was agreed that there would be Ministerial responsibility?
Lord MELCHETT: My Lords, I am not aware that there is Ministerial responsibility for the day-to-day running of the Post Office.
Lord SLATER: My Lords, is my noble friend aware that I was one of the Ministers who was responsible for putting that Bill on the Statute Book; that there was never an undertaking given that a Minister would be responsible for the day-to-day administration of the Post Office; and that he is not responsible for answering questions on day-to-day management? Further, is my noble friend aware that, if any apology to my noble friend who first asked the Question is necessary, it ought to come from the Chairman of the Post Office Board, and not from the Minister or his Department?
Lord MELCHETT: Yes, my Lords.
Lord LEATHERLAND: My Lords, does my noble friend think that a fitting climax to this series of questions would be that all Members of the House should send a Christmas card to my noble friend Lady Burton?
Baroness BURTON of COVENTRY: My Lords, I know that we have had enough of this Question, but may I on one matter of detail ask the Minister—I

1211
appreciate that it is not the fault of the noble Lord, Lord Melchett, and that he has been landed with this—whether the request for an annual figure could be construed as day-to-day management on any construction whatsoever?
Lord MELCHETT: My Lords, I think that the question of the number of letters posted over a certain period at Christmas and the way that those statistics are given probably is a matter for the day-to-day management of the Post Office. May I suggest that if anybody sends any cards this Christmas they send charity Christmas cards?

BUSINESS
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, with the leave of the House, at a convenient moment after 3.30 p.m. my noble friend Lord Wells-Pestell will repeat a Statement on the National Health Service and private practice.
CIVIL LIST BILL
Brought from the Commons, endorsed with the Certificate from the Speaker that the Bill is a Money Bill within the meaning of the Parliament Act 1911; read 1a and to be printed.

NORTHERN IRELAND LOANS BILL
2.53 p.m.
The PARLIAMENTARY UNDER-SECRETARY of STATE, NORTHERN IRELAND OFFICE (Lord Donaldson of Kingsbridge): My Lords, I beg to move that this Bill be now read a second time, This is a technical, financial measure which has already been debated in detail in another place. I will not detain the House with more than a brief description. The purpose of the Bill is to provide for further loans from the National Loans Fund to the Northern Ireland Consolidated Fund for approved capital expenditure. The loans will be used for on-lending to public bodies outside central Government, mainly the Northern Ireland Housing Executive and the Northern Ireland Electricity Service.
1212
Loans to Northern Ireland from the National Loans Fund are currently made under the Finance Act 1970 as amended by the Northern Ireland (Financial Provisions) Act 1972. The maximum gross total which can be lent under the 1970 Act is £450 million, and it is necessary to make provision for further loans before this limit is reached, which will probably happen soon after the end of the current financial year. So far, £361 million is outstanding under the 1970 Act. In addition £164 million is still outstanding under the Miscellaneous Financial Provisions Act 1950, so that the total sum outstanding in loans from the National Loans Fund to the Northern Ireland Consolidated Fund is now £525 million. This Bill would allow this total to be raised to £800 million, increasable by Order to not more than £1,000 million.
The Bill has three clauses, excluding the Short Title. Clause 1 sets the limit of £800 million on the total sums outstanding in loans from the National Loans Fund to the Northern Ireland Consolidated Fund, including those made under all previous enactments. It also provides that the limit can be raised once by Order subject to Affirmative Resolution of another place to not more than £1,000 million. The Secretary of State will make the loans under the Bill with the approval of the Treasury. This is a departure from previous legislation, which was enacted before the Office of the Secretary of State for Northern Ireland had been created. Clause 2 ensures for the sake of administrative simplicity that interest and principal on loans made under previous legislation, as well as under the Bill, will in future be paid to the Secretary of State. Clause 3 makes routine provision for the keeping, examination and publication of accounts.
My Lords, I will add only two points. The loans to Northern Ireland with which the Bill is concerned are not part of any subvention to Northern Ireland, since a full rate of interest is paid on them. Moreover, the people of Northern Ireland have lent to the National Loans Fund over the years through National Savings—for instance, the National Savings Bank, the Save As You Earn Scheme and by Premium Bonds—and by investing in United Kingdom Government Stock. The flow of funds between the National Loans Fund and Northern Ireland is therefore

1213
by no means one way. Secondly, I should emphasise that the Bill does not itself authorise any expenditure. It merely provides the machinery to ensure that funds can be made available for certain capital expenditure which has already been approved by the usual procedures. I commend the Bill to the House. My Lords, I beg to move.
Moved, That the Bill be now read 2a.—(Lord Donaldson of Kingsbridge.)
2.57 p.m.
Lord BELSTEAD: My Lords, as the noble Lord has explained, this Bill makes available money for certain capital programmes in Northern Ireland. I understand that the greater part of that money goes to the Northern Ireland Housing Executive and to the Northern Ireland Electricity Service. As I believe it will be possible to have a slightly wider debate than normal on the Northern Ireland economy under the forthcoming Appropriation Order, I should not wish to pursue any of the details of this Bill, but there is one question I would ask the noble Lord about its general effect.
The amount which can be lent to the Northern Ireland Consolidated Fund is increased, as the noble Lord has explained, by £275 million and by a further £200 million, if necessary, by Order subject to the Affirmative Resolution procedure. The Explanatory Memorandum to this Bill says:
"At the rate of lending now envisaged these additional funds would provide enough for Northern Ireland's requirements for approximately two years",
and then it says,
"…for a further period of approximately eighteen months",
referring to the Order-making power. Is that lending rate any higher in real terms than the rate at which money has been lent under this same power to the Northern Ireland Consolidated Fund during recent years?
One of the recipients of these loans is the Northern Ireland Finance Corporation, which does admirable work. But I think it is fair for me to remind the noble Lord that the Government now intend to widen the scale of the NIFC's powers and if it, or indeed any of the other claimants on the finance which this Bill makes available, is increasing the growth in pub-
1214
lic expenditure in Northern Ireland in real terms then I simply say that Parliament ought to be aware of it. My Lords, with that one question I certainly support the Second Reading of this Bill.
Lord DONALDSON of KINGS-BRIDGE: My Lords, I am grateful for the noble Lord's support. I think the answer to his question can be given very quickly. These loans are for continued development and they represent partly the increase required due to inflation and partly real development. I do not think one can put it more clearly than that. For example, in the case of the Northern Ireland Housing Executive, not only are its costs rising but the work it is doing is increasing, and these loans cover the two elements. I hope that that answers the noble Lord's question.
On Question, Bill read 2a: Committee negatived.

APPROPRIATION (No. 3) (NORTHERN IRELAND) ORDER 1975
3.0 p.m.
Lord DONALDSON of KINGS-BRIDGE Lord DONALDSON of KINGS-BRIDGE rose to move, That the draft Appropriation (No. 3) (Northern Ireland)Order 1975, laid before the House on 26th November, be approved. The noble Lord said: My Lords, this order, which appropriates the Autumn Supplementary Estimate, is the second Northern Ireland Appropriation Order to come before this House during the 1975–76 financial year. The sum to be appropriated by this order is some £147 million, and this brings the total Estimates provision to date for 1975–76 to approximately £974 million. The details of the sum required are set out in the Schedule to the order and further information relating to the Votes involved is contained in the volume of Supplementary Estimates which has been available in the Library for some time. The greater part of the additional provision sought is required to meet pay and price increases. Pay increases either conform with or pre-date the present counter-inflation policy. As regards other increases, the most significant are £8 million to repay outstanding loans from title Shipbuilding Industry Board to Harland and Wolff; the £3 million for compensation to the Northern Ireland Housing Executive for loss of rental income

1215
in 1975–76 as a result of the counter-inflation policy and the £2 million required for the Meat Industry Employment Schemes.
I hope this short summary has indicated to noble Lords the purpose of this financial order which has already been considered in another place. I know that some noble Lords wish to use this opportunity to discuss aspects of the general economic situation in the Province on which the order has a bearing, and I think it is quite appropriate to do so. I assure noble Lords that I shall endeavour to reply as fully as possible to their questions at the end of the debate, and shall be glad to reply in writing afterwards to points with which I have not been able to deal. I recommend the order to the House, and beg to move.
Moved, That the draft Appropriation (No. 3) (Northern Ireland) Order 1975, laid before the House on 26th November, be approved.—(Lord Donaldson of Kingsbridge.)
3.2 p.m.
Lord BELSTEAD: My Lords, as the noble Lord has explained, this order appropriates further sums for Northern Ireland for the rest of this financial year. The previous order added £102 million to the total provision for last year, this order adds another £147 million, and I suppose there will be Spring Supplementary Estimates. It is important to make it clear that we have taken on board what the noble Lord has said and to recognise that these increases accord with the appalling rate of inflation which the United Kingdom has been experiencing. On the subject of the escalation of these figures I have no questions to put to the noble Lord, although I am grateful to him for saying that in this debate we may stray a little more widely than usual.
I should like mainly to discuss how this order relates to employment policies in Northern Ireland, but other noble Lords may wish to touch on different aspects. If one takes gross domestic product, or productivity, or simply industrial production into account, it can be claimed that between 1955 and 1966 the Northern Ireland economy was expanding faster than that of Great Britain, but unemployment remained stubbornly higher than anywhere else in the United Kingdom. It was against that back
1216
ground and the outbreak of violence that the 1970–75 development programme was prepared. That plan gave as a target the promotion of 40,000 new jobs over a five-year period, but admitted that it would be a formidable task to achieve; yet if one takes the period from the beginning of 1970 to the end of 1974, which I admit is not exactly the period which was covered by the development plan, I understand that more than 40,000 jobs were promoted. If I am right, this is a tribute to all those who have been involved in that work in the Northern Ireland economy.
Job promotion through industrial training has been the work of the Northern Ireland Ministry of Health and Social Services and, from 1st January of last year, the Department of Manpower Services, and I think that they have good reason to be proud of their work. The counter-redundancy training scheme, the work of the Government training centres and the innovation of the integrated workforce units have been most valuable.
Under Class IX of this order I notice that there is an increase in the sums granted of some £230,000 for the Department of Manpower Services, and I have no doubt that it will be money which is well spent. If he is able to give them, it would be interesting to have up-to-date statistics from the noble Lord regarding industrial training—how it is getting on at the moment in Northern Ireland—and particularly to hear about the recruitment subsidy scheme for school leavers. But no enduring reduction in unemployment is possible unless industry expands and new enterprises take root. The Northern Ireland economy is indebted to the efforts which were made before 1972, not least during the Premiership of my noble friend Lord O'Neill of the Maine and also during the Premiership of the noble Lord, Lord Moyola, to attract new investment into the Province, and these efforts, it is fair for us in Parliament to claim, have been continued. During 1973, six new plants were moved into Northern Ireland from the United States, Scandinavia and Western Europe. Whenever anything like that occurs it gives a valuable lead to those whom one is hoping will trade with and invest in Northern Ireland. Class VI of this order includes provision for the industrial development services of the Department of Commerce. I should like

1217
to hear from the Government how they foresee foreign investment in Northern Ireland holding up in these very difficult times.
It was particularly to review the levels of investment in the Province that the 1971 Joint Review Body, under Sir Alec Cairncross, was set up which proposed the establishment of the Northern Ireland Finance Corporation. The objective was to offer financial assistance to businesses threatened with severe contraction or closure which had reasonably good prospects of viability and solvency. The effect on job promotion was instantaneous. The annual report of the NIFC for 1973–74 recorded that the Department of Commerce, together with the Corporation and the Local Enterprise Development Unit, had promoted an estimated 10,000 new jobs in 1973 alone. I personally have no further figures for the NIFC and the LEDU and if the noble Lord could give me any, either in reply or after the debate, I should be most grateful. However, the Government now intend, in the words of the gracious Speech, to give an enlarged role to the NIFC. I assume that means the role as it is to be found in the Scottish and Welsh Development Agencies, and presumably this will be be done by order.
Therefore, I have only one point on this matter to put to the noble Lord. Paragraph 3 of the Cairncross Report said:
"We see little to be gained by inviting the Government to become directly involved on its own account in the funding and running of new industrial enterprises".
If the NIFC is to follow the example of the Scottish and Welsh Development Agencies, presumably it will be empowered to give grants and other financial assistance to companies in difficulties and, indeed, possibly to take control of companies. At the present time, the Government need no reminding of the perils of Government subsidies if they are given for other than commercial reasons. Hitherto the NIFC has worked to very great effect within its original terms of reference, and I ask the Government to think seriously before hanging all of the provisions of the Industry Act round the necks of the Corporation and Northern Ireland industry.
My Lords, one of the reasons for unemployment in Northern Ireland is
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the comparative immobility of people, owing to housing problems. Enterprise Ulster and the Urban and Rural Improvement Campaign have mopped up areas of particularly bad unemployment and, of course, Enterprise Ulster retrains people. I should be grateful if the noble Lord could say whether the success which undoubtedly those two organisations have achieved is continuing.
Undeniably one of the keys to the iron sectarian ties which affect some parts of Ulster would be a relaxation of the demarcation lines which almost literally disfigure so many housing estates. Class VII of this order provides for the granting of over £6 million for housing services. In 1974 the Northern Ireland Housing Executive completed a housing conditions survey which showed that, as compared with England and Wales, a greater proportion of all the houses in Northern Ireland were unfit. I understand that the Report suggested that new ways must be found to prevent homes from becoming unfit through extreme disrepair. Has any answer been found to that problem? Is the dereliction of property through inter-secretarian strife showing any signs or lessening? At what level is new house building running? What are the long-term targets for new houses, and is there any plan for the location of any large-scale new housing estates?
There are just two further parts of this Order which I should like briefly to touch on. Class V deals with agriculture and I think perhaps the noble Lord, Lord Moyola, will be dealing with that in greater depth. I simply make the point that in a country where 10 per cent of employment is directly attributed to agriculture, the recession in the pig and the beef trade until earlier this year I would assume must have caused some grievous hardship, and I believe the Northern Ireland processing plants have been in considerable difficulty. With those special problems in mind I would assume that Northern Ireland agriculture deserves a slice of the EEC Regional Development Fund which is allocated to the United Kingdom. Can the noble Lord give any indication about the RDF as it affects Northern Ireland, and can he tell the House anything about the largest item which is to be found in Class V, namely, under heading 6, which deals with grants of nearly £2½ million for agricultural assistance schemes?

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Then, Class IV deals with education; I have understood—the noble Lord will correct me if I am wrong—that the education budget in the Province has been cut quite severely. Can the noble Lord confirm whether that is so, whether the cut has been in line with savings which have been required from other Government Departments, and to what those cuts amount? I believe I am right in saying that in 1973 the school building costs in the Province rose to over £10 million, providing 24,000 new places. Is there now any evidence of any fall in the total school population in Northern Ireland? Can the noble Lord give the school building programme figures for the current year?
I know there are in Northern Ireland many pressing economic problems to which other noble Lords may well refer, and perhaps the noble Lord the Minister will be able to clarify them; but probably the most obviously pressing problem is the current balance of trade, which is in the forefront of all our minds wherever we live in the United Kingdom. Whatever the rights and wrongs of import controls, there is no doubt that the Ulster textile industry must be suffering and that the import of foreign cars into the Province last year reached the really astronomic figure of 38.4 per cent. of new cars registered.
I am afraid I have dealt with a series of points, but I end by expressing the hope that in his reply, the noble Lord, Lord Donaldson of Kingsbridge, may be able to give us some overall view of the Northern Ireland economy, and that he can offer economic and commercial reasons that there is indeed hope for the future.
3.14 p.m.
Lord SHINWELL: My Lords, when my noble friend on previous occasions has submitted orders of this character, particularly where they have involved expenditure, they have gone through almost "on the nod", and certainly with limited comment. In my recollection this is the first occasion when an order of this character has been subjected to a detailed analysis, and I am bound to say that we ought to be grateful to the noble Lord, Lord Belstead, for having undertaken that task because, when all is said and
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done, vast sums of money have been expended in Northern Ireland and we ought to know the reason why.
The situation in that area is shrouded by the violence and terrorism and the deplorable events that have occurred in recent years. But seldom have we thought of investigating the use of the sums that have been expended. In particular, how much are we spending on unemployment? How much are we expending on social security and on the repair of buildings, residential and industrial, that have been destroyed? A variety of questions occurs to me, I am bound to say for the first time—and I apologise for it—and if it had not been for the even limited analysis which the noble Lord, Lord Belstead, has undertaken I should probably have remained in my seat. Somehow there is a feeling in my mind that many other Members of your Lordships' House may think it desirable that on some occasions, if not now (because probably my noble friend the Minister is unprepared for it) we ought to have further and more detailed information.
Another thought occurs to me. I am not quite sure that it is relevant but as it occurs to me I had better deliver myself of it. It is that we are talking a great deal about the possibility of devolution. If devolution is to cost such vast sums as have been expended on one limited area of the United Kingdom, heaven knows what is to be expended if devolution is ever implemented. I beg of my noble friend the Minister, if he cannot reply in detail to the quite appropriate questions that have been addressed to him by the noble Lord, Lord Belstead—and I can understand the reason if he cannot reply now—to give us an assurance that on some future occasion, not too far ahead, we shall obtain further information in much greater detail of how much is actually spent, how it has been expended and what advantages have been derived from the expenditure, apart from the sums that it has been found necessary to spend in order to deal with violence and terrorism.
3.19 p.m.
Viscount BROOKEBOROUGH: My Lords, I should like to begin by congratulating the noble Lord, Lord Belstead, on his analysis and his approach. May I also say how very interested I was to hear

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the noble Lord, Lord Shinwell, making those remarks because I have always been slightly afraid of wearying the House with details about the financial arrangements in Northern Ireland. Everyone here who has heard me speak knows that I am passionately devoted to Northern Ireland and to its success in trying to arrive at some peaceful solution that will make the expenditure at least on law and order very much less than it is today. I am greatly encouraged by the speech made by the noble Lord, Lord Shinwell, who is a man we all respect and love very much.
In the past I have tried to encourage the noble Lord, Lord Donaldson of Kingsbridge, to try the commercial method of air travel. He tells me he has done so twice. I can only tell your Lordships that my noble friend Lord Moyola and I both regret that he was not with us today. We spent some hours this morning flying over Liverpool, waiting for the fog to clear. Eventually we got down at Gatwick. During that time, because of the security arrangements, we were not able to get at our brief cases, so that if my speech has not the usual flow your Lordships will know that it has been hurriedly prepared in the few minutes since I arrived at the House.
Lord DONALDSON of KINGSBRIDGE: My Lords, if I may interrupt the noble Viscount, Lord Brookeborough, before the flow gets bogged down, which it does not seem to have done yet, I think it is a little hard, on the worst day of fog we have had this winter, to blame either the Government or British Airways for the absolutely essential security arrangements they make. This is a wrong attack. If you say that on a fine day your luggage is not properly dealt with, or something of the sort, that I would accept. But on a day of this kind, the fact that the noble Viscount has got here at all is a very pleasant surprise to me.
Viscount BROOKEBOROUGH: My Lords, I thank the noble Lord, Lord Donaldson of Kingsbridge, for his intervention. He need not fear that I have any complaint about the security. We were given some very interesting instructions when we arrived. The first thing that happened was that we were coming from Northern Ireland and our baggage was transferred into the international customs lounge for people going to foreign
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lands. We did not feel that was so good. Then followed the instruction that, "Passengers must claim their own baggage". I wondered whether at Gatwick it was normal for passengers to claim someone else's baggage!
My Lords, I should like first to thank the Government for allowing us to discuss matters concerning Northern Ireland on a rather broader basis than would be necessarily appropriate on the Appropriations Account. I should like to inquire of the Government the method by which they are financing, and are proposing to finance, the Budget of Northern Ireland. Do they intend to provide Northern Ireland with a block grant form of financing—which is a change from the previous method by which we were financed—to meet our social services on a parity basis? Apart from that, there was continuous negotiation with the Treasury to make sure that, in individual projects, finance was given to provide the incentives to make the investments for job promotion within Northern Ireland, the object being to raise the standard of living in Northern Ireland to that of the rest of the United Kingdom.
If we are to go for a block grant system, perhaps the Government could issue a White Paper or a Green Paper to say how this is to be calculated. This has considerable relevance in the future in the discussions about devolution which will occur in Wales and Scotland. In raising this subject, it is clear that it is time we had our own devolved Government in Northern Ireland so that Ulstermen could have a say in their own affairs. I hope that when we come back to this House in January, we shall have a clear policy which should enable a Government in Northern Ireland to be set up. There is something on which all parties in that convention agreed; that was the need for devolution. Equally, all parties agreed that there is a great danger in the present situation of having a political vacuum.
My Lords, 50 years ago at the formation of the province of Northern Ireland, the difference in the standard of living between those of us who lived in Northern Ireland and the rest of the United Kingdom was enormous. Efforts have continuously been made to close that gap, but it was only after 1945, during the period

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of the Labour Government under the late Lord Attlee, that we began to get regional development bearing fruit within the region of Northern Ireland. At that time we had an agreement between the Government of Northern Ireland and Her Majesty's Government that we should have parity in all the services within the United Kingdom, and that we should make an attempt quite separately to provide extra incentives to industry to come to invest in Northern Ireland, with incentives also to encourage existing industries to expand, so as to take up the unemployment slack.
My noble friend, Lord Belstead, quite clearly has said that the unemployment situation in Northern Ireland remains very obstinate. There have been many promotion efforts by various Northern Ireland Governments, continuing with the present régime, as very long-term projects. Everyone knows that if you start to promote something today, it takes many years before it is brought to fruition. By the 1960s, the index of manufacturing production was rising at a rate of about 5.3 per cent., which was well ahead not only of Great Britain but of a great deal of Europe. This was the beginning of success which, by its own impetus, carried us over the first years of rioting and violence. With the present recession, the future seems to me to be very bleak. Unemployment in Ulster is twice the national average; indeed, in parts, unemployment is at a truly horrific level. For instance, in November this year, the figure for Strabane was 27 per cent., and if one takes males only, the figure was well over 30 per cent. I do not believe that, if there were such a figure for Great Britain, something really energetic would not be done to try to break through such a figure.
Of course, Northern Ireland must flourish and must suffer with the rest of the economy of the United Kingdom. But because if its geographical position and the fact that in the past its industrial base was so narrow, and because of its present security problems, Northern Ireland is suffering in an exaggerated way from the present economies of the Government. For instance, if a 4 per cent. cut in public expenditure produces a certain result in Great Britain, the same cut in Northern Ireland produces a very much
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greater effect. Of course, the Government have recognised that Northern Ireland has special problems. In 1973, the previous Conservative Government set out very clearly that these special problems do exist, and this has been accepted by the present Government. But the Government made clear their determination to try to establish, as rapidly as possible, a sound economy with sound employment opportunities to achieve the same standard of living in Northern Ireland, with the same opportunities for employment and the same social conditions as the rest of the United Kingdom
My Lords, the White Paper also recognised—this is very important at the present moment—the dangers of idle hands in the present situation. My noble friend Lord Belstead has drawn our attention to the exertions and the work of the Ministry of Commerce and Manpower Services in trying to encourage industry to come to Northern Ireland. My noble friend referred to our industrial training schemes, which I believe lead the world. Within the Government of Northern Ireland, there is no doubt that there is all the skill to cure the problem. What is wanted is more drive and more investment, not less. With the rising working population and, unfortunately, with some industries on the decline, new job opportunities have to be provided at a higher level within Northern Ireland than would normally apply for an equivalent area in the United Kingdom.
My Lords, in 1971—I should like to say how proud I am to have been in the Governments of Northern Ireland when the development programme from 1970 to 1975 was being formed—we saw some 7,000 new jobs being provided. Had that continued, we would really have made considerable inroads to the problem of unemployment. But all of that in the 1970s was really the result of efforts made well before, many years before that. Now that the impetus has gone I feel that I can see few signs of a vigorous promotional campaign going on at the present moment. It is worth while here stating that it is not as though our labour relations were bad; they have been quite excellent, and indeed the strike record has been the envy of many regions in this country. Of course, at the moment the problem is that so much money and

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effort is having to be spent in holding on to existing jobs, and it is a very frustrating business to be just trying to hold on and not to be developing.
This brings me to the particular problem of Harland and Wolff. Although I wish to criticise the methods the Government have employed in saving the great firm of Harland and Wolff, I would make it quite clear that I support absolutely their decision to try to re-create a viable shipyard in Belfast. Shipbuilding is a strategic industry. It operates in a special climate of its own, nation by nation protecting its own strategic industry. Since it is in fact a strategic industry, in my view the whole burden of that industry should be carried by the nation as a whole because it is up to the nation to decide what size and what shape that industry should be. In fact, it is not a provincial responsibility. I know the problems of the shipbuilding industry. I am told that at the present moment if you want to buy a ship—and who would want to buy one?—in Japan and Korea the cost is some 40 per cent. lower than the cost in the United Kingdom, and in fact it represents only the material which has gone into the ship. Under those conditions it is incredibly difficult to see what the right future of this industry should be.
Harland and Wolff have two years' work ahead of them, but the question what happens after that is a most serious affair, and should this industry still be carried by the Province as opposed to the nation we could have some very grave problems. So far as the relative efficiency of Harland and Wolff is concerned, although the output is still far too low they can compete with reasonable success in Europe if they are pricing ships. But unlike other industries that Her Majesty's Government have been rescuing, labour relations within Harland and Wolff have been very good indeed. In 1975 up to date the total amount of time lost due to strikes has been only one half hour per employee. I believe there must be many industries which would be proud to have a record like that.
The Northern Ireland Office and the board of Harland and Wolff decided that it was necessary over the next two years to have £60 million pumped into Harland and Wolff. As I understand it—and this is what I would very much like cleared
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up by the noble Lord— £30 million of this money came from the Treasury and £30 million came out of the Budget of Northern Ireland. All Departments in Northern Ireland were asked to make economies to provide this extra £30 million. Education, as I understand it, had to provide about £5 million. It seems to me that this is an attack, however obliquely done, on the agreement that we should have parity in social services within Northern Ireland. That is a very long-standing agreement. If I am right, for the next two years Northern Ireland will in fact have parity less £30 million.
I should like the noble Lord to explain, if he can, the workings of this arrangement. For the very first time since 1945, when large incentives were provided to increase job opportunity in Northern Ireland, we are having job promotion balanced against the social services. I am entirely in agreement with the Government that people in an area should realise that they have only a certain amount of money, and if they spend it on one thing they do not spend it on another; but when you are dealing with a subject such as shipbuilding, which is a national strategic industry, I feel a different set of circumstances arises. We know that there is to be a delay in the school building programme; I do not know by how much. I know the noble Lord cannot answer this, but tomorrow we may be hearing of many millions of pounds going into Chryslers. I should like to know whether the comprehensive schools around those particular works are going to be delayed in order that people there should realise the difficulty of supporting a problem industry.
The announcement in which the Minister, Mr. Orme, said to the workers of Harland and Wolff, "Raise your productivity or you will get no more money", was clarity itself, and I believe that this has been taken to heart by the men of the Queen's island. I believe that they are determined now to deliver the goods. But it does not alter the fact that in two years there may be no goods to deliver because the world's shipping trade is in such a state. I wonder whether, when it comes to the question of Chryslers, we shall have as clear an indication as the Minister of State has given to the workers of Harland and Wolff. I would hope so, because if it was not so then one could suggest that it was politics

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and political support which was playing a part in Great Britain.
Lastly, in dealing with Harland and Wolff the Government have decided to leave them out of the general nationalisation plan for shipbuilding in the United Kingdom. They have also decided to leave out Short Brothers and Harland from the aircraft nationalisation plans. I am not going to debate here the wisdom of that decision, or indeed the political unease that it has caused, because that is, to my mind, water under the bridge at the moment. It is symptomatic of our problems in Northern Ireland that that particular decision has worried a lot of people; many people feel that this was the setting up of an industry ready for a pull-out from this country. I must ask the Government what arrangements they have made to ensure that both these great firms arc in continuous contact with the nationalised industries on this side, because there is a great danger, unless those communications are absolutely clear, of both industries being left out on a limb and then disaster will surely follow.
I wanted to draw the Government's attention to the problem of communications between Great Britain and Northern Ireland. So far as we can see, services have been closed at an alarming rate, and the cost of travel between Northern Ireland and Great Britain is now absolutely astronomical. I wonder whether the Government could have a really good look at that to see whether something could be done about it. May T ask the Government to have a really good look at the expense of travel, and at whether it would not be made easier for tourists and other people if Aldergrove were made into an international airport so that people coming from the Continent would not have to stop over in London on the way through?
My Lords, I have not touched on agriculture because my noble friend Lord Moyola will be doing that. I know the noble Lord and his Government are frustrated at having to spend so much money on prison building in that sort of area. However, prison building is no substitute for job promotion, and I should like to ask the Government whether that is being carried on the Northern Ireland Budget or how it is being carried, because it is
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part of law and order which should not be taken away from our social services budget.
I would end by asking the Government to tell us how they will increase their efforts, referred to in the White Paper. Do they intend to continue greater incentives to industry to come to Northern Ireland than exist in other areas than Northern Ireland, as has happened in the past? Have they calculated the vast scale and the form of investment that will be necessary in order to improve the standard of living, the standard of employment, and social conditions in Northern Ireland within the foreseeable future? And what do they consider to be the foreseeable future? Is it ten years, or what? I await the noble Lord's reply.
3.41 p.m.
Lord MOYOLA: My Lords, I must apologise to the noble Lord. Lord Donaldson of Kingsbridge, for the fact that I have not been able to give him any inkling at all of what I intend to say. As he will have heard, I spent a good part of the morning circling Liverpool in an aeroplane. Although I had good intentions, I am afraid that it was not possible to fulfil them.
I should like to support what the noble Viscount, Lord Brookeborough, has just said about the unemployment problems of Northern Ireland. I have not studied the matter in depth in the way that he has, but I have noticed the rather steady stream of factory closures which we have seen over recent months. It comes home to one particularly when one sees it happening on one's own doorstep. In my own small village of probably less than 1,500 people, we have seen two out of four factories close in the past four months. Unfortunately, it was the two largest which closed, and the two that remain, being very small, can have no hope of absorbing the people who have lost their jobs. It comes home to one particularly when one knows of two people in the same family suddenly finding themselves on the dole. I hope that the noble Lord will be able to give us some joy on the unemployment picture.
The main thing I want to talk about is agriculture, against the background of unemployment. As a farmer, I should declare that I have, of course, an interest. In Northern Ireland agriculture is still

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our largest industry; something of the order of 14 per cent. of the working population are involved in it and its ancillary industries. It follows, therefore, that if our economy is to keep its head above water, it is important that agriculture should be on a sound footing. I am fully aware that over here, too, farmers have been through a bad time in the past year, but when there is a recession the remoter areas feel the draught first and feel it hardest. Over the past year, 1974–75, farm incomes in Northern Ireland have been 40 per cent. below what they were in the preceding year, and if one takes it back further, 20 per cent. below the average of the four years before that.
A good deal has already been said about our geographical problems. The hard facts of geography add enormously to our difficulties. In saying that, I want to say how much we in Northern Ireland have over the years appreciated what we know as the "remoteness grant" which has been given to us by successive British Governments. This grant compensates in part, not by any means in full, for our transport disadvantage. I would at this stage, without labouring the point, like to ask the noble Lord whether he will give us an assurance that that grant is going to continue—I understand that it is shortly due for review—and that it will continue at a higher rate than heretofore, in order that it may compensate for the enormous increases in freight charges by road, sea and rail. When this calculation to decide on the amount of the grant is made, I hope it will not be forgotten that many of the things which farmers require have to come into the country, such as agricultural machinery, foodstuffs and so on, and of course the finished product has to go out again. There is a charge on many agricultural items both ways, and consequently this remoteness grant is of the greatest importance.
I should like to turn briefly to beef, which of course climatically we can produce best and easiest. Because of that, two-thirds of our cows are devoted to producing beef calves. As we all know, losses among beef farmers in the past year were pretty heavy. Farmers incurred enormous debts last winter, and although calf prices were much better this year, in many cases they were not sufficient to pay off the debts which had been
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incurred. As a result, because the price of cows is reasonably good at the moment, an enormous number are being slaughtered to pay the bills. Again, because at the moment there is a good trade in calves to the Continent, an enormous number are being sent there. It all means that if something cannot be done there will be an acute shortage of store cattle in the near future, because there will be comparatively few cows to breed, and there will be a great deal less beef for the market, and we are all going to pay more.
One further point I should like to make on beef relates to the variable premium, which we in the North of Ireland have appreciated enormously. Because of the stretch of water, I suppose we in the North of Ireland almost always receive less for our beef cattle than do farmers here. I think that buyers allow for transport costs—and generally a hit more. There are, of course, times when the price is still low with us, and because prices are good here we receive no variable premium. Put another way round, if the price in Great Britain was as low as the Northern Ireland price, then there would be a premium. I would suggest to the noble Lord that if he would let us have our own target price in Northern Ireland it would put Northern Ireland farmers on a much more equitable basis, and a much more fair basis, compared with their colleagues in Britain.
I should like to turn to grain. Until we joined the EEC, our grain importers in Northern Ireland were able to buy their grain on the world markets at, roughly speaking, prices that were comparable with those paid by the rest of the United Kingdom. Now we have to buy from the EEC and, because we are on the periphery, we have to pay a good deal more by way of transport charges than is the case in the rest of Britain. I am told that at the moment the disadvantage for us, compared with our counterparts in, say, Liverpool, is about £4 a ton, but if one takes the figures over the whole country, I am told that the average is about £7 a ton. To put it another way, in Northern Ireland it costs us £l more to finish a pig than in the rest of Britain. This is a serious disadvantage, and of course one has to add the fact that many of the pigs are exported to this country, so

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that there is a transport charge on that as well.
This is a particularly serious matter in a country of small farms because to make up for the shortage of agricultural land, people go in for intensive farming: in other words, pigs and poultry. The seriousness can be no better emphasised than by some figures which I have been given which show that the pig breeding herd in Northern Ireland fell by about 37 per cent. last year as opposed to only 17 per cent. in this country, and that was at the time of the recession. If people go out of intensive farming, they do not come back to it.
They do not have the capital to get back and, in the present climate of serious unemployment, it will not be easy to find jobs for people who leave this occupation; there are in Northern Ireland now about 14,000 people unemployed in the pig, poultry and related industries. This problem needs urgent attention; it needs either a direct subsidy on the transport costs or, on an EEC basis, a subsidy which, I have no doubt, would have to be, and should be, applied to the whole island of Ireland. It does not matter which way it is done as long as it is done quickly, and it must be done before confidence is eroded again and further unemployment occurs.
The noble Viscount, Lord Brooke-borough, referred to the question of transport betwen Northern Ireland and Britain, a matter which affects the economy, industry, business and, to some extent, the whole fabric of the Northern Ireland society. In the past year, we have been deprived of the Belfast-to-Heysham passenger service which British Rail ran both ways daily across the Irish Sea. It was taken off at the beginning of April when one would have thought the tourist trade was increasing. If there was ever a chance of the service paying, it was then; one's mind boggles at the reason. We are also told that we are to lose the daily service between Belfast and Ardrossan, and we have been told that we may lose—I emphasise "may" because I hope otherwise—the Townsend Thorenson service between Larne and Stranraer. The problem for industry and business are obvious, and when one
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realises that, in addition, the return air fare has just been increased to £44 for what is in fact a 50-minute journey, the situation is even more serious.
I have no doubt that some noble Lords will say that one pays that much for travelling from Glasgow or Edinburgh to London, but they are not comparable situations. There is no strip of water between and therefore there is no problem of having to transfer from train to boat and boat to train. In any case, the train takes only five hours from Glasgow to London, whereas one cannot get from Belfast to London in even double that time, except of course by air. Thus, the two things are not comparable, although many will argue that they are. I recognise that there are enormous problems for the undertakings which provide transport across the Irish Sea, but I believe that if it were made a little cheaper and perhaps a little easier for people to make this journey, it could be of help to business and industry, and, perhaps, also the community side of our problems. The rundown in transport services does not encourage industry to come to this area or help the bank balances of industries which want to send a director to London to do business.
On the community or social side, we all benefit by having our outlook broadened by travel, and particularly this is so where there has been a period of strife, when hatreds have been built up and there have been difficulties of this sort. As these hatreds die down, it would be of enormous help if people could be encouraged to get out of their environment and see how similar communities live in other parts of the world; if nothing else, going away provides a cooling-off period. I ask the noble Lord to examine this matter urgently, because it is totally wrong to allow one part of the United Kingdom to become, or feel it is becoming, isolated, as we are beginning to do. This is a real danger to employment, and if travel were made easier it might be a contributory factor to bringing peace. These are all matters which concern us in Northern Ireland. They are all problems which are magnified by the fact that we are a long way from the centre of things and I hope that when the noble Lord replies, he will be able to give me some joy on some of them.

THE NHS AND PRIVATE PRACTICE
3.57 p.m.
Lord WELLS-PESTELL: My Lords, with the permission of the House, it might be convenient if I were now to repeat a Statement made in another place by my right honourable friend the Secretary of State for Social Services on private practice and the National Health Service. The Statement reads as follows:
"The House will be glad to know that this morning I have met representatives of the medical and dental professions on the Government's proposals for phasing private practice out of NHS hospitals. As a result of this meeting, they are ready to call the Central Committee for Hospital Medical Services and the British Medical Association Council and the Council of the Hospital Consultants and Specialists Association together later this week and submit proposals to them for urgent consideration. It is hoped that they will be accepted and normal working resumed.
"As the House will be aware, the Prime Minister and I met a representative delegation of the professions on 3rd December at which the professions expressed anxiety that the Government's proposed legislation on phasing out private practice from NHS hospitals could render nugatory the practice of private medicine in this country which the Government have always said they do not intend to abolish. At that meeting outline proposals were put forward by the noble Lord, Lord Goodman, which were regarded as the basis for urgent exploration. The Prime Minister undertook that these proposals would be examined and that the professions would be informed of the Government's response.
"Since that time a process of clarification has been taking place with me through the noble Lord, Lord Goodman, and proposals have been evolved which the Government hope will lead to an end to this dispute. If the professions as a whole agree these proposals and normal working is resumed, the Government will embody these proposals in their legislation.
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Under the proposals, a copy of which has been placed in the Library, the professions make clear their continuing opposition to the phasing out of private practice and reserve their right to try to influence Parliament's decision on the point of principle, but they acknowledge that this may become the will of Parliament. It is proposed that the legislation would embody two principles: first, that private beds and facilities should be separated from the NHS and, secondly, an expression of the Government's commitment to the maintenance of private practice in this country through the renewal of the provision in the National Health Service (Amendment) Act 1949 which maintains the right to private practice by entitling doctors to work both privately and in NHS establishments. These two commitments will be related through the establishment of an independent board set up by the Government. The board will have an independent chairman, two members drawn from the medical profession and acceptable to it and two members appointed after consultation with NHS staff and other interested parties.
"The criteria under which pay beds and facilities would be phased out in the legislation will be the reasonable availability of alternative facilities for private practice. It is accepted that there are some pay beds and facilities which on this basis, and on the basis of their under-use, could be phased out without delay. The Bill will therefore contain a Schedule, giving details of 1,000 pay beds which will be phased out of the NHS within six months of Royal Assent. The Schedule will be drawn up on the criteria which I have mentioned and after consultations with all concerned. The phasing out of the remaining pay beds would be determined by the independent board which would be guided by the following criteria: that there should be a reasonable demand for private medicine in the area of the country served by a particular hospital; that sufficient accommodation or facilities existed in the area for the reasonable operation of private medicine, and that all reasonable steps had been, or were being taken to provide those alternative beds and facilities. This would be

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kept under continuous review. Where all reasonable steps were not being taken, that would, after due warning, be in itself grounds for withdrawing pay beds and facilities in the hospitals concerned.
"One of the factors the board would bear in mind in deciding whether private facilities for specialised operations, treatments and investigations should be phased out would be the willingness of the NHS to make such facilities reasonably available on an occasional basis in specified circumstances and at an appropriate charge. The Secretaries of State would have to be satisfied that there would be no disadvantage to NHS patients and that such patients were admitted on the same basis of medical priority as NHS patients.
"As stated in the Queen's Speech the regulation of the private sector following the separation of pay beds will be subject to further consultation with the professions. In the meantime the Government need to be satisfied that developments in the private sector do not significantly endanger the service the NHS gives to its patients and will enter into consultation with the medical profession as to how this can be achieved by voluntary means. The consultations would cover the point as to whether any reserve powers that it proved necessary to take in the legislation might be exercised by the independent board.
"The Government believe that the smooth phasing out of pay beds would be facilitated if, pending their withdrawal, a system of common waiting lists were to be introduced. The professions have expressed reservations on this matter, but it is proposed that the legislation should instruct the board to examine this and make recommendations to the Secretaries of State within six months of Royal Assent to the Bill.
"I hope that, in the light of these proposals—with which the Secretaries of State for Scotland and for Wales associate themselves—the professions will now accept that this is a matter for Parliament and end the damaging industrial action by senior medical staff. The issue of private practice in
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National Health Service hospitals has long been one of great controversy, not least within the Service itself. These proposals will ensure that the policy of separation is achieved, but in a way which should allay the fears of the medical profession, and provide an enduring settlement."
My Lords, that is the end of the Statement.
4.6 p.m.
Lord SANDYS: My Lords, the House will be grateful to the noble Lord, Lord Wells-Pestell, for having repeated a very long and somewhat complicated Statement which we shall be glad to study in detail at a later stage. Many matters are raised in this Statement—matters which your Lordships' House debated at length in a debate earlier this month. First, there is a primary matter, to which we take particular exception, the phasing out of 1,000 pay beds. Here I quote the Statement:
"…which will be phased out of the NHS within six months of Royal Assent."
This is wholly repugnant to the professions who have been in close touch with the noble Lord's right honourable friend. It is also wholly repugnant to this side of your Lordships' House and to all those concerned with the prosperity of the National Health Service and private practice in concert.
We believe most sincerely that the arbitrary nature of this decision will not lend itself to future harmony within the profession. Perhaps the noble Lord would be able to tell the House the reason for this decision. We take the view that it would be better to defer this decision so that it becomes a matter to be considered by the board which is to be set up at an early stage. We are naturally glad that in the terms of the Bill there will be provision for the re-enactment of the National Health Service (Amendment) Act 1949,which will maintain the right to private practice in the profession and will entitle doctors to work both privately and in National Health Service establishments. We believe that this is fundamental, and we are pleased that the Government have at last yielded to the very real arguments put forward by the profession.
Finally, what particularly concerns us is the question of the private sector in its

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various establishments after the Bill has been laid before your Lordships' House. I remind your Lordships of what the Secretary of State said in her speech at Folkestone on, I think, 9th October, relating to the circumscribed way in which Her Majesty's Government see the private sector operating. This has no mandate whatever in the Government's programme. There was nothing whatever in the programme about the circumscribed way in which they foresee private beds being made available. We recognise that it may be necessary to reach a new distribution of private beds, but this is a wholly different matter and one on which we hope the board will work in close consultation with the profession.
4.10 p.m.
Lord AMULREE: My Lords, I should like to welcome in a very warm fashion the Statement which has been made because I am pleased to see that it has now been accepted that it is the will of Parliament which must remain supreme. This means that there is a good chance that the consultancy profession will call off the strike in which they are indulging now—because although it may be covered up by the words "industrial action", it is in fact a strike—and that, as I said to your Lordships the other day, is something in which I do not think members of my profession should indulge. The other thing about which I am a little uncertain, although I do not disagree with it at all, is that we are told the facilities for private work will be separated from the National Health Service but will be allowed to continue on the understanding that there is no interference with the work for the National Health Service patients. My Lords, apart from the pay bed issue I have never come across any example of facilities being available to private patients which has militated against work for the National Health Service, and I have worked for the National Health Service for a period of20 years.
One further point I should like to make concerns the waiting lists. It has always seemed to me that there was an enormous amount of work to be done on waiting lists because, from what little experience I have had of them, I have never been certain how genuine they are. I see that the board is to make a recommendation about waiting lists at the end of six
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months. I wonder whether six months will really be long enough to do what will be an extremely difficult and intricate job. Finally, my Lords, I am rather disappointed that the Statement contains no reference to the Royal Commission which, about six weeks ago—I cannot remember exactly; it is so long ago that I have almost forgotten when it was—we were promised would be set up. I am surprised there was no reference to it in the Statement, and one wonders whether, again, this is to be an egg which will be addled from the start.
Lord REIGATE: My Lords—
Lord WELLS-PESTELL: My Lords, I am sorry, but I think that the practice of the House requires me to answer the two Front Bench spokesmen first. I think this is an inopportune moment to have another debate on the National Health Service, and if I may say so with very great respect to noble Lords, I hope we shall not be tempted to do that. I am surprised that the noble Lord, Lord Sandys, should talk about a certain repugnance on the part of the consultants at the idea of phasing out at one fell swoop 1,000 beds. I think that, if he consulted them, he might well find that that repugnance does not exist. They recognise, as we all recognise. that we have 4,451 private beds within the National Health Service. Only about 2,500 of them are in full occupancy. I admit that some of the others are used for a few weeks in the course of a year, but when you total them it amounts only to something like 2,500. I think that most people who are aware of the situation would recognise that we could dispose of 1,000 beds without any detriment at all to private practice. The question of the remaining beds will be one for the board to deal with. It will be for the board to see whether there is a sufficient number of pay beds available in any one district. This is their function, and it will be their decision. Perhaps I could leave that there.
My Lords, I am grateful to the noble Lord, Lord Amulree, for his contribution, which I thought was a very balanced one. As to his point about the Royal Commission, the only comment I would want to make is that the function of the Royal Commission is to look at the whole of the National Health

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Service. This Statement deals with a specific problem, so far as private practice and the consultants are concerned, and my right honourable friend the Secretary of State wanted to deal with this separately in view of the pressing and urgent need to get this result.
Lord REIGATE: My Lords, may I ask the noble Lord two questions? First, will the board, whose functions are at the moment rather difficult to follow, be able to take into account the problem of pay beds in teaching hospitals, where private beds have always had a special importance for a variety of reasons? Secondly, what will be the position about foreigners? Am I right in saying that British subjects will not be encouraged to use pay beds in National Health Service hospitals, but that such beds will still be available to foreigners? Will those be included in the 1,000 or not?
Lord WELLS-PESTELL: My Lords, I cannot answer the noble Lord's second point. I just do not know; but I will find out, and I shall certainly let him know what the position is.
Lord REIGATE: My Lords, with respect, it is a rather important point.
Lord WELLS-PESTELL: My Lords, the noble Lord is talking about private beds available to foreigners. I was saying that, so far as private medicine is concerned, 1,000 beds can be disposed of without imposing any difficulties on private practice in this country. With regard to pay beds in the teaching hospitals, this will be a matter for the board to look at and to review, and it will be for them to make a decision on it.
Lord PLATT: My Lords, I do so agree that we should not turn this into an occasion for a major debate. I understand that a certain compromise is within our reach, or our possible reach, and anything which will prevent the medical profession behaving as it has been doing in recent times would be very greatly to my satisfaction. I endorse everything that the noble Lord, Lord Amulree, has said about that. With regard to waiting lists, to which he also referred, I think there is an enormous amount of bogus in waiting lists. When you really go into them I think you will find that an
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enormous percentage of them are in fact children waiting for tonsil and adenoid operations which are probably much better not done. It is high time that somebody looked into this matter very seriously.
As your Lordships know, I have no personal advantage to gain by the continuance of private beds, but I reiterate what I have said before; that is, that I think private practice is an enormously important education to any consultant and, so far from private practice militating against the National Health Service, it has always been my view that private practice increases a doctor's experience of medicine in the populace as a whole, and that this is to the advantage of the Health Service. I hope that a satisfactory compromise will be reached.
Lord HARMAR-NICHOLLS: My Lords, I wonder whether the noble Lord, Lord Wells-Pestell is aware that, though he has a facility for making complex matters sound easy, the Statement was a complex one. He must be aware that, however favourably one may view its outcome, it is full of face saving and reflects the fact that there is a conflict into which ideology seems to enter. It is vital that we should be objective about this important matter. Is it too late for it to be put to a Royal Commission where it could be brought back into objective consideration the result of which everybody would accept, instead of passing it on in this way in which, clearly, there is a conflict of thought which can only be damaging in the future?
Lord WELLS-PESTELL: My Lords, the noble Lord is quite right. There are ideological differences and I have never been at any pains to deny that that is so. I believe that there must be a certain point where noble Lords on different sides of the House will not meet. The obvious thing to do is something which we have always been very good at; that is, trying to effect a compromise. I can only say what I said when we had the National Health Service debate in this House on 3rd December; that is, that, rightly or wrongly, we regard the issue as a political one and feel that it must, therefore, be determined by Parliament. We may be wrong about that, but that is how we feel. We do not believe that this is a matter which can be decided by the Royal Commission. Anything else, yes, but I should

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have thought that we had here not only grounds for reason and understanding but grounds upon which a solution to this rather distressing problem can be built.
May I add while I am on my feet that I have been looking again at the Statement in the light of the remarks of the noble Lord, Lord Reigate. It is a difficult Statement to take in. I said that the National Health Service would need to
"…make such facilities reasonably available on an occasional basis in specified circumstances and at an appropriate charge."
I feel that the answer is that beds for such purposes as the noble Lord described would be provided in that way.
Baroness GAITSKELL: My Lords, would not the Minister agree that, whatever we feel about the private beds issue—whether or not we feel it to be a matter of principle—it is true that private beds and private practice are no threat to the National Health Service, which can be run only as a public service?
Lord BOOTHBY: My Lords, before the noble Lord, Lord Wells-Pestell, replies, may I ask whether he has considered how much Her Majesty's Government and, indeed, all of us owe to the noble Lord, Lord Goodman, who has played a great part in this business, as in many others? Indeed, in so far as the Government are governing the country at all, the noble Lord seems to be doing most of it, and I feel should be paid a tribute.
Baroness LEE of ASHERIDGE: My Lords, the noble Lord, Lord Boothby, has anticipated what I wanted to say. No one will get a perfect ideological solution, but I should like to feel that, when Members have read their Hansard and had time to consider this complex Statement, they will feel that we should send our congratulations to the Minister responsible, to the noble Lord, Lord Goodman—who is lurking in the background— and to the representatives of the medical profession.
Lord WELLS-PESTELL: My Lords, briefly to reply to my noble friend, the whole purpose of this operation is to ensure that the National Health Service is able to offer a really comprehensive, effective and efficient service, while alongside it there is private practice. I would endorse what the noble Lord, Lord
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Boothby, said, but it is hardly for me, occupying such a junioir capacity in your Lordships' House, to extend the thanks of my right honourable friend to the noble Lord, Lord Goodman. I am sure that she will have done this herself much more effectively than I could do.
Lord SEGAL: My Lords, since the phasing out of the first 1,000 beds over a period of six months is a very considerable compromise on the part of the Government would my noble friend not agree that it would go a long way to provide reassurance to the various contributory schemes, as well as providing a very useful source of extra revenue to the National Health Service, if the phasing out of the remaining 3,000 beds were considerably slowed down after the end of the first six months?
Lord WELLS-PESTELL: My Lords, I cannot make any comment on the speed. This matter will depend entirely on the Board and it may well take some appreciable time before they are phased out. It may well be that there will be pockets—or perhaps I had better say "areas"—in the United Kingdom where it may take an extremely long time before one can offer a comparable service. So I believe that we must think in terms of a long-term operation rather than something which will take effect in six or 12 months.

APPROPRIATION (NO. 3) (NORTHERN IRELAND) ORDER 1975
4.26 p.m.
Debate resumed.
Lord DONALDSON of KINGSBRIDGE: My Lords, if we may now resume the discussion of the Appropriation (No. 3) (Northern Ireland) Order, may I first say to my noble friend Lord Shinwell—
Lord BELSTEAD: My Lords, I do not want unnecessarily to extend the debate but I believe that there may be another noble Lord who wishes to speak before the noble Lord replies.
Lord GREY of NAUNTON: My Lords, I was not aware that the noble Lord, Lord Donaldson, was about to reply and I should, in any event, hesitate to add to the talk about Northern

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Ireland and its problems. Much talk—and there is much talk—may equally well be the cause of troubles as their cure. So much that is said over here is about what is bad in Northern Ireland and all too little is said, and even less is listened to, about what is good. That is my excuse for seeking to add a few words to the specific points which have been made by the noble Viscount, Lord Brookeborough, and by the noble Lord, Lord Moyola. Five years in a privileged position in Northern Ireland taught me that, despite the undoubted bad, there is a great deal of good. Several years away from Northern Ireland since then have, alas! taught me that many people over there feel, rightly or wrongly, that not enough is said here on their behalf about what is good.
The draft Instrument before your Lordships is one that will appropriate a very large sum of money for the service of that part of the United Kingdom which is across the Irish Sea. There are others outside your Lordships' House who, for understandable reasons, would cheerfully excise that part from the United Kingdom and cease entirely to appropriate monies for it. That has never been the intent of Her Majesty's Government and the draft Instrument before the House is further proof of this. So I may be open to the charge of pushing at an open door if I try to justify Northern Ireland's claim to its share of what is available from the United Kingdom. However, the purse on which Northern Ireland must claim is, alas! very much slimmer than it was in the days when the statement about parity of services to which the noble Viscount, Lord Brookeborough, referred was made. It may therefore be necessary to speak up for the worth of the claim, not just on some promise made in the past but on its intrinsic worth.
There are two ways of speaking about Northern Ireland, neither of which is in the least likely to lead to success. The first is to utter some broad generalities and open oneself to being instantly controverted; the other way is to go into the endless complexities that undoubtedly surround anything discussible in that wonderful land. The second of these alternatives is tedious and your Lordships' House has had enough of it in the past and I shall have at least the merit of
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brevity if I use the "generality" method. I boldly say that there is, in spite of all the grievous tragedies of Northern Ireland that have anguished and perplexed the rest of the United Kingdom, a great good there that merits help of the kind that it is proposed to give by this appropriation of money.
We have been told that the level of unemployment there is twice the national level and that there are large pockets of unemployment where the level is vastly higher than anything anywhere else in the United Kingdom. I hope that no one will think that a fair deduction from this is that the majority of those out of work in Northern Ireland are unemployable. The contrary is the case. An instance can be taken from Short Brothers and Harland. Any firm that earns a Queen's Award to Industry can justly be proud of it. It is almost unbelievable that in the stresses of Belfast in recent years and in all the uncertainties and difficulties of the aerospace industry, Short Brothers have won the Queen's Award to Industry no fewer than eight times. This is something which is unparalleled except by (I think) two great companies with many separate divisions, some of which have earned the Award from year to year.
The fact is that with good management and wise understanding of the work force, Northern Ireland people are skilful and industrious; and if the question is asked whether strenuous efforts (to which tribute has been paid by noble Lords who have spoken previously) should be continued to reduce unemployment at the same time as the large and difficult problem of unemployment in the rest of the United Kingdom, the answer undoubtedly is, Yes. There is the additional consideration that the levels of unemployment in Northern Ireland are of themselves so destructive of self-respect as to be a direct cause of civil disorder and resort to anti-social behaviour. So there is a special need to tackle the unemployment problem there.
It is patently true that the Ulstermen themselves have contributed to the loss of job opportunities. This has happened not only through direct violence and the mindless destruction of life, limb and property but in other less direct but equally reprehensible ways. It would be a brave director or senior executive of a company

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who would stand up at an annual meeting of shareholders to explain why it was decided to invest further large sums of the shareholders' money in the reconstruction or further development of a business in a place with so dismal a reputation as has Northern Ireland. But there are good reasons for doing just that. There are the specific arrangements that have been made by succeeding Governments which have been mentioned this afternoon: the advance factories and the financial inducements. But beyond those there are the great advantages of intrinsic skills and, as the noble Viscount has said, a reputation for good industrial relations and a responsible trade union organisation.
It is dangerous for any non-Irishman to express any general views about the Irish character, particularly if he proposes to be in any way less than complimentary, but I wonder whether it is not true that the Irish have themselves in times past given the impression that they are, to put it politely, a little light-hearted about money. Some may be so; but the cold statistics of savings in Northern Ireland show that the Ulsterman is a canny man about money and the saving of it. This is all the more remarkable at the present time when, elsewhere in the United Kingdom, saving does not seem to be a great virtue, and the mutability of human affairs in Northern Ireland is greater than it is over here and consequently there is even more temptation to spend what one has and take no heed for the morrow. The Ulsterman is a great saver and a good regarder of his money and it may be assured that the monies appropriated for public services in Northern Ireland will not be frittered away.
My Lords, the noble Viscount referred to the terms of the White Paper of 1973, Northern Ireland Constitutional Proposals, Command 5259, and I am sure that the same principles there set out are still those that move Her Majesty's Government today. It was declared that the overall level of public expenditure in Northern Ireland would be determined in the light of the objectives to which the noble Viscount drew attention and would be compatible with public expenditure policies for the United Kingdom as a whole. As we are all so sadly aware, the harsh facts of economic life have turned very much against the United Kingdom as a whole since then; but des-
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pite all the unfavourable publicity and despite its self-inflicted wounds, Northern Ireland, not only as an integral part of the United Kingdom but on its own desserts—which far exceed the much more publicised defects and defaults—should have the parity of treatment which the White Paper set out and which had for many years before that been the basis of United Kingdom policy.
The noble Viscount, Lord Brookeborough, asked some searching questions as to the basis of the calculations which lie below the details of the sums of money which are to be appropriated if the draft order is approved. It is not for me to traverse that ground or to venture to accept the invitation of the noble Lord, Lord Shinwell, to go into such things; but one is surely entitled to hope, whatever arrangements underlie these calculations, that what Her Majesty's Government do about money for Northern Ireland will be the result of sympathetic, specific, realistic and effective consideration of the needs and desserts of a much maligned part of the United Kingdom.
4.39 p.m.
Lord DONALDSON of KINGSBRIDGE: My Lords, I am grateful to the noble Lord, Lord Grey of Naunton, for intervening. He has the respect of, I think, all members of the Northern Ireland Province and he reminds us that although there is a sense in which the preservation of the Province in something like its normal state is a cost to the United Kingdom, this is a cost which is very much worth while. I, for one, agree entirely with what the noble Lord has said. He made one or two points to which I think I should refer. He mentioned the excellent industrial relations, and the noble Viscount, Lord Brookeborough, spoke of the half-an-hour-per-employee time lost in Harland and Wolff.
Nobody who has anything to do with agriculture, as I have, in Northern Ireland can doubt the extreme energy of the Northern Ireland worker. There is a basis here of a possibility of industrial efficiency which is not so striking to the eye elsewhere, though there are other difficult problems. My noble friend Lord Shinwell was not right in suggesting that this is the first time these figures, which come up two to three times a year, have

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been subjected to fairly close analysis. As a matter of fact, six months ago we had a debate not very different from today's debate, dealing with all the same points which have moved on a little in the way things do. It is desirable and healthy that we should do this from time to time and, as noble Lords know, I have once or twice criticised one or two noble Lords for talking out of turn, but not on Appropriation Orders.
I should like to support the noble Lord, Lord Belstead, in his praise of the work of the Manpower Services Commission. This is one of the most important things that we are doing in Northern Ireland. Our industrial training programme is the most sophisticated in Western Europe. In Northern Ireland nobody lives more than 25 miles from a training centre. That is a remarkable statement. We have ten times as many training places per head of population as in Great Britain. These are supplemented, as noble Lords will know, by schemes to train workers on company premises, and groups of workers as an integrated work force, by direct labour schemes such as "Enterprise Ulster" and the Urban and Rural Improvement Campaign. I spoke about this the last time we were discussing this matter. The work they are doing is absolutely first class. They are collecting men, who seem to have been out of work for some time, from the employment exchanges and turning them into semi-skilled and hard workers so that they can go on and hold down a job elsewhere. It is excellent.
The noble Lord, Lord Belstead, asked about foreign investment. Clearly this is a matter of the greatest importance. It is not too easy at the moment to attract new investment in Northern Ireland for obvious reasons. The United Kingdom is subject, as we all know, to a serious recession. It is part of a world recession which has United Kingdom elements all of its own, and Northern Ireland is always a percentage worse in its economic problems than the United Kingdom. So when we are discussing investment in Northern Ireland we cannot expect to be particularly cheerful. It is very difficult to get investment here and it is still more difficult in Northern Ireland, but we continue to try. Last year, representatives of the Department of Commerce visited over 1,000 companies outside Northern Ireland
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—which was twice as many as in the year before—and since 1st January 1974 seven foreign-based firms have been attracted and will eventually provide something like 750 new jobs. It must be admitted that much energy has to be devoted (one noble Lord said this) to the task of persuading firms to continue and not decrease their activities in Northern Ireland and, where possible, encouraging them to expand. My right honourable friend Mr. Stan Orme spends his whole time on this and probably spends more time trying to stop things closing down than with expansion and getting new investment.
The noble Viscount, Lord Brookeborough, asked what other methods, apart from the Northern Ireland Finance Corporation, were available to encourage investment in Northern Ireland. The Department of Commerce, which has greater and more flexible incentives than anywhere else in the United Kingdom, is working away at this. Grants of up to 40 per cent. can be offered towards the cost of constructing new buildings and the provision of plant and machinery and advance factories can be made available at favourable rents. The United Kingdom Government industry schemes relating to special sectors are available too. There are currently some 58 foreign-based firms in Northern Ireland employing some 29,000 people, but no new American companies have come this way since 1969. Since 1975 the Department of Commerce has promoted 3,055 new jobs, which is not too bad. So much for foreign investment.
I do not want to say a great deal about the NIFC; there will be an Order before Parliament within a matter of a month or two regarding its new name and new terms of reference. We will leave those discussions until that date. The noble Viscount, Lord Brookeborough, said that we did not need to be reminded of the perils of pushing money into non-viable firms. First of all, it is not intended that it should have power to give grant aid on its own account. It will operate commercially so far as possible. In the circumstances of Northern Ireland we cannot expect that public ownership will never be appropriate. I should like to remind the noble Lord of the encouraging and hopeful start of Strath Earn Audio Company as a result of help from the Northern Ireland Finance Corporation.

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This is an entirely successful development. I would also mention the half stage that my colleague and right honourable friend the Minister of State has reached with the Ben Sherman Shirt Company in Londonderry. Here, they have halved the number of factories and work-force and are now trading at a profit. It is early days, but it is possible, by this kind of careful investigation, to put a little money here and there and to make things go which were otherwise not going. These points are worth mentioning because, as the noble Lord, Lord Moyola, said, it is depressing to find these companies shutting down in small areas, such as in the area in which he lives, where there seems to be no adequate substitute. We are doing something about this; something is happening here.
This takes me to URIC and Enterprise Ulster, which I referred to before. URIC provides employment for 2,500 men at a cost of £7½ million per annum. It also includes various amenity projects under district councils, but these will be phased out by the end of 1976–77, to be taken over by Enterprise Ulster. This direct labour organisation aims to equip the unskilled, long-term unemployed for work as well as to provide employment. There will be expansion of the organisation currently employing about 1,500 people on 100 or so projects, concentrated in areas of high unemployment, and will probably employ over 1,600 men by the early part of the coming year. It is undoubtedly a success and is now being copied in many respects on this side of the Irish Sea. It is particularly important in relation to possibilities about which the noble Lord, Lord Moyola, referred regarding intensive farming running down and there being people out of work in the country areas. It is about the only thing which can be put in here to be effective and it is important.
The noble Lord, Lord Belstead, asked about the school-leavers' unemployment subsidy. My information is that the reduction in the number of school-leavers in the Province has been noticeable as the result of this action, but there were still over 3,000 school-leavers on the register in November. The improvement is not effective enough, but it seems to have achieved something. The noble Lord also asked whether Northern Ireland agriculture receives money from the EEC
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Regional Development Fund. The answer is that as yet it does not, but I do not think there is any reason to suppose that it never will.
The noble Viscount, Lord Brookeborough, raised a number of points, some of which have been covered already. Perhaps the most interesting one concerned the block grant. This is a very interesting subject and, in relation to the future discussions we are to have on devolution, a most important one. There are relevant sections in the White Paper on devolution and in the Report of the Northern Ireland Convention. We are still studying the Report of the Convention and shall note what the noble Lord has said. There is no block grant at present; and this matter could be appropriate only if there were a devolved Administration to receive it.
The situation at present is that public expenditure in Northern Ireland is one of the fifteen programmes into which total public expenditure is broken down in the annual White Paper which the Chancellor presents to Parliament. The first place to which a Minister looks to finance a new service is within his own programme. If room cannot be found there. there may be savings to be made from some other programme or from the provision made in the public expenditure survey for contingencies. But in the present very difficult climate for public expenditure, it is practically impossible for any Minister to get money from outside this programme, and the choice may be between abandoning a project and finding offsetting savings. There is simply no money available elsewhere. Though a block grant may be a useful thing in easy times, it is quite unhelpful in hard times.
One of the most important points raised today has concerned Harland and Wolff and the question of nationalisation. In the first place, Harland and Wolff were nationalised in August of this year, well in advance of the rest of the United Kingdom shipbuilding industry, and the private shareholding in Short Brothers and Harland is now very small and of no practical significance. However, the Government do not feel it would be right to include these two companies among British shipbuilders and British aerospace—the point which was raised by the noble Viscount. These companies, important as they are to the economy of

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Northern Ireland, should be controlled locally and should be the direct responsibility of any future devolved Administration. Moreover, in the view of the Government, it will be to the advantage of the two companies and their work forces if they have an identity separate from the Great Britain nationalised industries rather than being peripheral part of them. This is not to say that the companies will lead an existence of isolation from the nationalised firms in the rest of the United Kingdom. Noble Lords may rest assured that the Government realise the importance of close and continuing links between the Northern Ireland companies and their counterparts in Great Britain but it is a little early to say exactly what form such links should take, as the counterparts are not yet in fully-fledged existence. However, the point is an important one and it will be observed.
The noble Viscount wondered whether the firm's status as a United Kingdom firm with a worldwide reputation and commitments would be jeopardised by exclusion from British shipbuilders. We think that such fears are greatly exaggerated. There is no evidence to suggest that keeping Harland and Wolff separate from British shipbuilders will lead to any lack of confidence in the firm on the part of shipowners. Its success will depend upon its ability to meet the needs of shipowners both at home and abroad. As the noble Lord has pointed out, Harland and Wolff is known worldwide and has a reputation for skill in the building of ships. The Government are determined to see that the yard succeeds.
I was enormously impressed a week or so ago, after speaking at a Chamber of Commerce dinner, when I was followed by the new chairman of Harland and Wolff, Sir Brian Moreton. I thought that his confidence was infectious, his pride in his factory was inspiring; and I feel that if anybody can bring off this venture, he will. We must not be to gloomy about the possibilities for Harland and Wolff. A great deal of money has been put into it, and we have made it absolutely clear that there is no more. My own view is that under this leadership we have a very good chance of pulling this venture off and, of course, if we do that it will be of immense value to the Pro-
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vince, whereas to allow it to fail would be a great disaster—though we are not bluffing when we say that it may come to that. However, I am full of hope, and I hope that the kind of absolute negative which has been given about no more money will satisfy the noble Viscount.
I should like to turn for one moment to the agricultural worries of the noble Lord, Lord Moyola. Goodness knows, I share most of them! The particular point I should like to deal with refers to the feeding stuffs differential. We have had a very elaborate examination made by the Ministry of Agriculture in this country, the Department of Agriculture in Northern Ireland and the feedingstuff merchants on the differential between the two. As the noble Lord said, they have given a perfectly firm figure, that the cost of the grain required for a poultry or pig ration in Liverpool is about £4 a ton cheaper, or it was when the examination was made—because it varies a certain amount—than it is in Belfast. I will not go into detail at this moment, but there is available here a report which noble Lords can see if they so wished. Basically, the reason for the differential is transport and delivery in bulk in England, and there is nothing whatever we can do about that.
Therefore we are up against the problem: are we to ask for new money to equalise this position? As may be imagined, we are exploring this matter very carefully. There is a real danger of a significant run-down in the 14,000 people which the noble Lord, quite rightly, allocated to the intensive industries, plus the processing of what they produce. There is a great deal of labour at stake The difficulty is that the industry in Great Britain would be only too happy to take up any reduction in pig, egg and poultry supplies from Northern Ireland. The Government are therefore in a real dilemma. We cannot be justified in subsidising in the long term the production of commodities in Northern Ireland which can be produced more cheaply on the mainland, without the need for any large amount of new capital. The case must be a social, rather than an agricultural one. I personally am most anxious to see Northern Ireland agriculture prosperous and healthy, and this must include some intensive production, though the basis must always be grass.
Viscount BROOKEBOROUGH: My Lords, did the report say how much of this differential is due to the fact that we have gone into the EEC and the supply of our grain coming into the ports in Northern Ireland has had to come a different way?
Lord DONALDSON of KINGSBRIDGE: This is discussed, my Lords. But the point is that ten years ago it would have made an enormous difference whereas now, with grain the price it is, it makes very little difference. If we ever got back to cheap grain, then our membership of the EEC might be a handicap, but with grain at its present prices it simply is not.
We have in the Province the skills; and the capital is already invested there, although some of it is running down. The question of whether to replace it is a commercial one about which the firms involved must make up their own minds. But, as with the air fare for the noble Viscount, Lord Brookeborough, the distance is a heavy and costly disadvantage. Any mitigation of these difficulties must require new money, and noble Lords will appreciate how difficult this is to come by today.
I can assure the noble Viscount that we are acutely conscious of the problems which he has mentioned, and we hope to make a statement on the subject in the fairly near future. The noble Viscount also asked about the remoteness grant. All I can say about that is that we think it is a very valuable grant and we shall give nothing away on it without a great struggle; in other words, we shall try very hard not to give anything away. I think we shall succeed.
My last word, because I have taken long enough, is on the air fare situation. First, I should like to point out that a couple of million pounds have been spent at Aldergrove in connection with the TriStar. Six months ago, I was hauled over the coals by every speaker about the horrors of TriStar. I left it a little late, but I myself have now been a couple of times by TriStar, and have found it extremely comfortable and quick. So I believe that the difficulties have now been dealt with. But when one considers whether one should subsidise people who are at a distance from the rest of the United Kingdom, but who are members of it, in order to get them
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over more quickly, one is up against an extremely difficult problem. All I can say is that if I were asked to pronounce my reaction would he very unfavourable, but the Government have not gone as far as that. The present position is that the Economic Council in Northern Ireland is looking at this matter and will make some suggestions. I think I shall say no more.
In a time of maximum difficulty, I am happy to have had the opportunity of answering some of the questions, and those I have not answered I shall reply to in writing. It is most important that we should not shirk open discussion of our very serious problems in Northern Ireland, and I thank noble Lords for the debate which we have had.
On Question, Motion agreed to.

LICENSING (AMENDMENT) BILL [H.L.]
5.2 p.m.
Lord HARMAR-NICHOLLS: My Lords, I have to open on an extremely sad note. My noble friend the late Lord Cowley had intended to speak from the Opposition Front Bench on this Second Reading, and I think everyone will recognise that his death at 29 years of age is nothing short of a tragedy.
Several Noble Lords: Hear, hear!
Lord HARMAR-NICHOLLS: It will be a great loss to your Lordships' House. He would have been, and intended to be, a significant Member of the Front Bench and the loss which we shall suffer will, perhaps, be second only to that of his family.
My Lords, I beg to move that this Bill be now read a second time, and I do so with some confidence for I know that one of its most important aspects will have the full sympathy of all of your Lordships, even including the noble and learned Lord on the Woolsack. I say that because as recently as last Wednesday, 10th December, as is recorded in Hansard, the noble and learned Lord the Lord Chancellor said:
"…some of the current flow of legislation can be obtained from the number of pages added to the Statute Book in the three decades from 1943 to 1972. In the period 1943 to 1952, there were 15.600 pages; 1953 to 1962, 11,000; 1963 to 1972, 18,000. In 1973 alone

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the addition to the Statute Book was no less than 2,248 pages."
He then went on to say:
"I have not immediately available the figure for 1974 I suspect it might well have exceeded that number."—[col. 955.]
There were 46,848 pages added to the Statute Book in 30 years, and the implication of what he said, and of the way he said it, was that this figure ought to be reduced whenever possible. The noble and learned Lord then said:
"The fundamental question with which we must deal today is how best to improve the content, form and clarity of this large volume of legislation which Parliament produces." [Col. 958.]
From all sides of the House we applauded those assessments, and I think it was right to do so. So I expect to have the unanimous support of your Lordships on that aspect because, whatever else this Bill may or may not do, it marginally reduces the volume of words on the pages of the Statute Book and improves the clarity of the legislation which remains. I do not think we should ignore the importance of that trend, however minuscule it may be.
As to the background, the Licensing Act 1964 was itself a consolidating Act arising from the previous Licensing Acts of 1949 and 1961, and subsection (5) of Section 76 of the 1964 Act, which I am now asking should be repealed, contains words which, apparently, were automatically carried forward from the 1961 Act. It is not unusual to have this automatic carrying forward which, with hindsight, we think ought to have had more detailed examination; such things often go through, and on that occasion it did go through.
Many of your Lordships know so much better than I that in these days of considerable legislation, when great calls are made on our Parliamentary draftsmen, sentences which seem innocuous in one Act are automatically carried forward into new legislation. As regards this small subsection which I am asking should be removed, I have checked the opening speeches made on Second Reading and the speeches made during the Committee and Report stages of the 1961 Act, and at no time was any reference made to it; at no time was it regarded as being of any importance whatsoever.
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This was clearly a case of an automatic carrying forward of a subsection which, as events turned out, has proved to have a somewhat unfair effect on certain sections of the community in a way which was clearly not envisaged.
Subsection (5) of Section 76 has to do with the operating of special licensing hours certificates for functions held on licensed and other premises. I myself have sat as a licensing magistrate for some 25 or 30 years, and this is the sort of matter with which one deals almost automatically within the terms of the Act. Apart from that, I should at this stage declare an interest as a director of companies which will be marginally affected declare this interest very eagerly, for that means that I am virtually in a position to testify from practical experience what will flow if we do nothing today. Certainly, I can show from practical contact how small concerns will be affected, for my concern is very small indeed. But the fact that one can approach with a little knowledge what would otherwise be looked upon as a very technical subsection means that one is speaking with rather more authority than one could do if one were speaking from the brief which is normally supplied from outside when matters of this sort are discussed in your Lordships' House.
However, by obtaining a special hours licence under the 1961 and 1964 Acts it is possible for patrons at functions designed for dancing and eating also to purchase intoxicating drinks, as well as soft drinks and coffee, within limits prescribed by magistrates but beyond normal licensing hours. Since 1961, people at such functions have utilised this right both by having their drink brought to them and by fetching it themselves from whoever was serving, according to which was most convenient to them. So we have a situation where for 14 years the licensees, the police and the public have accepted that as the correct interpretation of the Licensing Acts of 1961 and 1964.
If the point had been examined by the Parliaments of those years I truly believe that this is what they would have established, because to allow things to work in that way is both practical and makes sense. However, in December 1973 a Torquay licensee who was operating under a special hours certificate was

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found by the magistrates to have infringed the general licensing laws. He appealed against the magistrates' decision. As a consequence, and almost as a by-product, this case went to the Divisional Appeal Court and eventually to the Lords of Appeal in this House.
The case of Bradbeer v. Carter established for the first time in law the legal meaning of the words in Section 76(5) of the 1964 Act. They ruled that the legal meaning of the word, once attention had been drawn to it, was not the meaning that I maintain Parliament had in mind, if they had looked at the subsection when it was included. As I have said, there is no evidence that they did look at it. When the words of Section 76(5), which were automatically included without comment in the Act, were put under the powerful microscope of the Law Lords' inquiry the words were found to mean something quite different from what had been accepted for 14 years. I hasten to add that the noble and learned Lords who dealt with this appeal were not examining the principle. They were asked merely to adjudicate on the meaning of a word. They were confined to that very narrow and very proper legal task.
Just as the removal by me of this subsection from the Act in no way interferes with the general principle of the way in which the Act will continue to be applied, so the Law Lords' concentrated on the legal meaning of one word "Bar" and their decision interfered with something which had worked satisfactorily for so long. In law, the words mean that in operating a special hours certificate outside normal licensing hours nobody can purchase his beverage direct from the servery, only b y waiter service at his table. Previously if you had wanted your beverage to be served by a waiter at your table you could have that service, but if it was more convenient for you to collect it you did so. It made no difference to the amount which was drunk, nor to the amount served, nor to the running of the function. It was just a narrow point as to whether what you had to drink should be served to you by a waiter or should be collected over the counter.
In itself it is a very tiny point but I assure your Lordships that unless it is rectified hundreds of establishments, which provide proper and desirable out-
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lets for people's leisure, will be forced to close. That is the economic consequence which will flow from this decision. The tens of thousands of people who utilise these establishments as part of their leisure in a very satisfactory and pleasurable way will find that this service is no longer available. If we lose the opportunity of putting right this point it will benefit nobody but will frustrate and inconvenience many. As I have said, it will bring real hardship to some who, under the accepted situation of 14 years, have invested in hotels and halls, often with grants from the Government or Tourist Boards. I believe that our resorts in particular will suffer. At a time when we want to encourage people to use our home resorts instead of going abroad, I believe that the result of removing this facility will make it considerably more difficult to render our resorts attractive enough to keep our people at home. To insist on waiter service only is against the accepted fashion of today. Those of us who go to functions see this for ourselves. Once people have eaten they want to mix and move around, not to be pinned to a table. These are the kind of things which it is right for us properly to recognise in the age in which we live.
If waiter service only is insisted upon to supply people's needs the economic consequences are quite clear: many establishments will be unable, at present charges, to give the kind of service they have given for 14 years. Their charges to their patrons will have to go up very considerably, even if this service is allowed to continue. I believe that we must take that point into account when we are considering what appears to be a technical subsection which was automatically slipped into the 1964 Act without any discussion at any time and without it being properly understood, since for 14 years it was generally understood to mean that it was possible for this choice to be left to the patron. If we do not alter it the cost will make it completely uneconomic for many people to continue in business. I state that as a fact and I do so categorically from my knowledge of the economics of this trade as it affects small concerns. The risk to the continued employment of about 200,000 people, not to mention the musicians and artists, is real and disturbing, especially at a time when unemployment is a very real worry

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to everybody, particularly in the arts where the level of unemployment is extremely high.
I am not dragging in these points in order to make an emotive appeal regarding a sectional matter. These are the practical consequences which will flow if the legal meaning now given to one word upsets the operation of a previous understanding of an Act which had worked quite satisfactorily.
The scope of this Bill is truly minimal. None of the known susceptibilities normally related to licensing matters is involved in the repeal of this subsection. I know and respect the point of view of people who react in an emotional way to the purchase and consumption of intoxicating liquor. The repeal of this subsection has nothing whatever to do with that well-understood emotional reaction. There is no question of extending the licensing hours; there is to be no increase in the amount of licensing space; there is no possibility that as a consequence more drink will be served or consumed at similar functions than has been the case during the last 14 years. It has got nothing whatever to do with what I call the "gut" feeling of the normal "anti-licence man". However, unless we deal with it and it is carried through to the end there is the risk of adding another irritating chore to the tasks of our police force. They will have to face the unpopular task of reversing a situation that affects people's leisure which has operated satisfactorily for so many years. People will not understand the change and it will be one they will resent. I believe to the detriment of the police image.
At the beginning of this new week I do not hesitate to say we have just passed through one in which the assiduity and skill of the British police have reached new heights. We are all proud of the way in which they carry out their duties, and the strength that they will gain to carry out their future work will result from the new image which they earned last week. We must not weaken that public esteem by giving the police a task of applying unnecessary pin-pricking legislation which can only irritate. I believe this is important and I do not believe that in dealing with what I admit at once is a narrow technical point we
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ought to ignore what will flow from it. We know that in carrying out their tremendous tasks the police image is very important in being able to get the support and sympathy of the general public. We all know of the way little things connected with motor-car parking and other technical matters which we pass through in legislation upset people. This is something—interfering with people's leisure and with their way of life—which can do so much more damage than we realise unless we look below the surface.
For all these reasons I ask your Lordships to give this Bill a Second Reading. I must tell your Lordships that in anticipation of the Bill's going to another place I shall at Committee stage ask your Lordships to accept a minor amendment to the Long Title—again for purely technical reasons which have been pointed out to me. Apart from that, I submit the repeal of subsection (5) of Section 76 of the 1964 Act to your Lordships with confidence and hope, and I beg to move that the Bill be now read a second time.
Moved, that the Bill be now read 2a.—(Lord Harmar-Nicholls.)
5.22 p.m.
The MINISTER of STATE, HOME OFFICE (Lord Harris of Greenwich): My Lords, at the beginning of his speech the noble Lord, Lord Harmar-Nicholls, referred to the passing of the noble Earl, Lord Cowley. I understand that reference to this will be made later this evening, but nevertheless as the noble Lord, Lord Harmar-Nicholls, has referred to it, may I say on behalf of this side of the House how much we share his feelings of profound shock at the death of Lord Cowley and we wish to convey our deep sympathy to his widow in what must be a most terrible 24 hours. If I may say so at the same time, I am quite sure that those officials at the Home Office who had dealings with Lord Cowley when the Party opposite was in Office would certainly wish to be associated with those words. I will say no more now because I know that this evening tribute will be paid to him.
It is my intention to intervene this evening only briefly, so far as this Bill is concerned, and I am glad to be able to tell the noble Lord who has just spoken that the Government do not intend to

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oppose it. The Bill itself is extremely short, as the noble Lord has pointed out. Its intention was explained to the House by the noble Lord in introducing this debate, and as the noble Lord said, it springs from the judgment of your Lordships' House in its judicial capacity in the case of Bradbeer v. Carter. In essence, the question for decision by the courts in that case was, "What constituted a bar?" Bars are defined in Section 201 of the Licensing Act 1964 as including:
"…any place exclusively or mainly used for the sale and consumption of intoxicating liquor".
It is sometimes a hazardous business to guess at the original intention of Parliament and the noble Lord touched on this point. It seems fairly clear that the definition of a bar was designed to ensure that, if a room or space was used primarily for drinking, it should not escape any statutory controls on bars simply because it did not contain a counter over which drinks were served. As your Lordships' House in its judicial capacity has already noted, the definition in Section 201 is not an all-embracing definition of the term "bar". It simply gives an indication of what this term includes.
But if there was, until the judgment, doubt about the definition of a bar, the exclusion of bars from special hours' certificates under the 1964 Act is clear. Indeed, this exclusion goes back some time. It appeared in the Licensing Act of 1949, when a limited amount of late night drinking was permitted for the first time for a great many years. And the exclusion of bars remains in existing licensing law which was consolidated in the 1964 Act. The provisions of the Act concerning special hours' certificates are set out in Section 77. This provides for the issue of special hours' certificates on two conditions. First, a music and dancing licence must be in force, and second, the Justices must be satisfied that the premises are structurally adapted and bona fide used, intended to be used, for the purpose of providing music and dancing and substantial refreshment, to which the sale of intoxicating liquor is ancillary.
Section 76 of the Act—this is the point to which the noble Lord referred—deals with the permitted hours where special hours' certificates are in force. Its effect is that the consumption and sale of alcoholic liquor is allowed on premises
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covered by a special hours' certificate beyond the normal closing hours which apply to licensed premises. These permitted hours may be up to 2 a.m., or in certain parts of London until 3 a.m. The subsection of Section 76, to which the noble Lord referred, brings the two issues of bars and special hours' certificates together. It provides that nothing in the section applies in relation to any bar. Nevertheless, despite this the practice has grown up over the years in premises covered by special hours' certificates of serving drinks direct to customers over bar counters. The reasoning was, apparently, that in any premises to which a certificate applied the sale of drink would necessarily be an ancillary activity. These premises could not therefore be regarded as bars as defined in Section 201; that is in the sense of a place exclusively or mainly used for the sale and consumption of intoxicating liquor.
Many people would agree that the practice of serving drinks direct to customers over bar counters is not unreasonable provided that the sale and consumption of the drink is as Section 77 requires truly ancillary to the provision of music and dancing and substantial refreshment. However the recent judgment in Bradbeer v. Carter has been widely interpreted as meaning that bar service to csutomers is definitely excluded and that the interpretation put on the Licensing Act by the entertainment industry for many years has been wrong. The judgment of the court arose of course from the case they had before them and its applicability to other premises is not something on which it is possible to comment authoritatively. But it is certainly clear that most owners of late night entertainment premises as well as many police forces regard the judgment as having widespread application and it is argued that the livelihood of many of those employed in the industry may consequently be at stake.
The argument runs that the judgment imposes what amounts to a new requirement to provide waitress service at a table rather than bar service direct to the customer. The Government, of course, take seriously the estimates which have been put to them of the numbers likely to be laid off as redundant because of the implications of the judgment, while recognising that inevitably it is difficult to quantify such estimates with precision.

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Nevertheless, we accept that the new situation has given rise to widespread inconvenience and resentment both to club proprietors and to their customers. We take the view, however, that Government legislation should be in the context of any legislation that is introduced following consideration of the Erroll Committee's Report. In any event, there would be no opportunity in the current Session for a Government Bill on this substantial issue.
We are, therefore, grateful to the noble Lord, Lord Harmar-Nicholls, for the opportunity he has given to your Lordships' House of expressing a view on the matter. If his Bill finds favour with your Lordships, I cannot, of course, predict with any confidence its prospects of making progress in another place. But I can say that the Government would not oppose its passage there if Private Members' time could be found. As I have indicated, the Government would have preferred to deal with liquor licensing in one major Bill, on the basis of our consideration of the Erroll Committee's Report. Nevertheless, the recommendations contained in that Report would not appear in any way to be prejudiced by immediate action to reverse the Bradbeer v. Carter judgment, if that is the course that commends itself to the House.
5.30 p.m.
The Lord Bishop of LONDON: My Lords, I would wish to add my voice to those of the two noble Lords who have just spoken in expressing our deep regret at the untimely death of the noble Earl, Lord Cowley. Perhaps noble Lords do not know that we on these Benches have a special reason for being grateful to the late Earl, because for the last two years or so he has been acting as one of the Secretaries of the International Affairs Committee of the Board of Social Responsibility of the Church of England. He has made a very considerable contribution to the thinking and the work of that Board, and we therefore see his passing with the greatest distress and regret. We wish to associate ourselves with the words of sympathy that have been expressed to his family.
My Lords, the noble Lord, Lord Harmar-Nicholls, has been speaking with
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great persuasiveness about the minimal effect he believes his Bill will have upon the situation regarding the consumption of alcohol, and the clubs involved in it. I am sorry to have to shake his optimism in the universal support that he may receive, both in reducing the size of the Statute Book and also in removing what appears to be an irritant, for indeed, if there are passages in the Statute Book which are exercising what some would think to be a valuable restraint, then it is desirable that they should be there.
As the noble Lord has pointed out, the purpose of this Bill is to remove words which have been recently interpreted by the Law Lords in a certain way so as to make legal a practice which has grown up, and apparently been accepted for the last 14 years, as regards special hours certificates. It is difficult to see how that practice can have arisen, since I would contend that the words of the Act are perfectly clear. As the noble Lord, Lord Harris of Greenwich, has reminded us, Section 76(5) of the current Licensing Act states quite categorically:
"Nothing in this section applies in relation to any bar in premises or a part of premises to which this section applies…".
It is therefore very difficult to understand how anyone could have thought that the supply of drinks over bars in special hours certificate places could ever have been regarded as legal. We ought to appreciate that the powers granted by special hours certificates give a very considerable extension of drinking time at night; until 3 a.m. in central London, and until 2 a.m. elsewhere.
I would contend that Section 77 of the Act is quite clear in placing certain restrictions upon the supply of liquor in order to exert some control upon a situation which might otherwise get badly out of control. Section 77 of the Act states that places which get special hours certificates are to be used for the purpose of providing music and dancing and substantial refreshment, to which the sale of intoxicating liquor is ancillary. It seems that if the sale of drinks over the bar is allowed for its own sake, then there will be a very extended amount of drinking. Indeed, as one of the noble and

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learned Lords giving judgement in the House of Lords remarked:
"The bar counter would be a magnet to those people whom the Act meant to discourage, those who come to drink and only to drink".
There is a further complication in this matter, since the granting of a special hours certificate is so uncontrolled so far as magistrates are concerned. In the 1964 Act it is laid down in Sections 77 and 78 that where licensed premises or registered clubs have suitable premises and possess a music and dancing licence, and are intended to be used for providing music dancing and substantial refreshment to which the sale of intoxicating liquor is ancillary, the licensing justices shall grant a special hours certificate if it is applied for. It appears that they have no discretion in the matter; if the conditions are met, then they must give the licence. Moreover, the licence is not always to be granted by those who may have the best knowledge of the situation. In some places the licensing justices give the authority, but in others authority is not given by those who know the situation as regards liquor and therefore there is an area where the licence may be given by those who are not aware of the full and overall situation.
Moreover, it is very difficult indeed for proper inspection of these places. As the law stands the police may enter a club only when they suspect that the law has been broken. Therefore, it is very difficult for anybody either to refuse a licence, or to control the situation when a licence has been granted. If therefore this subsection is removed from the Act it may very well open the door to unlimited drinking up to 2 a.m. or 3 a.m., which was not the object of the Act as originally passed. Unfortunately, I cannot agree with the noble Lord, Lord Harmar-Nicholls, that this is unlikely to have any far-reaching effect. There are a number of public houses which have already introduced regular striptease entertainment of a rather unsavoury nature. It would seem very likely that owners of these places, as soon as this amendment to the law has been made—if, indeed, it is made—will be queueing up to get a special hours certificate. The magistrates would not be able to refuse them, and therefore there would be a great extension of drinking in the late night, at a time when there is growing alcoholism
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and a growing difficulty in getting transport during the early hours of the morning.
I think your Lordships ought to examine this Bill with the greatest possible care. It is probable that some of us would wish that it could be very considerably amended and if we are not able to amend it then we may find it necessary to oppose the Bill at Third Reading.
Lord WIGG: My Lords, will the right reverend Prelate the Bishop of London allow me to ask him one simple question? If he suspects that as soon as the Bill reaches the Statute Book—assuming it does—there will be a queue of people wanting to start a striptease programme in their clubs, could he explain to the House why they did not do it before the Law Lords gave a decision? For 14 years they could have done so, without starting a queue to do it.
The Lord Bishop of LONDON: My Lords, I am afraid I cannot enter into the minds of people who run establishments of this kind. All I can presume would be that when they know there is no doubt about the law, then they would find a certain amount of encouragement to go forward.
5.40 p.m.
Lord SOPER: My Lords, I, too, am sad at the passing of the noble Earl, Lord Cowley; I knew him little, but I admired him much and I am sorry at his passing. I am at the same time happy once again to engage in a combined operation with my noble and ecclesiastical friend in some effort towards the Church militant, and in this case I hope the Church triumphant, because I am implacably hostile to this deletion from the law and will deploy what arguments seem to me to be necessary, in addition to the admirable statement of the case which my noble and ecclesiastical friend has just made.
I find myself in total disagreement with the noble Lord, Lord Harmar-Nicholls, even in his anticipation that we would all agree with him in the attempt to reduce the amount of legislation. I remember it was Sarah Bernhardt who was once asked her opinion about the Ten Commandments and she said there were too many of them and the number

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ought to be reduced. Only reduce legislation if indeed that legislation is either ambiguous or is unnecessary. I believe that this piece of legislation rests upon a very necessary distinction between two forms of drinking which have not, as yet, been sufficiently identified; one is bar drinking and the other is mealtime drinking. It almost blisters my teetotal tongue to say this, but I think there is a reasonable case for the intake of alcohol—I would not accept this, but I think it is reasonable to deploy this argument—when it is part of a civilised accompaniment to eating and to pleasure seeking; indeed if I were pressed I think I might say that when the earthly paradise does arrive light wines might ecclesiastically be permitted.
But that is no argument for the present situation, in which I believe that the great majority of those who are intemperate find that intemperance aided and abetted by what is described quite accurately as bar drinking as opposed to the more civilised form of drinking which takes place to the accompaniment of a meal. It is on this ground that it seems to me that the Act which it is the intention of the noble Lord should be amended is perfectly clear and perfectly sound. Where drink is associated, even at late hours and early hours in the morning, with the other methods of pleasure and happiness, enjoyment, if you like, associated with meals taken and shows seen and participation in dancing—though I would not want to include striptease—this is a matter upon which it would be, to a very large extent, a repudiation of elementary rights, privileges and liberties that I think ought not to be infringed. But where this habit of bar drinking is recognised for what it does and what it constitutes, then I am implacably opposed to it.
I believe that this kind of drinking is far in excess of what is required, even by those who cannot subscribe to a temperance platform. I believe it is a prime cause of the kind of alcoholism with which I am in regular touch and which I know about. Moreover, I think it is a very sinister element in accident-prone situations. For at two and three in the morning there are very few taxis about and there is practically no public transport available; I believe it would be highly
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likely that those who had been drinking earlier on, as I suppose they would have been, and who continue drinking to that hour, particularly bar drinking, are likely to produce irresponsibility on their way home and are more likely to use their own cars in the absence of public transport. I think this is a real menace and ought to be included in any conceptual view of this whole situation.
But, principally I would say this—and if the noble Lord, Lord Harmar-Nicholls, regards this as emotive, I make no apology for it; it is certainly emotional, but I have never believed that rationality is the exclusive right of those who would proceed to legislate and that emotion is a suspect element in legislation. I have an emotional concept of the situation which I would venture to offer to your Lordships. We are at this moment intolerably accepting a level of alcoholic drinking among young people, stimulated by advertisements of the most rancid and, in my judgment, morally dubious kind; I believe that we are progressively moving to a situation in which more and more young people are liable to become alcoholics. I make no apology for making this claim; that is, that this legislative suggestion is highly likely to increase the probabilities of intemperance and over-drinking. To switch the emphasis away from the bar to the more civilised form of drinking with meals is not, so far as I am concerned, the summum bonum, but it is a very necessary and requisite part of intelligent legislation. It is represented by the Act as it stands, and I hope very much the Act will not be changed.
5.47 p.m.
Lord STOW HILL: My Lords, would your Lordships be so very good as to extend to me the indulgence of allowing me to add a few observations, although I am afraid I neglected to put my name on the list of speakers. If your Lordships would allow me to do that, I promise to keep my observations very short. I must preface them by asking to be associated with the sad expressions with which the debate began. It really is a very unhappy moment in which to rise to one's feet in the presence of the loss that we all have sustained.
My Lords, the point that I wanted to raise was this. It is common ground

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that the object of Parliament in enacting subsection (5) of Section 76 of the Licensing Act 1964 was to ensure that when a special hours certificate was granted drinking should only take place as an incident to other activities, dancing, eating, listening to a performance or whatever it might be. That, I think, everybody accepts, and, if I am right in understanding his very forceful presentation of his case, that would be accepted by the noble Lord who has introduced this Bill. The point that I wanted to raise—I think with the noble Lord more than with any other Member of your Lordships' House—is this. What his Bill seeks to do is to strike out of Section 76 of the 1964 Act any reference to "bars"; in other words, if the noble Lord's Bill is passed un-amended, there is no exclusion whatsoever of bars in relation to these special licences.
What the noble and learned Lords did, when sitting in a judicial capacity, which produced the judgment that we have in mind, was to construe the word "bar" as used in subsection (5), and they construed it as they thought the language required it should be construed in the context in which it was used. If the noble Lord's Bill is passed, there is no exclusion whatsoever in relation to bars, whatever the word means, and one accepts of course, at once, that it means what the noble and learned Lords expressed as their opinion in the decision they were considering. But that goes by the board if the noble Lord's Bill is introduced and passed; there is no exclusion whatever in relation to bars.
I should like to put my argument in the form of this question. Supposing you had, in a club in relation to which there was a special hours certificate granted, something which incontestably everybody would recognise as a bar, a room separately set apart for people to lean against a bar and drink and do nothing else. Then, as I understand the noble Lord's Bill—I may have got it wrong and if so I apologise—drinking could take place there. It would be contrary to the intention of the Act, but nevertheless there would be. I should have thought, a bar. I should have thought the noble Lords' Bill perhaps should require amendment, at least in this sense; if he strikes out subsection (5), he should substitute for subsection (5) some definition of a bar,
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or some definition of a place in which drinking was not to take place, in relation to premises of the sort we are discussing, to take the place of the wording which at present appears in subsection (5).
Lord HARMAR-NICHOLLS: My Lords, I intervene only because it might help to deal now with this very pertinent and significant point. The whole point of having to remove this is because these functions will take place in rooms where there is a bar. If you have to build new premises without a bar, those are the economic consequences of which I spoke that would mean that the whole place would not be there to offer to patrons at all. There is no question that, in removing this, that you are removing the need for it to be primarily music and eating. That will still be there under the rest of the 1964 Act; this merely removes the section which says, now that we have had this ruling, if it happens to take place in a room where there is a bar it is illegal. I intervene only to make that point, because I thought it was right that the misapprehension that the noble and learned Lord is under should be dealt with at once.
Lord STOW HILL: My Lords, I am extremely grateful to the noble Lord for his intervention. I cannot have made my point clearly. May I put it again. Assuming that you permit dancing, eating, and so on, to take place in a room in which there is a bar, and assuming that you proceed from the premise that the definition, or interpretation, laid down by noble and learned Lords in the decision we are considering is too wide—in other words, assuming that in the case which their Lordships were considering the noble Lord would have wished there to have been an acquittal—then I would ask this. Supposing you accept a much narrower definition of the expression "bar", supposing you assume premises in which there is a restaurant, tables, a dance floor, and all the rest of it, in which there is a bar at one side, a bar at the other side, but in which also there is a separate room which is devoted entirely to drinking, and in relation to which nobody could conceivably say that that was not a bar—in other words, it is a bar in a very much narrowed sense—as I understand the noble Lord's Bill that bar would have to be entirely disregarded. If a number of persons went into that bar for the sole

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purpose of drinking and for doing nothing else whatever—not dancing, not eating, just drinking, leaning up against the bar there and having drinks brought to them —then, as I understand the Bill, that would be perfectly permissible.
What I respectfully suggest is not that we should vote against the Bill tonight, but that at some time or other an Amendment to the Bill needs to be considered to see whether one does not necessarily have to incorporate some exceptions in relation to what obviously, and beyond any controversy, would be understood by ordinary people to be a bar and nothing but a bar. That is the only contribution that I should like to make. Speaking for myself, I would not oppose the Second Reading, but would ask the noble Lord to accept that nevertheless perhaps his Bill goes rather far, and that it may be necessary in due course to amend it by excluding some parts of premises of this sort, parts which undoubtedly, and beyond any controversy, are a bar set aside for drinking.
5.53 p.m.
Baroness PHILLIPS: My Lords, I wonder whether the noble Lord would forgive me for intervening. I too did not put my name down because I was not certain what exactly the Bill involved until the noble Lord introduced it. First, I should like to be associated with the deep feeling of sympathy for the noble Earl's family in this very sad time. His death was a terrible shock for all of us.
I am rather fascinated by the fact that the noble Lord who preceded me, who has a very fine legal mind, appears not to know what is common practice in public houses. Many of us go to these places, and I always feel when we debate these matters that we are slightly hypocritical, because we debate them in relation to licensing in a place where, at any time we wish during the sitting of the House, or even afterwards, we can partake of alcoholic liquor without eating, dancing, or even a striptease performance. We must bear this in mind when we consider what people outside like to do.
I have every sympathy with this Bill. I hope that we shall debate the whole of the Erroll Report and bring into effect some of its very far reaching recommendations. I am sorry to disagree with the right reverend Prelate, and indeed
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both of my noble friends on this side. This Bill will hardly increase the drinking of alcohol because of the characters who are going to materialise. There seems to be something doubtful in the suggestion about them "leaning on the bar". I do not know why you should drink more because you lean on the bar, but if they come in they will still have to buy a ticket and partake of the food and witness the performance before they can have alcohol. To suggest that people would come in to get some more drink at 2 a.m. in the morning is really suggesting a rather long-term way of obtaining extra drinks.
We already have all sorts of changes taking place in our public houses. I think that I am right in saying that striptease is not dancing. I believe that we have laws which say that you can move if you have a certain amount of clothing removed, but if you take all of it off you have to stand still. Of course, this rule may have been modified. I think that music and dancing is interpreted in a slightly different way. What we all want to see is what I call the civilising process of the public house. We do not want to have a place where people go to drink as much as possible in as short a time as possible because they do not have with them their wives, or some other friends, and therefore it is not as sociable or indeed as attractive a place as it should be.
I feel that this Bill will go some way to putting right another point. We have not very many enforcement officers for these different laws, and if we take up the time of the enforcement officers in finding out whether People are being served with drinks, or whether in this "do it yourself" age they are obtaining drinks for themselves, it seems that we shall again waste time which should be utilised in much more important spheres. I should like to support the noble Lord in his Bill. Also I say to the Minister that I hope that we shall have the opportunity in this Session of making some change in the licensing laws by taking up some of the recommendations of the Erroll Report.
5.57 p.m.
Lord WIGG: My Lords, may I apologise to the House for not putting my name down, but I did not think that tonight I should have to listen to three speeches that I have listened to which

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were more than flesh and blood can stand—at least so far as my flesh and blood is concerned. Before saying what I want to say, and so that my temperature can go down a few more degrees, may I join previous speakers and express the sense of sadness shared by all at the passing on of Lord Cowley. I did not know him very well, but we did have occasion to meet on the Lotteries Bill, and he was a most agreeable and considerate colleague. I am sure all of us join in expressing our deepest sympathy with his family in the irreparable loss they have sustained.
Turning now to this debate, can we get this Bill into focus. It does not introduce striptease, either in warm weather or cold weather; it does not induce people to drive home recklessly; it will not encourage any streakers; it will not encourage people even to have an extra cup of tea, because until very recently, for at least fourteen years, everyone, including the police and the Judiciary, thought that the law was in fact what Lord Harmer-Nicholls' Bill now seeks to make it. In other words, some £200 million has been invested in constructing premises to do what apparently the noble Lord, Lord Stow Hill, does not believe in fact they have done. The premises have been erected, and some 300,000 people are employed in this connection, because they thought the law was as it was thought to be.
Then two or three of your Lordships took off and interpreted the English language in a way which I never thought was possible. They obviously do not know what a bar is. A bar is a place not at which people lean but where they go to buy a drink; and it is perfectly clear—indeed, it is part of the explanation for the decline of religion in this country—that the two spokesmen for religion tonight are completely out of touch with the habits and practices of ordinary people. For example, the right reverend Prelate the Bishop of London showed not only that he is out of touch with people but is out of touch even with simple logic, because he wanted us to believe that there would be a queue, presumably of alcoholic drivers, to do that which they could have done for the last 14years but have in fact not done.
The overwhelming majority of people who are affected by this are ordinary,
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decent, working-class folk and they will not be at the bar. They will not be having a bun, a sausage roll or a drink unless they have gone to an establishment where singing or dancing is taking place. That is the condition; there must be dancing and music for this to happen. This is an age in which there is a short-tage of waitresses and waiters; but, according to the Law Lords, the customers can sit down and die of starvation and thirst, yet they cannot buy a drink, or perhaps even obtain a glass of water, until a waiter comes on the scene.
Lord HARMAR-NICHOLLS: My Lords, I am sorry to interrupt the noble Lord, particularly when he is arguing on my side, and I do so simply to make it clear that, as the Bill stands in my name, I am in no way critical of the Law Lords' decision. That decision was one which they, in their wisdom, thought was correct, and it very likely is. The fault here could be that of Parliament, because of the looseness of the words used.
Lord WIGG: My Lords, the noble Lord, Lord Harmar-Nicholls, has a veneration of the Law Lords which I do not share. They arc ordinary mortals like me, they can make mistakes like I do; but they are able to read English in a way which no other person living has so far read it, and I think that is barmy. Their decision will cause loss of livelihood for hundreds and thousands of innocent people, and it will sterilise a very large capital investment which this simple measure seeks to put right. That is the beginning and end of the story.
I have no interest in this matter. I cannot at the moment call myself a strict teetotaller, although it is true that years ago—about 50 years ago when I was a private in the Army—I joined the Army Temperance Association because by so doing I got "char and wads" buckshee. For the benefit of the right reverend Prelate the Bishop of London, it meant that I got tea and cakes free. I have had half a pint of bitter at various times since then, but generally I do not drink and I do not condemn the habits of others. The pattern of social behaviour involved in what this measure seeks to do is one which I wholeheartedly commend. It is arrant nonsense to suggest, Law Lords or no Law Lords, that this measure, if it reaches the Statute Book,

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will open the gateway to striptease, increased drinking, alcoholism and streaking when people are going home at night. In fact, what it will do, as the noble Lord, Lord Harmar-Nicholls, said, is relieve the police of the onerous and unpopular task of invoking the law to interfere with what are the social habits and practices of ordinary people.
Normally I do not find much time to share the views of the noble Lord, Lord Harmar-Nicholls, but I share this with him: we both come from the Midlands, and we both have the habit of plain speaking. The only difference between us is that he is polite to the Law Lords and I am not. Apart from that, I give his Bill every support; I hope it will get a Second Reading and will go back to another place, where it has already had a trial run; without opposition it got the unanimous support of the House of Commons under the Ten Minute Rule. The noble Lord is performing an important social duty which I hope will receive wide recognition because his Bill restores the position to what everyone has thought it to be for the last 14 years.
6.5 p.m.
Lord CAMPBELL of CROY: My Lords, I intend to be brief and I am speaking on this issue because of the tragic death of my noble friend Lord Cowley, to whom noble Lords have paid tribute, and I join in the tributes which have been paid to him. It is sad that so much promise should have been lost. We shall miss him in many ways, as I know very well, having had the good fortune during the past year to be occupied on this Bench with some of the same subjects in overseas affairs. I associate myself with the message to his family that has gone out from your Lordships' House.
I have come to this debate at very short notice, having been asked to do so this afternoon. I started flying from Inverness at eight o'clock this morning and my plane was diverted to Birmingham owing to fog. I wish, first, to congratulate my noble friend Lord Harmar-Nicholls on taking this initiative. He is clearly aiming to rectify a weakness in existing legislation where an interpretation has recently been made by the highest court in the land, your Lordships' House sitting in its judicial capacity—an interpretation which
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is different from that previously accepted by those most concerned. That is to say, a "bar" has been defined for certain purposes and a waiter service is required instead of a bar service in the circumstances which have been described during the debate. This difference is likely to affect the livelihood and business prospects of a number of people in this country. There is need for clarity in legislation. We feel that it is also a good thing to avoid new and arbitrary restrictions arising, unless they are necessary for social or other reasons. On this Bench we favour clarity in the law and simplification of it if possible, as was made clear in the debate in this House recently on the Renton Committee's Report.
My noble friend's Bill accordingly starts by commending itself under these headings to somebody on this Bench. Decisions, however, on licensing matters constitute a subject which is usually left by both Front Benches to individual Members of this House and another place; in other words, this is usually a free vote subject. I note that the Government do not intend to oppose this Bill. The noble Lord, Lord Harris of Greenwich, confirmed that it is thought by those who are affected by this recent judgment that it will have wide application to other cases, and he mentioned that this was causing disquiet, even resentment, because of the probable effects on the entertainment industry, which in turn is related to the tourist industry. I thought it was relevant and of interest to this House that he stated that the change proposed by my noble friend, if it were made, would not be inconsistent with anything the Government would be bringing forward as legislation on the Erroll Committee Report.
During the debate, though, we have also heard speeches from the right reverend Prelate the Bishop of London and the noble Lord, Lord Soper. The right reverend Prelate warned that if this Bill went through it would lead to people coming to functions of the kind we have been discussing with the principal purpose of drinking at a bar and they would get round the requirement that there should be music, dancing and food and the requirement that drinking should be an ancillary activity. In this he was joined by the noble Lord, Lord Soper, who took a similar view. Their concern

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means that we must look very carefully into this. Their argument is that, though a certain interpretation was generally accepted for 14 years, the passage of the Bill establishing that situation definitely would lead to a substantial increase in late night drinking. That is a matter which we can only go into at a later stage, having in the meantime tried to find out the facts so far as we can.
The Bill applies only to England and Wales, and I hope it means that there are not similar problems in Scotland. However, I am well aware that the licensing legislation is separate and that the Scottish legislation is in need of reform because it was I who set up the Clays on Committee to review the Scottish licensing legislation. This was the equivalent of the Errol Committee. I made a symbolic gesture at the same time, one of my main concerns being the reduction of drunkenness in Scotland. My symbolic gesture was, as Minister of Road for Scotland, to straighten out the Devil's Elbow. The Clayson Committee reported shortly before the change of Government last year and I was glad to note that the Queen's Speech told us that the Government intend to put forward a Scottish Licensing Bill in this Session. It seems, therefore, that the Clayson Committee Report will be acted on before the Errol Committee Report. The subject we have been discussing today will come up in a much wider context when that Bill comes before us.
I mention in passing that there is a great need for a change of attitude in Scotland. I was particularly struck by what the noble Baroness, Lady Phillips, said, because there there is a need for more social activities to be associated with drinking in public places, so that men do not simply go to a bar to drink and do nothing else and to try to drink as much as they can before closing time. In the meantime, where England and Wales are concerned, I hope that the initiative taken by my noble friend will lead to a satisfactory solution of the problem which has been raised by this recent legal interpretation.
6.12 p.m.
Lord BALERNO: My Lords, may I rise for a moment to support what my noble friend Lord Campbell of Croy has said about the urgent need for a revision of the licensing laws in Scotland. I can
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go back one step further than he, in that I was a member of the Guest Committee for the revision of the licensing laws, which sat 10 or 15 years ago and of which the Clayson Committee which my noble friend set up was supposed to forward and bring up to date the recommendations. I sincerely hope that the Government will implement what I understand to be their intention to make a proper revision of the licensing laws in Scotland.
There is one other point in relation to Scotland which I feel might be of interest in this discussion. It is that during the Edinburgh Festival last year a quite astonishing thing happened, in that any publican, any person who served drink and almost anybody who applied for a late licence could get one up to about 3 o'clock in the morning. Licences were granted with great freedom and very little objection was made. We all expected there to be some bad effects, but none was reported. Whether it was that the many visitors to the Festival who came from outside Scotland were trained to enjoy late night drinking and knew how not to abuse it I do not know, but even we native Scots did not abuse it and there was no increase in the number of convictions for drinking and driving or any other such offence. So I commend this to your Lordships and I advise the House that a little audacity in this matter would not be out of place.
6.14 p.m.
Lord HARMAR-NICHOLLS: My Lords, I should like to wish the best of luck to Scotland. The only reason I am confined to England and Wales is because the 1964 Act is so confined. I should like to thank the noble Lord, Lord Harris of Greenwich, so effectively, for filling in the decision which came from the Law Lords. I feel that it is very important that that explanation should be on the record in such detail but I did not think it right that I should take up your Lordships' time in giving it. The noble Lord, without any sort of collaboration with me, filled in something which is vital and, I felt, did so most effectively.
To the right reverend Prelate I should like to say that I do not feel that he is looking at the matter in a practical way. He does not need me to tell him that anybody who intends to go to a function just to drink and to do nothing else will not

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be stopped because there is waiter service. Those sort of people are the ones who corner the waiter. This ruling will not stop those who are a nuisance to everybody and who are not welcomed by anybody who is running a function. It will make no difference if the bar is removed. The point which the right reverend Prelate makes about people who do not eat or listen to the music but who merely drink will not be affected. Those people will always be there. I am a member of the right reverend Prelate's church and I read the Lesson regularly. He and I know that we have people who are intolerant in their religion. We know that they are a nuisance too, but that does not alter the fact that they turn up, that they are always the first ones to be there and that they are a nuisance. This is one of the disadvantages which we have to try to overcome when we are putting forward the real purpose of our interest in our Church. I was rather sorry that the right reverend Prelate introduced the question of striptease. I do not feel that it was necessary and it does not come into any argument relating to the removal of subsection 76/5.
I felt the same about the noble Lord, Lord Soper. The only reason I am using my right to reply is to say to him that it is quite clear that he and I will be on different sides when matters such as this come up. I know a lot about him because he is famous. He knows nothing about me, but let me tell him this: my father and grandfathers on both sides were miners and my two grandfathers and my father, having been in the mines at something like 11 or 12, left mining at the age of about 30 to become local publicans. That is the sort of thing that happens having done that dangerous and awful job. I was born in a pub in the Black Country of England and I cannot accept from the noble Lord that the only people who are civilised are those who drink their wine at a table being served by a waiter. I have seen that civilised people come to bars, and that there is nothing wrong in coming to bars. I have seen throughout my life that bars are well-run and that the sort of people the noble Lord objects to are those to whom the publican objects. I believe that perhaps the best policeman for moderation and good sense and
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I for seeing that young people do not over-drink and that the road safety element is remembered are the people who run bars. I wanted to say that because it is quite clear from the noble Lord's reaction that it differs from my life's experience and puts me on the side of finding that things are not so black as the noble Lord has satisfied himself they are. That is a debate which I have no doubt we shall have on many occasions.
I felt that the noble Lord, Lord Stow Hill, raised a point which it is essential to make clear. This was the question of a separate room with a bar. He again used the right reverend Prelate's argument that, with a separate room, only people who wanted to have a drink would come. However, the practical considerations are these: in hundreds of places where these very desirable functions take place, the one room is not big enough for both the eating and the dancing. It is quite usual for there to be a separate room and for people to leave the dance floor and the music in order to go to the other room to have a drink and food. If, by being legalistic, we make it impossible for these functions to take place, we shall come back to the point which I made originally that this really means that they will not be able to happen at all because, on the economics of the argument, they will not be able to take place with resultant unemployment. I have looked at this and I truly believe that the most effective and shortest way of dealing with this is by removing the subsection. It in no way interferes with the necessity for music, dancing and eating before one can have a special licence. I have great sympathy with the noble Baroness. Like myself, she understands the way in which good, decent people enjoy themselves, without having to be associated with striptease or with deliberate dangerous driving and such matters. However, the points which the noble Baroness had in mind about the general relaxation have nothing whatever to do with this Bill. Mine is a very tiny section, merely putting into law what has in fact been the case for about 14 years.
I have the confidence that when we get to Third Reading those points may perhaps be better understood. It may be that the right reverend Prelate will not repeat his suggestion that they might seek

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to divide the House on Third Reading. I am convinced that if this matter is looked at in a detailed and proper way, it will be seen that it in no way interferes with the general view which noble Lords are entitled to have regarding the overall matter of having intoxicating drinks at all. What I propose is intended to provide a cleaner, better law which will lead to good living. It is with the confidence that this is also the view of your Lordships that I submit this Bill for a Second Reading.
The Lord Bishop of LONDON: My Lords, before the noble Lord sits down, may I ask him whether he would accept that the situation regarding the granting of special hours certificates is unsatisfactory in that the magistrates have no discretion? Would he consider it possible to introduce some discretionary power for magistrates in the granting of these certificates?
Lord HARMAR-NICHOLLS: My Lords, that matter is quite outside and beyond the particular point I wish to argue today. If I went into those fields I think that the right reverend Prelate and I would be on different sides. But I should not like to injure the good opinion which I hope I have earned for my point of view on this narrow issue, by going into the wider issue today, although, as I said to the noble Lord, Lord Soper, I have no doubt that we shall find that we shall be protagonists when these matters—such as those which the noble Baroness, Lady Phillips, referred to—are dealt with in this House at a later stage.
On Question. Bill read 2a, and committed to a Committee of the Whole House.

FIREARMS (AMENDMENT) (NORTHERN IRELAND) ORDER 1975
6.23 p.m.
Lord DONALDSON of KINGSBRIDGE Lord DONALDSON of KINGSBRIDGE rose to move, That the draft Firearms (Amendment) (Northern Ireland) Order 1975, laid before the House on 7th November, be approved. The noble Lord said: My Lords, this Order in Council amends the provisions of the Firearms Act (Northern Ireland) 1969, as itself amended by the Firearms (Amendment) Act (Northern Ireland)
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1971, and the Firearms (Amendment) (Northern Ireland) Order 1973. Its main purpose is to improve existing controls and to clarify existing legislation in one or two respects. It follows a review of the control of legally-held firearms in Northern Ireland which was carried out last year, and while it makes a few changes of some significance in the law, there is no change in the general principles governing the issue of firearm certificates. Legally-held firearms are very strictly controlled in Northern Ireland—more so than in Great Britain.
The Order abolishes firearm permits. The permits in question are unique to Northern Ireland firearms legislation and simply allow a person to keep a firearm within his dwelling-house. He may not use it. There are only about 1,300 permits in existence, and they authorise, mainly, the possession of collectors' items, souvenirs, or antique weapons. In practice, the chief constable has for some time preferred to issue the normal firearm certificate in respect of such weapons, so that the system of permits has become superfluous. On expiry of a current permit, the holder will have to apply for a firearm certificate. The chief constable will of course have to satisfy himself that the person concerned satisfies the basic statutory qualifications for the issue of a firearm certificate but, subject to this, firearm certificates will be granted in substitution for the old permits. A modified fee only will be charged on the grant of a firearm certificate in these circumstances.
Some Amendments are made to that section of the Northern Ireland Firearms Act which permits the possession of firearms in certin circumstances without the need for a firearm certificate. In particular, the opportunity has been taken to regularise the use of air rifles at shooting galleries, at amusement arcades, church fetes or bazaars. For historical reasons, the police have until now exercised a discretion in allowing the use of these weapons at such functions so long as the person conducting or carrying on the range had a firearm certificate. This practice is now being regularised. Additionally, an exemption which was provided for institutes of higher education, or other approved research centres where studies in forensic medicine, ballistics or similar studies are undertaken, is being removed. There has been great difficulty in defining exactly what constituted an

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institute of higher education and any firearms held by such institutes or centres are held on the authority of firearms certificates. The exemption is therefore unnecessary.
The law is also being clarified in regard to the possession in Northern Ireland of firearms held under the authority of a firearm certificate or shotgun certificate issued in Great Britain. Generally speaking, these arc regarded as valid in Northern Ireland and this will continue to be the case, but in addition the Order introduces a new provision which will permit the possession in Northern Ireland, for sporting purposes only, of firearms or ammunition held by a person who normally resides outside the United Kingdom and is authorised to hold those firearms or ammunition under the law existing in his own country. Quite a few sportsmen from Continental countries come to Northern Ireland to shoot for sport and there is quite a traffic of sportsmen between the North of Ireland and the South. At the moment these persons must acquire Northern Ireland firearm certificates, however short their stay, and this is not a satisfactory arrangement. Regulations will be laid before Parliament setting out the conditions under which such firearms may be brought into Northern Ireland.
Under the firearms legislation in both Great Britain and Northern Ireland, persons convicted of crime are prohibited from possessing firearms for varying periods. If, for example, a person is sentenced to imprisonment for a period of more than six months, but less than three years, the prohibition applies for five years from the date of his release. If the period of the sentence exceeds three years, then the prohibition is for life. The reference to date of release has raised the question of the suspended sentence where, of course, there is no date of release as such. This Order amends the Northern Ireland legislation to ensure that a person who is given a suspended sentence comes within the statutory prohibition, by relating that prohibition to the date of the sentence, as opposed to the date of release.
Since 1920 the minimum age limit for possession of any firearm in Northern Ireland has been 16 years. It is considered that the age of majority is a
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better test of the maturity appropriate to the responsibility of possessing and using a firearm and accordingly the minimum age limit is being increased to 18 years. At the same time, it is conceded that the genuine enthusiast in what is, after all, a recognised international recreational pursuit should be permitted to become accustomed to the handling of firearms at an earlier age; and it is therefore being provided that young persons between the ages of 16 and 18 may have, and use, a firearm for sporting purposes under controlled conditions; namely, in the company, and under the supervision of, another adult who holds a firearm certificate for that firearm. Special provision is also being made to allow the young farmer between the age of 16 and 18 to possess firearms for the control of vermin on lands on which he works or resides.
My Lords, I have already mentioned that firearms control in Northern Ireland is more stringent than in Great Britain. The chief constable of the Royal Ulster Constabulary has greater powers of control than his counterpart in Great Britain. He may, for example, revoke a firearm certificate where he feels that the person holding it has no longer any good reason to have it. To complement his powers of revocation it is considered that the chief constable should also have the power to require the surrender of the firearms and ammunition to which the certificate relates when he revokes a firearm certificate, instead of simply the power to demand the surrender of the certificate itself. Apart from anything else, a person holding firearms or ammunition without the authority of a firearm certificate is holding them illegally. The provision will simply mean that when a firearm certificate is revoked for any reason, the firearms and ammunition to which it relates will be held safely in police custody until the owner can dispose of it.
In order that the police may have the fullest possible information about the movement of legally-held firearms, it has been decided that transactions between registered firearms dealers and between registered firearms dealers and private persons should be notified to the police in the same way that private persons already have to notify transactions under existing legislation. Noble Lords may

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be aware that in Northern Ireland certain firearms are ballistically tested so that their characteristics may be recorded for purposes of forensic comparison. It follows that if any of these firearms are repaired, altered or converted this could alter the characteristics already recorded. Accordingly, the Order requires that when such alterations or repairs are made the owner of the firearm shall report them to the police within 48 hours so that arrangements can be made for retesting if this is felt to be necessary. The existing penalties for firearms offences in Northern Ireland are generally less than those in Great Britain, and the opportunity is now being taken to bring them completely into line.
I now turn to the question of firearms clubs. At present, there are no more than 57 of these clubs in active operation in Northern Ireland. Three of them use full-bore or military-type rifles, about 20 use air rifles and the remainder use miniature or 0.22 calibre rifles. The clubs operate under the authority of Declarations of Approval issued under the Unlawful Drilling Act 1819, which simply permit the members of the club to assemble for target practice. The only other form of control is that firearm certificates must of course be held by either the club or club members. It has long been felt that this is an inadequate system of control, and power is now being given to the Secretary of State to impose conditions on Declarations of Approval which will more satisfactorily regulate the operation of the clubs. I might say that this proposal has been discussed with the governing bodies of the sport in Northern Ireland, and they are in general agreement with, and indeed welcome, the proposal. An undertaking has been given to those bodies to discuss again the types of conditions which should be imposed.
My Lords, I am confident that you will accept this measure as a reasonable extension of the already stringent controls over legally-held firearms in Northern Ireland. No one would deny that the real problem there is the illegally-held firearm, but clearly in the emergency which exists there—indeed, at any time—it is only prudent to control legally-held weapons as much as possible, consistent with reasonable facility for gun sportsmen to carry out the sporting activity of their choice. My Lords, I doubt whether your Lordships
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remember (why, indeed, should you?) but when the Green Paper on the Control of Firearms was debated in your Lordships' House in October 1973 I spoke strongly in favour of more stringent controls on weapons in Great Britain. Your Lordships will therefore not be surprised to know that I strongly commend this Order to this House. My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the draft Firearms (Amendment) (Northern Ireland) Order 1975, laid before the House on 7th November, be approved.—(Lord Donaldson of Kingsbridge.)
6.34 p.m.
Lord BELSTEAD: My Lords, I should like to thank the Government for the consultations which have preceded the presentation of this Order. The original draft of the Order really was not suitable in a variety of ways. Representations have been heeded and, I think, heeded to very good effect. I particularly support the prohibition on those convicted of crimes from holding guns for specified periods. Towards the end of his remarks the noble Lord referred to the menace of the illegally-held gun. A point was made in another place about the posting of firearms certificates and it was asserted in another place that many of these certificates go astray in the post in Northern Ireland. Under those circumstances, I wonder whether I might add my voice to what was said in another place and ask the Government whether they would look at that point again.
My Lords, I trust that the exchange of firearms permits for new certificates under Article 3 will attract only a very small fee. I am sure that this new provision will be accepted provided it is not accompanied by unreasonable expense for firearms holders. I think it would be an excessively cautious society—and an impracticable one, too—if young persons of over 16 were absolutely prohibited from learning to handle a shotgun in a country where so many people are involved in agriculture. Article 8 deals with this in a sensible manner, and this is very welcome.
I was glad to hear the noble Lord say that the conditions for firearms clubs are to be discussed with the governing bodies of the sport, because I think all who are involved in those clubs, and, also, all

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who are involved in target shooting, sometimes find it difficult to be able to get the necessary practice. I remember discussing this with members of the staff of a school in Northern Ireland which regularly sends a team to shoot at Bisley, and they made the point that it was very difficult for their pupils to be able to practise. If it can be arranged that things are not made more difficult to organise than necessary, then the clubs will be very grateful.
The only question and slight criticism which I would raise is that it would perhaps have been helpful to have had another Schedule at the back of this Order listing the differences between Northern Ireland legislation on this subject as it will stand when this Order is agreed, and legislation as it affects the rest of Great Britain. But I think that this has become fairly clear from the explanation which the noble Lord has given, and I most certainly support the passing of this Order.
6.37 p.m.
Lord MONSON: My Lords, I should be grateful if the noble Lord, Lord Donaldson of Kingsbridge, could kindly clarify two or three points pertaining to this Order, the majority of the provisions of which I find not unreasonable. Could the noble Lord confirm that shotguns, air guns and 0.22 rifles are collectively responsible for fewer than 1 per cent. of the murders committed in Northern Ireland since August 1969; and is it not the case that the majority of existing permits relate to relatively harmless sporting weapons of this category? Thirdly, could the noble Lord perhaps indicate how many murders since August 1969 have involved legally-held weapons, of whatever calibre?
Finally, my Lords—I may be unduly alarmist in this—is the noble Lord entirely satisfied that Article 6 might not open a dangerous loophole? It is common knowledge that arms and ammunition are reaching terrorist groups in Northern Ireland from certain countries to the East, West, South and South-East of the United Kingdom; I shall be no more specific than that. Is there not perhaps a danger that Article 6 might allow certain politically-motivated nationals of the countries concerned to bring in arms and
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ammunition to these groups under the pretence of being innocent sportsmen?
6.39 p.m.
Lord DONALDSON of KINGSBRIDGE: My Lords, I am grateful for the general support which this Order has received. I note the point made by the noble Lord, Lord Belstead, about the posting of firearms certificates. This is being looked at—it is obviously rather important—but I do not think we have got very far on it. We do not usually draw attention too obviously to parity in the wrong direction, and I think the legislation in Northern Ireland concerning firearms is going to be better than the legislation over here; so this may be a good reason for not having a Schedule showing how much we are ahead.
The noble Lord, Lord Monson, asked two questions. I can give him an answer which is not exactly in the form of an answer to the question he asked, but I have a record here of the number of crimes in 1975 which involved weapons, and the type of weapon it was, stolen from a legal owner, which I think are the relevant figures he wants. What I have not got is whether the crimes were murder, attempted murder or armed holdup. There were 5 committed with pistols, 5 with revolvers, 2 with shotguns, 1 with a self-loading military rifle, 2 with rifles and 2 with submachine guns, making 17 in all. Add to that 13 for the year before and there is a fairly nasty average because the truth is that these are the worst kind of crimes, and although the bulk of these crimes are committed by illegally held firearms, in so far as any are committed with firearms stolen from people who hold them legally, we cannot be too careful in trying to stop it.
So far as Article 6 is concerned, I think the noble Lord is worrying unduly. The procedure will be that if a Bavarian sportsman wishes to come and cull some of our antlered beasts, which we have in beautiful quantity in Northern Ireland, he will write to the chief constable saying that he is bringing in a gun of a certain make and asking for a temporary permit for it. The chief constable will be obliged to find out that he is who he says he is—he probably will be staying with a friend of the noble Lord, Lord Monson. It will

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be for the chief constable to check this; and providing he is who he says he is, and is going where he says he is going, he will be issued with a certificate valid front arrival to departure. My Lords, I am grateful for the general reception of this order. I think it will improve our general position in Northern Ireland.
Lord MONSON: My Lords, before the noble Lord sits down, I thank him for his reply, which satisfies my doubts about Article 6. He mentioned unspecified crime committed with a submachine gun. Is it the case that individuals can hold submachine guns under existing legislation?
Lord DONALDSON of KINGSBRIDGE: My Lords, almost certainly this would have been stolen from a UDR holding. There was an instance. Whether it is the one we all know about I cannot say.
On Question, Motion agreed to.

MONEYLENDERS (CROWN AGENTS) BILL
6.44 p.m.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I know that many noble Lords have referred to the noble Earl, Lord Cowley, but I should not want this particular opportunity to pass without saying something about him on behalf of the whole House and particularly because this Bill was one of his special subjects. It is difficult to believe that someone so young, so active and so sincerely and enthusiastically alive to all the things he believed in could have gone from us so suddenly. I have debated many times with him on aid and on foreign affairs and there has always been that unfailing good humour and courtesy which we grew to expect from him. More important than that, perhaps, was the fact that he had a very deep knowledge of his subjects. He was becoming a skilled debater and there can be no doubt that he could have gone very far in the service of this House. The fact that his untimely and, indeed, tragic death has happened in this way will be a very real loss to his Party, to the whole House and, I think, to the country. Perhaps, most important of all, we are all thinking of his young wife and her little daughter. We
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know her, many of us: we are all thinking of her and we send her our love and our deepest sympathy.
My Lords, I beg to move that this Bill be now read a second time. The purpose of this Bill is to establish that the Moneylenders Acts do not apply, and have never applied, to the loans made by the Crown Agents for Overseas Governments and Administrations either directly or through their wholly owned companies. The Bill involves no addition to public service manpower, nor to public expenditure. Your Lordships may remember a leader in the Daily Telegraph of November 25th which said:
"It is not often that Parliament is given the chance to consider a Bill of just two clauses which could save the taxpayer hundreds of millions of pounds, without cutting defence spending or the social services and on which Members can be wholeheartedly in agreement without breaching or even stretching Party lines."
Indeed a unique occasion—well, rare anyway. As my right honourable friend the Minister of Overseas Development said in his Statement on October 16th, which I repeated and which foreshadowed this Bill, he was informed in August by the chairman of the Crown Agents that the loans in question could be contested as irrecoverable and any securities related to them as unenforceable on the grounds that the Crown Agents are neither licensed moneylenders under the terms of the Moneylenders Acts nor a bank for the purpose of those Acts. As I think the House knows, before 16th October the Crown Agents had received some indications that their money lending status might be challenged. They had, in particular, received a letter from the liquidators of the Vehicle and General Assurance Company Limited requesting information on this point. The point has proceeded no further; but this was the necessity for this Bill.
It has always been understood that the Moneylenders Acts did not apply to the Crown Agents as servants of the Crown; they have also been advised that if this matter were brought before the courts they would have a very good case. However, if there were a challenge in the courts it would obviously certainly take a long time to resolve, and even if a judgment favourable to the Crown Agents were given on one loan it might not cover all the other loans.

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Noble Lords will understand that the delay and uncertainty could significantly worsen the Crown Agents' financial position. I think that noble Lords know that the Crown Agents' function at present is to provide financial, technical and commercial services to over 100 Government and 200 other public bodies overseas. These services include large-scale procurement activities for their overseas principals, about £113 million of which is business in the United Kingdom. Noble Lords will appreciate the consequent benefit to our balance of payments. I should like also to stress—I am afraid I have said this before—that they manage over £800 million in sterling securities and cash for their overseas principals. It is most important work which noble Lords on all sides of the House recognise. Of course, the Government want to see these valuable services continued for the sake of the Crown Agents overseas principals in the developing world and for the sake of this country in its relations with overseas countries. That is why the Government have emphasised many times that they stand behind the Crown Agents; if we do stand behind them we lay the taxpayer open to the liability of the potential cost to the Crown Agents of the circumstances I have explained. I cannot precisely estimate the total liability, but it is generally agreed that at maximum it would just about exceed £400 million, and that is without taking into account future interest payments on the loans.
My Lords, I think the House will realise that the main beneficiaries would he those property companies, secondary banking companies and other companies to which the Crown Agents have made loans or, in the case of insolvent companies, their other creditors. Can I come quickly to the element of retroactivity which some noble Lords will find distasteful? We always find retrospective legislation distasteful. I want to emphasise that this Bill does not involve overruling either a decision of a court or a clear legal proposition. I have mentioned an inquiry from one liquidator. Other questions about Crown Agents' money-lending status have been raised in correspondence; but no legal proceedings concerning the loans have been started before the Statement on 16th
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October. Neither have the Crown Agents instituted such proceedings. We are not therefore altering anything which has been decided. The House will agree that it is not therefore retrospective provision in the sense that the House might normally find objectionable.
May I emphasise that the House wish to remember that we are acting in the interests of the taxpayer and in relation to a very large sum. We must make the legislation bite on the loans which Crown Agents have made in the past, and those are the loans which are now in question. Nor do I think that it can be said we are seeking double standards between the public and the private sector. Noble Lords who follow these matters will remember that the Ship Mortgage Finance Company Act 1962, enacted when a Conservative Government was in power—I am making no political point about this—was a private Act related to a company in the Private sector, and was similarly retrospective. Therefore, in enacting this Bill, Parliament would not be adopting double standards.
In another place, the question was raised at the Committee stage of the Bill as to whether litigation had been started in which the Moneylenders Acts had been pleaded. My honourable friend the Parliamentary Under-Secretary of State said that he understood that no such litigation had been started, but if this proved to be inaccurate he would see that this matter was put right in your Lordships' House. Since this assurance was given I have been informed that a writ was served on Four Millbank Investments Limited after notice of this legislation was announced in Parliament on 16th October, claiming that a certain transaction was invalid. However, no details of the grounds on which the claim rests have yet been received, and it is not possible to say on what basis the action is being brought. I can say, however, that no defence under the Moneylenders Acts has been pleaded. I thought I ought to tell your Lordships of this writ so that there should be no further misunderstanding.
Some of your Lordships may question, as was done in another place, whether Parliament is being asked to legislate in the dark before we have more information about the Crown Agents in

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general; in other words, before my right honourable friend's White Paper is published and, of course, before the results of the Fay Committee are known. May I stress again that tonight we are dealing with current day-to-day activity of the Crown Agents, which is urgent. May I stress the word "urgent". The long-term future will be dealt with in the White Paper and in the ensuing legislation. All noble Lords know that this is not an easy problem and that we have to keep in the forefront of our minds the need to maintain the confidence of the overseas principals. I think everyone will agree that this time we have to get the framework absolutely right, and we need a little time to do this.
The conclusions of the Fay Committee, in whose conclusions noble Lords are deeply interested, will provide the reasons why and how the Crown Agents got into their financial difficulties, which nobody denies. But, of course, these things take time and the conclusions will not be available until some time in the coming year. In the meantime, we have an urgent need to clarify the Crown Agents' moneylending status now so as to avoid further financial problems. Until we have clarification, the Crown Agents may suffer serious loss of income and may be unable to recover capital owing to them. It is a risk we must eliminate urgently.
It is a very foggy night, but perhaps I may make one or two technical points in explaining the Bill. I will be as brief as I can. It has only two clauses. Clause 1 provides that the Moneylenders Acts shall not apply and shall be deemed never to have applied to loans made by the Crown Agents, either directly or through wholly-owned companies. It also declares in subsection (3) that this exemption shall not prejudice any status, privilege or immunity of the Crown Agents, or such a company as servants or agents of the Crown. Clause 1(1) is framed to cover any period when there was only one Crown Agent, when, in order to comply with the requirement that a company needs more than one shareholder, the other shares in the companies wholly owned by the Crown Agents were held in trust for them by a member of their staff acting in his official capacity.
Clause 1(2) is simply a definition of the Crown Agents which is needed because there is no legislation establish-
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ing them; they derive from the prerogative. It is more involved than might otherwise have been necessary because the titles of the appointments made to the Crown Agents by successive Ministers have not been identical. Clause 2(2) is included because legislation to repeal the Moneylenders Acts has already been enacted, as the House will understand, under the provisions of the Consumer Credit Act 1974.
I will not go into the Bill in more detail now; if noble Lords have questions on it, I will reply later. I want to stress that the position of the Crown Agents is unique. Their status for the past 150 years has never been dealt with in legislation or tested in the courts. I am sure the House will agree that we must clarify a situation which could soon increase the potential burden on the taxpayer for financial support to the Crown Agents to a degree which would be unacceptable. We have therefore prepared this Bill to place beyond doubt in this limited respect the position of the Crown Agents and their wholly-owned companies. I beg to move.
Moved, That the Bill be now read 2a. —(Baroness Llewelyn-Davies of Hastoe.)
6.59 p.m.
The Earl of GOWRIE: My Lords, like my noble friend Lord Campbell of Croy during our previous business, I am here as a substitute for the late Lord Cowley. I should like to thank the noble Baroness the Government Chief Whip most sincerely for her references to him. We are all very shocked by his death at less than 30 years of age and amid all the happiness of his strong family life and commitment and, likewise, of his strong commitment to a public career. It is conventional that we as a House pay our respects usually to Members of Privy Council rank or beyond upon their death; but I believe as a colleague and friend of Lord Cowley that I may join those on this side of the House in expressing to his young and charming wife our warm feelings for him and our great sadness at his loss. This House, Parliament and the country, as the noble Baroness suggested, are not so full of young men committed to careers in politics that we can afford to lose them lightly. My late noble friend was only at the start of his career; but I am glad to be able to recall that he was in 1973, albeit briefly, the youngest member of

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any British Government for very many years, and that surely was a promising start.
Lord BROUGHAM and VAUX: My Lords, may I interrupt my noble friend, on behalf of Maria Cowley, whom I am seeing later this evening. I will pass on the messages from my noble friend, the noble Baroness and the House.
The Earl of GOWRIE: My Lords, I am grateful to my noble friend for that intelligence.
I turn now to the Moneylenders (Crown Agents) Bill, which was, as we would expect, very disarmingly moved by the noble Baroness the Government Chief Whip, who itemised carefully and accurately all the areas of conceivable opposition that I might be able, at short notice, to raise. I understand that the Crown Agents manage overseas property, whether real or financial, belonging to Governments. Most Government institutions and banks in this country are covered by the Moneylenders Acts so that liability is not limited unless this Bill becomes an Act in the case of the Crown Agents. The noble Baroness mentioned that to all of us, as Parliamentarians, there is an element of distastefulness in retrospective legislation. Certainly here very large sums of money could be involved. She mentioned a total sum of some £400 million being at risk with overseas banks and institutions, as a result of doubtful debts in the 1974 accounts, of loans to Bristol banks and institutions, of overdrafts, commitments to overseas principals and interest received and liable to be repaid if judgment went against the Crown Agents. Since many people could theoretically be denied lawful benefits which they could expect to receive, I think there is an element of distastefulness here.
The noble Baroness said that the Bill does not involve overruling the decision of any court or any existing legal proceedings. I would say, with respect to her. in view of that sentence, "So we would all hope". I acknowledge, with her, that retrospective legislation may be unavoidable in this case. I believe it would have been better if we had received more information and if the White Paper outlining the intentions of the Government about the future of the Crown Agencies were published at least during the consideration of the later stages of
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this Bill. I was going to ask the noble Baroness whether that would be likely, but she has pre-empted me and indicated that it would not, and that the later stages of the Bill would be proposed without that information. However, I must agree with her that confidence in the Crown Agents must be maintained, and particularly where foreign Governments are concerned and at a time of great indebtedness towards them.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, perhaps I may be allowed to add a couple of words. I am quite sure in my own mind that nobody believed that the Moneylenders Acts did apply to the Crown Agents at the time when the transactions which may be in question were arrived at, that the Crown Agents were never intended to be caught by the Moneylenders Act sand that nobody could put up a defence under the Moneylenders Acts for any reputable reason whatever.
7.3 p.m.
Lord PEDDIE: My Lords, I should like to join in the expressions of deep regret and sympathy upon the passing of one of our colleagues. I did not know him well, but certainly had a great respect for his quiet charm and tremendous friendliness. I shall always remember him for those qualities.
Regarding this Bill, I do not think there is any doubt that here we have a piece of retrospective legislation, and no Parliamentarian can welcome retrospective legislation. But I believe that there are occasions when it is necessary to right a wrong or correct a mistake, or, as the noble Baroness said, to clarify a situation. I am sure that this Bill is justified on at least two of those counts, and therefore I welcome it as a piece of completely justifiable legislation.
Before making any further comments, I should declare an interest in that I am chairman of a company which has a financial connection with the Crown Agents; but beyond that my main reason for intervening in this debate is my continuing critical interest in the affairs of the Crown Agents—one which extends over almost five years. The noble Earl, Lord Selkirk, and I have frequently drawn attention in the past to most disturbing elements in the operations of the Crown Agents. Indeed, I can claim personal responsibility for exciting the interest of

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a number of Members in another place, which I think had some influence upon the activities which resulted in the Stevenson Report of May 1972—a Report which, incidentally, we never had the privilege of reading.
The noble Earl, Lord Gowrie, while welcoming the Bill, said that it was the responsibility of Government to give more information. I agree that the Crown Agents, and indeed the public, in times past have suffered a great deal because of the reluctance of Governments to give all the facts. I hold equally responsible the Party opposite, because I remember vividly that on 21st November, 1973—and I shall paraphrase Hansard—in response to questions posed at that time the statement was made by a Member of the Party opposite that the Crown Agents had adapted their organisation and structure to deal with a wide range of technical and financial services. The spokesman went on to say that in the light of the Stevenson Report they agreed that fully owned subsidiaries staffed by Crown Agents personnel should be developed to deal with specialised financial services of the Crown Agents. Beyond that, the statement was made that the investment policy pursued by these companies should be in accordance with the trustee analogy and consistent with their name and standing. I welcomed that statement at the time, and particularly the comment that the investment policy was to be in accord with the trustee analogy, but I must say that no full description of what was meant by that phrase was given. Presumably we were not aware of the full situation at that time.
Furthermore, I regret that the White Paper which has been promised by this Government has not yet been produced. It was as far back as 17th December 1974 that this Government made a cash injection of £85 million, and I would pay them this compliment: that occasion marked the first time ever of the giving of a full and frank expression of complete Government support for the Crown Agents. That was a most important decision—so important, as the Crown Agents themselves will testify, that it added to the confidence which was felt by overseas investors and resulted in a very substantial increase in deposits. My figures are in excess of those quoted by my noble friend. They indicate as
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much as £1,200 million of overseas funds now being handled by the Crown Agents.
I agree that this Bill involves no public expenditure. If it is not accepted, it could involve expensive litigation, the benefit of which could only be to property companies, fringe banks and others who have obligations to the Crown Agents. I believe that the Crown Agents have enormous potential, and in spite of a long, long period of criticism, I personally would say that I have absolute confidence in them, and particularly in the knowledge of Mr. Cuckney, who is the chairman and a man of outstanding reputation. I welcome this opportunity of making such a statement.
I would end by making this comment. I look forward to the publication of the White Paper, which is long overdue, and I hope that it will advocate a public corporation of a character which provides backing by the State but gives a considerable measure of independence to the Crown Agents themselves. I believe that the Crown Agents have been in the past, and can continue to be, a very useful asset to this nation. They have done tremendous work and I am quite sure that this House will give full support to, and will indeed welcome, this Bill as being a very necessary step to put matters right and make sure that we have continued progress on the part of the Crown Agents. I have great pleasure in supporting the Bill.
7.10 p.m.
Lord BRUCE of DONINGTON: My Lords, the noble and learned Lord, Lord Hailsham of Saint Marylebone, will correct me if I am wrong but, to the best of my recollection, under the Moneylenders Act 1927, there are only two ways in which a borrower can avoid his obligation of repaying a loan to a moneylender. The first is when a moneylender is not a registered moneylender as such, even though he holds himself, or a firm holds itself, out to lend money. The second is under Section 6 of that Act, which automatically voids a contract and any security given in respect of a loan if the contract for the loan does not state all the terms. The only reassurance upon this Bill that I require is that no borrower shall suffer as a result of its passing, by reason of any reference to Section 6 of the Moneylenders Act 1927. So long as I

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have that assurance, I think that the Bill should be thoroughly supported.
7.12 p.m.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, it is not often that I am able to thank the noble and learned Lord, Lord Hailsham, for help on these matters, but I thank him very warmly for his very clear and helpful intervention about the relationship between the Crown Agents and the Moneylenders Act. I hope he will forgive me for saying that he was absolutely right in his interpretation of the situation, and I am most grateful to him. Indeed, I am also grateful to my noble friend Lord Peddie, because we all know that he has been a very deeply knowledgeable critic of the Crown Agents in the past, and when he gets up I never quite know what he will say. So I am grateful to him for at least approving of two points in the Bill.
Of course he was right to be critical. As my right honourable friend said in another place when he was dealing with the current financial situation, no one has ever tried to pretend that the financial situation is good. Of course the Crown Agents are technically insolvent—I think that term has probably applied to me all my life and, unfortunately, bank managers take these matters rather seriously—but, even so, as the House knows, since my right honourable friend made his Statement about the £85 million, and the Bank of England's offer, neither of those guarantees has had to be taken up, and the Crown Agents have not had to fall back on them. Furthermore, as my noble friend Lord Peddie said, deposits made by oversea Governments and bodies have gone up, so that confidence in the Crown Agents has been maintained and increases. I should not like to argue figures with my noble friend Lord Peddie, but there is no doubt that they have gone up. This is what matters and it is of tremendous importance.
I share with the House the regret that we could not have had both the White Paper and the Report of the Fay Committee before we had to take this little but very important Bill, but I can promise your Lordships that the White Paper will be out very shortly. I know that that is a phrase which Government often use, but I really believe that it will be with
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us very soon. I have already said that we shall not have the Report of the Fay Committee very soon and, in the meantime, it is essential to get on with this Bill. I think my noble friend Lord Peddie will be satisfied with the White Paper when we get it. It will not only set out the history of the Crown Agents, but will describe what is proposed for its future functions, and the specific powers—I think this is important—which should rest with the Minister.
The word "incorporation" is always used in these matters. It describes a relationship of a kind which noble Lords perfectly understand between bodies in the public sector and Ministers responsible for them. I think that the White Paper will clarify the responsibility and broad oversight which the Government need to exercise, as has been proved by past events, over the activities of the Crown Agents, but will leave the Board to run their day-to-day activities. Most important, it will not disturb the traditional relationship between the Crown Agents and their principals. It must be admitted that this is an extremely difficult nut to crack. All sorts of Administrations have had a go at it. My noble friend referred to the Stevenson Committee. Everyone has tried to get this straight. At last, Her Majesty's Government have now grasped the nettle and I think that in a very few weeks we shall see the White Paper. But, again, may I emphasise that we need this Bill now, immediately, in order to save for the taxpayers millions of pounds possibly being forfeit.
The noble Earl, Lord Gowrie, asked me a question. I think the answer is that it will be the Crown Agents who are denied the right to recover loans which all concerned would have considered to be recoverable. As the noble and learned Lord, Lord Hailsham, pointed out, their debtors will be denied only the right to advance a contrary interpretation of the Act which the Government do not consider to be a correct one. The noble Earl also referred to the difficulties which another place have found in the law being left to the courts to determine. Of course, the courts interpret legislation handed down by Parliament, but if Parliament becomes aware that there is a lack of clarity in the application of legislation,

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then it is right and proper that Parliament should clear it up and I believe that this Bill represents such a case.
So without going into further details on this foggy night, may I again say that the Bill does not prejudge the repeal of the Moneylenders Act. It will cease to have effect at the same time as the Moneylenders Act ceases to have effect through the orders I have mentioned under the Consumer Credit Act, and its remedial effect in relation to past loans will continue. At this time of utmost restraint on public expenditure, it would be quite unacceptable to take on what could be an avoidable burden. We can dispel such doubts about the Crown Agents' past moneylending status only by legislation such as this Bill which I am recommending.
On Question, Bill read 2aand committed to a Committee of the Whole House.

OECD SUPPORT FUND BILL
7.18 p.m.
Lord JACQUES: My Lords, may I first join in the tribute to the late Lord Cowley, and in the messages of sympathy which have been sent to his wife and family.
My Lords, I beg to move that this Bill be now read a second time. It is a short Bill of five clauses. Its purpose is to enable the "United Kingdom" to join with 23 other nations in the formation of a Financial Support Fund of the Organisation for Economic Co-operation and Development—commonly known as the OECD. There is some urgency in regard to this Bill, because the Fund does not commence to operate until countries representing 90 per cent. of the quotas have deposited their instruments of ratification. Therefore, we have an obligation to our partners to proceed with reasonable haste. Also, it is in our interests to do so. Our country is committed and indeed to some extent is dependent upon international trade. Since the purpose of this Fund is to foster international trade it is also in our interests to ratify the Agreement as soon as possible.
The massive increases in oil prices in the autumn of 1973 and the summer of 1974 gave rise to considerable financial difficulties throughout the world. The consuming countries were unable to adapt
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their economies quickly enough to the changed circumstances and in consequence they had massive deficits in their overseas accounts. On the other hand, the producing countries had only a limited capacity for taking the imports which their newly found wealth enabled them to buy. Consequently they had massive surpluses and there was a grave danger that these surpluses would be invested in a way which did not correspond with the pattern of deficiencies. There was, therefore, the great possibility of financial markets throughout the world being threatened. There was the even greater possibility that individual countries which, through no fault of their own, found themselves in financial difficulties would seek to take unilateral action in order to correct their own balance of payments. Usually it is action which restrains trade, deepens the depression and delays recovery. It was to prevent that from happening that the Agreement with which the Bill is concerned was made.
Many proposals have been made for what is now commonly known as recycling the petrodollars, and this is one of them. However, this proposal has its own characteristics. First of all, before any member of the Fund can make a claim for assistance he must show that he is encountering serious external financial difficulties. Secondly, it must be shown that the country has made the fullest use of reserves and other forms of credit. Therefore, it is quite clear that this is regarded as the safety net.
This is not a Fund in the sense in which we usually use the term. It is not a permanent institution with its own resources. It is intended only that money will be raised to meet applications and the money raised will be unlent immediately. Consequently, there is no question whatever of a floating debt. The size of the Fund is measured by its potential for raising money and unlending it. Each of the countries which is a member of the Fund is allotted agreed quotas which indicate, first, the measure of the risk which is being undertaken by each country. Secondly, they indicate the voting strength which each country will have in making decisions. Thirdly, they give a rough guide as to the amount which a country can expect to be able to draw if it is in difficulties. The total of the

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Fund is 20 billion Special Drawing Rights, which is equal to 24 billion United States dollars. The United Kingdom's share is 1,600 million Special Drawing Rights, or 8 per cent. of the total of the quotas. Therefore, we have a percentage of the risk and a percentage of the voting power. Also, it is a guide to what we could expect if we needed to apply for assistance.
When a country makes an application to this Fund for assistance, it has to prove not only that it is encountering serious external financial difficulties but that it has made the fullest use of its reserves and other forms of credit. Also, it has to prove that it is following economic policies which are consistent with the objectives of the Fund. The object of the Fund is to avoid the need for countries to take unilateral action which would restrain trade. Consequently, a country which was taking unilateral action that would restrain trade is unlikely to receive a great deal of sympathy from the governing committee of the Fund.
Loans will be granted for a maximum period of 7 years and will be subject to the economic policy conditions to he agreed between the governing committee of the Fund and the applicant. Before any member of the Fund could obtain his full quota he would have to obtain two-thirds of the weighted voting strength of those members of the Fund who were voting. Our quota is 1,600 million Special Drawing Rights, which at the present rate of exchange is £917 million, and if we made an application for the total amount two-thirds of the votes would have to be in favour of granting it. Before any country can obtain twice its quota, 90 per cent. of the votes must be in favour of granting it; and before it can obtain more than twice, 100 per cent. of the votes must be in favour.
When an application is received the governing committee can decide to call upon the members who have a choice of two options in deciding how they will proceed to deal with the call. First of all, they can make available the money or credit. If we did that it would be a charge to the National Loan Fund, and any capital repayments and interest on the loan would go to the credit of that Fund. This is provided for in Clause 2 of the Bill. Alternatively, we need not
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contribute at all; we may be content to allow the money to be raised elsewhere by the governing committee and then we would simply guarantee the amount. Therefore, we have an option. Either we can provide the money or just be guarantors. If, of course, we guaranteed and had a loss it would have to be charged to revenue, not to capital account, and. therefore, it would be a charge to the Consolidated Fund. That is dealt with in Clause 3. A further alternative is that when it receives an application the governing committee of the Fund need not go to the members of the Fund for either contributions or guarantees. If it wishes, it can raise the money elsewhere on the collective guarantee of the members of the Fund.
If it did that our share of the liability would be 8 per cent. because our quota is 8 per cent. of the total. In practice, any loss that we are likely to make because of our guarantees will probably be negligible, for any default by a member of the Fund will probably be technical in the sense that the member was unable to find the necessary resources at the due date but found them afterwards. Therefore, any liability arising out of this Fund is likely to be temporary. The usual privileges and immunities are granted under the Agreement. In particular, there is tax relief to non-residents on securities issued by the Fund. This is dealt with in Clause 4.
In conclusion, the creation of this Fund is evidence of the willingness of developed countries to act in concert to overcome the effects of the oil crisis, and that we welcome. The provisions for the supply of credit may appear to be complicated but that is because an attempt has been made to make them flexible, so that the members of the Fund can adopt the methods which are most suited to their financial position and their legal procedures. So far as the United Kingdom is concerned, our first commitment is gradually to reduce and eliminate our external deficit, because while we have it we have to finance it. We have many different ways in which it can be financed. We welcome this facility, but we do not expect to have to use it in the near future. It is intended as a safety net and we intend to treat it as such. I beg to move that the Bill be now read a second time.
Moved, That the Bill be now read 2a.—(Lord Jacques.)
7.31 p.m.
The Earl of GOWRIE: My Lords, it is by custom rather than constitutional provision that your Lordships' House debates but neither amends nor delays Money Bills. Until the last few months it had never occurred to me to question this sensible national habit, but I must say that the Government's record of economic management makes me question our wisdom a little, it being so much worse even—and I stress the word "even"—than the previous Conservative Government's record, and so much worse even than the record of Mr. Wilson's previous Administration. In my view, there is probably more economic expertise and skill and practical experience in your Lordships' House than in another place, even if it is not much on parade today. I feel so pessimistic about the chances of any kind of national recovery under this Administration—even short-term recovery—that I rather wish we could block Money Bills, precipitate a constitutional crisis and force a General Election. But I acknowledge that for the time being this is wishful and indeed somewhat Antipodean thinking.
Consider, as an instance of the fearful cul-de-sac in which the Government are holed up, the present Bill. It is a perfectly sensible Bill and the noble Lord, Lord Jacques, introduced it in his usually clear and sensible way. Normally one would welcome it—or not exactly welcome it since the circumstances that engendered it, the OPEC cartel, the rising oil prices of 400 per cent.—are not exactly convivial topics. But one could at least have said that it was entirely sensible for the OECD countries to club together to set up a Fund to help each other finance the massive balance of payments deficits resulting from the oil producers' limited capacity to absorb imports from us, the oil importing industrial economies.
This legislation before us is the result of the desire of the United Kingdom to become a principal likely beneficiary of the Fund, since we are all too easily capable of demonstrating to the governing committee of the Fund that we are, under the qualifying rubric stated by the noble Lord, Lord Jacques, encountering serious internal financial difficulties. Un-
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for the Gvernment we are also, under the same qualifying rubric, required to demonstrate that we are making the fullest use of our reserves and other forms of credit.
One of the first things that your bank manager requires of you, when you apply to him for a loan because you are in trouble rather than because you have a bright or expansionist idea, is that you should state your intentions and chances of avoiding the same kind of trouble in the future. Yet we now know that, despite all the firmly-stated intentions to reduce public expenditure which the Chancellor of the Exchequer has been making, plainly he will do very little of the kind. Let us look briefly at the figures. The annual public expenditure review is to be completed next week and the White Paper is due in January. We understand that cuts of £3,000 million are proposed for the next two or three years, but in the present year we have exceeded last year's forecast by nearly £2,000 million, excluding the interest on that extra £2,000 million, so that in fact after interest it is of course a lot more.
At the start of this financial year the public expenditure of 1976–77 is expected to be £4,000 million lower than previously, but we have the roller effect, the effect of accumulated interest and the compound interest and we have extra expenditure projects such as the Chrysler crisis, and the like. To put it mildly, it also seems to me to be unlikely that at a time of sharply rising unemployment the Chancellor will be able, or will wish, to raise income tax.
Only yesterday, in an article in the Sunday Times, the Chancellor wrote, mentioning the social wage, that if we raise public expenditure in the short-term at the expense of productive investment we shall destroy our chances of improving public services in the future. I contend that we already have destroyed those chances, and for very many years to come. So the governing committee of the OECD Support Fund is faced with the British Government hurrying through this legislation in order to qualify for help, stating their intention of reducing their public borrowing requirements, but effectively doing the reverse the lesson of Chryslers is that we can only increase I our public borrowing requirements—by

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how must we shall probably learn tomorrow.
My honourable friend Mr. David Howell has calculated in another place that our existing outstanding amount of foreign currency loans to the public sector—I am talking not about general public borrowing but only foreign currency loans—is in the region of £9,500 million. The annual interest on this figure cannot be far under £1,000 million—or a modern billion—in each year, so that in addition to the OECD Support Fund entitlement—the Bill we are discussing today—we owe money to the IMF General Account, the IMF oil facility, the US Federal Reserve and the EEC joint borrowing scheme.
Of course I acknowledge that we shall have to borrow—or rather to continue borrowing—for a very long time to come but as we know from the recent history of the aerospace, shipbuilding and motor car industries there is a distinction between borrowing to get back on one's feet and borrowing to stave off reality just a little bit longer. The Government, like Mr. Micawber, are hoping for something to turn up and they think they know what it is—North Sea oil. But as the OPEC experience has warned us, this is next to useless unless a common energy policy and minimum price levels can be agreed. Yet the whole posture and behaviour of the Foreign Secretary recently has put this into jeopardy and raised the deepest and, I should think, justifiable suspicions among the very nations whose Support Fund we are now scrabbling to utilise. My Lords, one need not kow-tow to one's bank manager, but there is no reason to spit in his face.
My Lords, a final contradiction. It seems likely that on Wednesday the Government will introduce selective import controls. Certainly there are widespread rumours to this effect. It also seems likely that these will satisfy the TUC very little, some of whose leaders are urging a siege economy. What on earth good would a siege economy do to British Leyland or to the jobs it generates? What good would it do to Chrysler, whose continued existence in this country as a creator of goods and work depends entirely, as the Department of Industry acknowledges, on co-operation from the company's European subsidiaries?
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The noble Lord, Lord Jacques, said that the governing committee of the Fund would look with distaste at a Government who took unilateral action directed at disturbing the balance of world trade. I agree with him, but do the Government realise that if they introduce import controls on Wednesday these would be totally incompatible with the principles of the Fund whose legislative effects we are debating? In my opinion, it would be a far better thing for the country and for the House if we refused to give this Bill a Second Reading, at least until Thursday. I have to say I regret that our conventions preclude us from doing so.
Lord JACQUES: My Lords, the noble Earl, Lord Gowrie, has been very selective in the evidence he used. If I were going to the bank manager, I would point out that the first thing this country has to do is to bring down the rate of inflation, and that there are strong signs that the Government have taken effective action. The latest figures show that for the first time in more than three years the monthly rate has fallen three months in succession—I repeat, for the first time in three years. I would remind the noble Earl that this Government have not yet been in Office for two years.
My Lords, I would also point out that in the last six months the average increase in the Retail Price Index has been just over 1 per cent. bringing the inflation rate down, on an annual basis, to something around 15 per cent. That indicates that the action recently taken by the Government, with the co-operation of both sides of industry, has been effective. That is the most important thing to do. The noble Earl criticised the public expenditure of the Government, but he did not spell out the alternative. The alternative would be massive unemployment.
On Question, Bill read 2a; Committee negatived.

HILL LIVESTOCK (COMPENSATORY ALLOWANCES) REGULATIONS 1975
7.42 p.m.
Lord STRABOLGI Lord STRABOLGI rose to move, That the draft Hill Livestock (Compensatory Allowances) Regulations 1975, laid before the House on 27th October, be approved.

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The noble Lord said: My Lords, these regulations, will, with your Lordships' approval—which I hope will be forthcoming—implement the livestock subsidy provisions of the European Economic Community Directive on the Less Favoured Areas. The regulations will replace the hill livestock schemes, variations of which have already operated under United Kingdom hill farming legislation since 1946. For the first time, aid to hill sheep and hill cattle producers throughout the United Kingdom will fall within the compass of one scheme, and for the first time the House is being asked to approve a hill livestock subsidy scheme made under Section 2(2) of the European Communities Act. Before passing to the content of the proposed new regulations, I propose to remind your Lordships, if I may, of the background to the Directive itself.
My Lords, the Directive had its roots in the United Kingdom's negotiations to enter the Community in 1970 to 1971, conducted by the Conservative Administration. The attention of the Community was drawn to the special problems of our hill farmers, and in the Treaty of Accession the United Kingdom obtained general recognition of the need for the Community to take special measures in such areas. Subsequently, the preference of the original EEC members for a Directive related to the mountains only was broadened so as to take account of a wider area of land including the livestock rearing areas benefiting from United Kingdom hill sheep and hill cattle subsidies.
Noble Lords had the opportunity to consider the proposals of the Commission for the Directive on 3rd February this year, when it received a general welcome. On that occasion, I voiced from this Dispatch Box the dissatisfaction of the Government about the proposal of the Directive to limit headage payments on livestock—which I think we shall have to get used to calling "compensatory allowances"—to farmers who were not receiving a State retirement pension. I am glad to say that we were successful in getting this difference of treatment removed, although each member country has to bear the full cost of any livestock subsidies paid to pensioners. The amended Directive was finally approved at the end of last
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April, and member countries wishing to take advantage of its provisions have to introduce their own legislation implementing them within a year.
I should now like to summarise the main features of the regulations. First and foremost we have been able to include virtually the same definition of eligible hill land as in the former schemes. In other words, hill areas which were accepted as fully eligible under those schemes will be accepted under the regulations. The Directive does, however, restrict the payment of compensatory allowances to occupiers of three hectares—approximately 7½ acres—of eligible hill land. I am afraid this means the exclusion of some farmers who were previously able to claim. They are relatively few in comparison with the total number who benefit, but we are actively considering how best to cushion the blow.
My Lords, there are two other differences which I feel I should bring to noble Lords' attention. The payment of a compensatory allowance will depend upon the claimant signing a simple undertaking that he will continue to farm at least three hectares of eligible land for the next five years. State pensioners will be exempt from this provision. I believe that it will prove possible to administer this provision fairly bearing in mind that the regulations provide for release from the undertaking on a number of grounds including circumstances beyond a farmer's control.
The other difference concerns the limitation on payment. Here there has always been some difference in approach North and South of the Scottish Border, as, indeed, often happens, but throughout the United Kingdom regard has always been had to the carrying capacity of the land and to the need to have some limitation on the number of animals qualifying for subsidy. We have, however, always treated claims for cows and sheep separately even though they were grazing the same land. This separate treatment will no longer be possible because the Directive imposes an overall financial limitation of 50 units of account—which is about £28.50—for each hectare of hill land. Thus some farmers who stock fairly heavily with sheep and cows will, I am afraid, find that the limitation on

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the payments they receive under the regulations is more severe than under the hill livestock schemes. There is, of course, nothing necessarily permanent about the 50 units of account.
Otherwise such differences as noble Lords will find in the regulations are mainly of a technical and administrative nature. For example, there will for the first time be a common qualifying day for cattle and sheep of 1st January. This means that this winter's hill sheep subsidy formerly paid in relation to a December date is being deferred for about one month. We hope that this inevitable delay in the first year of the changeover will not cause farmers too much inconvenience. I can assure noble Lords that we are fully aware of the need to deal with farmers' claims as quickly as possible in the New Year. The rates of subsidy payable under the former orders have been incorporated in the regulations including, of course, the higher rates of hill sheep subsidy which followed the Annual Review earlier this year.
My Lords, I began by pointing to several respects in which the new regulations differ from the old United Kingdom schemes. I hope, however, that I have made it clear to noble Lords that in most respects the regulations will continue aid to hill farmers on much the same basis as before. I suggest that our negotiators in Brussels have, considering the total absence hitherto of any Community arrangement for financing this sector of the farming industry, done a remarkably good job. I can assure noble Lords that we shall take every opportunity open to us to seek modifications in the Directive to improve the position of our hill farmers where such modifications appear desirable.
Finally, may I remind noble Lords of two very important considerations: first, aid under the Directive will continue on an indefinite basis ensuring the future of hill farmers; and, secondly, the United Kingdom stands to gain a very substantial FEOGA contribution in the region of £12 million annually towards the cost of paying the allowances. I hope the House will see fit to approve these regulations, and I beg to move.
Moved, That the draft Hill Livestock (Compensatory Allowances) Regulations
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1975, laid before the House on 27th October, be approved.—(Lord Strabolgi.)
Viscount AMORY: My Lords, I should like only to say to the noble Lord that from the very clear description he has given it seems to me that in general these are very sensible arrangements. May I ask him one question with regard to the £12 million he mentioned towards the end of his remarks? Is that, as it were, the net receipt to this country arising from these provisions, or would the net receipt be something less than that, or is it impossible to calculate what the net receipt will be?
Baroness ELLIOT of HARWOOD: My Lords, may I also welcome these regulations, speaking as, I think, the only hill farmer in this House at the present moment. As someone who has now for 40 years been a hill farmer and in receipt of subsidies and assistance, which all hill farmers have had, I am very glad that in the speech the noble Lord made—and I might perhaps say how clearly and succinctly he put the case; I was listening with the greatest possible interest because I am affected by this—he also said that the Government are anxious that the hill farmers, whether in Scotland, England or Wales, shall not have any less assistance than they have at the present time. That is extremely important because the fluctuation in prices to which we are subjected in this country—I am not complaining; it happens to everyone—is such that if one cannot have some fairly stable under-pinning of the industry it is very difficult to carry on.
Last year was a disastrous year; this year is a bit better, but you have to go back quite a long way to even it out, and costs are rising all the time. So I do welcome this measure. I hope the Government will continue to support these agricultural discussions at Brussels and try to get the best they can for this country. It is something which affects quite a number of farmers and quite a number of people who eat beef and mutton. We do not want to have any less; we want, if we possibly can, to increase this production, which will save imports and save money. So I congratulate the Government on this and hope that they will continue to stick up for the hill farming industry.
7.54 p.m.
Lord SANDYS: My Lords, I am afraid I do not share the intimate knowledge and expertise of both my noble friends in this particular area of hill farming. I should like to thank the noble Lord, Lord Strabolgi, for his very clear statement. We are feeling our way towards aligning our agricultural legislation in this country with the Common Agricultural Policy; it is a process to which we must become accustomed, and the sooner we can become acclimatised to that system the better. There are, however, many matters which will affect the farmer.
I would begin by commenting on the EEC Directive and to comment first of all on Article 3(4) because, as noble Lords rightly said, there are some farmers who will be affected. One understands that there are involved about 750 farmers, mainly but not wholly in Wales, due to the fact that the areas which are defined in Article 3(4) are in danger of depopulation. There is a problem here, and I hope the Ministry will be able to give some assistance to the farmers affected. There is no area of farming in this country which is more important, certainly to the knowledge of the National Farmers Union, than the hill farms, because of the very close interchange in the markets between the hill farming areas and the rest of the country and the great importance of the national stockyard which is derived from the hill farms.
I should first like to ask the Minister whether his right honourable friend the Minister of Agriculture has implemented the full compensatory amount which is possible to achieve under the Directive. We understand that there is a little elbow room here, and perhaps the noble Lord may be able to tell us whether the full amount has been set out in this draft Statutory Instrument.
My second point is this. Can we be assured that the arrangements for winter keep will be unaffected? On reading through in some detail the EEC Directive we understand that Article 10 relates to aids for fodder production and pasture improvement. Of course we do not know what the Government have in mind, particularly as the regulations before us relate specifically to compensatory amounts; but it would be helpful if the noble Lord could assure us that the exist-
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ing arrangements for winter keep are unaffected.
As to the amounts concerned and the limitations placed, as the noble Lord, Lord Strabolgi, has said, there is a limitation of three hectares, which we believe to be 7.41 acres, as a minimum acreage. This affects some farms and some smallholdings, and there will be those who will be affected by it who previously were able to claim full subsidy. Other noble Lords have commented on this particular aspect. We hope that suitable arrangements will be made by the Minister in this regard.
Lord DAVIES of LEEK: My Lords, may I ask my noble friend a question since, as a Welshman and brought up for a while in Cardigan, I know what the hill farming means there. I had not intended to speak until after Christmas, but here I think I should say a word for the sweetest mutton in the world, which is Welsh mutton. These are very small farms, and for centuries the very small acreages, unbelievable as it may sound, were enough to keep the hardworking hill farmer going. I hope that this small acreage will receive some new look from the Government. In Wales particularly we are interested in what happens to the small Welsh mutton farmer.
Lord GLENKINGLAS: My Lords, before the noble Lord sits down, and being personally interested in hill farming, would he not agree that one of the great attributes of Welsh sheep is that, whatever area they are supposed to be confined to, they can always get over or under or through any fence that God has ever devised?
Lord DAVIES of LEEK: My Lords, I agree absolutely; but it was not for me to say that. The mountains are free.
8 p.m.
Lord STRABOLGI: My Lords, I should like to say how grateful I am to noble Lords in all parts of the House for the general welcome given to these regulations. I will do my best to answer the questions that have been raised. I am very grateful to the noble Viscount, Lord Amory, for what he has said. He raised one point about the FEOGA contribution. We cannot precisely calculate the net benefits to the United Kingdom, but the reimbursement represents 25 per cent. of

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United Kingdom expenditure, and we are the largest beneficiary in the Community, so we can be sure that there is a net gain over the United Kingdom contribution to FEOGA funds in respect of this particular EEC measure.
I am grateful to the noble Baroness, Lady Elliot of Harwood, for what she said, and also to my noble friend Lord Davies of Leek. If I may I shall refer later to the questions they raised about the farmers who have been excluded. First, I should like to answer the questions raised by the noble Lord, Lord Sandys, to whom I am also grateful for his constructive approach. He asked first whether the Government have taken advantage of the maximum permissible rates of subsidy allowed by Brussels for both cows and sheep. At the current rates of exchange for the Green Pound, the maximum level of subsidy permitted by the Directive is £28.48 for cows and £4.27 for sheep. This compares with the rates included in these regulations of £24.50 for cows and £3.60 (at the higher rate) for sheep.
Member-countries determine their own rates within the minimum and the maximum rates laid down in the Directive. Our current rates for sheep reflect a sizeable increase (that is, 60p per ewe) from the Annual Review determinations for 1975, and an increase of over 100per cent. in rates of sheep subsidy in only two years. The Government, though, are aware of the pressure from the industry for an increase in the current rates, and this is a matter which is under discussion as part of the Annual Review of the agricultural industry.
The noble Lord also asked me to confirm that the winter keep supplement will remain at the same level and is unaffected by the order. The winter keep headage supplement is included in the rates of allowance shown in the regulations, and will no longer be calculated as a separate item. In Scotland, acreage payments were also payable as an option to headage payments and noble Lords will have an opportunity of debating this later in the week when, through my noble friend Lord Kirkhill, the necessary order revoking the acreage scheme comes up for approval. I understand that the Secretary of State is actively considering with those concerned how best to cover
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the position of those Scottish farmers who previously benefited from the acreage scheme, and hopes to make an announcement early in January.
There is also the question of those farmers who enjoyed the old subsidies but will no longer qualify for the new allowances, referred to by the noble Baroness and by my noble friend. The new regulations disqualify about 1,300 farmers at present receiving hill livestock subsidies compared with some 63,000 farmers who are expected to benefit from the new allowances. Some 1,200 farmers with less than three hectares, most of whom are part-time farmers, will not benefit, as was mentioned by the noble Lord, Lord Sandys. In the past these farmers have received a total of £42,000 of subsidy annually and it is estimated that the average loss of subsidy per farmer will be roughly £35. One hundred farmers in England and Wales in the so-called "scheduled areas" will also be disqualified. They will lose a total of £33,000 of subsidy and an average of £330 each. However, many farmers in these two categories will be able to claim the beef cow subsidy, which should go some way to mitigate their loss. The Government are of course sympathetic towards these farmers and we are actively pursuing proposals designed to make available some alternative aid. I am glad to say that it is hoped shortly to announce details of arrangements for helping the farmers concerned.
On Question, Motion agreed to.

  WILD FAUNA AND FLORA: LICENSING SYSTEM
  WILD FAUNA AND FLORA: LICENSING SYSTEM