Sitting of 27 February 1975

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS

  GREATER LONDON COUNCIL (General Powers) BILL (By Order)
  Order for Second Reading read.
  To be read a Second time upon Tuesday next.

ORAL ANSWERS TO QUESTIONS
  National Finance

    Value Added Tax (Performing Arts)
    Mrs. Renée Shortasked the Chancellor of the Exchequer which Common Market regulations prevent the zero-rating of the theatre for VAT.
    Mr. Hannamasked the Chancellor of the Exchequer if he will now zero-rate the living theatre for the purposes of VAT.
    Mr. Goodhartasked the Chancellor of the Exchequer what consideration has been given to relieving the performing arts of value added tax.
    The Minister of State, Treasury (Mr. Robert Sheldon): There are no EEC requirements relating to the application of VAT to the theatre. My right hon. Friend is considering representations for relief from VAT for the performing arts, including the theatre.
    Mrs. Short: I am obliged to my hon. Friend for that reply. I was glad to hear the latter part of his answer. Will he tell his right hon. Friend that in Belgium the theatre is zero rated? I hope that we shall be able to follow suit.
    Mr. Sheldon: I take note of the representations of my hon. Friend. I pay tribute to the delegation that she brought to see my right hon. Friend the Chancellor of the Exchequer, whose representations are at present being considered.
    Mr. Hannam: Is the Minister aware that many of our regional theatres are facing the problems of deficits, despite the help given by the Arts Council? Generally speaking, the amount that they are in deficit is roughly the same as the VAT which they have to pay. If the Chancellor is able to give this relief to the living theatre it will benefit regional theatres throughout the country.
    Mr. Sheldon: That is a problem, as my hon. Friend pointed out. That is why my right hon. Friend the Chancellor is considering these matters sympathetically.
    Mr. Powell: Does the Minister agree that no progress has yet been made on the Government's renegotiation objective relating to VAT?
    Mr. Sheldon: As the right hon. Gentleman will understand, this is a much more limited matter. Within the EEC there are wide discrepancies in the treatment of the theatre.

    Giro (Government Banking)
    Mr. Goldingasked the Chancellor of the Exchequer what proportion of the Government banking is conducted through Giro.
    Mr. Robert Sheldon: I regret that the information asked for by my hon. Friend is not readily available centrally.
    Mr. Golding: Is my hon. Friend aware that many of us are concerned that the proportion is not great enough in view of Labour's "Programme for Britain" of 1963, which pledged that the Giro system would be used as extensively as possible by Government Departments and by nationalised industries? Will my hon. Friend tell the Paymaster-General that it is ridiculous that there should be duplicate banking facilities going through the computers of the Paymaster-General's office, and that Giro should be used in the public service?
    Mr. Sheldon: I support the contention of my hon. Friend that there should be a much greater use of Giro. I echo what my hon. Friend says in that respect. I would point out that the Treasury has recently reminded all Departments to consider making greater use of Giro and to offer it to the public as a way of making payments.
    Sir John Hall: Does the Minister not agree that it is rather extraordinary that the Government should not know what proportion of their banking is conducted through the Giro system? Do the Government not know how they conduct their banking?
    Mr. Sheldon: These are matters for the individual Departments. The task of the Treasury is to make recommendations regarding the most useful methods, and it has done so in this respect.
    Mr. Spriggs: Is my hon. Friend aware that the housing departments and the
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    treasury departments of many local authorities are having to deal with huge sums of arrears because people are not using the Giro system to make regular payments of rents and rates? Will he give his attention to this matter and advise local authorities about the value of Giro?
    Mr. Sheldon: I am more than happy to support what my hon. Friend says. I am sure that his question will draw the attention of local authorities to the need to make greater use of the Giro system.
    Sir G. Howe: Is it not the case that Giro is still losing money and costing a substantial amount of public money? In those circumstances, would it not be sensible, so long as the institution is there, for the Government to undertake aggressive marketing policies for those Departments under their control, and at least conduct the kind of marketing survey that my hon. Friend the Member for Wycombe (Sir J. Hall) has suggested? What are the Government doing to diminish the loss?
    Mr. Sheldon: My right hon. Friend the Secretary of State for Industry is considering these and other matters and, I am sure, will be informing the House in due course.

    Macroeconomic Model
    Dr. Jeremy Brayasked the Chancellor of the Exchequer if he will place a copy of the manual on the Treasury Macroeconomic Model in the Library.
    The Chief Secretary to the Treasury (Mr. Joel Barnett): A copy of the manual on the Treasury Macroeconomic Model was placed in the Library on 6th December 1974.
    Dr. Bray: I am grateful to my hon. Friend, but is he aware that Conservative Members left forecasting in the Treasury in a bit of a mess? Will he ask the Civil Service Department to look into the organisation of forecasting in the Treasury and ensure that the Treasury uses the best programmes and methods available in this country and the United States? Further, will he ensure that he is not diverted by the current theories of Lord Kaldor and Mr. Godley from serious work on the development of the model?
    Mr. Barnett: I hope that my hon. Friend will not object if I do not comment on the many theories that we have available to us, but the organisation and methods of Treasury forecasting are already being looked at, and the Civil Service Department is wholly involved in this inquiry. Up-to-date methods are used, incorporating refinements of procedure which have been developed both here and abroad. Where there is room for improvement we remain keen to consider such moves. A vast amount of technical expertise is now at our disposal. With all these resources available there would be no question of abandoning serious analytical and modelling work.

    Value Added Tax (Historic Buildings)
    Mr. Freudasked the Chancellor of the Exchequer what consideration he has given to the question of VAT assessment on the restoration of historic buildings.
    Mr. Robert Sheldon: I have taken note of representations for relief from VAT for restoration of historic buildings.
    Mr. Freud: Is the Chancellor aware that the VAT on the repair work on Ely Cathedral is £35,000, which has severely affected the material position of one of the most beautiful cathedrals in the country? Does he realise that there will have to be a further financial appeal, and if it is not the right hon. Gentleman's intention to tax the public's generosity will he consider making an exception in this case?
    Mr. Sheldon: The problem arises from the difficulty of discrimination which is inherent in the value added tax system. I recall full well when this tax was introduced as an comprehensive, broad-based and free-from-anomalies tax. The trouble is that the Government are having to live with the anomalies. Of course, the hon. Member will be aware that any grants which are made take account of the VAT.
    Mr. Lane: While there may be some possibility of reclaiming some VAT in cases like this, may not the time be coming when some public contribution in support of private generosity may be inevitable for historic cathedrals and churches such as Ely Cathedral if they are to be properly preserved? Will the Government keep an open mind on this subject in the future?
    Mr. Sheldon: Obviously the Government are very concerned about the preservation of historic buildings. We are prepared to consider doing anything which can be done within the context of what I have said.
    Mr. Cormack: The Minister will be aware that the Government have announced that they are to make £1 million available for historic churches, for which we are grateful. In view of that, will he not look again at the speeches which he and certain of his colleagues made on the subject two years ago and remove this absurd anomaly, bearing in mind that everything that was said by the hon. Member for Isle of Ely (Mr. Freud) applies to many of the country's most important historic buildings?
    Mr. Sheldon: The grants take account of the VAT that is included within the grants. The hon. Member is right about the problems of the tax. There are anomalies, and the Government have to live with the results of the inflation that was created by the previous Conservative Government.

    EEC Finance Ministers
    Mr. Townsendasked the Chancellor of the Exchequer when he next intends to meet the other Finance Ministers of the EEC.
    The Chancellor of the Exchequer (Mr. Denis Healey): The next meeting of the Council of Ministers (Finance) will be on 18th March.
    Mr. Townsend: Will the Chancellor confirm that it was the backing provided through our membership of the EEC that enabled him to persuade the IMF to adopt his scheme for recycling petrodollars? Is not this a classic example of the reason why we should remain in the EEC if we are to have an important influence over world events?
    Mr. Healey: The agreements reached in Washington were due to prior agreement among European Finance Ministers, but I am glad to say that the Finance Ministers of European countries outside the EEC also adhered to our common policy. This is a lesson which proves what can be achieved by European unity in seeking co-operation on urgent matters

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    of practical interest where the Governments concerned recognise the need for a collective policy. I found the same situation in the Eurogroup when Britain was outside the EEC and I was Secretary of State for Defence.
    Mr. Skinner: Will my right hon. Friend draw to the attention of the EEC Finance Ministers and any other financial experts the fact that the continuing use of tax havens, particularly the Channel Islands, has now developed to such an extent that already, even before the petroleum revenue tax has been introduced, oil companies are registering in Jersey? I have the names of the companies, and possibly my right hon. Friend has some, too. Surely this means that the expected revenue from PRT, which I regard as derisory, will be even less as a result of these activities. The matter needs to be dealt with immediately.
    Mr. Healey: If I can remember everything that my hon. Friend said I will draw the attention of my colleagues to it. As for the use of the Channel Islands and other islands in the world as tax havens, my hon. Friend will be aware that I closed most of those loopholes—where they were open to British residents—in last year's Finance Bill. I am glad to say that the capital transfer tax will apply as much to the Channel Islands as to anywhere else in the United Kingdom.

    Taxation (Widows)
    Mr. Ovendenasked the Chancellor of the Exchequer what representations he has received from the National Association of Widows concerning tax allowances; and what reply he has sent.
    Mr. Hooleyasked the Chancellor of the Exchequer if he will appoint a working party to study the personal taxation of widows.
    Mr. Healey: In common with other right hon. and hon. Members, I have received a letter from the association's general secretary asking that widows should no longer be taxed as single women. On 11th February my hon. Friend the Minister of State, Treasury, had a meeting with a deputation from the association accompanied by my hon. Friend the Member for Walsall, South (Mr. George) and the hon. Member for
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    Staffordshire, South-West (Mr. Cormack) at which various matters affecting widows were discussed. Naturally I shall consider all the various representations I have received, but I do not think that a working party is called for.
    Mr. Ovenden: I am grateful for that reply, and I am grateful to my right hon. Friend for meeting the deputation. Will he be more forthcoming? Does he accept that it is a basic injustice that a widow seeking to earn a family income should be more harshly treated by the tax system than a married woman who seeks to do the same? Is it not an injustice that a married couple with one child qualify for a tax allowance of £1,730 per year when both are working, while the widow receives a tax allowance of only £1,065 in the same circumstances? Will my right hon. Friend examine these injustices and anomalies and give an assurance that he will make some changes in the system?
    Mr. Healey: I am aware of some problems affecting widows, but my hon. Friend is not correct in saying that the widow is treated worse than the married woman for tax purposes. What many widows bitterly complain about is that if they are working they pay more tax than the married woman who is not a widow, but that is because the widow's pension is counted, like all pensions, as part of income, and widows are taxed on that as well as on their wages.
    I do not think that it would be right, when money is short, to seek to help widows in need simply by relieving the pension of tax. The right way to help is to increase the pension—something which we did to the extent of 30 per cent. last July, and a step that we are proposing to take again in April. Tax relief helps the better off most, while not helping the poor widow at all.
    Miss Fookes: Would it not be more appropriate to leave people with more of what they earn?
    Mr. Healey: In some circumstances, yes; in others, no.
    Mr. Hooley: Will my right hon. Friend consider the curious situation in which a widow whose aggregated income, including her pension, may be as low as £25 per week, pays the same standard rate of tax as a Member of Parliament

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    on £4,500 a year, or a headmaster on £6,000? Is there not a case now for a reduced rate of tax at the lower end of the income bracket, offset, of course, by higher tax on the wealthy?
    Mr. Healey: Of course there is a case for a lower rate of tax at the bottom end of the earnings scale. On the other hand, it would be a great mistake to imagine that that could be offset simply by increasing tax on the wealthy. The number of those at the lower end of the scale is so great that if there were to be a reduced rate for them there would have to be an increase in the standard rate as well.
    Mr. Nott: As the Chancellor said, many widows who are working feel wrongly that they are paying more tax than the single person working alongside them. Will the right hon. Gentleman ask the Board of Inland Revenue to look at the pay-as-you-earn forms, since these, I believe, mislead widows into believing that they are paying an extra amount of tax. The forms could be changed to clarify the situation.
    Mr. Healey: I shall bear that in mind, but no doubt I should get the same reply from the Revenue as the hon. Member got when, I hope, he put the same question when he was a Treasury Minister.
    Mrs. Millie Miller: Does my right hon. Friend remember that taxation is specifically excluded from the forthcoming anti-discrimination legislation and that many of the problems of taxation which are faced by many women, especially widows, need urgent attention? May we hope that he will deal with those as soon as possible?
    Mr. Healey: I am very much aware of that aspect of the problem. I assure my hon. Friend that I have it under continuous review.
    Mr. Ridley: Is the Chancellor aware that a possible solution might be to implement a householder's allowance for single women who are maintaining a house and a family, along the lines suggested by the Financial Secretary? Will he consider that very seriously, because of the heavy burden of expense on those widows who maintain separate establishments for themselves?
    Mr. Healey: That is one of the ways of dealing with the problem at which we are looking. The problem to which the hon. Gentleman referred must also be seen as a specific one, in the general context of what help should be given to single-parent families, of which widows form only one example. The Government hope to announce conclusions in that regard in the context of forthcoming legislation on child benefits.
    Mr. MacFarquhar: Is the Chancellor aware that the Financial Secretary, in a letter to me last October, stated—
    Mr. Speaker: Order. The hon. Member must not quote at Question time.
    Mr. MacFarquhar: Is the Chancellor aware that the Financial Secretary stated that widows deserved special consideration? In view of the Chancellor's answers so far, what does "special consideration" mean to him?
    Mr. Healey: Widows already receive special consideration. There was an increase of 30 per cent. in their pension in July 1974. They will receive another £1·60 increase in April and a further increase later in the year.

    Work in Progress (Inflationary Increases)
    Mr. Trotterasked the Chancellor of the Exchequer whether he can now state whether he intends to grant relief on inflationary increases in the value of work in progress to professional firms as well as traders.
    Mr. Joel Barnett: No, Sir. I cannot anticipate my right hon. Friend's Budget proposals.
    Mr. Trotter: May I point out that this is a question of principle? If it is correct in principle to give relief to trades as a result of inflation, because their work in progress is hit, exactly the same principle must apply to professional firms hit equally badly. Can the right hon. Gentleman deny that the principle applies equally to both?
    Mr. Barnett: I would not care to deny that. I am very much aware of the problem. However, I cannot anticipate my right hon. Friend's Budget proposals.
    Mr. David Howell: Surely this is a matter for the last Budget on November 12th and the present Finance Bill, and not for the next Budget and the next Finance Bill, whenever those will be? Does not the Chief Secretary recall a number of arguments in Committee on this subject, and would it not now be wise to bring forward a Government amendment to add to the other 120 or so Government amendments to the Finance Bill, which we shall discuss during the next few weeks, to make this necessary and worthwhile change?
    Mr. Barnett: No, Sir.

    Tax Levels (Negative Fiscal Drag)
    Mr. Hall-Davisasked the Chancellor of the Exchequer what studies he has made of the effects of negative fiscal drag on future tax levels in the light of projected central Government and local government expenditure and forecasts of growth of gross national product.
    Mr. Joel Barnett: The effects of negative fiscal drag—that is, the effect on tax levels of not increasing specific duties in line with inflation—are kept under constant review.
    Mr. Hall-Davis: Have we not reached the point of accelerating inflation which makes increases in tax rates inevitable, and is not the position aggravated by sticking to an outdated property rating system which makes it politically impossible to increase local revenues in line with the increase in local government expenditure?
    Mr. Barnett: As the hon. Gentleman knows, the whole question of local revenue is under review in another committee. We must await that report.

    Widowed Mothers
    Mr. McCrindleasked the Chancellor of the Exchequer if he will consider favourably the representations made to him to grant the equivalent of the married man's allowance to widows with children.
    Mr. Robert Sheldon: Widows with children already receive the additional personal allowance as well as the single person's allowance. We shall certainly continue to keep their position under review, but, as I said in answer to a
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    question from my hon. Friend the Member for Sheffield, Heeley (Mr. Frank Hooley) on 18th December, we are not persuaded that it would be justifiable to make up the full difference between the single and married allowances.
    Mr. McCrindle: Will it not help these women to help themselves, if they are left with all the household bills to be met out of one income, if their income for tax purposes is treated the same as the breadwinner's income in a two-parent family?
    Mr. Sheldon: I understand the point that the hon. Gentleman is making. We have sought to do quite a lot in that respect, as the hon. Gentleman will know. Last year, we increased the additional allowance from £130 to £180 to assist those widows with one child. If there are more children, there will be more tax allowances. However, from conversations with many of these widows, I realise that it was not sufficiently understood that, with the personal allowance and the additional allowance, and the allowance for one child only, a widow had to earn over £1,045 a year before she became liable to income tax. That is not a great amount. But there have been some misconceptions about this which it might be better to allay.
    Mr. Wellbeloved: Does not my hon. Friend agree that the taxation system as applied to widows struggling to bring up children compares unfavourably with the tax immunity enjoyed by some well-known residents of this realm?
    Mr. Sheldon: I can do nothing but agree with my hon. Friend.

    Poor Persons
    Mr. Mike Thomasasked the Chancellor of the Exchequer what steps he is taking to implement the Government's commitment to protect the less well off from the effects of inflation.
    Mr. Healey: Since entering office, we have approved a record uprating of pensions and associated benefits and have increased the maximum amount of family income supplement. We gave a £10 Christmas bonus in November and are committed to a further uprating of pensions and related benefits in April with another uprating later in 1975.

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    Family allowances will also be increased. The poor have been particularly helped by our food subsidy programme and the further reductions we have secured in the prices of basic items through the voluntary agreement. We have also imposed a freeze on rents and given selective rate and rent rebates.
    Mr. Thomas: Will my right hon. Friend accept that although that progress is good and useful, there is a real chance that the poor will in fact become poorer in 1975 and that there is now a need for a comprehensive poverty programme, bringing together the different Departments concerned, so that one Department does not subsidise food while another pushes up the price of another essential product? Will he also accept responsibility for co-ordinating such a programme because, at the moment when I ask him Questions about it, he tends to transfer them to the Prime Minister, yet when I ask the Prime Minister, he tends to transfer them to my right hon. Friend?
    Mr. Healey: I assure my hon. Friend, whose concern and interest in these matters is well known, that I shall try to see that that buck stops passing, even if it means that it stays with me.
    On the question of the co-ordination of Government policies on poverty—
    Mr. Thomas: A poverty programme.
    Mr. Healey: The co-ordination of policies on poverty adds up to a poverty programme. I have accepted responsibility within the Government machine for such co-ordination.
    Mr. Gwyn Roberts: According to the right hon. Gentleman's Department, there are between 27,000 and 31,000 people in receipt of family income supplement who are nevertheless paying tax. Does not that make nonsense of the system?
    Mr. Healey: The problem of the poverty trap, which is well known to those hon. Members on both sides who are concerned in these matters, is a very difficult one, with which no Government have yet found an adequate means of dealing. We take offsetting measures, for example, through the FIS, to help those who pay tax but are nevertheless below the poverty line.

    Company Liquidity
    Mr. Hordernasked the Chancellor of the Exchequer what further proposals he has to encourage company liquidity.
    Mr. Healey: An estimated £1,800 million will be made available to the company sector in 1975 as a result of measures taken by the Government last autumn. I am, of course, keeping the situation under close review.
    Mr. Hordern: Does not the Chancellor appreciate that these measures will do nothing for those companies which have large investment programmes and little or no corporate tax liability? Is not the situation that the only way to achieve success in reducing the great pressures which are now placed upon corporate liquidity is to abolish price and dividend control, because, if they are not abolished the unemployment rate will rise much faster than it has done already?
    Mr. Healey: I have been interested to discover that many of those in business who pressed me to relax dividend control, as I did last November, have since complained that I removed the one excuse which they were able to quote to their shareholders for not increasing dividend distribution in the past year. Very much the same is true of price control. Many companies have been unable to take advantage of the relaxation of price control because of increased competitiveness inside industry. But one of the major reasons for the problems facing companies is the very rapid inflation, which I am sure the hon. Gentleman will agree is due largely to the insensate increase in the money supply under the last Government.
    Dr. Bray: Will my right hon. Friend take steps to see that companies which are in a satisfactory liquidity position increase their investment?
    Mr. Healey: That is certainly a problem. The House will be aware that during the periods when there was no dividend control and a high level of corporate profits, investment in the company sector was very much lower than last year, when there was dividend control, when there was price control and when severe tax controls were put upon the company sector. The question of

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    how to encourage, cajole and otherwise persuade companies which have money to invest that money is one with which the Government are dealing. In so far as they are unable to do so on their own or cannot be persuaded, the National Enterprise Board and the planning agreement system should assist.
    Sir G. Howe: Does the right hon. Gentleman recognise that developments and extensions of Government control of that kind are the very instruments designed to discourage the investment which he seeks? In his first answer, when he was explaining that in present conditions competition renders the provisions of the Price Code and price control unnecessary, was not the right hon. Gentleman demonstrating the extent to which my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) was right to press for further relaxation and ultimate abolition of price control?
    Mr. Healey: As to that last point, all that the right hon. and learned Gentleman is saying is that what his hon. Friend the Member for Horsham and Crawley (Mr. Hordern) said showed that this was irrelevant to the problems which we are now discussing. The right hon. and learned Gentleman suggested that the National Enterprise Board and assistance to industry under the Industry Act would damage investment. However, that was not the view which he held when he was a member of a Government who nationalised the Rolls-Royce company and injected a great amount of additional money into its aero-engine activities.

    Inflation
    Mr. Lawsonasked the Chancellor of the Exchequer what proposals he has for intensifying the battle against inflation.
    Mr. Healey: Since the money supply is now under control, and import prices are moderating, stricter adherence to the guidelines laid down by the TUC for wage bargaining is the key to reducing inflation. We must therefore all intensify our efforts to secure that the guidelines are observed more strictly in the spirit as well as in the letter.
    Mr. Lawson: Does not the right hon. Gentleman agree that the £2,000 million reflationary package being urged upon him by the TUC would be just as disas
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    trous as excessive pay rises, about which he has warned so eloquently on a number of recent occasions and has reiterated today? Despite the right hon. Gentleman's self-satisfaction about the money supply, does not he agree that no anti-inflationary package can work unless there is a marked reduction in the public sector borrowing requirement to well below the official figure of £6,300 million at which it stands at present?
    Mr. Healey: For me to give a view now on how much inflation, reflation or otherwise is required by Government action would be to anticipate a judgment which I must make and reveal to the House in my Budget speech, which I assure the House will be either before or after Easter.
    The hon. Gentleman's second question escapes me for the moment—
    Mr. Lawson: Public sector borrowing.
    Mr. Healey: The hon. Gentleman will be glad to know that there are two later Questions on that matter.
    Mr. Luard: Does my right hon. Friend accept that the concern which exists about the present level of inflation is widely shared on the Government benches? Many of us are concerned about its possible effect in the near future on our balance of payments as well as on the level of unemployment. We welcome the strong views which my right hon. Friend has expressed about this, but has he seen the results of the opinion poll published today showing that the great majority of the population have no idea what the social contract means—[Interruption.] For those who believe that this should be the basis of our policy—
    Mr. Speaker: Order. The hon. Gentleman must ask a question.
    Mr. Luard: Does not my right hon. Friend agree that this shows an urgent need for an intensive public relations campaign to make the population aware of what this policy represents?
    Mr. Healey: It is desirable that all those who are concerned to reduce the present unacceptable level of inflation should do their best both in public and in private to persuade people to maintain the guidelines set down for bargaining.

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    I hope that I can count on my hon. Friend to give up at least two nights a week for that purpose.
    Mr. Pardoe: Does the right hon. Gentleman agree that his recent rather good speeches on this subject imply that he sees unemployment as the only possible alternative to the success of the social contract in dealing with wage inflation? If so, will he say how much unemployment he believes is needed to cure how much inflation?
    Mr. Healey: I am sorry to say that I am so overcome by the generosity of the hon. Gentleman's compliments that I scarcely feel like being unkind to him in answering the second part of his question.
    Unemployment is not the alternative to bringing down the rate of inflation; it is the consequence of failing to do so. How far unemployment will increase is a matter on which I do not care to make a judgment now. However, thanks to the measures taken by this Government last year, unemployment in Britain as a percentage of those able to work is lower than in any other industrial country, and it is rising more slowly.
    Mr. Spriggs: My right hon. Friend referred to the social contract. If he hopes to succeed in winning over the trade unions and the employers to the social contract, is he aware that justice must be seen to be done as between all those making claims on the economy?
    Mr. Healey: That is the case, but we also have to pay regard to justice to the people of Britain. Settlements made outside the guidelines laid down by the TUC are damaging to each and every one of us, no matter what occupation we follow.
    Sir G. Howe: Further to the point raised by my hon. Friend the Member for Blaby (Mr. Lawson) about the right hon. Gentleman's response to the TUC's suggestion for a very substantial increase in public spending, is it still his view that if wage rates rise beyond the level recommended in the social contract—to which he attaches such importance—he will, as he said in his Budget speech last year, be compelled to take offsetting steps to curtail demand?
    Mr. Healey: I have repeated that statement many times since making that Budget speech.
    Later—
    Sir John Hall: On a point of order. Mr. Speaker. It will be within your recollection that my hon. Friend the Member for Blaby (Mr. Lawson) asked the Chancellor whether he would comment on the problem of the public sector borrowing arrangements, which now stand at about £6,300 million. The Chancellor refused to answer that question on the grounds that there was another Question on the matter later on the Order Paper, so he deferred his reply until then. You will agree that this is a matter of grave and growing concern, not only to hon. Members but to the country. It is clear either that the Chancellor wished to reply to this Question and give more information about this important matter or, alternatively, that he was abusing the procedure of the House. May I suggest to you that the Chancellor be asked to seek your consent to reply to that Question?
    Mr. Speaker: These are not matters for the Chair, and I have received no such request.
    Mr. Stanleyasked the Chancellor of the Exchequer what has been the rate of inflation over the last three months for which figures are available expressed on an annual basis.
    Mr. Rookerasked the Chancellor of the Exchequer what is his latest estimate of the current rate of inflation.
    Mr. Healey: I would refer my hon. Friend and the hon. Member to the answer which my right hon. Friend the Paymaster-General gave on 14th January to the hon. Member for Derbyshire, South-East (Mr. Rost).—[Vol. 886, c. 230.]
    Mr. Stanley: Since he has ministerial responsibility, will the Chancellor say what he is prepared to do to secure stricter adherence to the TUC guidelines on wage settlements, apart from simply making speeches about them?
    Mr. Healey: The essence of the TUC guidelines is that they are guidelines for voluntary collective bargaining. Therefore, influence on those who negotiate is the only means which can be used by

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    the Government to secure adherence to them. I must point out that the exceptionally high increase in the rate of inflation in recent months was due in large part to 11 threshold payments, totalling £4·40, to over 10 million workers, for which legislation introduced by the previous Conservative Government was responsible. The increase in the rate of inflation was also due to various groups in the public sector catching up on the unfair discrimination against them, imposed by the statutory policy.
    Mr. Dalyell: Is not one of the major worries of the TUC the rate at which service industry manpower has gone up and the way in which the percentage of those in Government service has risen from 5½ per cent. to 6½ per cent.? In these circumstances, will he get some of the most critical men in the Treasury to look at the inflationary aspects of new forms of bureaucracy in Scotland?
    Mr. Healey: There are many critical men in the Treasury, and I hope that I am one of them. My hon. Friend will know, because he will have read the best White Papers, that the Government are planning to halve the increase in local government expenditure which took place during the past three years under policies introduced by the previous Government. I do not deny that effective control both of spending and of recruitment of manpower in local government is a difficult problem for any administration.
    Mr. Biffen: In the view of the right hon. Gentleman, what would be the consequences either of a fall in the rate of inflation, or the expectation of a fall in that rate, upon the level of unemployment?
    Mr. Healey: One certainty is that if there were a fall in the rate of inflation, or the expectation of one, many investment decisions now being held up would go ahead. That would lead to an increase in employment.

    Tax Refunds (Working Wives)
    Mr. Hollandasked the Chancellor of the Exchequer if he will take steps to ensure that working wives, paying income tax separately from their husbands, shall receive, without reference to their husbands, all tax refunds due to them as a
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    result of overpayment on either their earned or unearned income.
    Mr. Robert Sheldon: A wife who is separately assessed to tax from her husband already receives repayment of any tax overpaid on her earned or investment income without reference to her husband's tax position. Where a married couple elect for separate taxation of wife's earnings any tax overpaid by the wife in respect of those earnings is also repaid to her. But, since the husband remains responsible for any tax on the couple's joint investment income any repayment due on this investment income is normally made to him.
    Mr. Holland: Does not the hon. Gentleman regard is as faintly Victorian for his inspectors to require a signed consent from a husband before agreeing to make a repayment to his wife of tax overpaid on her small savings investments—tax paid by her and on her own private income? Is not it time that the Treasury began to accord equality of treatment to all taxpayers irrespective of their sex?
    Mr. Sheldon: The hon. Gentleman is correct in saying that this just refers to wives' investment income, because there can be separate assesments for tax and, in addition, there is a separate taxation system known as the wife's earnings election, as the hon. Gentleman will realise. He will also understand that it is the intention of my right hon. Friend the Chancellor of the Exchequer to reintroduce aggregation. As a result, there will be the aggregation of the investment income necessary for this purpose.

    Industrial Investment
    Mr. Cryerasked the Chancellor of the Exchequer if he is satisfied with the anticipated levels of investment in industry for 1975–76; and if he will make a statement.
    Mr. Healey: The prospects for investment this year are obviously uncertain, and depend on a large number of factors, but the measures taken last November, the expansion of FFI facilities, and the proposals for planning agreements and the NEB, should all help to sustain the industrial investment which is needed to maintain our standard of living.
    Mr. Cryer: Does my right hon. Friend agree that a curtailment of investment in the private sector could, in certain circumstances, be construed as a strike of capital? In such a situation, does he agree—I am sure he does—that it is vital for public bodies such as the National Enterprise Board to provide the urgently-needed levels of investment? Is he therefore concerned at the latest diktat from the European Commission that the levels of public investment in such areas as Yorkshire and Humberside are to be limited to 20 per cent.? Is not the solution for us to get out of Europe, so that we may have the freedom to invest?
    Mr. Healey: The nub of that question lies in the last remarks of my hon. Friend. I do not believe that the European Community will effectively seek to limit the activities of the British Government in regional policy, investment or the location of industry, in ways to which we would not wish to submit.
    Mr. David Howell: Is not the phrase of the hon. Member for Keighley (Mr. Cryer) about a "strike of capital" unusually fatuous and meaningless? Is not the Chancellor's real problem the fact that while public investment will rise considerably in the coming year—the figure I have is about 13 per cent. but perhaps the Chancellor may have a more up-to-date one—intentions for private investment are still abysmal? Does not the Chancellor now have a duty to tell the House, even before his next Budget, what he intends to do to revive profitability and investment in British industry, because that is the problem?
    Mr. Healey: I cannot recall whether the hon. Member was a member of the previous Government. He will recall that when the rate of profitability was very much higher than it is today, when dividends and Stock Exchange activity were very much greater, the rate of investment was far below the levels to which it is expected to fall this year. In the first three-quarters of last year there was an increase in manufacturing investment of 10 per cent.

  CONFEDERATION OF BRITISH INDUSTRY
  Mr. Duffyasked the Prime Minister if he will make a statement on his meeting with the CBI on 12th February.
  The Prime Minister (Mr. Harold Wilson): Yes, Sir. There was a full discussion of the Industry Bill, in which the representatives of the CBI outlined their anxieties on some of the provisions in the Bill. The Government undertook to consider the points that were raised, and the discussion on them was resumed at our meeting yesterday. I have arranged next week to hold a similar consultative meeting with the Economic Committee of the TUG. There will be a further meeting with the CBI in the near future.
  Mr. Duffy: Did my right hon. Friend impress upon the CBI at both meetings the fact that the extension of industrial democracy is a prime aim of the Industry Bill and that the present anxiety of the CBI to restrict the disclosure of information leaves it open to the charge either that it wants to preserve the monopoly of information within the firm or otherwise preserve the prerogative of management?
  The Prime Minister: There was a full discussion on both occasions about disclosure of information. I am 100 per cent. in support of much greater disclosure of information in these matters. Nevertheless, since the talks were confidential, I cannot disclose any information about what was said.
  Mr. Churchill: Will the right hon. Gentleman explain what he means when he says, in the phrase attributed to him in more than one newspaper report of the speech, that the industry White Paper will take precedence over the Bill? How can this come about?
  The Prime Minister: I am not quite sure what report the hon. Gentleman is talking about, because it was not a speech. The Question relates to a meeting with the CBI. As to the White Paper, I answered a Question about that on Tuesday. I commend the hon. Gentleman to study it.
  Mr. Atkinson: Will my Friend the Prime Minister explain to the House, on

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  the question of the disclosure of information, why he agreed with a CBI request to drop from the Industry Bill any reference to the disclosure of imports?
  The Prime Minister: I thank my hon. Friend for his friendly question. I am a little at a loss to know how to answer it, because I do not recall any such discussions with the CBI. My right hon. Friend the Chancellor, who was present on that occasion and who is beside me now, is also at a loss to recollect anything of this kind.
  Mrs. Thatcher: Is the right hon. Gentleman aware that some of us have studied his answer on Tuesday and find that, like other answers of his, it is not very clear? Is he aware that in paragraphs 31 and 33 the White Paper gives clear undertakings about the conditions for the acquisition of shares in companies but that the Bill does not reflect those conditions? Is he further aware that while he is saying one thing in his speeches his right hon. Friend the Secretary of State for Industry is doing another thing in the Industry Bill? Will the Prime Minister give the House an assurance that the Government will table amendments to bring the Bill into line with his undertakings in the White Paper?
  The Prime Minister: I am sorry if the right hon. Lady felt that my answer the other day was not clear. It is perfectly clear. What are not clear are the policies of the Conservative Party on almost anything. I have the fullest confidence, however, that under the right hon. Lady's leadership all these things will become clear in time. [HON. MEMBERS: "Answer".] The right hon. Lady says "Hear, hear". What are hon. Members complaining about? As for the Question which I answered the other day, the issue was fully discussed yesterday with the CBI. It will be discussed with the TUC. If any amendments are needed for the purpose of clarification or improving the Bill they will be introduced. It would be premature at this stage, while discussions with the CBI and TUC are going on, to say exactly what we would consider as the right policy.
  Mrs. Thatcher: The undertakings were quite clear, and it is quite clear that the Bill is not in accord with them. It is the
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  Prime Minister's promise which is at stake now.
  The Prime Minister: I am grateful to the right hon. Lady, because yesterday I explained to the CBI exactly what I had said in the House. We spent a great deal of time on both the disclosure of information—which was a separate question from what was raised on Tuesday—and the specific question relating to the White Paper. We discussed these matters at some length. When we have a statement to make to the House as a result of our consultations with both the CBI and the TUC we shall make it. If any amendments are necessary to the Bill or if any other form is appropriate, we shall carry those out.

  CLEETHORPES
  Mr. Brothertonasked the Prime Minister if he will pay an official visit to Cleethorpes.
  The Prime Minister: I have at present no plans to do so, Sir.
  Mr. Brotherton: Is the Prime Minister aware that that reply will be received with great regret in Cleethorpes, particularly by the large number of people living there who are engaged in the fishing industry?
  Is the right hon. Gentleman aware of the grave crisis facing the fishing industry? Will he take steps to divert some of the large sums of money being frittered away on food subsidies to help this most vital industry?
  The Prime Minister: I thought that fish was food. I naturally recognise the hon. Gentleman's concern—which is shared by my right hon. and hon. Friends and other hon. Members in that and other areas—about the present situation in the fishing industry. The hon. Gentleman will be glad to know that my right hon. Friend the Minister of Agriculture, Fisheries and Food has been considering the situation as a matter of urgency. Indeed, I am glad to inform the hon. Gentleman that the Government's decision on this matter was announced an hour ago. Temporary aid will be provided in the form of flat-rate daily payments, varying by class of vessel.

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  The total cost of the scheme will be about £6¼ million. My right hon. Friend will be laying the appropriate order before Parliament as soon as possible. I hope that the Opposition will not complain about the increase in Government expenditure which is involved.
  Mr. James Johnson: Is my right hon. Friend aware that, while there is not a single fishing vessel in Cleethorpes, there are two other places on the Humber—Hull and Grimsby—which have efficient, international, deep-sea, distant water fishing fleets? What my right hon. Friend said about the Government's decision, announced an hour ago, may be known in Hull and Grimsby. I should like to thank him on behalf of all my colleagues from the Humber fishing ports and other fishing ports for what we hope will be, if I am cautiously optimistic, a shot in the arm for the fishing industry.
  The Prime Minister: I thank my hon. Friend for what he included in his question. It may be that there are no fishing vessels actually plying from Cleethorpes, but I think that they go past Cleethorpes. In view of the interest shown by the hon. Member for Louth (Mr. Brotherton), who was not as quick as my hon. Friend in knowing what was really happening in this industry, I think that he is entitled to put that question, because some of his constituents are involved in the industry.

  SELF-EMPLOYED PERSONS
  Mr. McCrindleasked the Prime Minister if he will appoint a Minister to be responsible for the interests of the self-employed.
  The Prime Minister: I refer the hon. Member to the reply which I gave to the hon. Member for Reigate (Mr. Gardiner) on 18th February.—[Vol. 886, c. 341.]
  Mr. McCrindle: Is it not incongruous that the Minister responsible for small firms and therefore for thousands of self-employed people should find himself located at the Department of Industry, whose Secretary of State has not always been seen to be the greatest friend of the self-employed? Will he think again and, as in Belgium, consider appointing a Minister through whom the self-employed may make representations on such matters
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  as the level of national insurance contributions and the threat to their continued existence from the capital transfer tax?
  The Prime Minister: I hope that the hon. Gentleman will accept from me, because of my high regard for him, that some of these questions are now becoming as obsessive about my right hon. Friend the Secretary of State for Industry as, a generation ago, Tory questions were about Aneurin Bevan.
  Referring to the Belgian situation, it is always a possibility in any country that a Minister should have these responsibilities. The Belgian system was first established in 1906. It has existed in its present form for over 20 years. The precedent was therefore well established in 1970 when the Conservative Government came into office, but they did nothing about it. Still, I notice the interest shown in the question.
  Mr. Trotter: Is the Prime Minister aware that the self-employed who are not members of this House have noticed the way which, under this Government, hon. Members of this honourable House have ceased to be self-employed? Will he give an assurance that he regards the self-employed as useful members of the community, that they deserve a fair deal, and that he believes that they are receiving that deal from the Government?
  The Prime Minister: The decision to make the change in the position of Members of Parliament was taken not by this Government, but by the Conservative Government of which I think the right hon. Member for Finchley (Mrs. Thatcher) was then a consenting member. We have not yet heard whether there is to be retrospective dissociation on that matter, as on so many others. It was a decision taken by the Conservative Government. I have the greatest pleasure in saying that I think they were right, and we supported them.

  ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
  Mr. Stanleyasked the Prime Minister whether he will pay a visit to the headquarters of OECD.
  The Prime Minister: I have at present no plans to do so, Sir.
  Mr. Stanley: Does not the latest OECD survey show that Britain has almost the worst rate of inflation amongst the 24 OECD countries? Will the Prime Minister tell us how long the Government intend to combat inflation in this country using, it seems, only one effective weapon—rising unemployment and mounting short-time working?
  The Prime Minister: I totally disagree with the hon. Gentleman. I am interested in his new-found interest in OECD, because the Conservative Party spent the whole of the last election saying that they did not believe in anything that OECD printed or published on inflation. [Interruption.] Yes. The Opposition cannot dissociate themselves completely from all that happened in the past.
  I have answered many questions about inflation over the last two or three weeks, but I have not yet heard whether the Conservative Party now supports statutory wage control or not.
  Mr. Marten: On the question of overseas investment, should not businessmen under the Treaty of Accession and the Treaty of Rome be free to invest in the Common Market from 1st January this year? Does the Prime Minister know why that has not happened? As it has not happened, should not the Commission have come over just after 1st January, carried out an investigation into the question why we are not bringing this in, and told us what to do? Is the Commission, curiously, not coming until after June?
  The Prime Minister: I always welcome, as the whole House does, visitors from the Continent, but I do not go out of my way to stimulate visits by the Commission on this or any other question. I recall a famous Guildhall speech in which we heard that as soon as a decision was taken to enter the European Economic Community investment would surge forward. It has not done so. It has fallen. It is this Government's policies which will revive investment in British industry.
  Mr. Mike Thomas: Does my right hon. Friend agree that one of the reasons why investment may not have surged forward and companies are delaying investment is uncertainty about the matter, and that once the issue is settled the problem will be settled, too?
  The Prime Minister: The position, of course, is that there was what was regarded as certainty in 1971, and investment did not occur then. I agree that it is important that these matters should be settled as quickly as possible, and we are working to that end.
  Mr. Hooley: If my right hon. Friend does pay a visit to the headquarters of OECD, will he inquire what percentage of their national wealth its different members are contributing to overseas aid, and report back to the House on how the United Kingdom stands in that league table?
  The Prime Minister: I am grateful to my hon. Friend. I do not know the answer to that question but I shall try to advise myself on it without waiting to go to the OECD. In view of the announcements of Government expenditure and the statement of my right hon. Friend the Minister of Overseas Development, I would think that our record in this is very good compared with the record of many other members of OECD.
  Mr. Spriggs: On a point of order. I applied to your Office, Mr. Speaker, for permission to raise a Private Notice Question—
  Mr. Speaker: Order. It is a convention of the House that there cannot be discussion here about Private Notice Questions.

BUSINESS OF THE HOUSE
Mrs. Thatcher: May I ask the Leader of the House to state the business for next week, please?
The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): Yes, Sir. The business for next week will be as follows:
Monday 3rd March, Tuesday 4th March, Wednesday 5th March and Thursday 6th March, progress on the Report stage of the Finance Bill.
Friday 7th March, Private Members' Motions.
Monday 10th March, remaining stages of the Finance Bill, if it has not been concluded in the previous week.
Mrs. Thatcher: Is the right hon. Gentleman aware that we are in considerable difficulty with the Finance Bill? In Committee the Government gave 20 undertakings to put down amendments and 102 pledges to look at things again. They are not all tabled, and, therefore, the amendments to the amendments and further amendments may be tabled very late indeed; I hope that this will not jeopardise their consideration. May I ask the right hon. Gentleman not to get the House into that difficult state again, because it is impossible properly to consult in time all the interests which will be affected by this Finance Bill?
Second, while we are considering one Finance Bill, it seems appropriate to ask what will be the date of the next Budget. Third, can the right hon. Gentleman give us some idea when we shall have a debate on the referendum White Paper, and whether we can have two days on it when it comes?
Mr. Short: On the first point, I understand that up to Tuesday night some 83 Government amendments and new clauses had been tabled. More were in the possession of the House on Wednesday and others today. A total of 43 have appeared on today's Order Paper. The first day of the Finance Bill Report, as I have said, will be on Monday, when new clauses are expected to be taken, followed on later Report days by amendments to clauses, new schedules and amendments to schedules. But I will see to it that all the amendments are tabled in time for amendments to them to be put down.
I cannot say when the next Finance Bill will be, but the Chancellor does not now intend to introduce his Budget before Easter. The debate on the referendum White Paper will, I hope, be the week after next. I cannot, I am afraid, promise two days. [HON. MEMBERS: "Why not?"] There will be an opportunity later, of course, to debate the Bill itself, but certainly, I am not prepared to give two days. [HON. MEMBERS: "Disgraceful."] If it is the wish of the House, I shall certainly see that the rule is suspended for one or two hours.
Mr. Sillars: Can my right hon. Friend say when we will get the debate specifically on the unemployment problem
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facing the working people of this country? Is he aware that there is acute concern in trade union and Labour circles on this subject? We have noticed that the Opposition have taken Supply Days on a whole number of other matters but have significantly ignored the question of unemployment. Will my right hon. Friend demonstrate the concern of the Labour Government in this matter by giving us a debate in Government time?
Mr. Short: The Government certainly share my hon. Friend's concern, but, as I said last week, although unemployment is too high here, it is the lowest in the developed world. We shall certainly bear the point in mind, but I am afraid that I cannot offer any time in the next week or two.
Sir David Renton: May I remind the right hon. Gentleman that the Minister of Agriculture, when he made his far-reaching statement last week, agreed that we should debate his proposals, which are quite new? Is he aware that, if the Government wish to show real concern about the dangers of our present food situation, he should wish to find Government time for debating this matter, instead of forcing the Opposition to find time, as they have had to do on previous occasions recently?
Mr. Short: I said last week, giving particulars, that throughout the last 20 years every agricultural debate in the spring has been in Supply time. The Opposition this year are unwilling to debate agriculture in their own time.
Mr. Pardoe: Would the right hon. Gentleman give further thought to the question put by the Leader of the Opposition? She said that the amendments to the Finance Bill have made things very difficult. They have, in fact, made things virtually impossible. Last week, in answer to my question, the right hon. Gentleman said that we had to get the Royal Assent by 14th March. But the capital transfer tax proposals represent a net loss of revenue to the Government, so there is no real necessity to get it through by 14th March at all. Will he therefore think again about Monday? He cannot honour his promise to the right hon. Lady that we shall be able to consider these amendments in time to make amendments to them in time for Monday. The new

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clauses will be debated on Monday. Three have appeared on the notice of amendments today. If we get the amendments down today, they will just be in time. If we get them down tomorrow they will be starred.
Mr. Short: I have given an undertaking that all these things will be put down in time for the Opposition, if they wish, to put down amendments.
Sir G. de Freitas: In view of the importance of our regional policy, when will the House have a chance to discuss last night's decision by the European Comission to support our regional aid policy, as put forward in our renegotiations?
Mr. Short: Not next week, Sir, but I hope that certainly before long there will be an opportunity to debate EEC regional policy.
Rev. Ian Paisley: Is the right hon. Gentleman aware of the serious repercussions in Northern Ireland because of the announcement by the Minister for Transport of the cancellation of the Heysham—Belfast ferry? As this is the only British Rail link between England and Northern Ireland and as many people on both sides of the Channel are employed in that link, could he find time for a debate on the subject?
Mr. Short: I have looked into this myself. I have been to the constituency of the hon. Lady the Member for Lancaster (Mrs. Kellett-Bowman) and have discussed it with the local trades council. I know that the hon. Lady has been very active in this matter as well. Both British Rail and the Minister for Transport have looked at this, and my right hon. Friend made the announcement last week that this could not be held up.
Mr. Bidwell: Would my right hon. Friend convey to the Home Secretary, who has recently left the Chamber, that some of us would feel that it would not be good enough just to have a Written Answer today on the findings of Mr. Justice Scarman, which are now available, on the events in Red Lion Square on 15th June? If we cannot have a debate on that report, would my right hon. Friend convey to the Home Secretary our expectation of a verbal reference to it
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when we can question him further—perhaps next Thursday, when he is due to face Questions, or something like that? May I also point out that I and my Liberation colleagues come out of the whole situation with flying colours?
Mr. Short: I am sure that my hon. Friend and the whole House will want time to read the Scarman Report, which has been published today. My right hon. Friend the Home Secretary said in his reply he would study the proposals very carefully. I shall pass on to him what my hon. Friend has said.
Mr. Kimball: It is the desire of the House to help the right hon. Gentleman over the difficulties in which we shall find ourselves on Monday, and, in view of the problem of the late arrival of the Order Paper with the Government amendments and further amendments to come, may I ask whether we could not debate agriculture on Monday? By so doing we could show the Government the difficulties that this industry is facing in view of the capital transfer tax proposals, and perhaps the Government would then wish to put down further amendments to that tax at a later stage?
Mr. Short: The time for general debate in the House is shared between the Government and the Opposition. I have pointed out that for 20 years the Opposition have provided time for a debate on agriculture in the spring. The present Opposition will not provide time for agriculture.
Hon. Members: Rubbish.
Mr. Spriggs: Will my right hon. Friend reconsider the reply he gave to the hon. Member for Antrim, North (Reverend Ian Paisley), who raised the question about the Heysham-Belfast ferry service? Is my right hon. Friend aware that many of us who have interests in the railways and the people in general who work in ports and the seamen who work on our shipping lines have an interest beyond local matters? In view of what has been said by the hon. Member for Antrim, North, will my right hon. Friend take it that hon. Members on both sides of the House want the opportunity of a debate to show that there is good reason for the Government allocating sufficient finance to keep this service in being?
Mr. Short: I pointed out to another hon. Member that I myself had gone to Lancaster and discussed it with the local trades council. I reported back my discussions to my right hon. Friend the Minister for Transport, who reviewed this matter with the Chairman of British Railways. Unfortunately, they came to the conclusion, as so often happens in these cases, that the service had to be closed. I regret that very much. But the decision was taken and announced last week.
Mrs. Kellett-Bowman: On a point of order, Mr. Speaker.
Mr. Speaker: Could we please have points of order at the end of business questions.
Mr. Maxwell-Hyslop: Will the Leader of the House make representations to Mr. Speaker that the normal rule concerning starred amendments will be abandoned next Monday because of the shortness of notice? Second, will he allow Government time to discuss the horticulture industry, before we have to import unnecessarily food that we could grow at home and have people unnecessarily unemployed?
Mr. Short: On the first point, I am sure that Mr. Speaker himself has heard what the hon. Gentleman has said. On the second point, I am afraid that I cannot give any time to discuss the horticulture industry next week—which is what my statement is about today.
Mr. Faulds: Does my right hon. Friend realise, despite his bland response to me two or three weeks ago, that the provision of telephone facilities in the House is simply not good enough? It is becoming increasingly difficult to get any response when one rings in, and increasingly difficult to get a call out. Is this a matter of poor equipment or lack of staff? Will he please look at the matter and do something about it?
Mr. Short: When my hon. Friend raised this matter a few weeks ago I said that I did not agree with him and that I found the telephone service to be excellent. [HON. MEMBERS: "Oh."] Indeed, I do. But I told him that if he or anyone else had any specific points they wished to raise, I should be very happy
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to take them up. Since then, I have not had one specific case put to me.
Mr. Faulds: On a point—
Mr. Thorpe: Reverting to the question put by the hon. Member for Gains-borough (Mr. Kimball), will the right hon. Gentleman consider what might be a helpful suggestion which would meet the feelings of the House? Will he consider putting back the Finance Bill, so that we start on Tuesday, provided that the official Opposition is prepared to give a Supply Day for a debate on agriculture on Monday?
Mr. Short: No, Sir. The right hon. Gentleman knows quite well the law about getting the Finance Bill through. It must be got through, go to the other place, be printed, and so on, and we have to get Royal Assent by 14th March. I am not prepared to allow anything to hold that up.
Mr. Kilroy-Silk: Does my right hon. Friend agree that one of the most notable achievements of the Leader of the Opposition was the snatching of free school milk away from the over-seven-year-olds? Will my right hon. Friend give some indication of when the Government will introduce legislation to give back free school milk to the over-sevens?
Mr. Short: I shall certainly pass on what my hon. Friend has said to my right hon. Friend the Secretary of State for Education and Science.
Sir John Hall: Does the Leader of the House not agree that the House faces an almost unprecedented situation regarding the Finance Bill and that there must be almost a record number of amendments now on the Order Paper and about to be tabled which turn the Bill into almost a completely new Bill? Does he not agree that it might help the House, which will be under great pressure next week and probably the week after, if we referred the capital transfer tax clauses to a Select Committee and took them out of the present Bill altogether, thereby relieving the House of what will be very great strain indeed throughout the next week or two?
Mr. Short: No, Sir. The Government are not prepared to do that. Capital

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transfer tax will help the majority of taxpayers to a very great extent—[Interruption.] Indeed, it will. There is nothing unprecedented about the Finance Bill except the amount of time I am giving to it. The amount of time I have allocated is the largest amount for 50 years. The Opposition cannot deny that.
Mrs. Dunwoody: Will my right hon. Friend the Lord President say what has happened to the Bill to outlaw discrimination against women, particularly as, in view of the despicable behaviour of the Government Whips yesterday, it might be wise to have a clause written in to outlaw discrimination against women Members of Parliament?
Mr. Short: I do not accept the latter part of that question at all. However, the Bill on discrimination against women will, I hope, be published just before or just after Easter.
Mr. Jasper More: Is it not clear that the Leader of the House, in view of the protests already made, ought to reconsider his reply about the Finance Bill? Is he aware that in regard, for example, to the important subject of forestry, about which assurances were given in Standing Committee three weeks ago, it is only today that anything has appeared on the Order Paper, and as it has appeared in the form of a new clause it will, presumably, need to be debated on the first day of Report? Is it not an abuse of our procedure that we should be unable to have the extensive consultations involved in order to be prepared to debate this on Monday? This matter ought to be postponed at least until Tuesday.
Mr. Short: I should have thought that if that new clause had appeared today, the hon.. Gentleman had nothing to complain about. [HON. MEMBERS: "Disgrace."] Let me repeat: I have given more time to the Finance Bill than has been given to any Finance Bill since 1909. So the only disgrace is of the hon. Members who are shouting "Disgrace."
Mrs. Renée Short: Why is my right hon. Friend so unaccommodating to the Opposition? If the Opposition want a Select Committee in connection with the Finance Bill, why does he not put it to the Select Committee that was set up yesterday, and give it something much more important to deal with?
Mr. Short: The Select Committee, as my hon. Friend knows, was selected to do another job, and I am sure that it will do that job excellently.
Mr. Marten: As the White Paper on the referendum shows symptoms of Eurobias—
Mr. Gow: My hon. Friend does not?
Mr. Marten:—I am always objective—will the Leader of the House quite seriously consider a second day for the debate, because it would be a great tragedy if the Bill which was to follow it got it wrong?
Mr. Short: The hon. Gentleman knows from his personal experience that I have spent a very large amount of time in the last three or four weeks discussing this White Paper with very many people, including him—he will not mind my saying that—and many organisations and all the parties. There will be opportunity to debate the Bill itself just after Easter. I should have thought that one day plus perhaps two hours would be admirable for debating the White Paper.
Mr. Speaker: Points of order. Mrs. Kellett-Bowman.
Mrs. Kellett-Bowman: I wonder whether the Leader of the House is aware that I have spoken to the Prime Minister about the Heysham-Belfast ferry today, and that he has promised to reconsider the matter. I would not wish the Leader of the House to be under any misapprehension about this matter.
Mr. Speaker: Mr. Faulds, to raise a point of order.
Mr. Faulds: As you seemed to invite points of order a little earlier, Mr. Speaker, I shall be happy to oblige.
Mr. Speaker: It was the hon. Member's extraordinary subsidence which led to it.
Mr. Faulds: I shall make up for that.
The Leader of the House may suggest that there have been no complaints about the telephone service, but that is because I have not put them in. I have six postcards full of complaints which I shall be handing later today to the gentleman with the felicitous Shakespearian name of Mr. Pratt.
Mr. Cormack: On a point of order, Mr. Speaker. May I, on behalf of the House, seek your guidance? The Leader of the House made a statement this afternoon, with, I am sure, the best of intentions, which he cannot carry out. He said that there would be time for amendments to be tabled to new clauses, and so on, that would be put down tonight. That is not possible in accordance with the existing Standing Orders of the House. If the Government table vital amendments and new clauses tonight it is possible that the Opposition and, indeed, some Government Members might wish to table amendments to them; they will not be able to table amendments which will be unstarred. This is an important matter not only in the context of the Finance Bill but for the whole governing of this country, and I ask for your protection in this regard.
Mr. Speaker: I have already indicated my position. When I consider amendments which are starred, and indeed, if it comes to a question of manuscript amendments, I shall look at the position in which the House finds itself and decide the matter then, which is what I said before.
Mr. Peyton: Further to that point of order, Mr. Speaker. I am very much obliged to you, and I am sure the House is, for your guidance in the matter. What we are hoping for is that the Leader of the House will be able to explain what he meant when he gave the undertaking to which my hon. Friend the Member for Staffordshire, South-West (Mr. Cormack) referred. It is important for the Leader of the House to match his deeds now to the words that he used a short while ago and give the House of Commons and the public outside an opportunity to understand this stream of amendments which is being put down to a real hotch-potch measure, a nasty affair indeed, at the last moment.
Mr. Short: I understand that the Opposition do not like the Finance Bill. I said that there will be four days to discuss it next week on the Floor of the House, and I shall ensure that any amendments and clauses put down by the Government will be tabled in time to be amended if necessary.
Mr. Ridley: Further to that point of order, Mr. Speaker. May I point out that the Financial Secretary has written to me promising amendments to Schedules 1 and 2, which will be taken early in the consideration of the Bill? They will probably come up on Monday next, and as the amendments are not yet on the Order Paper the Financial Secretary's undertaking has already been broken in this instance because I shall wish to put down amendments to the Government amendments when they are tabled. Those amendments are not yet on the Order Paper, and I therefore cannot put down my amendments until tomorrow, which puts the House in an impossible position.
Mr. Spriggs: There is a vital matter, and it should be raised while the Lord President is still in the Chamber. My hon. Friend the Member for Warley, East (Mr. Faulds) raised a point of order about faulty telephonic equipment. May I ask for your guidance, Mr. Speaker? Many of us do not know who is responsible for receiving complaints. Can you advise the House?
Mr. Speaker: Complaints about services of the House should go to the Services Committee.
Sir G. Howe: On a point of order, Mr. Speaker. One of the essential services which the House is intended to provide for the country is the consideration and enactment of legislation only after due process and proper care. One of the pre-eminent responsibilities of the Leader of the House is to see that the Government's legislative programme is brought forward in sufficient order and sense for that task to be completed.
Is it not manifest that the Leader of the House is failing in his duty to the House and to the country in allowing the Finance Bill to be brought forward in this helter-skelter fashion in view of the destructive nature of the contents of the Bill and the urgent necessity for it to be considered properly by people inside as well as outside the House?
Mr. Short: The Bill has spent 163 hours in Committee—[Interruption.] The Opposition do not want to hear this. I have offered five more days on the Bill, and this is the longest period since 1909.

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In view of that, the Opposition's attitude is one of sheer downright irresponsibility.
Several Hon. Members rose—
Mr. Speaker: Order. The House has an important debate to conduct this afternoon.
Mr. Onslow: On a point of order, Mr. Speaker—
Mr. Speaker: Order. I have an application to hear. I am not going to take any more points of order about this matter.
Mr. Onslow: With great deference. Mr. Speaker—
Hon. Members: Name him.
Mr. Speaker: Order. I think that the less assistance I get from either side of the House the better. I have offered the co-operation of the Chair in the matter of starred and manuscript amendments. The Lord President has heard the case that has been put, and no doubt he will consider it. No further advantage will be gained by raising points of order. The matter has been raised again and again.
Mr. Onslow: On a new point of order, Mr. Speaker. May I suggest that you could help the House very considerably in this matter? In view of the difficulty that there will be for us to obtain the observations of our constituents and frame amendments to something which must be debated on Monday, because it is a new clause, will you consider rearranging the order for considering the new clauses and defer consideration of those which contain substantial amendments until a later stage?
Mr. Speaker: That is precisely why I was suggesting that the House should not pursue these matters further today. [Interruption.] Not the hon. Member for Bolsover (Mr. Skinner), please. I think the House is in a difficulty about this matter. If it can be considered carefully, and perhaps more temperately, ways may be found of dealing with this. What has been said will be considered, and I shall do the best I can to help. I call Mr. Nigel Lawson to make his application.
Mr. Wiggin: On a point of order, Mr. Speaker—
Mr. Speaker: I have called Mr. Nigel Lawson.

FINANCE BILL (REPORT STAGE)
Mr. Lawson: 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; namely,
"the grave threat to agriculture, forestry and family businesses resulting from the Government's failure to table crucial amendments and new clauses to the Finance Bill in sufficient time to enable these important interests to be consulted and make representations before the Report stage of the Bill is reached."
I gave you prior notice of this application, Mr. Speaker, and I think that the disgracefully inadequate replies that we have had from the Leader of the House reinforce the need for this debate.
The matter is manifestly specific. Nothing could be more specific than the stream of detailed amendments tabled by the Government, not to mention the new clauses and new schedules. It is manifestly important, since the Chancellor of the Exchequer has called the capital transfer tax, which is what is at issue, the most important tax change for a generation. These amendments, new clauses and schedules go to the heart and root of that tax.
It is manifestly a matter requiring urgent consideration for the reasons which have already been made clear. If the Report stage is to go ahead as the Leader of the House plans next week, beginning on Monday, no effective consultation or representations will be possible on matters affecting the very survival of many private farms, private forests, family businesses and, indeed, the employment which hinges on them.
The Government know full well that this is no way to proceed. The Leader of the House has said that he is going about the matter in this way only because of the Provisional Collection of Taxes Act deadline. I am sure that in other circumstances the Government would concede that this is a wholly improper way to proceed. Moreover, the details of that Act and its requirements can be overcome in other ways. I shall not go into detail now, but Early Day Motions Nos. 287 and 288 suggest one way of going about the matter. As the Leader of the House will be aware,

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capital transfer tax, which is a new tax, is not subject to the Provisional Collection of Taxes Act. There is also precedent for amending that Act.
I hope that these matters can be discussed on Monday if, Mr. Speaker, you grant a debate as I request. I appreciate that these matters have already been ventilated, but the fact is that by yesterday the Chief Secretary had tabled 83 amendments and new clauses and a further 38 have been published today, with two further new clauses and one new schedule—a provision of the utmost complexity, which comprises 89 lines of the Order Paper, amounting to three pages, dealing with forestry and vital interests affecting the forestry industry.
I have a letter here from the Forestry Committee of Great Britain. I will not read it. I shall just quote a short extract. The letter says that the Inland Revenue refuses any consultation on the details of the new clause and adds,
"This seems no way to legislate for the long-term future of a small but important industry."
These Government amendments, the five new clauses—
Mr. Speaker: Order. The hon. Member cannot go into the merits of the situation now.
Mr. Lawson: I am not going into the merits, Mr. Speaker, but in view of the fact that there are over one hundred amendments, five new clauses, and a massive new schedule, dealing with intimate areas of the economy, the maintenance of children, trusts, life insurance, forestry, private business and so on, I trust, Mr. Speaker, that you will see fit to have a debate on Monday so that the appalling proposals tabled by the Government can be checked before this Parliament is made a mockery.
Mr. Speaker: The hon. Member asks for leave to be given for a debate under Standing Order No. 9 on
"the grave threat to agriculture, forestry and family businesses resulting from the Government's failure to table crucial amendments and new clauses to the Finance Bill in sufficient time to enable these important interests to be consulted and make representations before the Report stage of the Bill is reached."
I am not unfamiliar with these problems, which were evident to me during
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the questions a few moments ago. I must decide as a matter of procedure whether I think that a debate under Standing Order No. 9 is appropriate. I do not think it is.
The other point which has been raised is a House of Commons affair. We shall want to consult whether the business can be arranged in a manner in which these matters can be taken with due notice. I am certain that the point will have been followed by those who have responsibility, and it may be, when the House examines the Government motion as to how the Bill is to be considered, that effect will be given to it.
Mr. Crouch: On a point of order. I am sorry to pursue a problem which has already been examined in the House, but I must confess that after nine years in this place, I am confused. My concern is for my constituents. I am worried that I shall not be able to serve my constituents on questions which are being raised about the Report stage of the Finance Bill which is to come forward on Monday. I have not had the privilege of serving on the Committee, which sat for many long days and nights considering important matters which affect all our constituents. I am sent to this House to represent my constituents. I cannot go back to my constituency tomorrow and say that I can serve their interests properly on Monday without having time to study these 83 amendments which I have not yet seen and in the knowledge that more amendments are yet to come.
The right hon. Gentleman the Leader of the House, who is meant to serve both sides of this Chamber and Members of all parties, has let me down badly today. Therefore, we must look to you, Mr. Speaker, to advise us how hon. Members can best serve their constituency interests following the action which the Government are taking. I must register my great dismay and concern that the Government are treating the House in this way. I hope that you will support a back bencher in expressing my anger and concern.
Mr. Whitelaw: Further to that point of order, Mr. Speaker. I think you made the position perfectly clear in what you said in hoping that the House will reconsider the position for Monday. I think that

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we are entitled to ask the Leader of the House in these circumstances—and since I held his office I hope he will pay attention to my words—to withdraw the accusation that the Opposition are being irresponsible in what we are putting forward. I hope that the right hon. Gentleman will do what you have asked him to do—namely, that he will reconsider the position so that we can move on.
Mr. Speaker: May I make quite clear what I said. I do not think I said that the whole position should be reconsidered. I suggested that the way in which this Bill should be handled during Report is a matter which should be reconsidered.
The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): I was suggesting that the Opposition were being irresponsible in suggesting that there is inadequate time for the consideration of the Finance Bill. I have given an undertaking two or three times today that all the material will be made available in time. I cannot do more. I have given that undertaking—[Interruption.] Of course I understand that the Conservative Party does not want the Bill, but we shall make the material available.
Mrs. Thatcher: I regard that reply as wholly unsatisfactory. Do I understand that the Leader of the House refuses to respond to your invitation, Mr. Speaker, and indeed our invitation, to reconsider the order of business? If so, we shall have to consider taking other action. The Leader of the House still has not got the point. It is not possible to table, in time, amendments to Government amendments which have yet to be tabled.
Mr. Short: I have got the point all right. The point is that the Conservative Party wants to defeat the Bill, and so does the right hon. Lady, the Leader of the Opposition. I hope that she will listen to me and try to understand that I have given an undertaking. The undertaking is that amendments will be tabled in time for amendments to be tabled to them, if so desired. I cannot do more than that.
Several Hon. Members rose—
Mr. Speaker: Order. I suggest that we leave the matter now. The Government have to propose the order in which the parts of the Bill will be taken on
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Report. That is what I venture to suggest should be considered. Of course every hon. Member should have as much time as is available to consider the provisions. I think that this matter can be dealt with by an arrangement of the order in which the parts of the Bill are taken. That is the suggestion. I think that instead of generating more heat on the matter today, it would be better for it to be considered quietly.
Mr. Ioan Evans: I am prepared to accept your ruling, Mr. Speaker, and I shall not pursue the point I wish to make, provided we have no more synthetic indignation from the Conservative Members after the filibuster in Committee upstairs.
Mr. Speaker: Order. I am accustomed to synthetic indignation.
Sir G. Howe: Further precisely to that point of order, Mr. Speaker, and to your helpful suggestion to the Leader of the House. The point now put by you to the Leader of the House, on which I seek clarification, is that the Leader of the House should genuinely consider the suggestion that the Government should now table an order specifying a sequence in which the Bill and its amendments should be considered, which would enable hon. Members on both sides of the House to give proper consideration to the torrent of new clauses still being tabled from the Government side of the House. Will the Leader of the House give an undertaking to consider tabling such an order?
Mr. Short: I will see that everything is put down in time to be amended.
Several Hon. Members rose—
Mr. Speaker: We must get on. Mr. James Callaghan.
Mr. Gow: On a point of order.
Mr. Speaker: Is it a new point of order?
Mr. Gow: It is a new point of order.
Mr. Speaker: What is the new point of order?
Mr. Gow: Would it not be in order to afford to the Lord President, the guardian of the rights of backbenchers an opportunity to tell the House this afternoon exactly what timetable the Government have in mind?
Mr. Molloy: This is an abuse.
Mr. Gow: Would it not be right to afford the Lord President the opportunity to tell the House precisely what timetable the Government have in mind for the tabling—
Mr. Speaker: Order. This is not a point of order. Mr. Callaghan.
Mr. Cormack: On a point of order—
Mr. Speaker: Is it a new point of order?
Mr. Cormack: Yes, Mr. Speaker.
The whole of the Opposition side of the House is grateful for the assistance you have tried to afford us, but if the Government are not prepared to accept the good sense of your wishes, would you accept a motion of censure on the Lord President on Monday?
Mr. Speaker: Order. The hon. Gentleman knows quite well that that is not a matter for the Chair. The Lord President said that he would consider the time that the House has—[Interruption.] The Lord President said that he would consider that the House should have appropriate time to consider amendments—[An HON. MEMBER: "The right hon. Gentleman has not said that."] Order. If hon. Members have a little sense, they will see that it flows from that that the consideration of these matters may involve a business motion. Let us get on.
Mr. Wiggin: On a point of order. The Leader of the House is not seized of the size of the problem to some of us who have been dealing with the Bill in Committee.
Mr. Speaker: Order. The matter of what the Leader of the House is seized of is not a point of order.
Mr. Spearing: On a point of order, Mr. Speaker. A few minutes ago you called my right hon. Friend the Foreign and Commonwealth Secretary to move a motion on the EEC budget corrective mechanism. Some of my hon. Friends and I have tabled an amendment. May we inquire whether it has been selected for debate?
Mr. Speaker: That at least is a question that I can answer quickly and very simply: "No". Does the hon. Member for Weston-super-Mare (Mr. Wiggin) wish to pursue his point of order?
Mr. Wiggin: The Leader of the House has not, as I understand it, given the assurance that you very helpfully suggested, Mr. Speaker. I should like to explain to you the practical problems involved in not having that assurance today, when we must consider the matter on Monday.
Mr. Speaker: Order. That is not a new point of order. The point has been put again and again. If anything is to come of my suggestion, it is much better to leave things as they are.

EEC BUDGET (CONTRIBUTIONS)
4.15 p.m.
The Secretary of State for Foreign and Commonwealth Affairs (Mr. James Callaghan): I beg to move,
That this House takes note of Commission Document R340/75.
I never thought that the day would come when in moving into a debate on the EEC we would pass from troubled to calm and peaceful waters. Several hon. Members are leaving the Chamber, but I hope that not all will do so, because there is money in the document for us, and if anything has been shown by the points of order it is the Opposition's desire to get their hands on some money. I am giving them the opportunity to do so, so I hope that hon. Members will stay while we discuss the issue.
The document is about the financial contribution that a member State should make to the Community budget and the broad effect that that will have on Britain's position. The document is likely to be of substantial financial benefit to Britain if we remain members of the Community. Under the proposals in the document we shall pay less than we would under the existing arrangements. The document sets out a mechanism for measuring whether a country's contribution to the Community budget is fair. If the contribution is not fair, the document provides a method for repayment of part of the excess contribution when it has been so measured.
The proposals in the documents are of general application. They apply to all member States, so that any one can benefit from the provisions if it fulfils the qualifications. At present it is clear that the United Kingdom will be the main and perhaps the sole beneficiary. The benefit to us will be measured in the form of a lower contribution in many millions of pounds. The initial period during which the scheme will last will be seven years. In every one of those years in which we fulfil the conditions set out in the document—
Mr. Nigel Spearing: If we do.
Mr. Callaghan: Of course, if we do. But I said "years in which", and I think
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that it is more likely to be "when" than "if". In every one of those years when we fulfil the conditions, Britain will be entitled to a repayment of part of the contribution that she is making now.
Incidentally, the word "budget" is a misnomer, because when one looks at the Community accounts one sees that they are more like our Estimates than our Budget—that is, they are the financing of ongoing expenditure rather than the provision of money for new policies which are for the Council of Ministers to decide upon. Indeed, new methods of providing finance are for neither the Commission nor Ministers to decide upon, but for the national parliaments. Although I shall continue to use the conventional word "budget", if we think of it in terms of providing for the estimates we are more likely to get near to what we conventionally discuss.
The Government are asking the House merely to take note of the document. One reason is that I hope to secure even further improvements in the conditions under which repayment will be made and in the amount of repayments. I shall be attempting to do this when the Foreign Ministers of the Community meet in Brussels next Monday and Tuesday. If I am not successful, the matter will have to be carried to the meeting of Heads of Government and Heads of State that will take place in Dublin a week later.
The House will realise that the document is not a final document. It states the proposals of the Commission, but not a decision. The decision will be for the Foreign Ministers to take, and they must take it unanimously. The reason I ask that the document be brought before the House at this stage is to give hon. Members the opportunity to discuss the proposal prior to my embarking on a further renegotiation and perhaps reaching agreement—as I hope to be able to do—with the other Foreign Ministers next week. I shall therefore be able to take into account what is said.
Mr. John Davies: While not wishing at all to deprive the right hon. Gentleman of the honour and glory of having recommended that this document should come before the House at this stage, perhaps I may point out equally that it was a matter which it was decided

723
by the Scrutiny Committee should be discussed on the Floor of the House.
Mr. Callaghan: The right hon. Gentleman may bear the honour, for as I was about to say in my next sentence, the recommendation was also made that the document should be discussed by the Scrutiny Committee, and I regard, as do the right hon. Gentleman and hon. Members, as most valuable the procedure that they undertake on these matters; and I thank them for the scrutiny that they give.
Those who do not follow our proceedings may well ask why such a matter—whether Britain's contribution to the Community should be lower than it otherwise would be—has arisen so shortly after the previous Conservative Government took Britain into the Community. Some one might well ask, "Did not you settle Britain's subscription then?" And the answer would be, Yes, it was so settled, but such was the rush and hurry of the right hon. Member for Bexley (Mr. Heath) and the Government of the day that it was settled on a basis that was unfair to Britain, an unfairness that the document that we are discussing today fully recognises by the nature of its corrective purposes.
There was a time when the Conservative Government had a misplaced reputation for financial prudence. That disappeared some time ago. In recent years the slipshod manner in which Britain's financial arrangements for entry into the Community were negotiated is an example of their profligacy; and this is not something we have only just discovered. We warned them of it at the time. May I quote one statement made on 28th October 1971 by the present Prime Minister when speaking of this matter. Referring specifically to the Budget contribution, he said:
"… the terms so frivously negotiated … involve an intolerable and disproportionate burden on every family in the land and, equally, on Britain's balance of payments."—[Official Report, 28th October 1971, Vol. 823, c. 2094.]
No notice was taken of that at the time and we have now come round full circle to try to put the matter right.
Mr. Eldon Griffiths (Bury St. Edmunds): The right hon. Gentleman began his speech by seeking to reimport
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some calm into the House. He is not helping it when he omits to tell the House that among the many things that my right hon. and learned Friend negotiated were arrangements to take up inequities as they arose, and to deal with them.
Mr. Callaghan: Calm has been obviously long since restored. We have almost the silence of the grave at the moment and I am very fearful of disturbing that. But I am afraid I cannot accept the hon. Gentleman's description of what took place when his right hon. and learned Friend was negotiating this matter. When we came back to re-examine this situation we found as the House is well aware that the Community budget had been so arranged that it is financed out of levies and duties on third country trade and a uniformly assessed VAT which would be up to a 1 per cent. rate. This inevitably bears hardest on countries such as the United Kingdom, one of the major trading nations of the world. Moreover, the internal development of the Community with a high proportion of its expenditure directed towards agriculture has meant that our prospective contribution to the Community budget would be unduly high.
When we returned to office and examined this matter, our examination revealed a widening gap, year by year, between Britain's contribution to the budget and our share of the Community's gross domestic product. In 1977 that gap, which can be fairly well assessed, may be 4 per cent. By 1980—because of a number of variables it is not possible to be so exact—there was a time when we thought that it might be as much as 10 per cent., but it looks now as though the gap would be—to quote a realistic figure—as much as 7 per cent. to 8 per cent. That is not supportable. It is quite insupportable that the difference between the amount a member country contributes to the budget and its proportion of the Community's GDP should be as much as 7 to 8 per cent., or indeed 4 per cent.
It was the return of a Labour Government committed to renegotiation that enabled us to make a start on putting this matter right. Here I should and do pay tribute to the members of the

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Commission for their willingness to listen to our case. Naturally, there was a tendency to grumble. After all, we were reopening a settlement made by a previous Government. They were entitled to say that. But they listened patiently as I made on more than one occasion the case that the Conservative Government should have made during their negotiations. The Commission allowed that there was a case and that it should be looked at.
As a result, last summer the Commission was asked to examine the situation. The Commission did so and in the autumn, about the time of the General Election, confirmed our opinion—an opinion which it was perfectly open to the Conservative Front Bench opposite to have arrived at a year before—that there would be a substantial gap between our share of the budget contribution and our share of the Community's GDP, a gap which simply could not be fair and which should have been seen and argued on earlier but was not. We pressed on, armed with this report, and in December at the Summit the Heads of Government and Heads of State agreed that our case should be further examined. They acknowledged that there was a need for a correcting mechanism in the event of this situation arising—a correcting mechanism that would offset the unfair consequences of disparity between our budgetary contribution and national income.
The principle is very simple, namely, that contributions should be related to capacity to pay—a principle perhaps more frequently heard on this side of the House than on the other side but certainly one that strikes an echo. The Commission was invited to produce a further report on how this should be done and how the correcting mechanism should be brought into effect. It is this report which is now in front of the House and on which further discussions are to take place on Monday and Tuesday next.
Mr. John Ovenden: My right hon. Friend has told the House of the disparity between our share of the GNP and our share of the Community's budget. Could he give us an estimate of what actual sum we shall be paying, expressed as a percentage of what we would pay, based on GDP? We need
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to know that before we know how much we shall receive from the correcting mechanism.
Mr. Callaghan: I am not anxious to go into figures and I hope that my hon. Friend will regard what I say as only an illustration as there are many variables. On the basis of the present figures it might be around £130 million a year, but I would not wish to be bound to that figure because of the variables that can arise. I am speaking of the position that would occur in 1977, but I place no weight on the particular figure and I would ask my hon. Friend to do the same. It is illustrative of the kind of thing we are discussing.
The figure might grow between 1977 and 1980 if there were a greater disparity between our share of the budgetary contribution and our share of the Community GDP, or it might decline—and on this one cannot be sure—depending on gross national income and other considerations. I give that only as an illustrative figure and I would ask the House to attach to it no more weight than that.
Having worked closely with the Commission on this matter, it would be ungracious of me not to acknowledge the work that it has done in producing this report, which goes some way to meeting one of our renegotiation objectives. The broad approach for recompensing members set out in the report is acceptable to us though some of the proposed details and conditions will require further negotiation—[HON. MEMBERS: "Oh".] My hon. Friends must speak for themselves. I am speaking for the Government now. For example, on what is acceptable even my right hon. Friend the Member for Battersea, North (Mr. Jay) would not, I think, disagree that the mechanism for repayment will be triggered automatically. That seems to me a very desirable thing and I would think I would have his assent and agreement on this.
Mr. Douglas Jay rose—
Mr. Callaghan: I am sure my right hon. Friend is now going on to another point. If he wishes to say he disagrees with the automatic triggering of the mechanism I will gladly give way to him.
Mr. Jay: I am not saying that the triggering was not automatic. I am saying that it did not operate in the right conditions.
Mr. Callaghan: As to its operating in the right conditions, that is something that I hope to discuss in a moment but in my view it operates entirely in the right conditions. It is not easy for other countries when Britain makes a case to pay less because it means that other member countries must pay more. Therefore, the conditions referred to by my right hon. Friend are subject to close scrutiny by them as well as by us.
The method of measuring whether a country should qualify for repayment is threefold. First, there will be a comparison between a member country's GDP and the GDP of the other member countries. It is less by a certain figure, the mechanism will be triggered. That is one of the conditions which must be satisfied.
The second condition which triggers the mechanism is if the rate of growth is below a certain percentage compared with the average rate of growth of the Community. It is fixed in the document at 120 per cent. of the rate of growth. Translating it into simple figures, if the average rate of growth of the Community was 5 per cent. and the United Kingdom economy was growing at 5½ per cent. we should be entitled, subject to the other conditions being fulfilled, to a repayment.
It is not therefore a very unfavourable ratio. Clearly if our rate of growth is less than 6 per cent. we are entitled, subject to the other conditions—[Laughter.] There is no point in laughing about this matter. All these things must be taken together. These are reasonable conditions which must be fulfilled. We shall fulfil all of them. In some ways I regret that we shall, but we shall. I wish that we were not in this position, but we shall fulfil them.
The third condition is that there should be a balance of payments deficit on current account. I do not see the case for that. It seems to me that it does not relate to the rate of growth of a country or the state the country may be in. For example, a Chancellor of the Exchequer may take the view that it was necessary to run a balance of payments surplus in the 1980s to offset the deficits
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which had been running in the late 1970s. Therefore, this is not a condition which I find particularly acceptable. I am not to be taken as being satisfied with the third condition nor as agreeing with the figures proposed in the Commission's document.
The House will not expect me to go into a final negotiating position today when I have to enter into negotiations on Monday, but I give a broad indication of what I should feel about the matter.
Mr. J. Enoch Powell: The Foreign Secretary mentioned a 7 per cent. or 8 per cent. divergence between the experience of the United Kingdom and the general experience of the Community. I wonder whether the right hon. Gentleman could help me and perhaps others by relating that to the 85 per cent. figure in the first of the conditions.
Mr. Callaghan: The two figures do not relate to each other. All I can say to assist the right hon. Gentleman is that when our gross national product is below 85 per cent. of the Community average, the mechanism would be triggered off. It would also be triggered off on the rate of growth. Therefore, both conditions are satisfied. It would also be triggered off, I regret to say, on the balance of payments deficit on the current account. All three conditions would be fulfilled for triggering the mechanism.
Mr. Powell: What did the 7 per cent. relate to?
Mr. Callaghan: It related to demonstrating to the Community that it is not right that a country whose gross domestic product is so much below the average of the Community should pay a contribution which is higher than that of other members of the Community. The difference of 7 per cent. to 8 per cent. relates to those two criteria. In other words, the difference between the amount of the contribution we would make and the amount of our average GNP is about 7 to 8 per cent. I want the House to realise that it is an estimate.
Mr. Mike Thomas: Given the free movement of capital in the Common Market countries, and given that on a number of occasions

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Britain has had a balance of payments crisis situation due to the capital account, why is it simply the balance of payments on current account which is mentioned in this context?
Mr. Callaghan: This is a measure of the economic activity of the country. It is not a measure which I find particularly acceptable. Transfers on capital account are not necessarily a measure of economic activity. I guess that that is why the Commission has put it forward. However, I shall want to discuss it in much greater detail on Monday and Tuesday in Brussels.
The new proposal of the Commission may well result in our paying sums which are much fairer in relation to what is paid and received by other countries. I have said that I am concerned about some of the arrangements which would limit accessibility to the repayment mechanism, including, for example, the size of the refund. I cannot object to a provision which would prevent us from making a profit on the budget as a result of our refund. That would perhaps be carrying matters too far. However, the Government must be satisfied that the refund will be reasonable in relation to the gap between our GDP and our budget share. I prefer not to go into greater detail. The House can well see whether the mechanism could be legitimately improved from our point of view. Everyone would agree that a little more simplicity in the slice limitation formula which the Commission has put forward would not be out of place and might make for greater equity. Clearly there is room for negotiation of these matters, and I intend to go into them next week.
However, I hope that hon. Members will acknowledge the remarkable advance which this mechanism represents over the arrangements which were negotiated. It is sometimes said by hon. Members on both sides of the House that the renegotiation is phoney. I should like to hear what anybody says about this correcting mechanism. There is nothing phoney about the renegotiation here. This is something tangible. I assure anyone who is tempted to take another view that the other Community Governments by no means underestimate the concession which they have shown themselves willing to agree to. But I must emphasise
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that the renegotiations on this matter are not over.
Another factor concerning the financing of the budget which may be changing for the better is the question of the levies. It is becoming clear that, owing to population increase in the world, to the rise, albeit slow, in living standards, in the developing world, and to the greater use of agricultural land the world is in a period when food shortages may be as frequent as surpluses. That was the analysis which was endorsed last November by the World Food Conference in Rome which recommended measures to increase production and manage supplies to match the growing demand. There will still be surplus years, but the international community is of the opinion that these years will have to be put to good use in order to build up internationally managed stocks to prevent famine in shortage years.
Here there is a subject for discussion at the Commonwealth Prime Ministers' Conference in April to which the Prime Minister and I hope to go, because we are moving into a new era in the supply of food and world food stocks. This is something which could operate to our advantage in our contribution to the Community budget. The international community must ensure that millions do not starve to death in the developing world the next time that there is a bad harvest in a major country.
However, the average level of world food prices is likely to be higher than it has been at any time since the end of the war, perhaps lower than now. If one has to make a judgment about the future, it seems to me that they are bound to be higher. They have been higher for some time, while the level of community agricultural prices has been falling slightly in real terms and is likely to continue to do so.
In 1971 it seemed likely that the Community's agricultural levies would impose a crippling burden on the United Kingdom. By 1974 levies seemed likely to represent a much smaller proportion of the budget than the tariffs we shall have to contribute. Our tariff contribution will be well above the Community average but will not be so much as our levy contribution.

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It is against that background of what I would call the new realities, as well as against the background of our determination to remedy the weaknesses of the terms originally negotiated, that I have been renegotiating. I commend the document to the House. I ask only—very modestly—that note should be taken of it. It is well worth starting on this basis and seeing where we get to next week when I have further exchanges with the other Foreign Ministers.
It would be a poor heart that would find nothing to rejoice about in these proposals. Even as they stand today they represent a positive achievement in the renegotiation stakes that we are conducting, and they will have to be taken into account in the balance sheet when the British people and Parliament form their judgment on the substance of the renegotiations.
Mr. Powell: I am grateful to the right hon. Gentleman for giving way. He seemed to be on his peroration without having referred to what is evidently an important part of the mechanism which I thought he would mention in his reference to tariffs and levies, namely, the fact that the mechanism is limited to the yield of VAT as part of the Community resources and that, therefore, Britain's contribution by way of tariffs or levies would not be affected. Will the right hon. Gentleman give the Government's view on that point before he closes?
Mr. Callaghan: I am obliged to the right hon. Gentleman. I had missed that point. It seems to us from the calculations we have made that the likely benefit that we could expect from this document would be contained within the level of payment of VAT or its equivalent. It has to be, as the right hon. Gentleman says, and it will be. In other words, as far as we can measure it, the disparity is not likely to exceed VAT.
The Minister of State for Foreign and Commonwealth Affairs (Mr. Roy Hattersley): It is not calculated on that basis.
Mr. Callaghan: My right hon. Friend corrects me. It is not calculated on the VAT basis but on the general basis. It is set against VAT because of the view of the Community about levies and tariffs,
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which is well known to the right hon. Gentleman. As someone who is concerned with the practical result, provided that I can satisfy myself that the repayment can be made out of a sum which is equivalent to VAT, there is no reason why I should object unduly, although I want to discuss the matter further.
What I am interested in is results. Many people argue theology, and I have no doubt that today it will be argued at great length, but no one will be able to deny at the end of the day that the result of this proposal even without any improvements, if it is officially adopted in its present form, will be to claw back for the British taxpayer many millions of pounds that would otherwise have found their way into the Community. It is by that practical test that we have to determine whether the negotiations are successful, and by that practical test there can be no doubt about the answer.
4.44 p.m.
Mr. Peter Kirk: As the Secretary of State rightly said, it would be a poor heart that did not rejoice at any prospect of further money coming into the Exchequer. It would equally be a poor heart that accepted verbatim the right hon. Gentleman's description of the history of the negotiations of 1971 and 1972. We have been into this before and I do not intend to go into it in great detail, except to dispute the statement made by the right hon. Gentleman that the Conservative Government accepted without qualification unacceptable terms and that, even if we rejected that, nobody else did. Of course the right hon. Gentleman did, and so did his Prime Minister, when they signed the communiqué which was issued after the Paris summit meeting last December, paragraph 35 of which states:
"The Heads of Government"—
which presumably includes the Prime Minister—
"recall the statement made during the accession negotiations by the Community to the effect that 'If unacceptable situations were to arise, the very life of the Community would make it imperative for the institutions to find equitable solutions.'"
What is interesting about the document we are discussing today is that it refers to the unacceptable situation and the correcting mechanism. The document which we are discussing and which the

733
right hon. Gentleman is commending to the House, albeit in qualified terms, refers back to a communiqué which was issued during the negotiations conducted by my right hon. and learned Friend the Member for Hexham (Mr. Rippon) at that time with precisely this situation in mind.
We did not know in 1971 and 1972 that the British people would have the misfortune of inflicting upon themselves a Labour Government and so would look forward to a steadily declining economic situation. Nevertheless, it was prudent, if nothing else, at that time to make provision for changes in the contributions if they became necessary. I agree with the right hon. Gentleman that such changes clearly are necessary. I agree that this is an example of the way the Community can work effectively in an on-going process of negotiation, with movements forward every day. I am glad that the right hon. Gentleman has persuaded the Commission to produce a document which, although highly complicated, will undoubtedly even in its present form be extremely beneficial to the British people.
Mr. Spearing: One matter which my right hon. Friend the Secretary of State did not mention was the calculation of the three-year moving mean. He claimed that we should benefit from this mechanism as it stands. Is the hon. Gentleman also satisfied that the three-year moving mean will provide additional cash?
Mr. Kirk: I think it will, but I do not have access to the facilities which the right hon. Gentleman has. My calculations are not perhaps as worth while as his, but it seems to me that it will. There are detailed matters in the document I wish to deal with in the course of what will be a short intervention because of the late start of the debate and because so many hon. Members wish to speak.
Despite the complication of the document, it cannot be disputed that the net effect must be beneficial to this country in present circumstances. I accept, as the right hon. Gentleman said, that we cannot ask him at this stage to give away his negotiating position before he goes into negotiations. That would be unreasonable and unfair, and I shall not try to do it. Equally, I accept that the right hon. Gentleman has no personal responsibility for the document and that it would be unreasonable
734
to expect him to produce immediate answers to small points which may be raised on it. If the right hon. Gentleman or his right hon. Friend are unable to answer certain questions immediately, perhaps they can be replied to by correspondence.
I assure the right hon. Gentleman that I look forward to rejoicing again with him—to put it in the words of the Prayer Book—on another shore and in a greater light at Brussels when we examine the process again in the process of concertation next week. Perhaps at that time the Commission or the Council will be able to give us a slightly more accurate assessment of what precisely will happen.
My general point is that this is a matter of general application. Although the document has been produced by the Commission because the British Government requested it at the summit meeting—or the meeting of the European Council as we must learn to call it—there is no reason why any other of the nine member countries which get into financial or economic difficulties should not benefit from it. I can think of at least two which in the near future might feel it necessary to avail themselves of precisely this type of support. Although the right hon. Gentleman commenced his speech with the triumphant shout that there was money in it, there is not money in it just for us. If our economy improves we may find later that we are having to make a net contribution rather than receiving a net gain. That is a point that should be expressed.
I understand that no calculation has been made by the Commission or Council, but it may be that Her Majesty's Government have calculated whether any other countries now fall within the triggering mechanism. I shall be asking the Commission, when wearing my other hat as a member of the European Parliament, what calculations it will make in that respect.
Any judgment that we make of the scheme must be based on how it affects other countries as much as how it affects this country. We must consider the net effect of payments in and out over the whole seven-year period. I imagine it would be the view of the Government—I should be grateful if the right hon. Gentleman will confirm this—if the

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scheme were reasonably successful that it would be intended to incorporate it as a kind of permanent mechanism into the budgetary procedure of the Community. That would seem to make a good deal of sense. The idea of having a trial period is sensible in that we can see whether it work effectively. If it fails to do so we shall have to find some other way of dealing with the assessments which will have to be made in future.
I agree, too, that the word "budget" in this context is a misnomer. I have said that on more than one occasion both in the House and outside. We are dealing with estimates and nothing more. There is no budgetary mechanism in the sense of using the budget as a means of economic planning. For that reason this corrective mechanism cannot be used for such a purpose. In the same way it would not be possible to use a similar mechanism within the context of the British Budget.
I am horrified to agree so much with the Secretary of State for Foreign and Commonwealth Affairs. The right hon. Gentleman may not welcome it. None the less, I agree with him that the balance of payments qualification is a curious factor. That is a matter that we must explore further. It would seem that there is a clear case that in any given year it might be necessary for a Government to run a balance of payments deficit for particular purposes, whereas at a later stage, though in considerable economic difficulty, that Government could have a net surplus in its balance of payments current account.
Mr. Bryan Gould: Does the hon. Gentleman agree that, if by some mischance or perhaps good fortune we were unable to meet all of the criteria at once over a three-year running mean, it is possible that we would not alter the budget mechanism at all and that the divergence between our proportionate gross national product and our budgetary contribution would be about the same? In those circumstances, which seem more than likely to arise, does the right hon. Gentleman agree, referring to what he said earlier, that we might also be required to contribute under the scheme?
Mr. Kirk: We must accept that there is always the possibility that we might
736
have to contribute to it as well as the possibility that we might get something back given our present circumstances. As the Secretary of State rightly said, there is not the slightest doubt that in 1975—and the forecast for 1976 is not all that rosy—we shall be net receivers and not net contributors. It will be a question of our relative position as regards the other Eight. We must remember that the Commission has put forward this scheme as a mechanism of general application at the request of the European Council. That was specifically stated in the summit communiqué. We cannot put forward a mechanism of general application and then say that we shall accept it only if it applies to us in a beneficial manner. We cannot say that we will not accept the risks which might be involved in such a scheme. Of course, we know that as the scheme wilt be applied at the moment it will act towards us in a beneficial manner.
I now turn to one or two minor points about the scheme which perhaps I might put before the Secretary of State. I accept that it may well be that he will not be able to give me replies this afternoon. My first point relates to page 6 of the document at the beginning of Paragraph C. The paragraph reads:
"The Commission considers that where the criteria for the possible development of an unacceptable situation are operative this entitles a Member State to apply for the correcting mechanism to be put into operation."
I understand—perhaps the right hon. Gentleman will confirm this—that although the words are the same in the English and French texts they are different in the German text and appear as "all relevant criteria". That is a very different matter. That is clearly something which will have to be cleared up before the right hon. Gentleman enters the next round of negotiations. It is certainly a matter that we shall wish to raise with the Council. It is perfectly true that at a later stage there is a reference to "pre-established criteria". There is confusion that should be sorted out.
The second detailed point that I wish to raise relates to page 8. There is the rather curious statement that when a member State
"has benefited from the correcting mechanism for three consecutive years"

737
the Community authorities have to
"make a special examination of the situation of the State in question and to take the appropriate measures to give effect to Community solidarity …"
In other words, there is a corrective mechanism for the correcting mechanism. We are getting into complicated and deep waters. I believe that it is unnecessary to carry the matter into such elaborate depths, if that is a correct interpretation. It would be far better to let the rolling procedure continue until the end of the seven-year period and then to review the situation as a whole.
Mr. Callaghan: If the correcting mechanism is a wicket keeper then this provision is a long stop.
Mr. Jay: Oh, no.
Mr. Callaghan: It is no use my right hon. Friend saying "Oh, no". He has not been present during the discussions and I have.
Mr. Jay: I have read the papers.
Mr. Callaghan: My right hon. Friend may have read the papers, but they have not always been read with care. When I hear my right hon. Friend quoting the manifesto it reminds me of Satan using the Bible for his own purposes. If a country finds, after the correcting mechanism has been applied for three years, that it is still in need of the mechanism, the purpose of the provision, as I understand it, is that more assistance should be given or a greater amount of repayment should be made. It is not the reverse at all. The purpose is to try to help even further than was the position in the first place.
Mr. Kirk: I am most grateful to the right hon. Gentleman. That has clarified that point. If we can accept his interpretation, that is a matter of considerable satisfaction. It is a matter that needs to be spelt out in slightly greater detail.
The final detailed point that I wish to make is whether the right hon. Gentleman agrees with the use of the Article 235 procedure. It is a procedure that I personally dislike. Does he agree that it might be better to use the normal procedure of the Community rather than the catch-all procedure? It is said that no treaty has been produced for specific corrective mechan
738
isms of this kind, but, I would have thought that the general financial provisions could cover a scheme of this kind without very much difficulty. I do not think that they would run into any great opposition if they were produced.
Subject to those detailed questions the Opposition give general blessing to the document. I hope that I have been as brief as I promised to be. We give a general blessing to the right hon. Gentleman's efforts and we hope that we shall always see him in so genial a form.
4.59 p.m.
Mr. Douglas Jay: I welcome the fact that we are having this debate. Of course, the credit for that must be shared between my right hon. Friend the Secretary of State and the Scrutiny Committee. I very much welcome the fact that my right hon. Friend finds some things in the document which he cannot completely accept. He said that it would be a poor heart which could not find something which it welcomed in the document. I think that it would be a very soft head which welcomed everything in it. It is more in sorrow than in anger that I say to my right hon. Friend that although this is admittedly a consultative document—he has already given us an undertaking, as I understand it, that he will try to improve it—I find it exceedingly disappointing, as it stands, if it purports to be a fundamental renegotiation of the terms of entry. I trust therefore that, in the light of the debate today, my right hon. Friend will seek substantial improvements.
A fundamental renegotiation was, after all, promised by the Labour Party's election manifesto—and I hope that my right hon. Friend does not object to my mentioning that. He quoted it in his celebrated speech on 1st April last year. He has always presented the Budget contribution as one of the main elements in the whole operation. He did not quote today what the manifesto said. It promised:
"New and fairer methods of financing the COMMUNITY BUDGET. Neither the taxes that form the so-called 'own resources' of the Communities, nor the purposes, mainly agricultural support, on which the funds are mainly to be spent, are acceptable to us. We would be ready to contribute to the Community finances only such sums as were fair

739
in relation to what is paid and what is received by the other member countries."
However, the proposals in the document do not ensure that the British contribution will always be fair in relation to what is paid by other member States. Everybody took that to mean that the proposed annual contribution by this country would be drastically revised so that in future it would be comparable, as a percentage, to Britain's percentage share of the total GNP of the EEC. Indeed, my right hon. Friend made it a major issue—and he referred to the principle of the percentage share of GNP this afternoon—that our contribution under the 1971 settlement would markedly exceed our percentage of Common Market GNP. The Commission's own document last December—Document R2829/74—estimates, and I think this is where my right hon. Friend's 7 per cent. figure came from, that under the 1972 settlement we should pay 22 per cent. of the budget compared with 15·9 per cent. of the total GNP four years hence.
But of course the corrective mechanism suggested in this document, which my right hon. Friend did not mention in detail today, does not make our contribution comparable to our share of the total GNP. It does not propose a substantially revised United Kingdom contribution. Instead it provides for possible refunds to be made as a sort of emergency relief when, and only when, a complex series of conditions is simultaneously satisfied. Under this scheme in most years refunds would not be paid and the British contribution would continue to exceed a fair proportion.
The "unacceptable situation" is interpreted not as being a situation in which the British contribution is unfair but as a situation in which we are suffering special economic difficulties. At least four major conditions have to be fulfilled simultaneously before relief is forthcoming. First, the GNP of the applicant country has to be below 85 per cent. of the EEC average. Secondly, its growth of GNP has to be below 120 per cent. of the EEC average. Third, and this is extraordinary, it has to be suffering a deficit on the current balance of payments. All these situations have to be calculated on the basis of a three-year moving average, so even the
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coincidence of all of them in one year would presumably not enable a refund to be paid. Fourth, there has to be a disproportionate contribution to Community financing and there has to be "simultaneous occurrence" of this disproportion and of all the economic situations which I have already described.
But even here the disproportion is not calculated in the way in which the Government originally wished—as a straight comparison of our GNP as a proportion of the total GNP of the EEC. A new complication is introduced. We are told that the excess contribution should not materially count unless it is transferred across the exchanges, and that otherwise member States must not
"call in question the consequences of the Own Resources system".
Even more ludicrously, the document states that because agricultural levies and customs duties cannot be regarded as a burden on the States concerned, therefore the aggregating mechanism could appropriately be limited to the total payments in respect of VAT. But of course the agricultural levies and customs duties are a massive and the main burden on our economy. In addition to all this, two further ceilings are placed on the total refunds that can be made, thus limiting them even further.
There therefore appear to me to be three serious defects in this proposed mechanism. I am not saying that my right hon. Friend has not done his best to improve it, I am saying that he has not yet by any means fully succeeded in doing so. First, the introduction of the balance of payments deficit condition entirely alters the nature of the proposed reform. There is no reason why the United Kingdom should pay an unfair contribution to the budget just because we have no balance of payments deficit. My right hon. Friend the Foreign Secretary is a former Chancellor and a former official of the Inland Revenue. This proposal is rather as though the Inland Revenue were to argue that a person was not entitled to the ordinary reliefs under income tax unless he had a large overdraft with his bank. I am sure that my right hon. Friend would not argue that. Although we sometimes forget it, this country had a large balance of payments surplus as recently as 1970 and 1971. Surely the Government have not assumed

741
that we shall not have a balance of payments surplus again for an indefinite number of years.
The second weakness is that I cannot believe that a Government, pleged by its manifesto—which I hope I am allowed to refer to—to the promise that the "own resources" system is not acceptable could accept a document which says, as this one does,
"The Heads of Government confirmed that 'the system of "own resources" represents one of the fundamental elements of the integration of the Community'."
Thirdly, the whole scheme is so hedged about with complex conditions that in the interests of brevity I have not mentioned, all of which have to be fulfilled at the same time, that it is hard to believe that in very many years anything but a pretty small refund, if anything at all, would be payable. I would guess that it would be a rare year in which a French lawyer could not find some condition somewhere which had not been satisfied.
Even that is not quite all. If ever the aggregating mechanism does operate and refunds are made for three years, the Commission is then apparently to move in and exercise some special powers which are not clearly specified over the economy of the country in question. My right hon. Friend interpreted what this means, but his interpretation is not what the words say. They are on page 8 and they read,
"The Community authorities would then make a special examination of the situation of the State in question and take the appropriate measures to give effect to Community solidarity in the light of the assessment made by the convergence of economic situations and policies."
Some hon. Members may be in doubt about what that means. That makes me a little sceptical, if not suspicious. If it means what my right hon. Friend said today, I hope his interpretation will be written into the document, because, if not, some people will remain sceptical.
Mr. Callaghan: My right hon. Friend, of whom I am deeply fond, would, if given a copy of the Sermon on the Mount, be able to parody it. Supposing I remedied the three serious defects to which my right hon. Friend has pointed, would that make the slightest difference to his attitude towards leaving the EEC?
Mr. Jay: It would make a good deal of difference. If my right hon. Friend does not believe what I say to him, I shall have difficulty in believing what he says to me. I assure him that I much prefer the Sermon on the Mount to this document.
The document contains a concluding remark suggesting that the scheme will operate for a seven-year trial period, after which, if it does not continue, we shall presumably revert to where we were before. On the evidence before us today, the final result is that we are not offered a real reform of an unfair system and a scheme for a fair contribution in future. All that we are offered is an emergency relief scheme which we cannot tell how often would operate, and which would trigger off, after throe years, some form of exceptional supervision of our economy, not on the grounds that we were insisting on fair play but because we were in exceptional difficulties.
I am encouraged by what my right hon. Friend has said today. However, I cannot believe that the Government, in view of the election pledges which I have quoted, will accept these terms, or anything like them, as a serious piece of renegotiation.
The least we should ask for is a simple adjustment scheme to ensure that this country makes no more than a fair contribution based on GNP. The balance of payments criterion should be omitted. I am glad that we are reaching agreement on that. The payment of refunds should in no way permit additional interference in the British economy. I trust that my right hon. Friend will take his stand on those principles in the forthcoming talks next week and achieve a considerable amendment of those proposals. If my right hon. Friend assures us that he will do that, I shall ask my hon. Friends not to oppose the scheme in its entirety. If he cannot, we must regard it as seriously unsatisfactory.
5.14 p.m.
Mr. John Davies: All hon. Members must have been impressed with what the right hon. Member for Battersea, North (Mr. Jay) said, to the effect that if his three points were handled satisfactorily by the Foreign Secretary, his attitude of mind towards withdrawal from the Community would be changed

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considerably. That is a remarkable, interesting and powerful statement.
I am incapable of quickly doing the mental arithmetic concerning his three points, but I guess that the figure involved is about one-third to one-quarter of the present milk subsidy. It is interesting to observe that the right hon. Member for Battersea, North, who is associated with the thought that this is the single greatest decision that this country has had to make since the war, would agree to the decision for between one-third and one-quarter of the amount paid in milk subsidies.
Mr. Jay: The right hon. Gentleman is now misinterpreting what I have said. I was seeking brevity. I said that it would make a difference if those improvements were made. I believe—as the right hon. Gentleman must believe—that the budget contribution is of far less importance than our total deficit with the Community and the burden of the common agricultural policy.
Mr. Davies: I understand that. None the less, I think that we must hold the right hon. Gentleman to his earlier statement, the record of which we shall shortly see in the Official Report.
I have not been inclined to pour cold water on the Foreign Secretary's endeavour to get a more favourable and reasonable budgetary contribution scheme. On the contrary. I wish the right hon. Gentleman well in his endeavours. He seems to have been able to press this point home. There is a certain amount of shadow boxing, but that is part of the normal political horseplay in these matters. The appropriate moment to seek such an adjustment is a matter of judgment. At the time when the previous Conservative Government, of which I was a member, was seeking in terms of priorities to achieve an effective regional policy, it seemed wiser to leave this issue for subsequent handling, although not relegating it to a position of no importance. I regard what the Foreign Secretary has done as substantial, and I welcome it. However, I think we shall have difficulty.
The "own resources" provisions of the Community operations are hard to overturn. They form a relatively impregnable area. The Foreign Secretary will find
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that hard to change. The purpose of the Community is the creation of a single market. The object is to break down barriers, be they tariff or non-tariff, which exist between member countries of the Community, so as to ensure that in due course there is a free and open market similar to that which exists in the United States of America.
The members of the Community believe—I think rightly; the right hon. Gentleman may think wrongly—that that is the precise condition in which the fortunes of the Community will prosper most. We believe that, although not for purely selfish or jealous reasons. However, I do not doubt that the idea of self-enrichment is not totally unpopular to the members of the Community either. They believe that through such an arrangement they will create in Europe a Community which will have a powerful and valuable effect on the rest of the world in terms of its external political emphasis and of its ability effectively to help the conditions of life in the developing countries.
I commend the recent agreement with the African, Caribbean and Pacific countries on arrangements which could not have been entered into by a single country. All this reposes in the belief that in due course the Community can be created into a single tariff-free, barrier-free market. In the case of a universal market, as is the case in the United States of America, tariffs which are raised at the point of entry belong to the total exchequer of that country. In the same way tariffs will belong to the total exchequer of the Community.
The operation and purpose of the Community is geared specifically to the proposition of "own resources", because "own resources" mean that tariffs which are levied at the frontiers of the Community belong to the Community to dispose of as its members consider right. That is the purpose of the operation. That is why "own resources" were referred to, and why it will be hard to persuade the Community to change the relationship of its member States.
Mr. Jay: That may be the right hon. Gentleman's view, but I am sure that he will agree that it was not the view expressed in the Labour Party's election manifesto.
Mr. Deputy Speaker (Mr. George Thomas): Order. This is a very brief debate. The right hon. Member was called to speak. Perhaps I may be allowed to return to the Beatitudes and remind the right hon. Gentleman that
"Blessed are the meek, for they shall inherit the earth."
Mr. Davies: Perhaps I might make one comment upon the right hon. Gentleman's intervention and say that, fortunately, I am not bound by that manifesto in any way. Moreover, I believe that I am right in saying that the conclusion reached by the Heads of State at their summit meeting was to endorse the principle of a common market and, therefore, the principle of "own resources". Therefore, the Foreign Secretary and the Prime Minister have made it clear already that they accept that to be the principle of the Community and one by which they will abide.
The purposes implicit in the creation of "own resources" are well understood. They have never been concealed or doubted by those who have had to deal with the Community. They represent a basic requirement for member States to comply with in dealing with the budgetary purposes of the Community.
Naturally, I was relieved to hear the Foreign Secretary say that, as a result of the change in the pattern of tariff and levy arrangements and the extent of them, the likelihood was that a greater proportion of the total budgetary contributions would come from the VAT contribution and that therefore it would accommodate a greater degree of differential if ultimately a differential showed itself.
Much reference has been made to the criterion dealing with the 85 per cent. of what hon. Members have called "average gross national product". We are discussing GNP per head. That should be kept very much in mind. Population change and the like has a powerful effect on GNP per head.
I share the views already expressed today that it is not certain that with all the changes and chances likely to occur in the next decade we shall find ourselves necessarily on the receiving side of the operation. Nonetheless. I welcome the corrective mechanism, which is a fair and reasonable approach to what is a real problem.
746
My final comment takes the form of a question to which I hope that the Minister of State will be prepared to respond. If I understand the mechanism correctly, where there is a differential which is regarded as being a justified reclaim by a member State, subject to the criterion that I have stated, that differential will be aggregated with the budget of the ensuing period. Therefore the payment out to the member State will result in the inclusion in the budget for the ensuing period of a supplementary figure which will make good the shortfall of the member State. In other words. The member State itself will contribute a proportion of it. Is the right hon. Gentleman content with that? It seems to be slightly interesting from an accounting point of view and from a resource point of view. If the right hon. Gentleman cares to comment on it, I shall be happy to hear what he says.
5.24 p.m.
Mr. Evan Luard: My right hon. Friend the Member for Battersea. North (Mr. Jay) began his speech, as he has done on other occasions, by quoting from the Labour Party manifesto. It came as no surprise to hear him conclude that the terms of the proposed corrective mechanism did not in his view satisfy the requirements of that manifesto. In that, my right hon. Friend repeated the pattern of earlier debates on the Common Market, and I am sure that we shall hear it again on many occasions in the future.
Many people will refer in these debates to the Labour Party manifesto. Those who have made up their minds already that Britain should not remain in the Common Market will then conclude that the terms which have been negotiated do not meet the requirements of the manifesto. Those who believe that we should remain in the Common Market will conclude that they do. It will surprise no one to hear that my own view is that, so far as it can be judged at present, the corrective mechanism now proposed will meet the conditions laid down in the manifesto.
I want to quote three sentences on the subject appearing in the manifesto. The first says that we are seeking to obtain
"New and fairer methods of financing the Community budget."

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No one can contend that, if it is introduced, this mechanism will not represent a new method of financing the Community budget; or that it will not be a fairer method. It must be a fairer method because its object is to provide compensation for countries like ourselves who, in the present situation, find themselves contributing a larger share of their GNP and who may find themselves in difficult economic circumstances. Those countries will be able to pay less than they would otherwise.
The second sentence in the manifesto is crucial and it has been quoted a number of times, for example, by the right hon. Member for Down, South (Mr. Powell). It reads:
"Neither the taxes that form the so-called 'own resources' of the Communities … are acceptable to us."
At first sight, it may seem that this condition has not been met. But let us look at it in detail. The words
"Neither the taxes that form the so-called ' own resources' of the Communities …"
clearly imply that we have not been demanding the total abandonment of the "own resources" system. That would have been an unrealistic demand to make because there was no chance that the Common Market countries would have been prepared to abandon the system. What we said was that we did not like the taxes that formed the so-called "own resources"' system.
We have not achieved a complete change in those taxes. They will still consist basically of the levies, the tariffs and the VAT. But the precedent that we have established by getting agreement to a corrective mechanism is that they will not consist exclusively of those existing taxes. That is a basic change in the principle so far adopted in the Common Market.
I accept that alone it is not enough. I should prefer an altogether better system provided in the Common Market for obtaining the resources which it requires for agricultural support, social policy, regional policy, and so on. But, for the reason that I have stated—the fact that the great majority of the Common Market countries support the present system because they believe it to be one which provides automatic financing and
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which is appropriate to a single market—it would not have been possible to obtain a change of this kind within the short space of time required for our renegotiation.
Mr. Spearing: Can my hon. Friend identify the alternative method of raising money to which he has referred? Is not it analogous to someone saying that we have changed the rating system because we have introduced a system of rate relief for people with low means? It may ease its application, but surely it does not change the basic pattern.
Mr. Luard: It changes the total effect of the taxation system.
Mr. Spearing: That is another matter.
Mr. Luard: That is my point. The reason why we wished to change the system was that we recognised that it could in certain circumstances act very unfairly, in the sense that a country might be obliged to pay more than in logic it should pay in terms of its national income per head. That is why we objected to the system, and that is why the system is being improved.
The second half of the sentence which I was quoting from the manifesto says that we also do not find acceptable
"… the purposes, mainly agricultural support, on which the funds are mainly to be spent".
Again it cannot be said that we have yet brought about a fundamental change in the expenditure of the Common Market. It would have been absurd to expect to be able to achieve that. But all the time there is a shift in the emphasis of expenditure. For example, more may be given to the regional fund or to the social fund at any one time.
In the area of agricultural support, which is by far the largest single element in the expenditure of the Common Market, there are important changes in the direction of expenditure. Only this morning we read of an agreement about to be reached concerning agricultural support, the result of the review of the common agricultural policy. One of the results of that review is that much less money will be needed in future to finance the enormous stockpiles of agricultural produce we have had, such as the butter mountain. We have contributed to this in our negotiations. There has been thus

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an important change in the whole expenditure of the Community within the last few months.
I come to the last sentence of the three I quoted from the Labour Party manifesto:
"We would be ready to contribute to Community finances only such sums as were fair in relation to what is paid and what is received by other member countries."
That is precisely the effect which this mechanism will bring about and which it is designed to bring about. [HON. MEMBERS: "No."] That obviously depends on the definition of "fair". We are all entitled to make our own judgment as to what is fair. The manifesto refers to
"only such sums as were fair in relation to what is paid and received by other member countries".
The purpose of this mechanism is to make our contribution fairer in relation to what is paid by other member countries, taking account of their national income and their income per head and our national income and income per head. It will create a much fairer and equitable system than the one we have today. To that extent, we should be satisfied with it.
I admit that there are details of the proposals in this document, of which the final result is not yet known, which I should like to see improved. One of them is the reference to the balance of payments situation. There is no logical reason why the Community, in deciding whether one country is paying more than its fair share, should take account of the balance of payments situation of that country. Ideally the Community needs only to take account of one factor, the 85 per cent. of GNP per head. That is by far the most important consideration.
Mr. Powell: While the hon. Member is referring to fairness, will he direct his attention to one brief sentence in the document before us? At the bottom of page 4, paragraph 4, it says:
"The correction should not apply to the whole of the disparity but should be limited to two-thirds of it"
What comment has the hon. Member to make on that?
Mr. Luard: I was just about to mention that point. This is one of several
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features of the document which I regard as either unsatisfactory or obscure. If taken literally, a number of references in this document would quite significantly limit the effect of the mechanism. This is one of them. The reference to a payment out of VAT revenues is another, and the reference to the three-year moving average is another. It is difficult to see exactly how this is to be interpreted. I hope that the Secretary of State will take up these points in his discussions in Brussels next week. Even if he does not receive full satisfaction on those points, there is no doubt whatsoever that they—
Mr. James Callaghan: Do not say that.
Mr. Luard: I will give my right hon. Friend every possible support. I hope that he will take with him the views of all hon. Members that we should receive a more satisfactory deal.
I personally would like to congratulate my right hon. Friend. Those of us who are reasonably familiar with the workings of the Common Market were doubtful about how far the Secretary of State would be able to obtain satisfaction on this element of our renegotiation terms. I think he has done extraordinarily well so far, especially in overcoming the deep objections and reservations that the French Government had to making any kind of concession to us. I hope that he will do better still in the future, and will be able in Brussels to clear up some of these minor points raised during the course of the debate.
5.35 p.m.
Mr. Douglas Hurd: These debates are valuable, not just because of the intrinsic importance of the documents and proposals involved but because they shed an improving light on the nature of the Community to which we belong.
The sum involved in the proposals before us is not a puny one. The Foreign Secretary gave us an illustrative figure, to which he did not want to be held, of £130 million a year. That was the approximate possible benefit to this country at a later stage in the working of the corrective mechanism. This is not nearly as large a sum as that which we discussed with much attention in the context of public expenditure when dealing with a

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new food subsidy, for example. Nor is it nearly so large a sum, if we are thinking in terms of the contribution across the exchanges, as the trade deficits to which we give less attention than we are giving to this document. Nevertheless, it is a sizeable sum and it is right that we should discuss it.
As the Secretary of State said, after a time the sum may not work in our favour. When North Sea oil begins to exercise its influence on our balance of payments we may be required to contribute under this scheme rather than to receive from it. That is a natural consequence of the nature of the Community to which we belong and it is on that point that I wish to speak.
This document has two possible pedigrees. It is important to decide among ourselves which is the right one—not for the purpose of scoring party points but because, according to which pedigree we believe to be the true one, we shall decide our view of the true nature of the Community. It is possible to argue, as did the Secretary of State when opening the debate, that the pedigree of this document dates back through two General Elections to the Labour Party manifesto. It is perfectly natural that Labour Members should indulge in very minute textual criticism of the different sentences of this manifesto, although it is possibly more appropriate to a meeting of the Parliamentary Labour Party than to the Floor of the House.
There is no reason why the House should take the manifesto of a particular party as the permanent and total definition of this country's interests. Therefore, Conservative Members are entitled, and the right hon. Member for Down, South (Mr. Powell) is entitled, if he so wishes, to take a broader view.
Mr. Powell: It is a question of morality.
Mr. Hurd: I am most grateful to the right hon. Gentleman. I was coming to that point. It is amazing, and flattering to the Labour Party, that the right hon. Gentleman should spend so much time on what he has just described as the morality of the situation and what, in the last debate, he described as the integrity of the situation.
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During the last debate the right hon. Gentleman's settled view was that the textual integrity of a Labour Party manifesto—in that case we were talking about the import order—should prevail over this country's clear international commitment. That is a view he has consistently expressed. I find it a difficult one to accept. The right hon. Gentleman describes himself as a Tory but not a Conservative. Having imbibed Tory doctrine from my earliest days, I do not understand how anyone could describe himself as a Tory and hold the view that a party manifesto should aver-ride our international commitments.
I believe that the real pedigree of this document lies in a different direction. It goes back as my hon. Friend the Member for Saffron Walden (Mr. Kirk) said, to the 1972 declaration. As he pointed out, the summit communiqué, for which the Foreign Secretary claimed a good deal of credit, specifically stated that that was the pedigree of this document. The communiqué specifically stated that the Commission was taking this further step because in 1972 it had declared that such a step might become necessary. That is in no way to deny the pertinacity and courage with which the right hon. Gentleman and his right hon. Friend have pursued the matter and put flesh on the bones which were then established. That is the ongoing nature of the Community and with great skill they have done their best in protecting our interests.
It is natural that when particular proposals come forward, such as those in this document, right hon. and hon. Members on both sides of the House should say that they are not sufficient, that they want more information, that the passage about the balance of payments should not be included, and that the proposal that only two-thirds of the deficiency should be recouped is inadequate. That is all part of the coming and going of the Community.
The Treasury Bench were highly approving of such criticisms when they heard them a few minutes ago, because they enable them to go to Brussels fortified in the knowledge that behind them are hon. Members on both sides of the House pressing them to do better. This is of great advantage to the Foreign

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Secretary when he sits round the table with his colleagues. As I said, that is all part of the on-going process of the Community, and rightly so.
What is a sham and almost a tragedy for this country is that the right hon. Members for Battersea, North (Mr. Jay) and Down, South (Mr. Powell), who know much more about the details than I do, should use their energies and eloquence in this House not primarily to fortify and strengthen the Foreign Secretary's hand in his dealings with our partners, not primarily to get a better deal for this country, but to illustrate and further their own stubborn hostility to the whole notion of the Community to which we belong. It will be a great blessing to this House and to the country—I hope that it will be a blessing not far removed—when the energies and eloquence of those two right hon. Gentlemen and many other hon. Members on both sides of the House, after the referendum, are devoted fully to improving strengthening and making constructive criticisms of the Community which will enable us to play a fuller part in it.
I think that 1973 was a bad year for the Community, because it faced a terrible energy crisis. Not even its dearest friends could claim that it emerged sucessfully from that crisis. Also, 1974 and now 1975 put great burdens on the Community with the British renegotiation.
The importance of this debate, of the document, and of the speech made by the Foreign Secretary seems essentially to be that whereas at the beginning—some of us shared this view—it was widely felt in the Community that the British renegotiation demands which were put forward were a burden and an irritation, I suspect that now, as we approach the critical point of the discussions which are taking place, we are reaching a different and more hopeful conclusion. The renegotiation and its outcome, instead of being essentially a burden and an irritation, may figure in the history books as the succesful proving ground which established for ever the worth of the Community.
I think that is the essential importance of this debate, of its predecessors, and of the debates which we shall have in the next few weeks. Because I sense that
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feeling in the air in this House today, I am glad to have had the chance of participating in the debate.
5.44 p.m.
Mr. John Ovenden: I shall attempt to be brief because my task has been made easier by the lucid manner in which my right hon. Friend the Member for Battersea, North (Mr. Jay) has put most of the points that I wished to make.
I am not surprised that some hon. Members find the document or our membership of the Common Market acceptable even without this corrective mechanism. We are fully aware that right hon. and hon. Members opposite and, indeed, some on this side of the House voted for acceptance of the original terms negotiated by the right hon. and learned Member for Hexham (Mr. Rippon. However, the vast majority of my right hon. and hon. Friends fought an election upon a Labour Party manifesto which laid down certain conditions for our continued membership of the Common Market.
I agree with my right hon. Friend the Member for Battersea, North that this document does not go far enough towards meeting those terms. It falls far short because it does not present us with a change to the permanent system of financing of the Community. All that we are given is a corrective mechanism for seven years. The documents makes clear that the Community is still committed to long-term acceptance of the "own resources" system of finance which we made clear in our manifesto was not acceptable to us.
I cannot go all the way with my hon. Friend the Member for Oxford (Mr. Luard) who claimed that that was a fairer system of finance. I might concede that it is a less unfair system of finance, but it is doubtful whether we could go that far. This document is merely a balancing mechanism to compensate for a grossly unfair system of Community financing.
My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs during a recent Question Time said that even if he came back from Brussels with a crock of gold some hon.

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Members would question it. I suggest that all that glistens is not gold and that this is a prime example.
We are not interested in offers of Community charity to member States in economic difficulty. We should be seeking a long-term solution to the problem of spreading fairly the Community budget. The proposals in this document offer no redress to a member State unless it is in economic difficulties. The terms that we laid down clearly insisted that we should not pay more than our fair share of the Community budget at any time. That means not just when we are hard up but at any time.
If we accept this proposal, it will mean that should we return to a position of economic strength—many of us believe and hope that we shall do so—there will be no limit to the unfairness of the contribution which we can be asked to make. Not only could we be paying an unfair contribution, but we could be asked to make a contribution towards a compensating mechanism for other countries.
Mrs. Elaine Kellett-Bowman: I cannot help feeling that the hon. Gentleman has misunderstood the provision. The whole point of its being a general provision is that in no circumstances will our contribution be unfair. It will be related to our capacity to pay. [Hon. Members: "No."] Indeed, it will.
Mr. Ovenden: The hon. Lady has completely misunderstood the document, if she has read it. What the document lays down I shall come to later and I am sure that she will agree she is entirely wrong.
These proposals take no account of the income which member States receive from the Community budget. My hon. Friend the Member for Oxford referred to this matter when he said that in our manifesto we insisted that there should be a fair contribution related to the ability to pay and, I take it, to proceeds from the Community budget. This budgeting mechanism takes no account of that. All the time that the bulk of the money from the common pool is spent on agricultural support, this country is on the losing end.
Mrs. Kellett-Bowman: What about regional policy?
Mr. Ovenden: I shall be coming to the hon. Lady's first point shortly. The proposals to help us in times of hardship are far from generous. To satisfy the conditions for receiving some rebate on our contributions we must satisfy the three criteria laid down in the document. That means that we must have a relatively low standard of living, a low rate of economic growth and a balance of pyments difficulty. If all three conditions are not satisfied over a period of three years, we receive no rebate on our contribution, however unjust that contribution may be. I think that that deals with the hon. Lady's point.
I take some comfort from the point made by the Foreign Secretary that he does not accept the necessity for this condition about the balance of payments, but even assuming that we can satisfy all those three conditions and that we do bear a disproportionate share of the budget, we are still expected, I understand, to bear 10 per cent. above our fair share without seeking any compensation from the Community, and even beyond that figure we are committed to receive back only a proportion of the unjust burden that we are carrying.
I do not believe that when we set out on these renegotiations we sought a form of Community means test under which we could apply for some kind of EEC supplementary benefit if we fell upon hard times. What we set out to do, and what we told the people in the election we would seek to do, was to establish a system whereby we would pay our fair share of the Community budget—no less and no more.
5.51 p.m.
Mr. Peter Blaker: The Foreign Secretary—I am sorry that he has left—said that it would be ungracious not to acknowledge the work that the Commission has put into preparing this document. With respect, I believe it was ungracious of him not to acknowledge the ground work which, as my hon. Friend the Member for Mid-Oxon (Mr. Hurd) said, the Conservative Party did and on which he is building. He accused us of imprudence in the arrangements that we made in the 1971 negotiations. That was unjustified.

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I pass over the fact that the principal negotiators on the Labour Party side, one of whom is still in the House—the right hon. Member for Fulham (Mr. Stewart)—said that they would have recommended for acceptance the terms which we obtained. I pass over the fact that we made transitional arrangements which are embodied in the treaties of accession, under which we are still paying a smaller relative percentage of the Community budget than our relative share of the Community GNP.
But I emphasise once more the fact that we arranged for the safety net which is reported in paragraph 96 of the White Paper of July 1971, Command 4715. That safety net was itself quoted in the summit conference last December as the basis for the document which we are now considering.
I would quote also from something which has not yet been referred to today—the speech of the Foreign Secretary in the Council of Luxembourg on 4th June, in which he said:
"The Community declared to us during the course of the entry negotiations that if unacceptable situations should arise, 'the very survival of the Community would demand that the institutions find equitable solutions'."
So right from June of last year, in this context the Government have been relying on the understanding that we obtained in our negotiations.
It was recognised in 1970 and 1971 by both the principal parties that this problem of the Community budget would be one of the most difficult in the whole negotiations—because of the methods of financing the budget, because we are big importers, because of the common agricultural policy. But it was also recognised by both parties that we could not expect to change the common agricultural policy before we got in. The Prime Minister is on record as having said that. It was also recognised that we could not change the budgetary system before we got in but that we could hope to work for change in both fields once we were a member.
What was not foreseen at that time was that the size of the gap between our relative share of the GNP and our relative budgetary contribution would be as big as the Foreign Secretary forecast on 4th June. When we raised the problem of our budgetary contribution in 1970 and 1971, the six original members argued that
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the situation was unpredictable and that, having provided transitional arrangements up to 1980, one would be able to review the situation after that time or indeed before that time as we went along. They argued that, as a member of the Community, our import pattern would change; they argued that new funds would be set up which would probably benefit the United Kingdom. Indeed, the regional development fund is now being set up; it will bring this country £150 million over the next three years and has a great potential for growth in future.
So we were able to obtain the transitional arrangements, and the safety net, and we are still now paying a smaller percentage of the Community budget than our relative share in the GNP.
What our partners said at that time has been amply borne out. They said that the situation was unpredictable. In a country which will soon have had three Budgets in one year, I do not think that we can now say that it could safely have been predicted in 1971 what the economic situation of this country vis-à-vis the other members would be in 1980. Agricultural prices have doubled since we entered. No one would have predicted that. Our import pattern has changed. We have heard a good deal in the last few months, from the Secretary of State for Trade in particular, about our trade deficit with the Community. The reason for it is that there has been a big shift in our import pattern, so that we buy much more from the Community.
For that, there have been good reasons. In 1973, our food purchases from the Community were £291 million. In 1974, because food is cheaper now in the Community, they were £689 million—about 2½ times as much. But what I would like the House to note is this: the obverse of the coin to what the Secretary of State has been saying when complaining about the size of that deficit is that, because we are buying more from the EEC, our contribution to the budget will be less. Instead of buying goods from outside the Community, on which we would be paying levies or tariffs, we are buying goods from inside.
The hon. Member for Gravesend (Mr. Ovenden) referred to the CAP. I understand that, during 1973 and 1974, we received about £176 million from the

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guarantee section of the agricultural fund. According to information that the House has recently been given, we received £19 million in 1973 and the same amount in 1974 from the social fund. So here, too, the forecasts of our partners in 1971 that the situation was unpredictable and that we stood to benefit from other sources of revenue have been amply borne out.
It is interesting to see how our expenditure on the Community budget compares with what was forecast in the negotiations in 1971. The forecast for 1973 was that our net contribution would be £100 million. In the result, it was £104 million. More interesting is that the forecast for 1974 was £115 million, when in fact, as the House has recently been informed, it was only £30 million—a substantial reduction.
I was interested to hear the Foreign Secretary say today that according to his latest assessment, the gap between our relative share of the GNP and our relative share of the Community budget, instead of being 10 per cent., as he had forecast in June—I think I understood his remarks correctly—is now more likely to be 7 per cent. or 8 per cent. That represents a very significant improvement.
I was interested, too, to observe that the Prime Minister said in the House recently that,
"when we come into the 1980s and when there is North Sea oil and the rest of it, if the terms of renegotiation are such that we are still in the Common Market, we would feel it right that we should make a bigger contribution then, following a smaller contribution in the late 1970s."—[Official Report, 16th December 1974; Vol. 883, c. 1129.]
That is very different from what the Foreign Secretary and his colleagues were saying at an earlier stage. It seems to me to reflect a realisation on the part of the Government that perhaps they took a too pessimistic view last June, that our partners were right in forecasting that things were very difficult to predict, and that perhaps the situation will be better than the Government feared at one time.
I was particularly intrigued to read in The Times of 26th February a report that the Secretary of State for Trade, who is at present in Nigeria, had said that Britain would emerge in the late 1970s and 1980s as the strongest power in Europe. I do not know whether he has
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been accurately reported, but perhaps the House will feel that in view of his track record we ought to rely more on what the Foreign Secretary has said this afternoon than on the ebullience of the Secretary of State for Trade. But at any rate, he also seems to be changing his view about our relative economic prospects.
I do not want to give the impression to the House that I am not supporting what the Foreign Secretary is trying to do. I believe that there is a serious point, and I support him in his efforts to obtain a mechanism which will remedy any injustices—recognising all the time, as have my hon. Friends, that this could in the end and, indeed, before very long, maen that we are having to make a contribution rather than receiving a net benefit.
What I want to point out is that our partners in this exercise—not only the Commission but the other member Governments—are being helpful to us. We do not need to take up this budgetary question now. The question is not an actual one until certainly the end of 1976, and possibly 1977. As my right hon. Friend the Member for Knutsford (Mr. Davies) has said, the sum involved is relatively small compared with other Government expenditure. Nevertheless, the Commission has produced in very quick time a document which is intended to be helpful and, indeed, is helpful.
The Community is considering a system of general application, because it will have to apply to everyone. That is something we tend to forget when looking at the progress of what the Government call their renegotiations. Every proposal that is produced by the Community to help us has to be of general application to the whole Community. The Community is making these concessions to us and going out of its way to help us without knowing whether we shall remain in the Commupnity. The Community is, therefore, taking steps which would not otherwise be taken on the chance and in the hope that we shall remain inside it. We ought to recognise what the Community is doing on our behalf.
On the substance of the documents I have one question and one comment. The question is this: when does the right hon. Gentleman expect the system proposed, once it is adopted, and however modified,

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to begin to be of help to us? When will it come into force?
My comment is this: as right hon. and hon. Members on both sides of the House have pointed out, there are certain hurdles to be jumped. I think that is not unreasonable, because we are asking for a very big change of principle in a system which the original six member States adopted after very long and difficult negotiations only four or five years ago. Therefore, I think it not unreasonable that the document should in effect provide that before adjustments are made, the applicant country should have to demonstrate that there is a palpable imbalance and not merely a temporary or minimal imbalance.
But I agree with those of my hon. Friends and other hon. Members who have said that it would be right for the right hon. Gentleman to look very closely at the proposal that a deficit on the balance of payments on current account should be required as one of the pre-conditions before a country becomes eligible for aid. Among other matters—I do not think that this has 'been mentioned—we are at present running very heavily into debt. We hope that in due course, and before long, we shall be running a surplus on our balance of payments on current account so that we can start to make progress towards paying off these debts. We would not want to be hampered in this process by a clause of this kind. So I fully support what has been said on that subject.
I shall not ask the right hon. Gentleman to comment further. Some hon. Members seem to think it right to press the Foreign Secretary and his colleagues to state, before negotiations begin, precisely what their sticking point is to be.
Mr. Spearing: No.
Mr. Blaker: I recall that in the debate on milk the other day, my hon. Friend the Member for Banbury (Mr. Marten) did precisely that. That is not a reasonable thing to do, because it would hamper the Foreign Secretary in his negotiations.
I believe that this document meets the tests which were laid down by the Foreign Secretary in his speech in June, that is, that it avoids a tendency to promote increasing divergence between the economies of member countries, and that it
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contains a self-correcting element. It seems, therefore, to be a useful basis for the coming negotiations. Indeed, if a gap of anything like the size that was foreseen by the Foreign Secretary in June—or that now foreseen, as I understand it, for the year 1980—between our relative contribution to the budget and our relative GNP were to appear, under any Government, the Community would not only have to do something about it but it would do it willingly, because that is the nature of the Community.
6.7 p.m.
Mr. Frank Hooley: This document represents primarily a cosmetic exercise designed to dress up what is an unacceptable arrangement in a way which will make it acceptable to the British public and possibly even to the Labour Party. The difficulty which the supporters of membership of the Common Market have been up against is that on every economic calculation it is disadvantageous to this country. On matters of the balance of payments, capital movements, food prices and our actual contribution, the calculation is firmly against membership. Those who advocate membership have been unable to get round these figures, however ingenious their explanations.
However, what is more important about this document is this: if I have interpreted correctly what my right hon. Friend the Foreign Secretary said this afternoon, his own position has shifted on the question of renegotiation, because he is broadly accepting the propositions of this document, with some minor modifications on the balance of payments and one or two other matters. Broadly he is prepared, as I understand it, to accept the propositions as a sufficient correction of the lack of balance in our contribution to the Community budget.
There has been much reference to the Labour Party manifesto, quite properly. But the important point about that manifesto is that my right hon. Friend himself quoted it specifically at the outset of the renegotiations, in his statement on 1st April 1974. I can hardly think he would have done that unless he was taking it as the starting point of his own renegotiating stance and unless he regarded the particular words as of very special significance. One does not make

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that kind of statement at an important international gathering unless considerable significance is to be attached to the words. The words are that a new and fairer method of financing the Community budget is required.
I am sorry that my hon. Friend the Member for Oxford (Mr. Luard), for whom I have a great personal regard, indulged in a good deal of semantic sophistries about these words. "New methods" must mean new methods. It cannot be said that giving a small refund—or even a big one—constitutes a new method of financing the Community's budget because, candidly, it does not.
The document itself is brutally frank on this subject. It say quite clearly on page 5:
"Thirdly, the correcting mechanism should take account of the different nature of the three classes of Own Resources ",
and it goes on to refer to VAT, customs duty and agricultural levies. Indeed, the document goes further. It excludes agricultural levies and customs duties from being taken into calculation when the refund, if any, comes to be made.
It is clear in this document that there is no intention whatsoever to go for any new methods of financing our contribution to the budget. The existing methods will remain, and what is proposed is a complex and extremely obscure formula for some sort of family income supplement, some form of rent and rate rebate, call it what one will, to try to make our contribution look tolerable, presumably, in the eyes of the British electorate.
I was somewhat disturbed by my right hon. Friend's rather wistful suggestion that food prices will remain high and food will remain scarce. I am sure he does not want that to happen and that in saying it he was making some sort of personal judgment about what might happen. I do not think that this kind of generalised personal judgment about what might happen to the trend of agricultural prices over the next few years can be a basis for policy on so important a matter as our membership of the Community.
Mr. James Callaghan: This is not a personal judgment. This is the analysis of the World Food Conference. It may or may not be right, but there has to
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be some assumption for future policy, and that is as good an assumption as any.
Mr. Hooley: My right hon. Friend might look at what has been happening to the prices of commodities other than food over the past two years. There has been a drastic turn-round in the general level of commodity prices, and there could equally be a substantial change in world food prices given two successive years of good harvests. One of the major factors of the current situation was the almost unprecedented disaster in world food harvests in 1972. I do not think we need argue that point in too much detail tonight because it is speculation. I am rather sorry that my right hon. Friend should have clutched at that straw to justify what otherwise is not a convincing argument.
The other curiosity about this document is that it does not deal with the unfairness as such of the British contribution to the Community budget. Talking about an unacceptable situation, the document says on page 2 that it
"must depend on an assessment of the simultaneous occurrence for a Member State of a certain economic situation and of a disproportionate contribution to Community financing."
In other words, elaborate calculations have to be made about our economy over and above any question whether our contribution to the Community budget is inherently unfair.
It would be possible for our gross national product per capita to be above 85 per cent., for our economic growth to be above 120 per cent., for us to have no deficit on the balance of payments and still contribute to the Community budget a sum grossly disproportionate to our level of wealth within the Community. One cannot, therefore, regard these proposals, which are complex and obscure in themselves—and I have left out the question of a moving three-year average and all the fol-de-rol incorporated in them—as a serious attempt to make good a basic imbalance. It is essentially a cosmetic effort to dress up an unacceptable situation into something that may be sold as successful renegotiation.
There are other caveats in the document. The refund cannot exceed our VAT contributions and, even if it is established that we are paying too much, because of the weird standards of the

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document we can still recoup only two-thirds of the overpayment, which seems a curious exercise in equity.
There is the suggestion that if for three years we have the temerity to claim any refund from this overpayment, to claim two-thirds of the excess which, even by its calculations, we have paid, the Community will put in examiners and demand that we take appropriate measures to give effect to Community solidarity, and so on.
By any standards this is an unsatisfactory document. It does not represent renegotiation. It represents a cosmetic exercise to dress up a wholly unsatisfactory situation and to make it appear that an unjust imbalance arrangement in itself can be corrected by a complex formula by which I defy any Member of the House and any one in the Treasury to work out what sort of refund will be made to this country.
Public expenditure figures just published show that within a few years this country will be paying net of any return on regional fund or social fund about £280 million per year to the Community. That represents 70 per cent. of what we are proposing to give in aid to the poorer countries of the world. We are facing the situation that even on these calculations we shall probably be donating more per capita to the rich people of Western Europe than we are giving to the poorest people in the world.
6.18 p.m.
Mr. J. Enoch Powell: There are two distinct objectives of the fundamental renegotiation which have to be taken into account in forming a judgment on the document which is before the House. I should not say that they are not connected. They have a certain overlap but they are different, and they are different in their degree of importance.
I should like to refer first to that which features second in the celebrated and oft-repeated passage, repeated from the Labour Party manifesto in the speech of the Foreign Secretary at Luxembourg on 1st April. That is that we are to contribute to Community finances only such sums as are fair in relation to what is paid and what is received by other member countries.
I think that this debate has shown—perhaps this at any rate was not entirely
766
distasteful to the Government Front Bench—that that objective in several respects has not yet been attained. One has already been referred to, namely, the fact that on the face of these proposals they do not propose to meet the whole of any inequity—"disparity" is the word in the document—but shall be limited to two-thirds of it.
The second, which has already been mentioned, is that there is a ceiling on the refund or allowance related to one only of the elements of contribution to the Community's own resources, namely, the yield of VAT.
But there is a third limitation, perhaps even more serious, which I do not think has yet been given adequate weight. I refer to the fact that this machinery applies only to the net sums which fall to be paid over. I cannot believe that it can be regarded as a contribution to fairness that the fairness should apply only when the calculation of plus or minus results in a net outward payment. For even if there were no net outward payment, even if the pluses exceeded the minuses, the unfairness would still be present in the computed figure whether plus or minus.
That aspect, which has hardly been touched on in this debate, brings out the fact that what renegotiation has so far achieved is not an alteration or correction of the system which will render it fair and equitable but a sort of reserve scheme for dealing with extremes of inequity in certain defined circumstances. That perhaps is emphasised by the concluding portion of the document which makes it clear that this is a temporary and provisional arrangement.
It may be said that naturally the Community in instituting even this modified reform would wish to regard it as experimental and see how far it goes. But what the Government are engaged in, on their own profession, is a fundamental renegotiation of the terms. What comes out of that must in all conscience be as permanent in its nature, as much a part of the structure of our membership of the Community, as any of the other terms. The framework as well as the contents disqualify the result, so far from being regarded as meeting the second of the objects of renegotiation—namely, the restoration of fairness and equality in pay

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ments and receipts between the Government and the rest of the Community. But more far-reaching is the commitment in the first half of the celebrated passage in the speech made by the Foreign Secretary in Luxembourg.
Tribute must be paid to the hon. Member for Oxford (Mr. Luard), who had a hopeless job before him in attempting to show that the result corresponded in any way with the profession in that sentence. He did his best and it was not his fault that he failed. That objective was based on the denial that we accept the taxes that form the so-called own resources of the Communities. That is an integral part of the statement of the Government's position.
"… The taxes which form the so-called resources of the Communities are not acceptable to us".
If we were to say that the National Health Service was financed out of income tax, we should not be moving to a new form of finance for the NHS if we introduced certain reliefs and safeguards into the system of income tax. It would still remain the form of tax on which the resources of the service were based. No kind of adjustment of the sort before us in this document, even if its blemishes and remaining inequities were removed, could possibly be regarded as rendering acceptable or replacing by others the taxes which form the so-called own resources of the Communities.
Mr. Mike Thomas: Will the right hon. Gentleman list the taxes which he finds acceptable to finance the Community, or does he not wish to see it financed at all?
Mr. Powell: That question should be addressed to the hon. Gentleman's own party. These are the words of the Labour Party. Their only meaning is that there are other taxes which are more acceptable or that the Community's own resources as a concept are not acceptable.
Mr. Luard: Will the right hon. Gentleman accept that the reason why it was suggested that the existing taxes were unacceptable was that it was believed that they did not bear fairly on the different members of the Community? Therefore, if a mechanism can be provided to make the burden of taxes fairer between members, does that not satisfy that condition?
Mr. Powell: That will not do. One can render the operation of a tax equitable, but that is a very different matter from replacing the tax by other taxes. It in no way corresponds with the statement about taxes forming the so-called own resources—namely, levies, tariffs and VAT—which were described as not acceptable. The meaning must have been considered over and again by the Labour Party and by the Foreign Secretary.
Earlier in the debate an important point was made by the right hon. Member for Knutsford (Mr. Davies) in this connection. He said that the Community's own resources were part of the essence of the Community—that it is part of the essence of the making of a Common Market that there should be common or own resources. I venture to take issue with the right hon. Gentleman. Of course, one can have a Common Market without a common budget. One can have a free trade area without any own resources. The significance of the own resources element is that the Community intends to be far more than a free trade area. It intends to have policies of its own financed by—and these are the words—"its own resources".
Mr. John Davies: I clearly specified that it was implicit in the creation of a Common Market, and I made an analogy with a market such as that in the United States where there is a common economic system. The own resources concept centres particularly on tariffs and levies and provides for a certain ability to draw on VAT within a certain limit, but this is a complementary provision in terms of the own resources concept, the basic own resources being the tariffs.
Mr. Powell: The right hon. Gentleman has made my point even better than he did originally. His analogy with the United States is correct. Of course, the United States is a "common market", as indeed every State is a common market by definition, but it is also a State. The own resources of the Community are the badge of the intention of the Community to be a State and to have purposes other than those which are implicit in being a Common Market.
The hon. Member for Mid-Oxon (Mr. Hurd), in a thoughtful speech—I personally appreciated the words he chose—missed the point. The great importance for

769
hon. Members and for the electors in considering this element of the purposes of a fundamental renegotiation was that, according to the success or failure of this objective, light would be thrown on the kind of Community to which we were still to belong.
The Minister of State for Foreign and Commonwealth Affairs reminded the House a few days ago that I voted for these terms of renegotiation. I had it in mind that a community which neither had own resources fed by these taxes nor spent those resources on the present purposes would be a community radically different from the present Community—in other words, that it was a fundamental renegotiation. If both the taxes and the purposes can be changed, in addition to the securing of 100 per cent. equity along with the other objects of renegotiation, a very different proposition will be placed before the electorate of this country.
Therefore, it is crucial that the achievement of the Government, or at any rate their attempt, succeed or fail, should correspond not only to the second element in their policy, which I think by general agreement is still far from being achieved, but to the first.
6.30 p.m.
Dr. J. Dickson Mabon: It is fair of the right hon. Member for Down, South (Mr. Powell), although I would not accord the same privilege to other Opposition Members, to examine closely the Labour manifesto, since he voted for it on two occasions. What Labour voters in South Down did at the October election I do not know. But the right hon. Gentleman is right to examine the words. They are the nub of the debate.
My right hon. Friend the Foreign and Commonwealth Secretary is not arguing that this document is the end of the matter. He is seeking guidance before the final stage of renegotiation. I do not think that some of the guidance offered to him has been very helpful. Some hon. Members say "Seek terms that our partners could not possibly accept, because we do not want to stay with those partners any more." In other words, it is false guidance. Some of the speeches have not been in that tone, but there are some hon. Members who would not be content with any terms. To some of them
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fundamental renegotiation means that we should get out tomorrow, and that is all. Such hon. Members are here under false pretences. They might as well say "We do not want it at all. Let's leave the Common Market." As for the rest of us, we are entitled genuinely to argue whether we have a reasonable deal so far.
Each citizen is entitled to read the prospectus to which the right hon. Gentleman subscribed in February and October 1974 according to his own interpretation of events so far, not according to the interpretation of my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley), or the Red Queen from South Down, telling us "If I say it three times, it's true." [Interruption.] I may have got the character wrong, but the sense is the same. No hon. Member has the right to lay down what we should all believe. We must make our own personal judgment on the matter, bearing in mind what has happened since the Labour Party announced our terms of renegotiation in 1972, I emphasise not 1974.
Before we even joined the Common Market, we in the Labour Party announced what our terms of renegotiation would be. Since then the proportion of Community expenditure devoted to agriculture has been falling fast. Anyone with any intelligence studying the Market will realise that Community expenditure on agriculture will fall even more rapidly, given the circumstances in France and Germany, where there is quite a substantial change-over, with many people still moving from agriculture to other industries.
After we vote this evening we shall discuss the regional development fund. Is it not a fact that part of Community expenditure will be devoted to the regional development fund, not a ha'penny of which has been spent so far, thanks to the dog-in-the-manger attitude which some of us on the Government side have taken to it, blocking the fund, when we could have had it a year ago? I say that in criticism of my own Government. We are now to have the fund, if the proposals are implemented.
In addition, in the past year we have witnessed under Dr. Hillery the inauguration and distribution of the social fund. Many miners, steel workers and other people are benefiting today from redundancy grants, retraining grants and grants

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for investment in their areas for declining industries. Thank goodness we have the social fund. That must be taken into the balance as well. Those studying the terms and weighing up the document must in all fairness take into account these three changing elements.
If I were a member of the Bundestag listening to the debate I should be surprised at the cheek of some hon. Members. I say with respect to my hon. Friend the Member for Heeley that if the mechanism is a cosmetic it is one of the most expensive perfumes the Germans have ever bought. It will cost quite a lot of money to a wealthy country such as Germany, which already subscribes a substantial proportion of the Community budget, and which under the proposed arrangements is more rather than less likely to subscribe even more. Its share will become even greater and its burden heavier. It may be right that we should have fair shares for all and that the richest should carry the heaviest burden. It can hardly be complained that the mechanism is not good when it does that.
Mr. Kirk: If the hon. Gentleman were a member of the Bundestag, would he not be even more annoyed by the comparison made by one of my hon. Friends when he contemplated the unemployment figures in Germany and the unemployment figures here?
Dr. Mabon: Precisely. My hon. Friend the Member for Heeley has an awful nerve to say that he defies anyone in the Treasury or any hon. Member to put a figure to how the four variants will turn out over a three-year period. If anyone knew what the variants were, we should not be having the debate but should simply be submitting the figures. We should be congratulated if we got them right. It would be the first time in our economic history that we had been able to predict anything. The Treasury has never predicted anything of consequence for one year, never mind three.
Mr. Hooley: That is exactly what I am saying. My hon. Friend would not predict our exact balance of payments deficit over the next three years, nor the average for the next three years running. In fact, the Treasury can calculate on the existing situation, because it has done so in the public expenditure payments.
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Under the nonsense before us, no possible calculation can be made.
Dr. Mabon: I do accept that. I cannot tell what the figures are. I am not God, despite the views of some of my constituents. I am not in a position to predict, nor is my hon. Friend. It is conceivable that the present rich Germany, albeit with a great deal of unemployment, might not be so well off in the years ahead, and that at some stage the proposed mechanism might even work to its benefit rather than apparently to its disadvantage. The same applies to other countries in Europe, Italy, Ireland and the other countries coming within the proposals.
We have a good mechanism, and we have had a good debate on it. I hope that my right hon. Friend the Foreign and Commonwealth Secretary will be able to benefit from the advice we have offered and seek to improve on it.
6.38 p.m.
Mr. James Callaghan: We have had a good debate. I think that those who wished to speak have done so. It is only proper that I should answer some of the questions put to me before we proceed to take note of the document, as I trust the House will. What has been said generally strengthens my hand, because it puts the views of the House behind me on a number of issues that still have to be discussed.
I turn to the questions that were put to me. I cannot answer the hon. Member for Saffron Walden (Mr. Kirk), who asked whether this would be a permanent measure. It will run for seven years. I do not think that the Community is willing to look any further ahead than that at present. I would not want to press it to do so, because the economic circumstances of many of us may change in that period. What is important—I re-emphasise this—is that there has been an acknowledgment of a relationship between capacity to pay and a member's contribution. If that principle is accepted, we can build on that, even if the nature of the scheme changes from time to time.
The hon. Gentleman was right to emphasise that it is of general application. I asked for that and pressed for it, first, because I did not think that it was right that Britain alone should press for

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special circumstances and, secondly, because it was in accordance with our manifesto. That is, as it should be, a general principle for these new and fairer methods of financing the Community budget.
I will come back to the words of the manifesto later, but rarely have I seen anything but a scriptural text subjected to such complete exegesis. The hon. Member for Antrim, North (Rev. Ian Paisley) does this every Sunday. I will not tempt him. I will sit under him on some other occasion when he is in the pulpit. I would only say in passing that I have been only venturing an opinion on what the words mean, and perhaps I may be allowed my view because I had the prime responsibility for drafting it, something which I do not believe anybody else here can claim, as I happened to be Chairman of the Home Policy Committee at the time.
Should we use the Article 235 procedure? The hon. Gentleman preferred not. This was really one of the ways in which he was seeking to avoid asking for an amendment of the Treaty. The House will know that it was with general Government consent that I sought to renegotiate without seeking amendments to the Treaties—which, by definition, would take a very long time and require the consent of all member States and would need to go through the various Parliaments. Article 235 seemed to give perfectly good cover:
"If action by the Community should prove necessary to attain one of the objectives of the Community and this Treaty has not provided the necessary powers, the Council shall, acting unanimously on a proposal from the Commission and after consulting the Assembly, take the appropriate measures."
We were able to convince the Commission and the Council that this was an appropriate article for the purpose. Why should we seek to get Parliament to amend the Treaty if we can operate under one of the existing clauses?
Mr. Kirk: I quite understand what the right hon. Gentleman is saying, but there are two points to be looked at here. Under the existing financial regulations this can be done anyway. I am speaking without them before me, as they are not in the Purple Book, but, nevertheless, they seem, from my own dealings with
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the regulations, to indicate that. Secondly, there is an amended financial treaty going through at the moment to which this could be added and which would not hold up the operative arrangements under Article 2 dealing with the main budget proposals. Article 235 is a very dangerous article and should not be activated too often.
Mr. Callaghan: I take note of the hon. Gentleman's point. I had not thought of tacking it on to the issue he has raised. It is something I will consider in the future, but at the moment the Commission is content to act under Article 235.
On the point raised by my right hon. Friend the Member for Battersea, North (Mr. Jay), if I may address myself to the grandfather of my grandchildren, I would say to him that, of course, he is correct in indicating that the corrective mechanism would not make our contribution exactly comparable to our GNP unless we were to get 100 per cent. repayment; and it is limited to two-thirds under the Commission document at the present time. That is a feature that I find unfortunate. If my right hon. Friend wants to jog my elbow on that he will be jogging a willing elbow, and we shall have to see what we can do about it in the course of the negotiations.
Mr. John Lee: My right hon. Friend has said that that is an unsatisfactory feature. May we then take it that an improvement to 100 per cent. is something he would regard as a sticking point in his renegotiation?
Mr. Callaghan: That seems to me to have all a lawyer's exactness and a lawyer's failure to understand how one negotiates. I would not dream of giving an answer to such a question when I am going to Brussels on Monday, but I do not regard this as satisfactory at the present time.
I also agree with my right hon. Friend the Member for Battersea, North that, as I have said earlier, the balance of payments deficit is a feature that I do not find particularly relevant to the kind of principles we are attempting to incorporate in this particular corrective mechanism.
Mr. Gould: May I attempt to strengthen my right hon. Friend's resolve

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on this? I am sure he would agree that if by any chance a Labour Government were able to prod the country into producing two substantial balance of payments surpluses over the next seven years that of itself could actually make the corrective mechanism inoperative.
Mr. Callaghan: That is true, and that is why I regard it as unsatisfactory as a criterion. I am not indicating the degree to which I am going, but it has been generally said on both sides of the House that people regard this as unsatisfactory. I take note of the degree of strength with which this view has been expressed in relation to the balance of payments deficit being a criteria.
Mr. Blaker: Would the right hon. Gentleman like to consider whether in fact he has given a correct answer to his hon. Friend? Could not one have a small balance of payments surplus in one year but a different figure when averaged over three years?
Mr. Callaghan: I believe that the hon. Gentleman is absolutely accurate. If the figure is averaged that could be; but I will agree with both hon. Gentlemen.
The right hon. Member for Knutsford (Mr. Davies) raised a rather tricky point, that if the repayment is to be included in the next year's budget revenue the beneficiary could well contribute to that. He asks how can we get 100 per cent. repayment since the beneficiary would pay a share of the repayment which it is getting. I do not think I have an answer to that. I do not know how much it would be. I suppose in year 3 one would get repayment of the extra amount that one had to pay in year 2, but clearly it can be only a fraction and would not be very large. It is a point on which I shall wish to consult the Treasury experts. I am sure that they will find some even more abstruse formula to deal with that particular point. I am grateful to the right hon. Member for raising it. It is certainly one that I had not considered.
I agree with my hon. Friend the Member for Oxford (Mr. Luard) who complained that this applied to only two-thirds of the disparity. Again, this is something on which, obviously we are to have some
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considerable discussion during the next three or four days.
I also agree with the hon. Member for Mid-Oxon (Mr. Hurd) that we may get to a point where we shall be contributing in due course, something with which my hon. Friend the Member for Gravesend (Mr. Ovenden) does not agree. He does not think we should be contributing at any time in this way. He feels that we should alter the whole system. I am bound to say I would not mind if we got ourselves into an economic position where we were able to make this contribution, because it would show that our economy was really bounding so far ahead that we could afford to look at this issue with some degree of equanimity.
Mr. Ovenden rose—
Mr. Callaghan: I will deal with my hon. Friend's point if he will allow me. I did not think that I had disposed of him. I would not mind if we got into that position.
The hon. Member for Blackpool, South (Mr. Blaker) asked when this system would start to come into force. I believe that the answer is that presumably it starts to come into force when the articles have been agreed by the Council; and assuming Britain remains a member of the Community after the referendum, presumably the scheme would be in operation for us. It would not bring us any benefit in 1975 because our key contribution would not be as great as is our proportion of the Community's GNP per head. I do not think it would be as great either in 1976, but in 1977 we shall begin to get the benefit, because the amount we would be contributing would be greater than our proportion of the share per head of the Community's GNP. That is the best answer that I can give. That is one of the matters which will have to be tidied up in Brussels.
The right hon. Member for Down, South (Mr. Powell) and my hon. Friends the Members for Sheffield, Heeley (Mr. Hooley) and Gravesend referred to the question of new methods, saying that it is the "own resources" system which we must tackle. I wish to put my ha'porth into this exegesis of the text of the manifesto. I say with some certainty, having been one of the drafters of it, that the

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main issue with which we were concerned was the third sentence, which reads:
"We would be ready to contribute to Community finances only such sums as were fair in relation to what is paid and what is received by other member countries".
We were concerned with the objective and the end result.
As a matter of theology, I agree with the right hon. Member for Down, South in what he said about the "own resources" system. I do not wholly accept the view that levies which accrue to an island where the points of entry must be through the ports are the same as levies which accrue to a whole continental economy. That must be so until we have one whole continental economy. I have used that argument in obtaining the corrective mechanism. I have argued the case on that basis. If Britain were a member of the Community and we reached the stage where there was one continental market embracing all of us, with one monetary union and a common economic policy, the theology on levies would be right, but at the moment I do not accept it.
For that reason, among others, I have pressed for the corrective mechanism which we have secured. I do not accept some of the theology underlying it and which led to the second sentence appearing in that part of the manifesto dealing with the Common Market. The question which we must ask—and my hon. Friends the Members for Sheffield, Heeley and Gravesend make this judgment in their trade union negotiations—is how much money we shall get at the end of the day. That is what the British people will ask. They will be less concerned with theology than with results.
I have attempted to answer the questions which I have been asked. No one has said that the corrective mechanism will not be beneficial. Not even the opponents of dealings with the European Community have argued that it will not benefit the British people. They have argued that it is not enough, that it is not in accordance with the manifesto, that it may run out, that it is complicated and that it will be difficult to apply. But any fair judgment, even on the basis of the document without improvements, would have to conclude that the corrective mechanism represents a substantial improvement on the present position.
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It is on that basis and in that spirit that I ask the House to take note of the document and to send me forth to see what further improvements I can obtain.
Question put and agreed to.
Resolved,
That this House takes note of Commission Document R340/75.

EEC (REGIONAL DEVELOPMENT)
6.55 p.m.
The Minister of State for Foreign and Commonwealth Affairs (Mr. Roy Hattersley): I beg to move,
That this House takes note of Commission Document R/2055/73, taking account of further developments brought to the attention of the House.
For procedural reasons it will be necessary for the moving of the motion to be suspended from seven o'clock until ten o'clock. Therefore, the hordes of enthusiasts who intended to invade the House at 10 o'clock to hear the details of the regional development fund will, to their deep regret, miss the first few minutes of my speech. I intend to sketch in some of the background to the Community's attempts to create a regional development fund and then, at ten o'clock, describe the documents which the Scrutiny Committee has before it and which are the subject of the motion.
The European Economic Community has had as one of its principal aims since its foundation the encouragement of parallel development in the economies of member States—a policy clearly very much in the interests of those countries whose levels of economic growth and record of overall prosperity are well below the Community average. The regional development fund was intended to promote this end. Its creation was envisaged as long ago as 1971, but sadly, and I suppose inevitably, the practical application of the principles of the fund proved to be a great deal more difficult than the statement of its purpose.
Between 1971 and 1974 discussions about size and distribution made very little progress. Both the Paris summit in 1972 and the Copenhagen summit the following year failed in their established and publicised efforts to set up a fund.

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Then, after three years of disappointment and frustration, George Thomson initiated a new set of bilateral discussions between the Commission and the member countries in another attempt to provide a scheme which would assist the Community's less favoured areas. The outcome was a dear indication that the will to establish a regional fund still existed. It was, however, equally clear that the countries of the Community, particularly those which would be net contributors to a regional fund, wanted that fund organised on a much smaller scale than was originally proposed and wished its benefits to be more narrowly concentrated on the areas of greatest need.
Last December, at the Paris meeting of the Heads of Government, the establishment of a regional fund was finally agreed. The Prime Ministers made the essential agreement in principle that was necessary to get the fund moving. They also made a series of practical decisions about its size and the distribution of its benefits. For the first three years the fund will amount to about 1,300 million units of account—about £550 million. Italy and Ireland are to be the principal beneficiaries, but the United Kingdom is to receive almost 28 per cent. of the fund's resources—approximately £150 million.
Mr. Neil Marten: It will perhaps be convenient if we delay the right hon. Gentleman's speech a little. Has the fund been agreed, or is it still in the proposal stage?
Mr. Hattersley: The Heads of Government, at their meeting in Paris in December, established the figure which they believed appropriate for the fund. They also established the distribution of the fund. But clearly that must go through a number of Community procedures. As the hon. Member for Saffron Walden (Mr. Kirk) will confirm, discussions have been going on in the Community on whether the fund should be adjudged on obligatory or non-obligatory resources and therefore be a matter for proper consideration and determination by Ministers or whether it should be subject to amendment and argument, and, I suppose some ill-intentioned people would say, interference by the European Parliament.
Mr. Marten: In other words, I presume that the sum is not final, it has not been fixed and, in our parlance, it has not passed through the legislative procedure.
Mr. Hattersley: The sum is final in the sense that the Heads of Government thought that that was what it should be and in the sense that control over the fund will remain with the Council of Foreign Ministers. It is final in the sense that the Foreign Ministers expressed the view that it was inconceivable that they would want to alter the calculations made by the Heads of Governments in December. Discussion continues, however, between the Council of Ministers and the Parliament on the legal definition of the expenditure.
Mr. Peter Kirk: I am sure the right hon. Gentleman will confirm that this matter will be discussed next week between the Council of Ministers and the Parliament. Until we have discussed it, it is impossible to say whether or not the fund is in this form.
Mr. Hattersley: That is the point I was trying to make and the point that the hon. Member for Banbury (Mr. Marten) was trying to elicit from me. I want to confirm what I believe to be the reality—
It being Seven o'clock, and there being Private Business set down by THE CHAIRMAN OF WAYS AND MEANS, under Standing Order No. 7 (Time for taking Private Business), further proceeding stood postponed.

LONDON TRANSPORT (ADDITIONAL POWERS) BILL (By Order)
Order for Second Reading read.
7.0 p.m.
Mr. Nigel Spearing: I beg to move, That the Bill be now read a Second time.
Mr. Speaker: I have to inform the House that I have not selected the amendment in the name of the hon. Member for Hampstead (Mr. Finsberg) and other hon. Members, nor do I intend to select the motion in his name.
Mr. Spearing: From discussing matters of high national policy we turn to a matter

781
of practical importance to the people of London. Although the Bill is relatively modest in scope, it has relevance to the services offered by London Transport, their quality and their reliability. Hon. Members representing London constituencies know how important that it is for their constituents.
The Bill confers further powers on London Transport Executive in relation to manufacture, repair and supply and for other purposes. The phrase "manufacture, repair and supply" refers to public passenger road vehicles and rail transport and equipment. The other purposes relate to the running of the services, particularly to catering.
The history of the powers of publicly-owned transport authorities to manufacture, sell and engage in contracts or to promote subsidiaries in respect of these services is complex. I shall not bother the House with the legal details. Suffice it to say that for many years, indeed traditionally, the railway industry supplied its own equipment through the Victorian railway companies and also bought in from outside suppliers. The Transport Act 1968 gave wide powers to the inheritors of these services, including London Transport. British Rail Engineering is an engineering company in its own right which manufactures and sells equipment at home and abroad. It has techniques and expertise at Derby which create worldwide interest. The same powers are available to the National Bus Company, which has gone into partnership with British Leyland Motor Corporation to produce in Cumberland the national bus.
Unfortunately, those powers did not apply in the same way to London Transport. Within a year of the passing of the Act, and presage within that year, the Transport (London) Bill, which became an Act in 1969, transferred the powers of supervision of London Transport from the Minister of Transport and the House of Commons to the Greater London Council. The Transport (London) Act 1969 did not give similar powers to London Transport. The wide powers which London Transport shared with the British Transport Commission were modified.
Although by the Act London Transport was given power to supply nationalised bodies as defined in the definition section, those nationalised bodies did not include the new passenger transport
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executives which were established by the 1968 Act or the municipal transport concerns. Whereas it was possible for British Rail and the National Bus Company to carry on as before and to set up subsidiaries or joint subsidiaries, it was not possible for London Transport to do so. Although it may have been legally possible, the subsidiaries would have been limited by the 1969 Act. It was therefore not possible for London Transport to supply what are technically known as outside bodies and outside persons. At first one might think that was fair enough and that nationalised bodies were excluded but "outside persons" included PTEs and municipal bus undertakings throughout the country. That is the anomaly which the Bill seeks to remedy.
The history of London Transport is bound up with the development of transport technology. With the founding of the London Underground Group—UERL as it was called—some American technology was brought in at the turn of the century for the construction of the underground railways and the electrification of the District and Metropolitan Railways. Despite its age, the London Transport system still has a great deal to offer to rapid transport systems throughout the world. Equipment was brought in for the railways from as far afield as Hungary.
The motor bus, which was perfected in the late 1930s, was subject to rapid change in its technology. The old London General Omnibus Company founded a subsidiary called the Associated Equipment Company to manufacture reliable buses which stood the test of the exacting London conditions. It was necessary for that to be done because private suppliers were found wanting. The company produced its own prototypes in conjunction with the operating managers of the London General Omnibus Company, and improvements were made when the buses were in service. The enterprise shown by that company was inherited by the London Transport Board in 1933.
The forward-looking Act of 1933 owed a great deal to the former Labour administration and Herbert Morrison who was its Minister of Transport, but it did not include the Associated Equipment Company, although for many years and

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into the war period it supplied nearly all London's buses. The London bus, which is of worldwide renown, was developed by a partnership between those who were responsible for economy, reliability and giving a good ride to the passenger and those who were concerned wth ease of manœuvre and operation for the driver. That tradition was continued by London Transport into the late 1960s.
Just prior to the war the Regai RT-type bus was introduced and many of those buses are still running. Large numbers of them pass the Palace of Westminster every day. That bus was designed in 1938 and thousands of those buses, with modifications, are still running throughout the world.
In the late 1960s after the development of the RM bus, its successor, the situation changed, and it is that change which has made the Bill necessary. London Transport Executive developed the RM bus and proved it over thousands of miles. It made an arrangement with the then Leyland Company for the provision of the parts to London Transport specifications. The prototype RT bus was made by London Transport, and the RM bus is the last of the line of the London Transport breed.
In the late 1960s two or three things happened all at once. First, in its wisdom the House decided to give municipal and public operators grants for the purchase of buses. That meant for the first time that the Ministry had some say over design. Secondly, there was the rationalisation of the commercial vehicle industry. There were amalgamations, take-overs and rationalisation within the industry. The old AEC became part of the British Leyland Motor Corporation. The corporation produced other things apart from buses, trucks and cars. At the same time there was a change in the type of bus required. We all know about the development of one-man-operated buses and the demise in certain parts of the country of the traditional crew-operated bus. Different designs were required although the technical requirements of the chassis remained much the same.
Difficulties arose because the Ministry began to say that in order to rationalise resources it was better not to have too
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many types of buses. It was suggested that the grant would be available only if there were rationalisation of the industry and the construction of buses. From that time onwards, for reasons that are not clear, London Transport could no longer in practice produce its own specifications or carry out its own running trials.
It is no secret that although the process of rationalisation was carried out largely under the British Leyland umbrella there was a slightly different emphasis within the corporation. The House will know that there are Leyland bus and truck divisions. We also know that buses are in two main categories, namely, the highspeed, long-distance coaches and the stage carriage buses. It became apparent to operators that not only did British Leyland take a different line in its truck market but that it began not to pay so much attention to the requirements of stage carriage public operators.
The requirements of the truck market are different from those of the public operators of buses and coaches. Trucks require maintenance and the operators demand economy. It is well known that many truck operators write off their vehicles at a much faster rate than do public stage carriage operators. In general, I am told, a bus lasts twice as long as a truck. Therefore, the requirements of the stage carriage operators are quite different from those of the truck operators and from the operators of long-distance coaches.
Unfortunately London Transport came to the end of the road—I hope that that will be a temporary state of affairs—as regards its own developments.
Mr. Geoffrey Finsberg: I am not clear whether the hon. Gentleman has left the RT type and is dealing with the RM bus. I understood him to say that the RM was developed in the early 1960s. Has he any idea of the estimated useful life of the RM when originaly designed?
Mr. Spearing: Perhaps I shall be able to find out during the debate. I revert to the RT, which is familiar to all hon. Members. I have been told that, given proper spares and facilities, the life of an RT is indefinite. I am not sure of the exact life of the RM in terms of mechanical condition, given proper and thorough

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servicing of the sort that London Transport always carries out. I shall try to find out. The financial life of a vehicle, of course, is a different matter. It is clear that RTs have outlived their financial life in terms of depreciation by many years.
Mr. John H. Osborn: I am trying to follow the hon. Gentleman's argument. Is he regretting the fact that national standards are being imposed on the transport authorities? Surely London has its own requirements. Anyone producing buses knows that London buses are produced for a limited rather than for a wide requirement. Is not rationalisation to be welcomed rather than regretted? I am not clear what the hon. Gentleman is saying.
Mr. Spearing: I understand the hon. Gentleman's mystification. He obviously does not have much contact with the London public. He does not seem to know what has happened since the situation arose as I have described it. Rationalisation in terms of high Government policy or in terms of City finance may be desirable, but the requirements of those who operate London buses are much more exacting than in any other city in this country or elsewhere. If the hon. Gentleman will be patient, he will understand what has happened.
After the events that I have described, London Transport was forced to buy off the peg. Anyone who knows anything about London Transport—probably Conservative hon. Members do not have many bus drivers in their constituencies, and they do not appear to have a great knowledge of the subject—will know that things began to go wrong quite quickly.
When I first entered the House as the Member for Acton, I was assailed by the unions. They complained of buses that blew up, buses that had flywheels which dropped off and buses from which oil spurted on to the road. They also complained about chassis twisting. All sorts of gory stories came to my attention. I thought that I would be a little disloyal to the bus manufacturers if I brought these matters to the attention of he House. I was glad to see that the former Member for Walthamstow, East, the present hon. Member for Newbury (Mr. McNair-Wilson), brought the matter to the atten
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tion of the House on 25th May 1971. He said:
"… the Chairman of London Transport … kindly made it possible for me to visit one of London Transport's garages at Victoria to see the sort of problem that London Transport is up against. I was shown no fewer than 29 major parts—both mechanical and electrical—of the engine that are breaking down fairly consistently. I gather that the trouble lies in the design of the engine. A bus operating in London is worked harder than a bus operating almost anywhere else in the country …"—[Official Report, 25th May 1971; Vol. 818, c. 323.]
The hon. Gentleman went on to make it clear that it was not the fault of London Transport that essential spares for buses had not been forthcoming. He then criticised the situation which had occurred.
Mr. Neil Macfarlane: A short while ago the hon. Gentleman indicated that since the late 1930s London Transport has been designing from its own specifications. Is he saying that its designing after all these years has proved a little fallible?
Mr. Spearing: Despite the length of my discourse, I am apparently going too fast. Apparently the hon. Gentleman does not understand that the situation I am now describing relates to the new types of buses which London Transport was required to buy off the peg as a result of rationalisation. It was required to buy vehicles built to specifications different from those of its former buses. I am sorry that I did not make that clear.
We are now in an equally bad position. The situation that I have described began in 1971. Indeed, matters had been going that way for some years before. This matter is dealt with in LT News of 14th February. That is a publication which London Transport issues for its employees. In the issue of 14th February there is a photograph of a bus which has been gutted. The article states:
"This bus is a victim of the maintenance problem that in the past year has had up to 10 per cent. of the LT fleet 'up against the wall'—more than 600 buses out of the 6,000. The current total out of service is 400—nearly seven per cent."
That situation applies not only in London. We have had Adjournment debates on matters related to this subject and it appears that there is a similar

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situation throughout the country. I have asked Questions about bus suppliers and it seems that the situation I have described is the same throughout the country. I have had letters from the Chairman of the National Bus Company to the same effect. There were articles in the London Transport magazine a few years ago to the effect that the Chairman of London Transport had been going to see British Leyland to get the spares situation sorted out. It is known throughout the country that it has not been sorted out. In fact, it may have become worse. This is not the result of the three-day week; the problem existed long before that. Nor is it the result of the series of engineering strikes that took place in the early 1970s. The situation existed long before that.
I am told by my constituents who work on buses that part of the problem is that the buses are not now put together in the traditional way. I am told that many spare parts are made by outside suppliers and that nowadays buses are built more like cars. People tell me that the spares they require are not necessarily available and that difficulties arise because they are supplied by so many outside suppliers. That may not be accurate, but it is what the men are saying. Clearly the national situation has changed since the middle-1960s, and the problems which London Transport and the other bus operators in Britain face are very serious.
One might ask why London Transport does not manufacture some of the spares itself. I am sure it would like to do so, and perhaps it already does to a limited extent. But there are many different types of spares, and London Transport wishes to build up the sort of capacity that will enable it to carry out this operation properly. Existing legislation provides relatively limited scope for such an operation. London Transport is able to deal only with the National Bus Company. It cannot deal with the muncipal companies which have 10,000 buses. London Transport has about 6,000 buses of its own and the passenger transport executives have another 6,000. There is obviously scope for a pooling of resources. Any firm has its peaks and troughs of activity, and if it cannot operate on a large enough scale the manufacture of spares becomes uneconomic.
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The same situation does not apply in the case of British Rail. Railway equipment is a different matter altogether. Here too, however, the rules need changing. London Transport offers an extensive advisory service for export. It advises customers all over the world about the design and implementation of rapid transit schemes, and such schemes are increasing in number. There is a demand for its capacity and expertise on signalling control which it cannot satisfy. It has some capacity at its Acton works just as it has capacity at Aldenham and Chiswick in respect of buses. Therefore, this is a question not merely of meeting internal demand but of providing exports.
I am sure that the House will support an attempt to increase the use of resources, brains, initiative and expertise. The activities provided for in the Bill could be carried out in partnership with the National Bus Company and British Rail Engineering. Underground trains have different requirements from those of conventional trains, but a partnership between London Transport and British Rail Engineering and London Transport and the other bus companies would be possible.
There is also the question of the effect of these operations on the competitive position of existing suppliers. I understand that there is only one significant bus manufacturer in Britain, the British Leyland Motor Corporation, which does not seem to have done too well recently. The only other company I have heard of is Metro-Scania, which is a combination of a Scandinavian firm and Metropolitan Cammell. The latter provides the bodies, although the chassis are not produced in this country. The only true competition, therefore, is with British Leyland.
I should have thought it desirable for British Leyland and London Transport to get together so that they could pool their knowledge and enjoy the best of both worlds. There might be concern about whether London Transport would undercut the prices of other suppliers, but Section 6(1) of the existing Act would prevent this to some extent. It states:
"if the Executive engage, either directly or through a subsidiary, in any activities authorised by paragraph (d) or (j) of this subsection, the Executive shall in carrying on these activities act as if they were a company engaged in a commercial enterprise".

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The activities referred to in paragraphs (d) and (j) concern the letting of vehicles and car parking, so that is the extent of the Executive's present powers. I cannot see why those provisions would not apply to any manufacturing or service activity. Quite clearly it would not be desirable for London Transport deliberately to undercut or to operate other than in the way provided in the Act. I am advised that London Transport is not seeking to have that provision amended.
A further point arises concerning the disclosure of activities by London Transport should it go into partnership with British Leyland, British Rail Engineering or the National Bus Company. Any matter of that sort has to have the approval of the Greater London Council. Therefore I would have thought that any activity by London Transport in that regard would have been covered by the authority of the Greater London Council.
Mr. Geoffrey Finsberg: On the point about the provisions in the earlier Act when the hon. Member said that London Transport would not be able to undercut, is he saying on behalf of the promoters that they are giving such an undertaking?
Mr. Spearing: I do not think I would use precisely those words. Assuming that the Bill is given a Second Reading that matter might be explored in Committee because there might be some desire by the Executive in that direction. The word "undercut" depends on what criteria are adopted. If London Transport is permitted, by using these provisions, and without making a deliberate loss, to take advantage of opportunities which are not available to other suppliers, in other words if it supplies materials, overhauls and so on at cost plus, I would have thought that would be acting commercially. The fact that London Transport's bid might have been lower than someone else's could be interpreted by some as undercutting. We may have to pursue this point in Committee, but this provision is already in the existing Act and London Transport would wish to give indications that they would not wish to act in an unfair manner in the usual sense of that term.
I hope I have been able at least partly to set at rest any anxieties which hon. Members may have felt about this Bill. I have tried to demonstrate the need for
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it and that there would be little danger to London Transport's competitors from these activities. I have heard of no objection from those competitors. If there are objections to public enterprise expanding in this way I cannot see that they can be applied to London Transport since British Rail Engineering already has these powers and they were not taken away even by the last Conservative Government.
This question is not only one of discrimination against London Transport, because London Transport consists of Londoners. I have been a bitter critic of London Transport over this matter and I am very glad that this initiative has been taken. I badgered the former Chairman to do something about the reliability of buses. At least that will be done. If I cannot obtain the active support of all hon. Members on both sides, at least there will be tacit agreement to this move, because the interests of London transport are the same as those of London constituents.
We know how difficult it is for London Transport to operate in today's economic and social difficulties. Bus drivers living in my constituency say that people are queueing in the rain, while men are playing cards, because of "NBA", which means no bus available. That situation existed for a long time, even during the staff shortage, and I believe that it continues. I hope that all hon. Members, or at least those with the interests of London constituents at heart, and who want to see good and reliable bus services, will support this measure, which will be for the good of London.
7.31 p.m.
Mr. Anthony Berry: We are grateful to the Chairman of Ways and Means for affording us this early opportunity of debating this important Bill. Whatever our views on the Bill, it is right that we should discuss these additional powers for London Transport.
It strikes me as odd that whereas the 1969 Act was introduced and considered in the normal way, both in the House and in another place, tonight, when we are discussing the enlargement of the most important part in that Act, a different procedure is being followed, since we have only three hours in which to discuss this important change.

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The Second Reading of the Bill was moved not by a Minister, although I am delighted to see the Parliamentary Secretary present. He must have done a little homework on the 1968 and 1969 Acts and must be thankful that he was not Minister of Transport in those days.
Instead of the Parliamentary Secretary, it was a back bencher, the hon. Member for Newham, South (Mr. Spearing) who moved the Second Reading. Although I prepared a note of appreciation in anticipation of the way in which he would take us through the intricacies of the Bill, I should like to go further than I originally intended. We are very grateful to him. He took a lot of time preparing his statement. It is always difficult for back benchers to introduce Bills when they have had no responsibility for or concern with the drafting. The hon. Gentleman was outstanding. In my 10 years as a Member of Parliament I have heard many GLC Bills introduced by hon. Members on both sides of the House. I do not believe that I have heard any hon. Member who has taken more trouble or given us more help and explanation, and I thank the hon. Member. Any criticisms I may make of the Bill are not intended against him. Nothing that I say in criticism of the Bill is intended to be directed against those working for London Transport, who do a magnificent job under great difficulties.
As it is so soon after his retirement, I could perhaps begin with a tribute to Sir Richard Way, who was recently Chairman of London Transport. He had a distinguished career as chairman. It was unfortunate that his last year in office was marred so greatly by staff and bus shortages, although there was an improvement in staffing at the end of the year. His term as chairman was also marred at the end of the year by a series of brutal attacks on those who drive our buses and who look after London Transport late at night, working unsocial hours. Such attacks are wholly unjustifiable and inexcusable. Those Members of Parliament who knew Sir Richard throughout his period of office would like to express their appreciation of the way in which he responded to the many letters we sent to him on behalf of our constituents and of the way in which he looked into the problems raised.
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I extend a warm welcome to his successor, Mr. Kenneth Robinson. Many of us knew him here as a colleague. He was a distinguished Minister in an earlier Labour Government.
It is interesting how distinguished Labour Members and ex-Ministers become distinguished heads of nationalised industries. We have the examples of Mr. Richard Marsh and Mr. Kenneth Robinson. I was trying to think who might be the next. Perhaps by the end of the year the Secretary of State for Trade may become an EEC Commissioner.
Mr. Robinson has sent out leaflets asking whether we should like to become regular subscribers and to receive information about London Transport. We wish him well in his important job.
It is necessary to think back to the London Transport Act 1969, which this Bill seeks to amend, and to the 1968 Act on which the 1969 legislation was largely based. If passed, this Bill will bring the 1969 Act still more into line with the 1968 Act. That is why it is necessary to study the powers of the 1968 Act in detail.
The 1969 Act, which did not go as far as the 1968 Act, was inspired by a Conservative-controlled GLC and was introduced by a Labour Government. At the time Lord Castle described it as a shotgun wedding, presumably between his wife, the right hon. Lady the Secretary of State for Social Services, and Sir Desmond Plummer. We were not entirely happy with the Act, and we know that the Government would have liked still larger powers, had that been possible at the time.
The present Leader of the Opposition led for the Conservative Party in Committee on the 1969 Act. During the Second Reading she said:
"Concerning powers, we are bound to come up against a little controversy, as the Minister indicated. I understand that earlier this afternoon the GLC passed a recommendation in the following terms:
"That the General Purposes Committee do take such action as may be necessary to secure the amendment of Clause 6 of the Transport (London) Bill 1968 to ensure that the powers of the London Transport Executive to engage in manufacture and trade are restricted to the minimum necessary to enable it to perform its statutory function as a public transport undertaking."

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"It is clear that at the moment the GLC does not wish to have the extensive manufacturing powers granted to it under Clause 6.
It is now asking for still greater manufacturing powers.
My right hon. Friend continued:
"I should like to make one or two comments about those manufacturing powers. The Minister will expect us to oppose some of them. The right hon. Gentleman referred particularly to the construction, manufacturing and producing powers in Clause 6(1)(i). I have one special comment to make about those powers. Although certain of the other powers under that Clause are subject to the sanction that they should be run on commercial principles, there is no direction that the manufacturing powers should be run on commercial principles. The subsection is excluded from the sanction. As the Bill stands, it will enable the Executive to compete on an uneconomic basis with private industry and to deal with its subsidiaries and the other authorities on preferential terms."—[Official Report, 17th December 1968, Vol. 775, c. 1261.]
In fairness, having quoted from my right hon. Friend, I should quote from the speech of the Minister during that Second Reading debate. He said:
"There is the question of manufacturing powers, which we have discussed from time to time in the Chamber. London Transport has traditionally done more in this field and has facilities for doing more, than the undertakings which will make up the new passenger transport executives. It has been inhibited in the past both in not being able to make full use of its resources and in its relations with its suppliers.
The Bill, therefore, proposes that, subject to direction by the Council, the Executive should have powers to manufacture for itself, for its subsidiaries, for the various members of the nationalised transport "family", and for the Council."—[Official Report, 17th December 1968; Vol. 775, c. 1246.]
There is no mention there of any outside interests. Nor was any reference to outside interests made by the Parliamentary Secretary, the hon. Member for Newcastle-upon-Tyne, West (Mr. Brown), when he wound up the debate. He said:
"The question of manufacturing powers has aroused great interest. This is clearly a thorny subject with hon. Members opposite, Strong views on it are held on my side of the House, too. It is fair to say that the GLC is not entirely happy about it. On the one side, it has been argued that we should hold back the scope of London Transport more than we have in the Bill and that we should place it in the same position which it was in under the Transport Act 1962. On the other hand, it can be strongly argued that we should confer on the Executive the manufacturing freedom which the nationalised industries generally enjoy under the Transport Act 1968. I am
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sure that some of my hon. Friends would strongly argue this point.
The proposals in the Bill are generally tailored to match the resources and new status of the London Transport Executive. The Executive will not be a nationalised industry. It will be a body placed in a novel way under local government control. It must have all the powers it needs to do its job properly, and it must be able to make reasonable use of the facilities and skills which it possesses. The Executive will be able to manufacture for itself, for the nationalised transport authorities and for the Greater London Council. This gives the Executive a wide field for development of its facilities. We do not think that it is right to deny an undertaking of the size and with the facilities of London Transport the basic powers which it needs to manufacture to this extent. We clearly must hold to this."—[Official Report, 17th December 1968; Vol. 775, c. 1300–1.]
Clearly it was very much in the mind of the Minister and of the Parliamentary Secretary at that time that there was no need to increase the powers to the extent envisaged in this Bill.
Then we had the Committee stage of the Bill, when attempts were made by the Opposition to reduce the powers. On the other hand, there were also attempts by some Government supporters, notably the hon. Member for Carlisle (Mr. Lewis), to increase them. He thought that the powers should be virtually the same as those proposed in the present Bill. However, the Government declined to accept his proposal. In Committee, the Minister made it clear that he did not think it right that those powers should be in that Bill. Another amendment was moved in Committee by the hon. Member for Ilkeston (Mr. Fletcher). That, too, wished to increase the powers. Again the Minister resisted it. I cannot help drawing attention to the fact that the resistance was possible only because Opposition Members voted with the Minister against the amendment moved by the hon. Member for Ilkeston. So once again the Government refused to change the powers laid down in the Bill at the outset. We tried to reduce the powers, one or two Labour back benchers tried to increase them, and the Government said that the Bill was right as it was and should not be changed.
When we come to the 1968 Act, on which the 1969 Act was based, we have to look closely at the powers, because here we come very close to what is envisaged in the present Bill.

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On Second Reading, my right hon. Friend the Member for Worcester (Mr. Walker) said:
"Let us look at the powers given by Clause 45"—
which later became Clause 48—
"to each of the authorities concerned—British Railways, Inland Waterways, National Freight Corporation, and the rest. Subsection (2) states:
'Each of the authorities to whom this section applies shall have power … to manufacture for sale to outside persons and to repair for outside persons, anything which the authority consider can advantageously be so manufactured or as the case may be, repaired by the authority by reason of the fact that the authority or a subsidiary of theirs have materials or facilities for, or skill in, the manufacture or repair of that thing in connection with some existing activity of that authority or subsidiary …
shall have power—
(b) to sell to outside persons, and for that purpose to purchase, anything which is of a kind which the authority or a subsidiary of theirs purchase in the course of some existing activity of that authority or subsidiary'.
The authorities will have power
'to manufacture road vehicles, bodies or chassis for road vehicles or major components of road vehicles'.
These powers will all be given to the nationalised industries in future. The Bill gives powers as to garages, motor accessories, repair shops and shipbuilding. The Clause provides the Government with the possibility of the largest extension of nationalisation in British history without ever again having to come to the House of Commons for legislation to do it."—[Official Report, 20th December 1967; Vol. 756, cc. 1318–19.]
My right hon. Friend was not quite right, because now the Government come to this House again for that extra little bit of nationalisation which is envisaged in the present Bill.
We think that the powers in this Bill are quite wrong and that they should be resisted.
It is a custom in this House to debate London Bills, and very often hon. Members on one side or the other table a motion calling for a Bill to be read a Second time in six months in order simply to have a debate on London affairs. That is not the case tonight. We wish genuinely to discuss and if possible to postpone the powers proposed in the Bill.
We do not approach this matter in a parochial way. It is a London matter, but these powers go much wider than any
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affecting just the capital city. In any event, I do not think that we in London are parochial, unlike people in some other parts of the country. I have not heard any request for London to have its own count in the EEC referendum, for example. But as London Members we have a special responsibility because we are all too aware that, in addition to our constituents up and down the great city, a great many people come into London from outside to work and there are many visitors, many of whom use London Transport. For that reason, any change in London Transport is perhaps most important than a change in any other transport system. We have to ask ourselves whether the change will help London Transport and its customers and, if so, whether it will be in the best way or whether it will have harmful effects.
We discuss this subject at a time when the GLC has announced the largest rate increase in its history. There has been a continual refusal over two or three years—for electoral reasons—to increase fares. This has led to London Transport's biggest-ever deficit. It is not surprising that we should have doubts about the powers in this Bill.
What are London Transport's problems and will they be helped by the Bill? The greatest problem is the shortage of manpower, which was particularly bad last summer. It has improved a little in recent months. There is still a 20 per cent. shortfall. As a result there are fewer trains and they are running late. There is a shortage of buses. London Transport garages are operating 25 per cent. below strength. The housing shortage affects London Transport workers who, because of their working hours, need to live reasonably near to the depôt. London Transport is now heavily in deficit, after having made a profit for the first four years or so of its existence. We do not know what the size of the deficit will be.
What money is available? Is it being used in the right way? We appreciate that this is a time of expenditure cuts. However, we must look to the future and see that the money available is used constructively. The hon. Member for Ealing, North (Mr. Molloy) and I asked questions yesterday about the Fleet Line. Obviously a shortage of money will affect new lines. It would be a pity if work is stopped and

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the team disbanded. I understand that the Heathrow underground link is behind schedule. There is a shortage of new buses. I understand that on an average day 600 buses are off the road because of a shortage of parts. I presume that part of the purpose of the Bill is to deal with this problem. Is it necessary to tackle it by invoking mammoth nationalisation powers? I doubt it.
The Government are using the inability of British Leyland to supply sufficient new buses to London Transport as an excuse for introducing these extra powers. We know that British Leyland has its problems. I do not want to add to them, but I am shocked at the way British Leyland has; supported the promoters of this Bill. It can only do damage to its competitive position. This is taking place at a time when the motor industry worldwide has spare capacity. It is counterproductive and financially irresponsible for a nationalised industry to propose embarking upon a plan to extend its manufacturing powers in this way. Perhaps it is to be expected of a nationalised industry, but I am shocked that it should have the support of what used to be a bastion of private enterprise.
The powers in the Bill are far too wide. Why is this so? First, it is because ever since London Transport was formed under the 1969 Act it has been jealous of the powers given to British Railways, the National Bus Company, the National Freight Corporation and the British Waterways Board. They were given these powers in the 1968 Act. It was not until a Labour-controlled GLC and a Labour Government coincided that these things could be put right in the way that is now suggested. I remember what happened last time we had a Labour Government and a Labour-controlled GLC. It was not long before both were changed. It might happen again.
London Transport has had to employ expert research staff and would like to sell its know-how to other transport concerns on a consultancy basis. Further, London Transport does not like being a second-tier nationalised industry accountable to the GLC. There is no justification for the extension of this State trading. London Transport has said that what it needs is the power to enter into associations as necessary with major United
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Kingdom statutory operators and others to secure, on a long-term basis, the supply of equipment and essential goods and services on the most economical basis possible in this new manufacturing environment.
This suggests a requirement much less widespread than that which is in the Bill. The object is to have more buses. Since we want to see London Transport solve its problems in the right way we tabled an Instruction yesterday to omit the manufacturing powers, which we consider to be wholly unnecessary. In Committee, if we get that far, we hope to table amendments to ensure that there are safeguards which will prevent London Transport from competing with Tube and bus manufacturers by engaging in large-scale manufacturing. We shall seek to ensure—if these powers are given—that London Transport will have to act commercially in its manufacturing activities.
The word "commercially" is vital. It was omitted in the 1969 Act because it was not thought to be necessary. That was probably correct because at that time the extension of powers now proposed was not foreseen.
Mr. Spearing: The hon. Member mentioned the Instruction. I thought he said that it was in relation to manufacturing. But the manufacturing ability is applied to "outside persons". Will the hon. Gentleman clarity that?
Mr. Berry: Yes. The Instruction says:
"That it be an Instruction to the Committee on the Bill, to remove from the Bill the power given to the Executive to manufacture for supply to outside persons."
This is not a Government Bill, which is perhaps an indication of the measure of support it enjoys. I fear that any favourable reaction to it will be short lived. Whatever its parentage, and while I have no doubt that the present Secretary of State for Social Services will not be reluctant to establish her relationship, I am equally sure that Sir Desmond Plummer will be joined by Mr. Richard Marsh, who was even more emphatic in his refusal to accept that these powers were necessary, in declining to accept further responsibility for this so-called offspring.
It is such a dangerous and potentially harmful measure that I find it hard to believe that it did not originate in that

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special haven of peculiar irresponsibility, the brain of the Secretary of State for Industry. It is a coincidence of a remarkable nature that we are discussing this Bill on a day when our colleagues in Committee were to have begun their discussions on an even more recognisable example of the Government's determination to turn our country into a Socialist State. In the Industry Bill the Government seek to give the State monopolies which they have already created and advantages which they hope will make tighter the stranglehold they intend to put round the private sector. We on the Conservative benches utterly reject this proposal. Accordingly I shall ask my right hon. and hon. Friends to vote against the Second Reading of this Private Bill.
8.0 p.m.
Mr. John Cartwright: I join the hon. Member for Southgate (Mr. Berry) in congratulating and thanking my hon. Friend the Member for Newham, South (Mr. Spearing) for the clear and lucid way in which he introduced this measure. My hon. Friend did not wax quite as lyrical as Messrs. Flanders and Swann in his description of the London Transport omnibus, but he was getting on that way.
Mr. Ted Graham: Hold very tight, please!
Mr. Cartwright: Indeed, hold very tight, please. I wish that I could have been so entertained by the historical introduction by the hon. Member for Southgate. Sadly, I did not find that very entertaining.
The only important point about the history of the matter is that the 1968 Act gave London Transport the same manufacturing powers, rights of association, and the power to sell goods and services, as British Rail and the National Bus Company. However, hardly had those powers been dangled before London Transport's eyes than they were snatched away by the London Transport Act 1969.
It seemed that towards the end of his speech the hon. Member for Southgate admitted that those powers were removed because of the attitude of the leadership of the Greater London Council. Many hon. Members on this side of the
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House would agree that the attitude of the GLC was extremely shortsighted, because the removal of those powers denied London Transport the opportunity to undertake co-operation and partnership by involving itself in shareholding with outside bodies to produce not only for its own needs but for sale to outside organisations.
The only organisations to which London Transport is allowed to sell under present arrangements or with which it is allowed to go into partnership or shareholding arrangements are the Greater London Council, its own subsidiaries, or other nationalised bodies. This seems to deny London Transport the opportunity to co-operate with other passenger transport executives with which it has a great deal in common, because problems concerning the provision of public transport in the city of London are much the same as in the cities of Manchester and Liverpool or many other large urban areas in this country.
It is a sad fact that London Transport has surplus capacity not only in the production of spare parts but in the overhauling of vehicles, repairs, and so on. Such surplus capacity could be made available to other passenger transport executives. That is one area in which London Transport has lost out as a result of this denial of powers.
Mr. John H. Osborn: I think that that contradicts what was said by the hon. Member for Newham, South (Mr. Spearing) who introduced the Bill. The hon. Gentleman talked about the shortage of parts and components. That is a normal management problem that faces the private as well as the public sector of activity. I think that hon. Members would like to know whether there is over capacity or under capacity.
Mr. Cartwright: That is a fair point. I will come to the question of spare parts, shortages, and so on, later. I understand that London Transport has spare capacity and is producing certain spare parts. One difficulty about the whole operation is that it cannot produce the complete range of spare parts that it needs because the demand is not large enough from London Transport alone to make it an economic proposition. If there were a wider market, it would become a viable

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operation. That is one of the arguments in favour of these additional powers.
My hon. Friend the Member for Newham, South said that London Transport had been denied the chance to sell its expertise to overseas transport operators and to co-operate with United Kingdom manufacturers in the specialist areas of the provision of vehicles and spare parts.
Turning to the implications of the powers which the Bill would restore to London Transport, I suggest that there are two great advantages. The first is that these powers would help London Transport to cut its present level of costs. I should have thought that hon. Members on both sides of the House would favour that prospect. The second is that they will go a long way to ensure a continuation of the supplies of vehicles and spare parts that London Transport needs.
On the cost front, I understand that there is a definite surplus capacity in London Transport for both the production and the provision of other services. If this spare capacity could be used to provide products or services for other transport operators, that would clearly involve extra income from the revenue which would be generated, which in turn would result in a reduction of the unit costs of production.
Secondly, the removal of the ban on the sale of expertise overseas is important. After all, London Transport is the largest bus operator in the world. I understand that its expertise is in great demand by overseas bus operators. If, by giving London Transport the powers sought in the Bill, we could provide an opportunity for it to engage in the sale of its expertise overseas, possibly in co-operation with United Kingdom manufacturers of vehicles and spare parts, substantial prospects for export orders would result. I should have thought that would commend itself to the House.
Thirdly, there is the possibility of co-operation with British Rail and the National Bus Company in producing and selling components to third parties. British Rail and the National Bus Company are already involved in that way. Because of the absence of powers, London Transport can neither join in those activities nor compete with them. There, again, I should have thought, is an area of additional revenue for London
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Transport if it had the powers proposed in the Bill.
I turn to the guaranteeing of future supplies. The key to this problem was the suggestion by my hon. Friend the Member for Newham, South about the possibility of co-operation with private manufacturers in the production of vehicles, parts and equipment. If that kind of co-operation and production could be achieved, it would be to the advantage not only of London Transport but of other operators. That would be a tremendous step forward for London Transport.
I understand that there are no major objections by the manufacturers concerned. Indeed, I thought that I detected a note of sorrow on the part of the hon. Member for Southgate that there were no objections by the manufacturers. British Leyland came in for some castigation because it was prepared to support these additional powers being provided for London Transport. I suggest that if we could achieve a joint operation between London Transport and private manufacturers of British Leyland's standing there would be a great improvement in the present situation.
We all know about the problem of shortages of spare parts and the implications for London Transport. Like other hon. Members, I have had letters from the Chairman of London Transport referring to its difficulties. The most recent letter that I have had refers to
"a scarity of spare parts for buses resulting from problems in the engineering industry which have affected not only London Transport but other bus undertakings throughout the country. Representations have been made at the highest level to ensure that all possible priority is given to London Transport orders. We have also sought alternative sources of supply (including some on the Continent) and have 'cannibalised' our own unserviceable vehicles, where appropriate, to keep as many buses as we can on the road."
That is an indication of the extent to which London Transport is dependent on suppliers for its important needs. If we could get London Transport involved in a joint operation, with a seat on the board of a subsidiary company, for example, I believe that future supplies would be better assured and that it would be in a much stronger position.
That is also true of the whole area of bus supply. We have heard that the

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number of firms able to meet London Transport's requirements for both buses and underground rolling stock is very limited. If we are serious about competition, we are forced to look overseas. Here, again, there is a risk that, as rationalisation in British industry increases and as takeover bids follow takeover bids, London Transport and other bus operators in the great urban areas might find themselves high and dry without an adequate source of supply, particularly as the provision of buses is very much the poor relation of truck manufacture. I understand that nine-tenths of production in the bus and truck division is in trucks. If the truck side is so lucrative, there must always be a fear that supplies will dry up and London Transport will be in a difficult situation. Here, too, the involvement of London Transport in the manufacture of these things as a joint enterprise would put them in a much stronger situation.
I notice that, according to The Times today, Mr. Ron Ellis, the head of British Leyland's bus and truck division, had a meeting yesterday with the directors-general of all the passenger transport executives and referred to the repeated criticism of delays in the delivery of double-decker buses. He admitted that, in the short term, British Leyland would almost certainly lose more orders for double-decker buses for foreign suppliers, and he urged some co-ordination of demand by PTEs.
London Transport, with the great deal that it has in common with other PTEs, could play an important rôle in trying to co-ordinate this demand, instead of the present situation in which one transport operator vies with another to get supplies out of manufacturers. Joint ventures in manufacturing, design and so on between London Transport and the private manufacturers is one way of approaching that sort of operation.
I was a little surprised by the sudden lurch by the hon. Member for Southgate into party political dogma towards the end of his speech. I do not feel that his heart was really in it.
Mr. Berry: Yes it was.
Mr. Cartwright: He could have fooled me. The hon. Gentleman made the
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required reference to "Wedgwood Bennery" which has to come from virtually anyone speaking about anything from the Opposition benches. If the Secretary of State for Industry were to rescue a child from drowning the Press headline would probably be, "Benn's Latest Grab".
What we are talking about here is not political dogma at all but a sensible arrangement on behalf of London Transport to try to reduce the level of costs and to safeguard their future supplies. Since the National Bus Company has these powers and is working jointly with British Leyland, it falls to hon. Members opposite to explain why London Transport should not also have these powers.
The Bill is a common sense attempt to remove what many of us regard as a harmful and unjustified restriction on London Transport. It is very much in the interests of ordinary Londoners, whether London Transport passengers or London ratepayers, to set London Transport free from the shackles that threaten its future. I commend the Bill as a sensible attempt to do just that.
Mr. Deputy Speaker (Mr. Oscar Murton): Mr. Neil Macfarlane.
8.13 p.m.
The Under-Secretary of State for the Environment (Mr. Neil Carmichael): It might be convenient if I intervened at this juncture—
Mr. Macfarlane: On a point of order. May I ask you, Mr. Deputy Speaker, to repeat the name that you called just then?
Mr. Deputy Speaker: Mr. Neil Carmichael.
Mr. Macfarlane: I apologise, Sir.
Mr. Carmichael: It is late and it has been a long week.
This may be a good time for me to intervene to give the Government's views in a brief speech.
I should like to begin, as others have done, by paying a sincere compliment to my hon. Friend the Member for Newham, South (Mr. Spearing), who moved the Second Reading. He did a very good job. It has been a pleasant experience for me in the last two Private Bill debates in which I have taken part to have heard

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my hon. Friend and my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) do a superb job in difficult circumstances. I sometimes wonder whether the whole process of private legislation has not gone too far—although it is not, of course, my job to interfere. But that is how it is. This is not a Government Bill but is promoted by the people who run the undertaking.
The hon. Member for Southgate (Mr. Berry) has obviously done a great deal of homework. I did not take part in the debates on the 1969 Act but I remember that we were both together night after night and day after day in the debates on the 1968 Act. I do not know whether some of the hyperbole of his right hon. Friend the Member for Worcester (Mr. Walker) is beginning to rub off on him, but he rather exaggerated some of his suggestions about the powers in the Bill.
As my hon. Friend indicated, the purpose of the Bill is simple and straightforward. The London Transport Executive has powers to manufacture and repair things required for its own purposes, for the Greater London Council and for the nationalised transport industries. The Bill seeks to extend these powers so that the executive has power to manufacture or repair for anyone things which it has power to manufacture or repair for itself, and to supply to anyone things which it has power to purchase for its own business.
The House has heard why the executive considers that it needs these powers. The points of my hon. Friend the Member for Woolwich, East (Mr. Cartwright) were very illuminating and supplemented the statement by my hon. Friend the Member for Newham, South. The executive wants these powers basically for two reasons. First, because of the restrictions currently imposed upon it, London Transport cannot optimise the use it makes of the facilities it already has. It has an extensive business in the provision of components and materials for buses and in overhauling and reconditioning vehicles. It can use this capacity for its own vehicles and those of the subsidiaries of the National Bus Company, but not for the vehicles belonging to other operators, such as the passenger transport executives. Also, it is not widely known that London Transport owns a very large catering business—it has to, in order that staff working
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shifts at awkward hours can get adequate meals. But it is debarred from using this capacity to assist any other firms or undertakings which have similar problems.
Mr. Cyril D. Townsend: Can the Minister explain why London Transport needs these powers now but did not need them only a few years ago? What has changed? It is not clear from the hon. Gentleman's remarks.
Mr. Carmichael: This is evolution. People look for the best way of using their resources. Everyone is trying to optimise the use of resources. Later I shall try to discuss how we should use every asset we have, particularly those of which we know something and of which these operators have experience. It is in the interests of London, where there are manpower shortages in many industries, that the executive should be able to use some of these resources.
Second, there may be situations where it is sensible for London Transport to be more closely involved in the production and supply of equipment which it and other transport operators use. This is not to say that if Parliament grants the executive the powers it is now seeking it will immediately begin manufacture and sale in direct competition with established suppliers. Through my hon. Friend the Member for Newham, South, the promoters assure us this is not so. This we understand and accept. Rather it is the executive's intention to enter into financial collaboration with its suppliers when this can be agreed to be mutually advantageous. Thus, not only will the expertise which London Transport possesses in all areas of public transport be made available to the manufacturer: it will also ensure that the particular needs of the public transport industry are not disregarded in a wider industrial complex.
In support of its case for the Bill, the executive has made reference to the worldwide consultancy services it operates. In my view it justifiably claims that possession of unrestricted manufacturing, repair and supply powers would enable it to give effective support to those consultancy services. All of us have no doubt on occasions—I have heard it done in Adjournment debates—castigated what we consider to be the inefficiencies of services provided by the executive. But it

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still remains as true today as it has always been—as has been mentioned by hon. Members—that it is to the door of the executive that public transport operators the world over come when they require assistance and advice. There can be no greater compliment to the London Transport Executive than that.
We have heard tonight from Opposition Members very many of the arguments that were so vehemently expressed during the passage of the Transport Act 1968 when the question of manufacturing powers for the nationalised transport industries was under discussion. Similar arguments were advanced during the passage of the Transport (London) Act 1968. I have no intention of wearying the House tonight by restating the many arguments put forward from this side during the long hours of debate we had then. I would only say that, whatever may have been the position six or seven years ago, the case is much stronger now for allowing a public transport operator the freedom to deploy its assets to the best advantage both of itself and of its industry.
The hon. Member for Southgate drew a parallel with the Industry Bill introduced recently by my right hon. Friend the Secretary of State for Industry. Hon. Members should well know by now that it is one of our cardinal beliefs, and a belief held in the Labour Party generally, that if public money is injected into a private industry, whatever may be the circumstances, the investing public authority has a right to have a voice in the affairs of that particular industry. If, therefore, the executive is granted the powers it seeks and in furtherance of its aims as an efficient transport operator embarks on a mutually agreed partnership with private industry, we believe it right, and indeed it can only be right, that financial sharing means decision sharing. To that extent I welcome the analogy with my right hon. Friend's Bill.
I should perhaps make it clear that no question arises of Government grants to finance any use that London Transport might make of the powers sought in this Bill. Taxpayers' money would not be at risk. Nor would any losses that might be incurred as a result of the exercise
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of these powers be eligible expenditure for transport supplementary grant.
Mr. John Page: Perhaps the Minister will forgive me for interrupting after having arrived in the Chamber only recently. I shall explain my position later. The hon. Gentleman has said that no claim will be made on taxpayers' money. Is there a chance that claims may be made on ratepayers' money? If so, will he enlarge on that matter a little?
Mr. Carmichael: The hon. Gentleman must have missed the point. I said
"Nor would any losses that might be incurred as a result of the exercise of these powers be eligible expenditure for transport supplementary grant."
I know that that is a slightly different thing. In other words, there would be no charge on the taxpayer here.
Mr. Page: The ratepayer.
Mr. Carmichael: If, on the other hand the ratepayers decided, through their elected body, that they wanted to finance some venture of the London Transport Executive, obviously that is something which democratically they have a right to do. But perhaps the next part to which I shall come in my speech will ease the problem for the hon. Gentleman.
There has been criticism that the Bill contains no obligations on the executive to use these powers—which I hope that Parliament will give it—in a fully commercial way. Here I should like to address myself to my hon. Friend the Member for Newham, South. The Government would like to see written into the Bill a provision on the lines of those contained in Section 134(2) of the Transport Act 1968 and Section 6(1) of the Transport (London) Act 1969 that when engaging in any activity under the powers conferred by the Bill the executive should act as if it were a company engaged in a commercial enterprise. Similarly we should like to see provision made for the advance publication of any proposals to use these powers. I hope that the executive will consider whether the Bill might be amended in this way. This matter can be dealt with in Committee.
Mr. Geoffrey Finsberg: I have taken the point made by the Minister. Does

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he intend on behalf of the Government at some stage in Committee, if the Bill reaches that stage, to ensure that that is in fact inserted?
Mr. Carmichael: What I am doing now is suggesting to the executive and to my hon. Friend the Member for Newham, South, who will be involved with the Bill and who is in close contact with the London Transport Executive, that they should accept this as a very strong Government recommendation that this should be put into the Bill.
Subject to those reservations, the Government think it right that London Transport should have these powers. I urge the House to give the Bill a Second Reading so that it may go forward to the appropriate Committee for detailed examination, as do all Private Bills.
8.25 p.m.
Mr. Neil Macfarlane: I apologise, Mr. Deputy Speaker, for having the same Christian name as the Minister and for causing some misunderstanding about 10 minutes ago. I am grateful to have a few moments to talk about this important Bill.
I listened with admiration to the hon. Member for Newham, South (Mr. Spearing) for his historical knowledge of the development of the 24-seater, although I was more nostalgically oriented in the graphic description he gave of Newham. I was a parliamentary candidate there in 1970. Alas, I was one of a long line of Conservative candidates who have come second in that area. None the less, I hope that the hon. Gentleman will not feel that because he represents that area he is the sole custodian of all bus drivers, and bus depôts, because we all have these excellent gentlemen in our constituencies and recognise their enormous importance and the job function which they have. We are aware of their problems, which were graphically described by my hon. Friend the Member for Bexleyhealth (Mr. Townsend) during his Adjournment debate last week.
However, I want to look at the Bill because it is important for the House to look at the Transport (London) Act 1969, which states quite clearly:
"It shall be the general duty of the Greater London Council, hereafter in this Act referred to as 'The Council', to develop policies and
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to encourage, organise and where appropriate carry out measures which will promote the provision of integrated, efficient and economic transport facilities and services for Greater London."
It is that word "economic" in relation to transport facilities and services for Greater London which I want to look at. We are proposing to extend and enlarge the powers, in effect, of the Greater London Council and, more indirectly, the London Transport Executive. This new proposal will cause much concern, not only in the minds of ratepayers in the Greater London area but also in the minds of many of the retailing and wholesaling organisations in the country. The proposed powers would enable the London Transport Executive to manufacture, supply, maintain and repair "anything" required for the purposes of the Executive.
This word "anything" broadens the spectrum enormously. I have been sent during the past few days, as I suspect have many hon. Members, several documents, by the promoters of the Bill and by various opponents of the Bill. But the Bill states quite clearly that:
"In the event of these powers being conferred on the Executive, there would be opened to the Executive opportunities for participating in joint company ventures with British manufacturers without any restriction on the company's markets for its products and without the company being tied to products for which the Executive have their own manufacturing facilities."
It goes on to say:
"The Executive would be able to carry on the manufacture and repair for 'outside persons' things which they have facilities for manufacturing and repairing for their own business—for example, the manufacture of bus body parts, the overhaul of mechanical units and the servicing of road vehicles. They would also have the power to purchase for supply to 'outside persons' commodities such as spare parts, materials and consumable stores of a kind which they purchase for their own business."
It is this area that will cause widespread concern to many people involved in a variety of businesses throughout the country.
It will enable the London Transport Executive to expand its commercial activities substantially. I do not think that this is the sort of power which we should be investing via a corporate body such as the GLC. This is in itself a considerable extension of the present power in Section 6 of the London Transport Act

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1969. That section permitted the manufacturing of goods and repairs for the executive itself.
I think that many Conservative Members have a lot of sympathy for various organisations. The motor industry, retailing or wholesaling, manufacturing, spare parts stockists, servicing, and so on, will feel concern at this extension which the GLC will be taking. The motor industry, in its wide range of activities, has had two or three bad years, and it involves itself in an important aspect of our life.
I think it was the hon. Member for Woolwich, East (Mr. Cartwright) who said that there was not spare production capacity. I think that is arguable. I think that there is spare production capacity in the motor industry, both nationally and worldwide.
Mr. Cartwright: Not for buses.
Mr. Macfarlane: That, too is arguable.
Mr. Cartwright: I was saying that there was spare production capacity in London Transport. I was also quoting the head of the Bus and Truck Division of BLMC who said that he does not expect to be able to meet the needs of the British market in the short term.
Mr. Macfarlane: I still believe that there is spare production capacity, and the question is whether the Government are doing enough to utilise it. The Bill if allowed to go through will be counterproductive, and it will be financially irresponsible for a nationalised service industry to expand into manufacturing for "outside" use. This is something upon which the Opposition agree.
I agree with the view held in 1968 that the GLC should have powers only sufficient to enable it to function. I do not believe that the GLC and the LTE should act as a commercial undertaking in relation to its manufacturing activities. If the Bill is passed the House will grant, in effect, far wider manufacturing powers.
Perhaps I may ask the House to consider the many organisations which have assailed us. I have here a memorandum from the National Federation of Builders' and Plumbers' Merchants which contains the kind of argument which I regard as valid. The document says:
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"The Federation represents the majority of builders' and plumbers' merchants in the United Kingdom and for many years has consistently opposed powers sought by local authorities in regard to the storage, supply and handling of building materials to other parties. In the majority of such cases the authorities concerned have indicated that they would not wish to deal with such materials; and have conceded assurances or amendments accordingly. The Federation submit that storage and handling of building materials must call for expert experience and knowledge and that operations by others than firms such as the Federation's members would involve heavy overhead expenses and loss arising from the rental or cost of storage space, the labour of handling and transport, loss from breakage, pilferage and the cost of security arrangements."
That illustrates the kind of concern which many of these outside retailing, wholesaling and supplying organisations have as they watch the Bill go through.
There are several questions which have to be asked and which have not been touched upon this evening. If the GLC or the LGE want power for consultancy purposes only—and that has been suggested—the Bill is far too wide ranging for that purpose.
Secondly, it is clear that Government Members and the GLC see the Bill as a further advance into subsidised nationalised industries which will erode further private enterprise. Labour Members and the GLC probably see the Bill in the context of the Industry Bill, and that in itself must be worthy of a "No" vote from the Opposition.
The hon. Member for Woolwich, East said that we were looking at the Bill from a party dogma point of view. The hon. Member for Newham, South mentioned Herbert Morrison. Greater London Conservatives are bound to quake and think it important that people should hear our views on the subject. This is a fairly large step into the kind of legislation which is running in tandem with the Industry Bill now going through the House.
Mr. Graham: Hear, hear.
Mr. Macfarlane: The hon. Gentleman says, "Hear, hear", and that sums up the situation admirably. There is no justification for the extent of State trading which the Bill will empower.
Finally, the poor old ratepayer could as a result of the Bill have to stump up

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cash at some future date. What we have not heard is how this kind of enterprise will be funded, how it will be financed. We have not been told exactly what amount of money will be required to launch it, and again it could be the poor old ratepayer who will be called upon to subsidise and capitalise the kind of enterprise which could develop over the next two or three years and could develop into a kind of commercial extravagance, without the necessary expertise which is available to other organisations. The London Transport Executive and the GLC are not the experts in this field in which they seek enlarged powers.
I hope that we shall hear from Labour Members how these matters will be financed and costed and what plans are to be put forward. No doubt at some future stage we shall find out. It is a bad time nationally to seek this extension of activities, especially when many local authorities are facing huge deficits. The London ratepayers have put up with all they can stand. One of the critical arguments against this Bill is that we do not know where the money is coming from. We must have an answer to that question at some stage, and we hope that it will be answered tonight.
8.36 p.m.
Mr. John Parker: Many London Members of Parliament have had numerous complaints about bus services. Our constituents may be prepared to accept the fact that shortage of staff makes it difficult to provide the services which people want, but people are not prepared to accept the fact that there are not adequate supplies of spare parts to keep the buses running. Therefore, since the Bill will make a contribution to improving London Transport services as a whole, I support it.
The Opposition are eaten up with the whole idea of creeping nationalisation. They are terrified about that bogy the whole time. Let us examine their arguments. The hon. Member for Southgate (Mr. Berry) appeared to regret the amount of co-operation proposed between private enterprise firms and London Transport. The Conservative Party stands for competition with a capital "C" yet takes a different view when unnecessary competition does not work as between one part of manufacturing industry and another.
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British Leyland and London Transport together can not only meet their own obligations but meet the needs of other transport undertakings obligations as well.
I wish to quarrel with the view of the hon. Member for Sutton and Cheam (Mr. Macfarlane). I believe that London Transport has the requisite expertise to undertake this work. I believe that a combination of the efforts of British Leyland and London Transport should lead to the winning of valuable overseas markets. A few years ago when I was in Dubrovnik I saw a number of ex-London Transport buses operating in the streets. The transport undertakings in that city were extremely pleased with the performance of those vehicles, even though they were second hand. At some future date they will wish to replace them with new vehicles. However, new London Transport buses were not available at that time and I hope that due note will be taken of this factor in future trade negotiations. Undoubtedly there are a large number of overseas markets to which we can sell these vehicles, and this can be done by co-operation between a private concern such as British Leyland and London Transport.
We are experiencing an enormous exodus of population from London. I do not quarrel with the fact that new towns are being developed and that people are moving out to them. However, we must look ahead to the London of the future and plan for the time when we shall need an expansion of such activity here. This will involve the employment of expertise in London and many skilled workers. Certainly the provisions of the present Bill will provide jobs of this type in the Greater London Area. That we should welcome.
I have looked at a number of transport services overseas. If we compare London Transport with the transport service of New York, we see that London Transport is top every time. London Transport has a very fine record and a lot to tell and to sell to the world, but we have to give it every opportunity to do its best and not stand in its way. We must ensure that it holds the lead over New York and similar transport services.
I will not repeat what has been said by my hon. Friend the Member for Newham, South (Mr. Spearing), but there

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is a very strong case for the Bill, because it will assist London Transport by giving a better service to London. That is one of the main reasons why we should support the Bill.
8.41 p.m.
Mr. Cyril A. Townsend: I am all in favour of London Transport's influence being extended. I am proud that the Victoria Line is a world-beater. But our basic point of view is that London Transport can produce world-beating equipment without the powers in the Bill. We opposed the extension of London Transport's powers in this respect in 1969. I have not been convinced by the arguments tonight from the Labour Front Bench that there is a need to make a change now.
The Bill is too wide ranging for the purposes which London Transport appears to have in mind. My hon. Friend on the Front Bench, the hon. Member for Southgate (Mr. Berry), quoted an extract from a brief which we have all received from London Transport. I refer to the section which says:
"L.T. has no wish or intention of going into manufacturing in order to compete with anyone. Its duty is to provide the transport service which best meets the needs of Greater London."
If that is the case, the Bill is not required. It is as simple as that.
I am not critical of London Transport. I have great respect for that organisation. It is not the dog that is mad, but I am a bit worried about the sanity of the dog owner. London Transport is controlled strategically and financially by the Greater London Council, which is a dangerous Labour council. I say that it is dangerous because it has just made a fantastic rate increase, and there was a fantastic increase last year. The Greater London Council is spending approximately £70 million a year on buying up private housing in Greater London. Not unnaturally, the Opposition are a little suspicious when London Transport, which comes under the Greater London Council, produces a Bill of this nature.
I could not help noticing that Mr. Harrington, the deputy leader of the Greater London Council—to whom I hope responsibility has come with power—said in his budget speech not long ago that there was a need for more municipal
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enterprise to help the ratepayers. That sort of attitude makes us suspicious of what they have in mind across the river.
I do not welcome the extension of municipal enterprise, because I believe that it will not help the ratepayers, and that at the end of the day the ratepayers will have to cough up more. I welcome the remarks we had from the Government Front Bench, because I believe that private industry has a right to certain safeguards. The London Transport Executive should be made to act commercially. I cannot support the Bill in its present form. In my view it is yet another step towards State socialism.
8.43 p.m.
Mrs. Millie Miller: Far too little has been said in the debate about the London travelling public. What we are really talking about is the service that London Transport is trying to provide to all our constituents. That should be in the forefront of our minds when we are discussing this problem.
The London travelling public has suffered greatly over recent years. First it suffered because of staff shortages, as an Opposition Member said. He also said that one of the reasons for the staff shortage was the housing problem of London, which the Greater London Council is trying to alleviate by buying up the private houses to which another hon. Member referred.
Another reason for the staff shortage was the extremely low pay. That problem has been overcome. But the misery of the London travelling public has been added to by the fact that, knowing that the staff shortage has been overcome, they are still left with delayed or absent buses because of the shortage of spare parts. That is a vital reason for the Bill.
A number of Opposition Members have referred to the original Bill which gave London Transport these powers. As somebody who was deeply involved in London government at the time, I well remember the battle which took place with the Tory-controlled Greater London Council when it was demanding more and more bribes, to take over the service, bribes which ran into millions of pounds and which were strongly opposed by Labour members of the individual boroughs, as well as being opposed in the House. Some of my colleagues on

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this side of the House will remember where the responsibility for the Bill lies. We have to ask for these changes to take place today to rectify the short-sightedness of the Greater London Council at that time in accepting these powers.
A number of Conservative Members who have applauded the able way in which my hon. Friend the Member for Newham, South (Mr. Spearing) moved the Second Reading of the Bill appear not to have listened very closely to his historical account. In speaking of these proposals, several hon. Members have said that London Transport does not have the expertise to do the various tasks that the Bill envisages, and yet the historical account given by my hon. Friend covered the whole development of buses and how London Transport, until the time when these powers were taken from it, was responsible for bus development of the kind we have accepted up to the present time.
Mr. Macfarlane: Perhaps I can clear up one point for the hon. Lady. I am not saying that London Transport is lacking in expertise to run its own services, but it lacks expertise in running an organisation to sell to outside bodies and to set up that kind of organisation.
Mrs. Miller: I am glad that the hon. Gentleman has clarified that point, because the tragedy is that apparently nobody else in the country has the expertise to do this kind of thing either. Sadly—and my hon. Friend the Member for Woolwich, East (Mr. Cartwright) referred to overseas purchases—I had a very irate letter from a constituent recently about the decision of London Transport to go to Saab of Sweden to buy buses for our service because British Leyland was unable to provide such buses and, what is more, was unable to provide an effective programme of spare parts to keep those buses running.
On the question of overseas use of buses, I am aware that there is a large fleet of British Leyland buses and I was very distressed to learn that these are to be replaced in the near future by a fleet of Saab buses for the same reason—not because London Transport has not the expertise to run its own services but because the British vehicle industry is apparently unable to compete, either in this country or overseas, in this provision.
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It is very important that we pay regard to the development of a sturdy, reliable bus which London Transport happily provided to the extent mentioned by the hon. Member for Dagenham (Mr. Parker) whereby second-hand buses originally made in this country are still providing effective service overseas. That is a great tribute to the design and development which London Transport initiated. Unfortunately, because of the changes in the powers of London Transport, much of the opportunity to continue with this development has been lost. It needs to be restored.
For example, London Transport has been carrying out some very effective experiments with a new minibus service. The hon. Member for Hampstead (Mr. Finsberg) will have had the benefit of a new service being introduced in his constituency to carry small numbers of passengers on rather unusual routes to get them across boroughs. This has been a most welcome experiment but, sad to say, the buses on that service have been extremely inefficient. Many of them break down and they can often be seen standing by the roadside along the route because, first, spare parts are not available, and secondly, and far more important, the buses have had to be bought "off the peg", as we have been told, and are not of the high standard and specification that London Transport itself would have desired.
Mr. John Page: Will the hon. Lady say why the buses had to be bought off the peg?
Mrs. Miller: I should willingly do so, but my hon. Friend the Member for Newham, South has adequately described the situation. I refer the hon. Gentleman to tomorow's Hansard, where he will be able to read the history of the development.
It is a great pity that once again we are dealing with such matters as this in terms of public versus private enterprise. Private enterprise has admitted that it is unable to provide the service. Public enterprise has the expertise. Together they might be able to provide a worthwhile service for Londoners and people overseas, which will not only provide additional employment in a sector in which it is declining rapidly in other areas but be a valuable additional export

819
market for this country which it badly needs.
The hon. Member for Southgate (Mr. Berry) said that the problem would be solved in a few years and, therefore, we need not take the measures proposed in the Bill. I hope that he will tell his constituents who wait hours for buses which do not come "We cannot accept these proposals, which will enable London Transport to do something about the situation, but if you wait all will be well within a few years". Now we have the chance to do something to help a failing industry in the private sector by giving it the expertise which is available to it from London Transport.
8.53 p.m.
Mr. John H. Osborn: The hon. Member for Newham, South (Mr. Spearing) gave a very interesting introduction to the Bill. I speak not as a Member representing a London constituency but as someone who has occasion to live in London and has to pay rates, which hit anyone who lives in London.
My hon. Friend the Member for Southgate (Mr. Berry) and I were involved in the passing of the Transport Act 1968, and the powers given to the passenger transport authorities were the subject of much debate at the time. Section 10(xix) provides
"for the purposes of the business of the Executive, to form, promote and assist, or join with any other person in forming, promoting and assisting, a company for carrying cm any activities which the Executive have power to carry on …"
Similar words appear in the Bill. If local authorities and passenger transport authorities have power to manufacture, what are the consequences?
I said that I spoke as a ratepayer in London, but in adidtion it is seven years since the passing of that Act. I have had the privilege of visiting many London Transport establishments, including the Aldenham bus depot. I was fascinated by the management structure there. The way in which the depot was operated gave rise to considerable discussion.
I am concerned about the giving of powers which may not be exercised with commercial prudence, thus adding to the
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burdens of the ratepayers of London and elsewhere.
The hon. Member for Newham, South deployed the interesting history of the RM bus and the RT bus. He said that British Leyland was unable to provide suitable buses and he referred to Saab and Scania. It has been suggested that London Transport and British Leyland might get together to produce buses which are suitable for London Transport. I am not certain whether between the two there is a love—hate relationship or a love relationship. British Leyland has not been able to provide suitable buses. Should London Transport take on this activity and supply buses to others?
I did my apprenticeship in the engineering industry. An engineering company requires castings and forgings. The management of an engineering company, because it cannot get an adequate supply of castings from outside, may decide to run a foundry. That kind of decision might be of advantage to London Transport as a business operation because there is co-operation on design and joint production control. One disadvantage in the case of engineering is that if the castings fall below standard the engineering firm may have authority to go to a competitive supplier. In this example, the engineering group has to decide what to do if the foundry is unable to meet demands on its capacity. The problem arises in the case of the bus service if private industry is unable to provide the components. If in an engineering firm the foundry or forge does not come up to requirements, the management can close it and rely on outside suppliers. The Greater London Council would never get away with doing that, and the cost of a failure to make that type of decision would fall on the ratepayer.
The GLC is asking for greater manufacturing powers. Factories in Japan have a philosophy of letting out as much as possible to sub-contract and developing the management expertise that makes that possible. The management of a large engineering group has to decide what is to be made within the group and what is to be purchased from outside. The greatest skill in an assembly unit or engineering group is the skill of the purchaser and his skill in maintaining good contact and continuity with the

821
supplier. The worst body for doing that is a bureaucratic body. A public body may not be a good purchaser, there may be a failure in supplies, and a public body is not the best body to take on a factory to produce something which it does not know how to purchase from outside.
One of the reasons for State manufacture, whether in British Rail or British Steel, is to bring about rationalisation and a reduction in the number of factories. I am not certain whether the powers which are being sought by the GLC would achieve a national policy. The Government should rather be encouraging one or two suppliers to supply all the passenger transport authorities, including the GLC, with their bus requirements.
For far too long we have been entangled in a national and regional bureaucratic, mixed economy. One bureaucratic body—it could be the GLC in this case—has perhaps found it difficult to be commercial in its approach and to balance spare capacity on the one hand with shortages on the other. That is a challenge for a private enterprise, flexible company. It is also a challenge for a local authority which is ill equipped to provide the balance and flexibility that is required.
It is suggested that London Transport—I do not deny this—has developed an expertise that is the envy of the world and which can be sold to the world. Perhaps the tragedy of that development is that the expertise has grown within London Transport and has not been developed by the suppliers of buses and other equipment to London Transport.
The guaranteeing of supplies is a problem that is facing every sector of private enterprise. At a time of full employment such as we have had during the past two or three years, and at any other time, it is inevitable that supply will fall out of balance with requirement unless a reasonable economic and commercial criterion is achieved. That situation has hit the poor man in the street trying to get a bus ride home in the evening in the London area.
I must accept that it is reasonable that London Transport should have similar powers to the National Bus Company or the powers of other transport authori
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ties. It could well be that the result of the 1968 Act has been to give passenger transport authorities powers that are too wide-ranging and powers that have stopped them becoming good purchasers. I should like to see the development of a national policy so that if outside suppliers let London Transport down they could be strengthened. I should like to see a joint venture so that the suppliers could provide London Transport with what it needs.
I have been to Paris and to Brussels and I have seen their local transport facilities. I would welcome the authorities in Brussels and Paris having the chance to buy British. In a jam I would welcome the GLC having a chance of buying overseas so that there could be competition in supplying its needs. If the Bill is passed as it stands, it could well turn out to be a millstone around the neck of an already pressed ratepayer and taxpayer. That could be the result if these powers are not managed properly. In terms of economic assessment and in terms of management audit, this could be a costly exercise.
I welcome the Minister's suggestion that powers to allow London Transport to operate as a company should be brought into the Bill. But that does not go far enough. We are saddled today with criticism of private enterprise. We are already too much entangled in a mixed economy at national and regional levels. This is one more example of public ownership of the means of manufacture, distribution and exchange but at regional rather than national level. It is one more example of Bennery that has been forced upon us because of a series of measures which the present Socialist Government have passed to make our economy more mixed. When we debate the problems of the GLC, it seems to be a solution to the Labour-controlled GLC and to Labour Members that we must have more State control to provide for the shortcomings that have been found.
I have been a Member of the House for 15 years and I have been involved in these matters for 25 years. We have heard mention of Dubrovnik, and I was in Belgrade only a few years ago. I also know Moscow. As we move into a state of more and more bureaucratic stagnation, it could well be that the passage of the Bill will result not in a Utopia

823
for the passengers of London but a slide into greater and greater stagnation. I hope that my hon. Friend the Member for Southgate will examine the Bill and ensure that we do not get into a state of even more stagnation in the supply of equipment. By all means let us have competition. Let us persuade the passenger transport authorities and the GLC to look outwards and to be better purchasers from the private sectors of Britain and Europe. Let us try to get out of our difficulties in that way. Let us not denigrate private enterprise. It is short of money and going through a difficult time. I hope that these points will be considered.
9.5 p.m.
Mr. Bryan Davies: First I have an interest to declare which is probably not unique among my right hon. and hon. Friends but which would be among Conservative Members, and it is that I travel on buses. That gives me an insight into the problems of London's transport which is denied Conservative Members. The bus queue is an important social institution which recently has shown degrees of civil violence rather than aspects of communality. The problem is that in recent years the reliability of London's buses, which used to be a byword, has deteriorated so that passengers have lost faith in the arrival of their buses.
For a time the trouble arose because of staff shortages and inadequate pay levels for London Transport staff. However, people have begun to realise that there is now a major difficulty in the supply and maintenance of buses. The Opposition have put forward a poverty of argument on the Bill. They have engaged in a certain amount of party sloganising about "Bennery" and the idea that somehow London Transport Executive are like Soviet commissars. Their arguments stem not only from a lack of understanding of the Bill but from a lack of contact with the problems of our cities. The Bill drives home the point that commercial criteria cannot provide the necessary resources for maintaining the social fabric of a city where this is dependent upon the reliability of its transport. We have had to learn this lesson on housing, a whole range of social services and sewerage.
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To say that commercial supplies represent the weakest aspect of London Transport is not to criticise suppliers such as British Leyland, or to suggest that British Leyland has no eye to a commercial market. The requirements of London Transport represent a very small proportion of British Leyland's orders and it is natural that British Leyland should concentrate its efforts on trucks and supplies overseas which make more commercial sense. However, it is the people who live in London who have to bear the burden of an unreliable bus service. The Bill does not spring from dogma or from the desire to extend public enterprise for its own sake. It arises because of the desire to extend public enterprise to come up with an answer to the problem.
London Transport plays a crucial social rôle. If roads are some of the arteries of our city the buses are the red corpuscles which make possible the healthy functioning of the body of London. Circumstances will make us increasingly dependent on public transport. Demands for fuel economy, pressures for road space and the enormous costs of the motor car, not merely in terms of its consumption of fuel, will lead inevitably and ultimately to dependence upon the bus and other forms of public transport if we are to maintain the social life of our cities.
In Los Angeles and New York commercial criteria have been predominant in the operation of public transport, and the needs of the people have not been met. London would be a much poorer place if we adopted some of the attitudes expressed by Conservative Members who say we should cut down London Transport and adopt commercial criteria more widely, and that we should refuse to provide facilities which would guarantee a reliable service.
In the context of the speeches a clear realisation has been established that London Transport has the resources, in terms of expertise and physical resources, with which to carry out its intentions and wishes under the provisions of the Bill. We have also heard of the enormous research potential and the consultancy possibilities, which represent a gain to this country.
Within that framework we support the Bill on the basis that we shall safeguard

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the basic interests of London Transport in the reliability and provision of buses. Public transport can develop in a city only on the basis of the reliability of the arrival of buses. Anything which increases the reliability of London Transport will win the approval of vast numbers of Londoners who use the buses daily, especially since the population of London is likely to increase if we make the correct social provision. On that basis I support the Bill.
9.12 p.m.
Mr. John Hunt: During the life of the previous Government the hon. Member for Newham, South (Mr. Spearing) and I served in Committee on the Water Bill, of blessed memory. Therefore at that time I came to know the hon. Gentleman's very persuasive, if somewhat long-winded, oratorical powers. Therefore, I begin by adding my own tributes to those already paid to the hon. Gentleman for the way in which he opened the debate.
I should like to compliment my hon. Friend the Member for Southgate (Mr. Berry) on his speech from the Opposition Front Bench. I understand that while he was addressing the House he became Conservative Chief Whip for the Greater London area. Therefore I congratulate him both upon his speech and upon his appointment, and I am pleased to take this early opportunity of establishing myself firmly in his good books.
The Opposition came to the debate with some apprehension regarding the powers contained in the Bill. As the debate has proceeded our fears have not been allayed. We have been left in considerable doubt why these powers are requested, what is to be done with them and how they are to be financed.
The powers proposed in the Bill will enable the London Transport Executive to manufacture, repair and supply to outside persons anything connected with its operations. Those are sweeping powers and go much further than those contained in the Transport (London) Act 1969.
Why is London Transport not content with its present powers? Much of the criticism made by the hon. Member for Newham, South, and many of his scathing remarks about the quality of spare parts and servicing, could be dealt with under
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the existing legislation. We are entitled to know why these additional powers are required.
Clause 2 refers to "construct and produce", "exchange", and "supply by sale"—in other words, the means of production, distribution and exchange, words which have a familiar ring.
Mr. Spearing: I fear that I did not make the point very clearly in presenting the case for the Bill. However, the hon. Gentleman has put his finger on it. As, regards manufacture, one of my arguments was that it was impossible for London Transport to go into partnership with others with manufacturing capacity and that one of the major reasons for asking for these powers was to enable it to do so. If I catch the eye of Mr. Deputy Speaker again later, I shall develop that a little further.
Mr. Hunt: I am grateful for that intervention, and I shall listen with interest to the further explanation which the hon. Gentleman has promised us.
In this interesting speech, the Minister referred to the involvement of London Transport in catering and its desire to make its services more widely available. That would seem to be an example of London Transport dabbling in matters which are emphatically not its concern, although I am tempted to suggest that it might take over the catering services of the Palace of Westminster. It could do hardly worse than our present Kitchen Committee.
We are assured in a memorandum from the promoters that London Transport has no wish or intention to go into manufacturing in order to compete with anyone. But I submit that whether or not that is its wish or intention, it will be the inevitable effect of what is proposed.
The hon. Member for Newham, South spoke about undercutting and said that this was safeguarded under existing legislation. However, it was significant that, in reply to an intervention by my hon. Friend the Member for Hampstead (Mr. Finsberg), the hon. Gentleman was unable to give any specific undertaking on behalf of the promoters. Perhaps he will do so in his later remarks. I was encouraged to hear the Ministerial intervention and the recommendation of the Government in that respect. This requirement

827
which we would like to see for London Transport to act commercially in its manufacturing activities goes to the very heart of the Opposition's fears and objections.
If, as we are told, London Transport needs the powers to enter into associations, as necessary, with major United Kingdom statutory operators and others to secure on a long-term basis the supply of equipment and essential goods and services on the most economical basis possible in this new manufacturing environment, I say, well and good. But if that is so, why are the powers so wide and sweeping?
I echo one or two comments already made by Opposition Members. I sense a political element in this proposed legislation. My hon. Friend the Member for Southgate rightly reminded us of the history of the Committee stage of the 1969 Act when there was substantial pre-sure from a group of Government supporters to do precisely what London Transport is proposing now. Therefore, this measure is, in a way, a reflection of the pressure which has been maintained over a substantial period by the more Left-wing Members of this House and others of similar persuasion at County Hall. It is not surprising that many of us see the measure as the thin end of the wedge, or perhaps the thin end of a Wedgie.
We are told that London Transport has to employ expert staff for research and that it would like the opportunity to export this know-how on a consultancy basis. In a memorandum submitted on behalf of the promotors of the Bill we are told that because of its long experience as a pioneer in a number of transport systems, London Transport has know-how which is in demand by United Kingdom and overseas operators who sustain London Transport's consultancy business which is currently confined to providing advice. I accept that. If the Bill is limited to that specific objective there would certainly be no quarrel from Conservative Members. It is because the Bill is so widely drawn that we object so much to it.
Instead of involving itself, as it now wants to do, in a wider degree of manufacture, repair and supply of vehicles, London Transport should be more pro-
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their reasons. I accept that, besides trying perly and usefully involved with other matters such as staff shortage. I have long felt that London Transport has missed many opportunities to provide living accommodation for its staff, possibly over station premises. I am sure that more could be done here. Equally, the provision of car parks for commuters is something which it has been slow to develop. These are all ways in which we can show that London Transport has its priorities wrong. It should be tackling these problems instead of entering into spheres which are none of its busines.
The Bill has to be seen against the background of the actions of the Government, who by harsh and penal taxation, by the threat of more and more State control and interference, have placed British industry in dire straits leading to a grave lack of cash and confidence. The Bill, therefore, represents yet another encroachment upon the réle of private enterprise. For that reason it should be resisted and, I hope rejected.
9.22 p.m.
Mr. Ted Graham: I am grateful for the opportunity to speak in this debate. It is not without significance that the hon. Members for Southgate (Mr. Berry) and Enfield, North (Mr. Davies) and myself—all within the borough of Enfield—have been able to take part.
I speak with the knowledge of a commuter. I am a daily user of public transport and travel from Bush Hill to Seven Sisters and then to Victoria. I am not unfamiliar with the problems, stresses and strains which are placed not only upon the travelling public but upon the servants of London Transport and British Rail. Without exception, hon. Members have expressed their understanding of these stresses and strains.
My hon. Friend the Member for Newham, South (Mr. Spearing) laid great stress upon what the promoters of the Bill hope it will achieve—greater efficiency, profitability, safety and reliability in the operation of London Transport.
I welcome the extension of municipal enterprise. I do not burke the issue. In 1968 there were people in power able to provide the powers proposed in the Bill but they decided not to do so. I believe that politics was not far removed from

829
their reasons. I accept that, besides trying to correct the wrongs in the system, one of the reasons why a great many Labour Members favour this extension is that it would be compatible with efficiency to extend the boundaries of public enterprise. It is sound business practice not only to develop and expand horizontally but to do so vertically. The Bill gives us an opportunity to use the capital and expertise which has already been used to service the fleets of London Transport and possibly to enable London Transport to compete with other undertakings. For the life of me, I cannot see why Opposition Members are so concerned not only to restrict London Transport but to protect private enterprise from competition.
The hon. Member for Sutton and Cheam (Mr. Macfarlane), with a great deal of wringing of the hands, said that retailing and wholesaling organisations had expressed great anxiety about the competition that would result from the Bill. The purpose of this House in this context is not to protect retailing and wholesaling organisations from another source of competition. If the people to whom they supply goods have the opportunity of obtaining them from London Transport because of competition, that is fair and proper.
Conservative Members believe that one motivation for the Bill is that London Transport is jealous of some of the powers enjoyed by nationalised industries. I see nothing wrong—indeed, I see a great deal that is laudable—in London Transport wishing to extend to itself the opportunities to be more efficient and reliable in its efforts to serve the public in a better way. I appreciate that time is short. I certainly believe that it is proper for London Transport to seek these powers. I support the Bill.
Mr. Geoffrey Finsberg rose—
Mr. John Page rose—
Mr. Finsberg: I am prepared to give a minute to my hon. Friend the Member for Harrow, West (Mr. Page).
9.27 p.m.
Mr. John Page: I am extremely grateful to you, Mr. Deputy Speaker, and to my hon. Friend the Member for Hampstead (Mr. Finsberg) for this courtesy.
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I must declare an interest in two ways. First, I am a director of a company which supplies goods to the heavy transport industry. Secondly, were it not for the graceful agility of my mother, I would have been born on a No. 88 bus at Lancaster Gate. Eight minutes after she dropped off, I appeared, smiling and dynamic, on a welcoming world.
This is a sad moment because many of us who have had a pre-natal interest in London Transport realise its expertise in the design of buses. Were it not for two matters I would support the Bill. The first is that the right hon. Member for Blackburn (Mrs. Castle), the Kung Fu of the then Ministry of Transport, twisted the arms and put her foot on the jugular vein of London Transport and said that if it did not buy "off the peg" buses it could not have a grant. Because of that, the old-time relationship between AEC and London Transport expired and Londoners have had to use buses quite unsuited to and improperly designed for London roads. It is the fault of the right hon. Member for Blackburn, nobody else.
The second is that the Industry Bill, introduced by the Secretary of State for Industry, has so offended ordinary manufacturers and the political world that it would be impossible for us to hand on a plate, on our knees, the key which the Bill provides for total manufacturing rights over a wide range of activities.
That is why, with sadness because of the expertise and knowledge in the London Transport design centre. I shall have to vote against the Bill.
9.29 p.m.
Mr. Geoffrey Finsberg: How could I have deprived the House of that contribution by my hon. Friend the Member for Harrow, West (Mr. Page)? We shall have to look very carefully to see where omnibuses are going when carrying expectant mothers in future. It may make a lot of difference to a football or cricket team.
I congratulate my hon. Friend the Member for Southgate (Mr. Berry) on his new appointment. I thought that he finished his utterances in this House in a superb fashion. My hon. Friend now enters a period of Trappist silence in his new appointment. We shall miss him very much indeed.

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This has been an interesting debate. One or two points of dispute still remain between the parties. The hon. Member for Woolwich, East (Mr. Cartwright) appeared to support the Bill because it would provide more buses for Londoners. The hon. Member for Enfield, North (Mr. Davies) should not be so arrogant as to say that it is only Labour Members who travel by public transport. Two of the richest people in the House are members of the present Cabinet. We do not have that kind of wealth on this side of the House.
Even if every bus which could be produced were on the roads, we have had admissions from London Transport chairmen past and present that they do not have the staff to drive them. So there is no purpose in saying that had these powers been available in the 1969 Act, London Transport could have done any more than it has to overcome the bus shortage. If London Transport had decided to manufacture and to put its capital—that is, ratepayers' cash—into buses, those buses would have been eating their heads off in the garages and not earning their corn. That would not have been sensible.
The Minister was very helpful and gave a welcome assurance about the Government's attitude. He said that London Transport was looking for better ways to use its resources. I should have thought that everyone who stands in a bus queue waiting for a convoy of No. 11 buses to arrive would believe that London Transport had enough to do supplying viable bus and tube services before going into all these outside ventures.
I do not believe that it is London Transport's job to offer catering, for instance, to outside firms. I should have thought that it would be possible, if the matter were properly worked out, to get many outside caterers to do London Transport catering. That does not come within the Bill but its power to compete with private enterprise catering does.
The Minister then said that London Transport had, through its sponsor, said that there was no immediate intention to use these powers to enter into manufacturing. That is said in some of the documents that we have had from the spon
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sors. But if we pass the Bill, tomorrow it can decide to implement it. It is the words of the Act of Parliament which have to be construed, not the assurances, however well-intentioned, of the Minister, which will count in the end. The Minister talked of these arrangements being entered into on a mutual basis. I wonder whether it will be the same sort of mutual basis as the voluntary planning agreements that we are promised under the Industry Bill.
We all welcome the Minister's recommendation to London Transport that it should seek to amend the Bill should it be given a Second Reading so as to accept commercial responsibility for that clause. It is a pity that that provision was not in the Bill as it was presented to us.
My hon. Friend the Member for Sutton and Cheam (Mr. Macfarlane) in a carefully reasoned case, pointed the concern of many industries at the effect of the Bill. It is right to say that such diverse bodies as those manufacturing building materials and those engaged in catering are worried about the all-embracing powers that the Bill could give London Transport.
The hon. Member for Dagenham (Mr. Parker) talked about competition. Let the House be quite clear: no one on this side is afraid of competition. What we are afraid of is unfair competition in which the hidden overheads of State industries are never costed in and we never know the true rate of return on their capital. That is unfair competition and it is that sort of competition to which the Bill could give rise.
The hon. Member for Ilford, North (Mrs. Miller) spoke about the bus route that she and I know—the C11. I doubt whether there are many opportunities for mass manufacture of that sort of bus. I should not have thought that London Transport would be well advised to enter into a large building contract for them.
The hon. Lady went on to talk about her recent visit to Lisbon and to comment on the view of the Lisbon authorities who are worried because they cannot get new British buses. I am sure that she knows that constant complaint of all manufacturers of British buses is that it is the industrial disputes that they have had which have caused their foreign

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buyers to put no reliance on delivery dates.
The hon. Lady is not the only person who has been to Lisbon or to Stockholm, where I have had conversations with Saab-Scandia. They glory every time there is an industrial dispute in British Leyland, because it gives them the opportunity of getting more of our orders.
I come to some of the provisions of the Bill. Suddenly, London Transport believes that it is expedient that further powers of manufacture should be conferred on it. Why? Many of my hon. Friends have asked why. It appears to be because London Transport wishes to get into the same league as all the other members of the nationalised industries. Indeed, that is in the submission that has been sent to us from 55 Broadway—why, we are asked, should London Transport alone not have powers to supply outside bodies. Just because other nationalised industries have these powers, we see no reason why London Transport, until it is doing a proper job, should be in a position to expand services and divert scarce resources.
I have already mentioned competition. Clause 3(1)(b) refers to supplying outside persons
"in the course of any activity for the time being carried on by the Executive."
This presumably, could mean that London Transport could manufacture uniforms for sale to other people—that is, if, in the course of its duty, it is providing uniforms for its staff. It might hold out a case for selling uniforms outside.
I do not believe that London Transport has made out its case at all. As my hon. Friend the Member for Southgate pointed out, the 1968 Act gave powers to London Transport to do certain things. The 1969 Act specifically recreated London Transport. Although there was a Conservative GLC, there were in power in this House a Labour Government, with a far more tenable majority than that of the present Government. Yet that Government were not prepared to put those powers back, because they realised that London Transport was not capable of doing the sort of work that it wants to undertake.
London Transport must get this right. It certainly is in a position to capitalise upon its know-how. No one on the
834
Opposition benches has denied that it has expertise. It goes abroad and gets substantial fees for advising authorities all over the world how to run a very good bus service. It is perhaps true that it cannot run a good bus service itself, but others are prepared to pay for its advice, which is good in other parts of the world.
Mr. Ronald Brown: I cannot agree with many of the hon. Gentleman's points. What he has said is a little unfair. He knows quite well that the reason for the poor bus service in London has nothing to do with the inefficiency of the service itself. It is due to a whole range of other problems which his Government encouraged at the time, and they stopped the buses from running.
Mr. Finsberg: The hon. Gentleman would have heard that said three or four times if we had had the pleasure of his company very much earlier in the debate.
Mr. Brown: It is still true.
Mr. Finsberg: However, the hon. Gentleman managed to defeat the Department of Industry over IDCs in London and we are grateful for the way he twisted the Minister's arm on that matter.
London Transport has know-how. If that is what London Transport wants to sell in co-operation with private enterprise, that is what should have appeared in the Bill—not blanket powers for utter and complete nationalisation.
Let me quote from a document which many of us received on 14th February from the Parliamentary and Legal Council of the Motor Industry.
"The Parliamentary and Legal Council of the Motor Industry, representing the Society of Motor Manufacturers and Traders, the Motor Agents' Association, the Scottish Motor Trade Association, the Institute of British Carriage and Automobile Manufacturers, and the Motor Cycle Association of Great Britain, is gravely concerned at the extension of powers being sought by the London Transport Executive in this Bill …
At a time when the motor industry both worldwide and nationally has spare production capacity, it is seen as counter-productive and financially irresponsible for a nationalised industry to propose embarking on a plan to extend its manufacturing powers in this way."
That was 14th February. But what has happened since? Suddenly on 26th February, there was a further letter from the

835
Parliamentary and Legal Council of the Motor Industry, which said:
"As I explained to you on the telephone yesterday, at the time when the note which you received from us through Commander Powell was prepared, we understood that the views expressed in it were those held by all the SMMT members who were most affected by the Bill. However, we are now advised that British Leyland do not oppose it."
Why does not British Leyland still opposite it? We are entitled to ask and look behind the scenes. There are three possible scenarios. One is that the presence of the Ryder investigatory team may have put into the British Leyland management the fear that the coffers of Her Majesty's Government will not be opened to any opponent of State enterprise. Or perhaps pressure from Ministers to the same effect was applied. Or perhaps, thirdly, this is another example of the jellyfish attitude of British Leyland when it is called upon to defend private enterprise and when it is asked to manage its own affairs properly on the shop floor.
This is a matter of principle, and British Leyland cannot have it both ways. One either believes, or does not believe, in nationalisation. The Opposition do not believe in nationalisation. We do not believe that State enterprises should compete unfairly with private enterprise. I hear mention of Rolls-Royce. That was a foolish contract entered into by the right hon. Gentleman the Secretary of State for Industry on the RB-211 which nearly bankrupted Rolls-Royce. We remember many other enterprises with which the right hon. Gentleman claimed to be connected. The fact is that it is wrong, and one cannot call it fair competition, that private enterprise which pays taxes has to compete and pay taxes to subsidise nationalised industries which make a loss. That is another reason why we are not prepared to let the Bill go through tonight.
Reference has been made to the Secretary of State for Industry. It would be unfair not to make further reference to him, but I shall go back a little further, to the Labour Party conference in Brighton on 6th October 1971.
Mr. James Wellbeloved: A very good conference.
Mr. Finsberg: I accept that from an expert. The right hon. Gentleman said:
836
"We want industry to be in the public sector to change the power structure of our society."
That may or may not be apposite to the Industry Bill and the National Enterprise Board. It is certainly not apposite to the mandarins at 55 Broadway. They should be concerned with one thing and one thing only, and that is satisfying the demands of the travelling public in London who feel badly let down by London Transport.
As has been said on more than one occasion, this is in no way a criticism of the overworked staff of London Transport. It is a criticism of a management which, without having completed its task, wishes to turn to other fields of endeavour which will bring no direct benefit to the travelling public of London. London Transport should stick to its last. I repeat that its commuters are far from satisfied with its progress. London Transport ought to get its own house in order before trying to get into someone else's house.
I welcome the Minister's statement that the Government will expect London Transport to insert the commercial clause into the Bill, but in spite of that I do not believe it would be right for the House to give a Second Reading to the Bill and I invite my right hon. and hon. Friends to join me in throwing it out.
9.44 p.m.
Mr. Spearing: I hope that I may have the leave of the House to reply to the debate. We have had our differences, but this has been a most interesting debate and I thank the hon. Member for Southgate (Mr. Berry) for his appreciation of some of the points I made.
I, too, had some contact with Sir Richard Way. I do not think we agreed on the majority of occasions on which we met, but we met and corresponded and he said that he would do all he could in the way he thought proper to get London Transport on to a good working basis. Therefore, I join the hon. Member for Southgate in that respect.
The hon Gentleman gave us a legal historical outline, which I think complemented mine and which was a little more practical in approach, and led us into a consideration of the 1969 Act. It is true that the then Labour Minister did not give London Transport the kind of

837
power for which we are asking now. The hon. Gentleman implied that that was London Transport's free choice and that it was something it did not wish to have. We were not told what were the views of his friends on the other side of the river at that time.
It was suggested that Sir Desmond Plummer set the scenario at the time I suggest that the situation was a little different from the fact that the then Government were asking a reluctant Greater London Council to take on board a local enterprise, such as London Transport, which it did not wish to have. My understanding is that the resistance of the Minister had rather more to do with the susceptibilities of Sir Desmond Plummer because the manufacturing facilities of London Transport would have been anathema to the then administration at County Hall. I can understand that a Minister, acting on the view that politics is the art of the possible, would not wish to thrust such a measure on to a reluctant GLC. That is a much more likely explanation of the anomaly.
Mr. Ronald Brown: Does not my hon. Friend realise that at that time Sir Desmond Plummer did not wish to take over London Transport, even though this House was urging him to do so? Indeed, when he got it he tried to cripple it by introducing a provision that it should strive for profitability in each financial year. That made it impossible to run anything better than the sort of service about which the Opposition are now complaining.
Mr. Spearing: There were many considerations involved at the time, but it is news to me that Sir Desmond did not wish to take on London Transport, despite the statutory legal obligations on the GLC at that time in terms of the strategic plan.
I should like to reply to the points made in the debate. The Opposition implied that this was a provision the effects of which would be massive. I do not think that is true. I have already said that there is at present workshop capacity within London Transport. To take an example which is relevant in this context, at the Park Royal coach works, adjacent to my old constituency of Acton, 60 per cent. of capacity goes to London
838
Transport. If the Bill is passed, an arrangement could be made for the use of those facilities on a joint basis with British Leyland—on the same sort of basis as the Conservatives appear to be happy to allow nationally. The Green Line buses which run to Parliament Square, and parts of the London Country Bus Services are serviced by London Transport. Therefore, when we look at the practicalities of the matter, the political theology is less relevant. I shall return to that matter a little later in my reply. The fact that this partnership has been prevented by the present legislation is at the heart of the need for the increased powers which are sought.
The question has been asked whether the promoters will accept the concept of acting commercially. I am glad to say that that is certainly so. Had I been approached on this matter earlier as a promoter of the Bill, I would have made inquiries. I would have been willing to accept similar wording to that in the existing Act and to apply it to the new legislation in accordance with the Minister's request—wording similar to or identical with the wording in Section 134 of the 1968 Act. That task can be undertaken in Committee, and I hope that the Opposition will bear that conclusion in mind when they take their decision a little later.
I was asked about the length of life of buses. It is true that the RM has a design life of about 15 years, but we must remember that the RT had a design life of 15 years too. Some of those vehicles are running well after 20 years. My hon. Friend the Member for Dagenham (Mr. Parker) mentioned the ex-London Transport buses which he had seen operating efficiently in Dubrovnik. Therefore, the long life of London buses has been proved throughout the world.
It would be a pity if bus spares or new designs could not be obtained. If we cannot get spares at home, how will users abroad be able to obtain them? That is not a failure of London Transport. That failure lies elsewhere, and it began long before Sir Don Ryder appeared on the scene. We cannot blame public enterprise or my right hon. Friend the Secretary of State for Industry for lack of spares abroad. London Transport has an overseas advice service. It cannot manufacture abroad or license a company for

839
manufacture, construction or assembly. At present it can provide the advice and know-how, but it cannot enter into a commercial arrangement on production. With the Bill, it could.
I enjoyed the lucid speech of the hon. Member for Sutton and Cheam (Mr. Macfarlane), who went on about the ratepayers. He seemed to suggest that there would be no scrutiny of how the powers were used. The scrutiny would be not with the House but with the GLC, under whatever political colours it happened to be running at the time. The hon. Gentleman's friends, whether in a majority or a minority, would scrutinise the use of the powers in the Bill.
Hon. Members asked where the money was coming from. Any money raised is possibly a responsibility of the taxpayers. But I have explained that in at least one case it could come in kind from existing plant. There need be no large amount of capital involved, or no capital at all, if existing plant such as that of Park Royal is used in a joint effort funded by London Transport and British Leyland. I am told by the promoters that they would wish to borrow the money in the normal manner, under scrutiny from the GLC, which would have to debate the matter and be satisfied that the money raised would be properly spent and that the interest on it could be paid. Therefore, although there may be some risk, it would be up to the GLC to judge.
Mr. Macfarlane: That is why we are seeking to curb the Bill. We are not anxious that the GLC, controlled by a Labour administration, should have wider powers for the purposes to which the hon. Gentleman referred.
Mr. John Page rose—
Mr. Spearing: I do not have time to give way again.
The hon. Member for Sutton and Cheam is entitled to his views, but he is showing a disregard of the qualities of his friends on the GLC and their ability to judge whether a scheme would put ratepayers' money at risk. I do not think that it would necessarily do so. Indeed, I believe that the interest on the capital would perhaps work in the opposite way. But it would be up to the hon. Gentle
840
man's friends to scrutinise the matter properly.
I am in favour of greater scrutiny of what I think the hon. Member for Hampstead (Mr. Finsberg) called the mandarins of London Transport. Great concern for the ratepayers has been expressed, but not much concern is expressed by hon. Members or members of the GLC about the efficacy and efficiency of London Transport. It is doing a difficult job in difficult circumstances, and by and large is doing it quite well. But many of my colleagues in London Transport have given examples of ways in which economies could be made and services could be provided with less money. Often, these suggestions are not taken up. If Opposition Members are concerned about ratepayers' money subsidising London Transport, let them look to the practicalities, and not so much to the theology.
I had a request to have regard to good suppliers and good purchasers. The problem is that London Transport wishes to be a good purchaser, but, for reasons which I have outlined, it has not been able to be one. The goods and machines it wishes to purchase apparently have not been available. That is the point which Opposition Members seem to have forgotten. The matter has not suddenly arisen since Sir Don Ryder and BLMC appeared in a difficult light. It has been going on for many years.
The Parliamentary and Legal Council of the Motor Industry has not had the courtesy to send me a copy of the document which the hon. Member for Hampstead mentioned. Perhaps it did not know that I was involved in the matter. That is up to that body.
I would have thought that there would be ample opportunity for bus exports and bus manufacture in this country. The tragedy is that for reasons at which I can only hazard, those in charge of BLMC do not seem to have ploughed this furrow at all well. It is a very specialised field but one in which Britain has so far excelled and at which perhaps we are not excelling as well as we once did.
Mr. John Page: Could the hon. Gentleman say, first of all, who owns Park Royal Motors? Secondly, as I said in my speech, it was the right hon. Lady the Member for Blackburn (Mrs. Castle)

841
who was then Minister of Transport who refused to allow the grant unless "off the peg" buses were used. She is the source of our troubles, and nobody else.
Mr. Spearing: Had the hon. Gentleman been present at the beginning of my speech he would have heard my reference to that point. On his question on Park Royal Motors, I understand that it is a subsidiary of the British Motor Corporation but it is not far from the works of London Transport.
The hon. Member for Ravensbourne (Mr. Hunt) mentioned catering and suggested that that was not a fit matter for London Transport. He forgets that, unlike this House, London Transport catering has to operate uncommercially over very long hours, sometimes for very few people. That is one of the things that London Transport has to do to keep a good staff and to be a good employer.
My bus friends tell me that "P and T" is one of the most important things in their job and it is something which London Transport must provide. Why have a large kitchen at a bus depot which is empty, and only partly used for a very long time during the day, and an ILEA school or perhaps some other institution close at hand where facilities are duplicated? This is only a proper use of public facilities. There could be some interchange arrangements between these bodies who, after all, are supplying the community with food and supplying the other institutions of which we are all in need.
The hon. Member for Hampstead said that London Transport should concentrate on providing a good service and that it was not shortage of buses which
was causing some of the problems. I am afraid he is wrong. Had he talked to some of the bus drivers in his constituency he would have found that this is not true. One of the things which has caused them the greatest anger in the last few years has been seeing thousands of people waiting in the streets for buses when there are no buses to drive. This was true to a certain extent even at the time of the greatest staff shortage.
Mr. Macfarlane: To a certain extent.
Mr. Spearing: Subsequently it has been even more true as, fortunately, greater numbers of staff are available. The hon. Gentleman mentioned the policy of the GLC. It was his party that was advocating a great construction of ringways in this country which would have meant that we would have had large numbers of cars and further difficulties for public transport.
I conclude by requesting hon. Gentlemen opposite, in particular—indeed, all hon. Members—not to be so concerned with political theology. I believe that many people want to do a good job and want to be part of a good organisation. I believe that potentially London Transport is a very fine organisation—if it is given adequate powers to do its job. With proper scrutiny from the GLC, with people on either side looking at this once-great organisation, it can once again become the lifeblood of London that it was in the 1930s. I am sure we all agree on that. I hope that hon. Gentlemen will allow them to do it.
Question put, That the Bill be now read a Second time.
The House divided: Ayes 122, Noes 104.

Division No. 115.]

AYES

[9.59 p.m.

Anderson, Donald

Coleman, Donald

Fitch, Alan (Wigan)

Armstrong, Ernest

Colquhoun, Mrs Maureen

Flannery, Martin

Atkinson, Norman

Cook, Robin F. (Edin C)

Fletcher, Raymond (Ilkeston)

Bagier, Gordon A. T.

Cox, Thomas (Tooting)

Fraser John (Lambeth, N'w'd)

Bean, R. E.

Cryer, Bob

George, Bruce

Bonn, Rt Hon Anthony Wedgwood

Cunningham, Dr J. (Witeh)

Gilbert Dr John

Blenkinsop, Arthur

Dalyell, Tam

Graham, Ted

Boothroyd, Miss Betty

Davies, Bryan (Enfield N)

Hamilton, W. W. (Central Fife)

Bray, Dr Jeremy

Deakins, Eric

Hamling, William

Brown, Ronald (Hackney S)

Dell, Rt Hon Edmund

Harper, Joseph

Buchan, Norman

Dempsey, James

Harrison, Walter (Wakefield)

Buchanan, Richard

Dormand, J. D.

Hattersley, Rt Hon Roy

Butler, Mrs Joyce (Wood Green)

Douglas-Mann, Bruce

Hoyle, Doug (Nelson)

Callaghan, Jim (Middleton & P)

Duffy, A. E. P.

Hughes, Rt Hon C. (Anglesey)

Campbell, Ian

Dunn, James A.

Hughes, Robert (Aberdeen N)

Carmichael, Neil

Dunwoody, Mrs Gwyneth

Jackson, Colin (Brighouse)

Cartwright, John

Ellis, Tom (Wrexham)

Jackson Miss Margaret (Lincoln)

Cocks, Michael (Bristol S)

English, Michael

Janner, Greville

Cohen, Stanley

Evans, John (Newton)

Jay, Rt Hon Douglas

Jenkins, Hugh (Putney)

Ovenden, John

Stewart, Rt Hon M. (Fulham)

John Brynmor

Owen, Dr David

Stoddart, David

Johnston, Russell (Inverness)

Palmer, Arthur

Strang, Gavin

Jones, Alec (Rhondda)

Parker, John

Taylor, Mrs Ann (Bolton W)

Kelley Richard

Pavitt, Laurie

Thomas, Mike (Newcastle E)

Kerr, Russell

Peart, Rt Hon Fred

Tinn, James

Lamond, James

Pendry, Tom

Torney, Tom

Leadbitter, Ted

Penhaligon, David

Walker, Harold (Doncaster)

Lestor, Miss Joan (Eton & Slough)

Prentice, Rt Hon Reg

Walker, Terry (Kingswood)

Luard, Evan

Price, C. (Lewisham W)

Ward, Michael

McElhone, Frank

Roderick, Caerwyn

Watkins, David

Mackenzie, Gregor

Rodgers, William (Stockton)

Watkinson, John

McMillan, Tom (Glasgow C)

Roper, John

Wellbeloved, James

Madden, Max

Ryman, John

White, Frank R. (Bury)

Marks, Kenneth

Sandelson, Neville

White, James (Pollok)

Marquand, David

Shaw, Arnold (Ilford South)

Whitehead, Phillip

Mason, Rt Hon Roy

Silkin, Rt Hon John (Deptford)

Wise, Mrs Audrey

Mellish, Rt Hon Robert

Silkin, Rt Hon S. C. (Dulwich)

Wrigglesworth, Ian

Mikardo, Ian

Skinner, Dennis

Young, David (Bolton E)

Miller, Mrs Millie (Ilford N)

Small, William

Molloy, William

Spearing, Nigel

TELLERS FOR THE AYES:

Newens, Stanley

Spriggs, Leslie

Mr. George Cunningham and

O'Halloran, Michael

Stallard, A. W.

Mr. Ernest G. Perry.

NOES

Adley, Robert

Higgins, Terence L.

Raison, Timothy

Alison, Michael

Howe Rt Hon Sir Geoffrey

Rathbone, Tim

Baker, Kenneth

Hurd, Douglas

Renton, Rt Hon Sir D. (Hunts)

Berry, Hon Anthony

Irvine, Bryant Godman (Rye)

Roberts, Wyn (Conway)

Blaker, Peter

Jenkin, Rt Hon p. (Wanst'd & W'df'd)

Rossi, Hugh (Hornsey)

Bradford, Rev Robert

Jessel, Toby

Sainsbury, Tim

Braine, Sir Bernard

Joseph, Rt Hon Sir Keith

Shelton, William (Streatham)

Brotherton, Michael

Kellett-Bowman, Mrs Elaine

Shepherd, Colin

Carlisle, Mark

King, Tom (Bridgwater)

Shersby, Michael

Channon, Paul

Kirk, Peter

Silvester, Fred

Clark, William (Croydon S)

Lamont, Norman

Sims, Roger

Clarke, Kenneth (Rushcliffe)

Lawrence, Ivan

Sinclair, Sir George

Cooke, Robert (Bristol W)

Le Marchant, Spencer

Skeet, T. H. H.

Cormack, Patrick

Mates, Michael

Spicer, Jim (W Dorset)

Craig, Rt Hon W. (Belfast E)

Mather, Carol

Stanley, John

Crouch, David

Maxwell-Hyslop, Robin

Stewart, Ian (Hitchin)

Crowder, F. P.

Mayhew, Patrick

Stradling Thomas, J.

Davies, Rt Hon J. (Knutsford)

Mitchell, David (Basingstoke)

Taylor, R. (Croydon NW)

Durant, Tony

Montgomery, Fergus

Tebbit, Norman

Dykes, Hugh

Moore, John (Croydon C)

Thatcher, Rt Hon Margaret

Edwards, Nicholas (Pembroke)

More, Jasper (Ludlow)

Townsend, Cyril D.

Finsberg Geoffrey

Morrison, Hon Peter (Chester)

Tugendhat, Christopher

Fisher, Sir Nigel

Mudd, David

van Straubenzee, W. R.

Fletcher-Cooke, Charles

Nelson, Anthony

Viggers, Peter

Fookes, Miss Janet

Neubert, Michael

Walder, David (Clitheroe)

Fowler Norman (Sutton C'f'd)

Newton, Tony

Walker, Rt Hon P. (Worcester)

Galbraith, Hon. T. G. D.

Normanton, Tom

Weatherill, Bernard

Goodhart, Philip

Nott, John

Whitelaw, Rt Hon William

Goodhew, Victor

Onslow, Cranley

Wiggin, Jerry

Gray, Hamish

Osborn, John

Winterton, Nicholas

Grieve, Percy

Page, John (Harrow West)

Wood, Rt Hon Richard

Griffiths, Eldon

Page, Rt Hon R. Graham (Crosby)

Young, Sir G. (Ealing, Acton)

Hampson, Dr Keith

Paisley, Rev Ian

Hastings, Stephen

Pattie, Geoffrey

TELLERS FOR THE NOES:

Hayhoe Barney

Percival, Ian

Mr. John Hunt and

Hicks, Robert

Prior, Rt Hon James

Mr. Neil Macfarlane.

Question accordingly agreed to.

Bill read a Second time and committed.

BUSINESS OF THE HOUSE
Ordered,
That the Motion relating to Regional Development may be proceeded with at this day's sitting, though opposed, until half-past Eleven o'clock or one and a half hours after it has been entered upon, whichever is the later.—[Mr. Thomas Cox.]

EEC (REGIONAL DEVELOPMENT)
Postponed Proceeding on Motion
That this House takes note of Commission Document R/2055/73, taking account of further developments brought to the attention of his House,
resumed.
10.10 p.m.
The Minister of State for Foreign and Commonwealth Affairs (Mr. Roy Hattersley): At a few minutes before seven o'clock I reminded the House of the origin of the regional development fund of the European Economic Community and the decision made by the Heads of Government of the Community during the Paris Summit in December to give reality to its principles. I was asked about the size and distribution of the fund's benefits. I said that for the first three years the fund will amount to 1,300 million units of account. That is about £550 million. Italy and Ireland are to be the principal beneficiaries and the United Kingdom is to receive almost 28 per cent. of the fund—namely, approximately £150 million. That is, of course, the gross figure. As the fund is financed out of contributions from the EEC Budget, including our own contribution, the net gain is appreciably smaller. It is impossible to calculate exactly, but it seems likely to amount to approximately £60 million.
That is a small sum compared with the £500 million which the United Kingdom spends each year on assistance to industry. However, it represents a modest transfer of funds from the Community to the United Kingdom. It will take its place alongside the benefits that we receive from the Social Fund, the European Coal and Steel Community and the Agricultural Fund.
At the Paris Summit last December the Prime Minister made it clear that
846
for the United Kingdom at least the operation of the fund depended upon the construction of proper regulations governing its use. It is these regulations which we debate tonight. We debate them as an essential part of the scrutiny procedure of the House. Part of one of the documents now before us refers to the Regional Policy Committee which will consider regional matters within the Community. A note about its function appears in paragraphs 8 and 17 of the new explanatory memorandum. It would have been possible to have reached agreement on that committee's terms of reference at the meeting of the Council of Foreign Ministers on 11th February, but I reserved the British Government's position so that the House should be given an opportunity to comment on the proposals before they pass into Community law.
At that meeting I made a second point which I wish to report to the House. The object of the Community's regional development fund is to assist investment and thereby create or maintain jobs. That is obviously the central aim of our own regional development policy, a very large part of which consists of the regional development grant system. Regional development grants in Great Britain are available for the renewal of plant and machinery as well as for the creation of the new physical capital. They are paid automatically on qualifying expenditure in qualifying areas. It is because of that that we find some difficulty in relating each regional development grant to the number of jobs it has either created or preserved. It was proposed—I refer again to the meeting of the Council of Ministers on 11th February—that payment from the regional development fund should be limited to projects which could demonstrate a definite connection between investment incurred and jobs created or maintained.
No one within the Community doubts that regional development grants are eligible for reimbursement from the EEC's fund. Somehow the gap has to be bridged between the knowledge that our own grants qualify for assistance and the technical difficulty of demonstrating their relationship to employment creation or employment maintenance. I made it

847
clear to the Council that a practical solution has to be found which enables regional development grants to qualify under the Community scheme without the British Government being obliged to mount an elaborate administrative effort to match each grant to a specific number of jobs created or maintained.
I referred to the Council on 11th February specifically because it was on that occasion that I insisted that the House should have an apportunity to debate these matters before we came to a final conclusion. I know very well that the Scrutiny Committees of both Houses had before them draft regulations for the regional development fund for many months before the discussions to which I referred in Brussels on 11th February.
The documents still in front of the Scrutiny Committees were adopted by this House last summer, and in theory those documents still lie upon the table. Since they were first prepared the fund and the proposals for its administration have changed. Because of that I submitted to both Scrutiny Committees a new explanatory memorandum which described the present proposals for the organisation and government of the regional development fund. The new document is not simply a list of the changes which have been proposed since last year. It outlines the proposals for the fund as they stood immediately before the Council or Ministers three weeks ago. It describes the document on which the Council of Foreign Ministers and its subordinate committees have been working.
The annex to that document includes actual draft clauses which may become the articles of management of the fund. But although the document includes these clauses the text of the annex is issued on the authority of the British Government, not the Community. The initial Community document which it resembles in extraordinary detail remains confidential to the Council. It has not been published and it remains our policy to submit to the Scrutiny Committees only documents which are published. On this occasion, however, we have described the position the Council has been asked to adopt because we believe that it was right to do so, thus enabling the House to make its judgment and express its opinions on the
848
management of the fund before its rules, conduct and procedures are decided in Brussels next Monday or Tuesday.
Mr. Russell Kerr: You must be joking.
Mr. Hattersley: I am not, but I am interested to hear why my hon. Friend thinks I should be. I must make it clear that in making this document available in an unusual way to the Scrutiny Committee we are doing so without the establishment of any precedent. Our rule remains—it is a rule of the House, and a good rule—that the Scrutiny Committee examines published documents before the point of submission to the Council of Ministers. That is a rule which we should, in general, stick to.
Mr. John Roper: My right hon. Friend said that the policy is to present documents to the House on their point of submission to the Council. Does that mean on the point of their initial submission or on the point of their ultimate submission?
Mr. Hattersley: By that I mean on the point of their initial submission, assuming that they are at that point published. Those are the two criteria—that it is initial submission and that they have been published.
Mr. John Davies: Would that apply, for instance, to a document which was already five years old?
Mr. Hattersley: I think that the right hon. Gentleman has some specific document in mind and I am far too cautious to comment on a particular document, the nature of which the right hon. Gentleman knows but which I do not. If he gives me notice of the point I shall examine the document he has in mind.
Mr. Peter Kirk: By the term "making public", does the right hon. Gentleman mean making public to the British public or to the European Communities as a whole? The annex to which he refers has been public in the European Parliament for about 18 months.
Mr. Hattersley: There are established in statements by my right hon. Friends the Foreign Secretary and the Leader of the House the criteria by which we judge when documents should go to the Scrutiny

849
Committee. My simple point is that those criteria must, by and large, be observed.
On this occasion, because of the importance of the subject and because we wished to meet the needs and wishes of the House, we came to this arrangement. I give the assurance that in future—I think it is conducive to the orderly conduct of business—we shall maintain those rules, although it is right this evening for the House to discuss the regional development fund before my right hon. Friend and I decide on Monday or Tuesday how it should be ruled and governed.
I turn, therefore, to the new document, which was submitted to the Scrutiny Committee. In a number of ways it is a substantial improvement on the document describing the regional development fund, which was debated a year ago. For instance, the detailed definition of "qualifying areas" which appeared in the earlier document has been radically changed and replaced by a more general formula, which appears in paragraph 7 of the new explanatory memorandum. The new definition of "qualifying areas" applies to those benefiting from national systems of regional aids.
That definition is in sharp contrast to the precise—some would argue over-precise—manner of defining qualifying areas which had appeared before in Community documents. That more general definition is much more acceptable to the Government than the previous complicated list of specified districts. It enables the Government to determine boundaries in which both national and Community assistance can be received. As a result, all areas which the Government choose—I emphasise "which the Government choose"—to make eligible for assistance under our own regional policy will qualify for Community aid.
In the distribution of the limited Community funds we may choose to give priority to the development areas, to the special development areas and to development areas in Northern Ireland. Essentially, that choice will be ours, and the intermediate areas will not be excluded.
Rev. Ian Paisley: I am sure that the Minister is aware of the Dublin Government's attitude towards Northern Ireland. Will the Minister give
850
an assurance that the Government will be entirely responsible for regional aid to those areas around the border of Northern Ireland which are inside the United Kingdom?
Mr. Hattersley: Let me make it clear in the most transparently simple terms. If the rules governing the regional development fund which are now proposed are accepted, the British Government will determine the areas into which that aid goes. The sum of £60 million will be available to be spent in those areas, on the application of the British Government. The choice will, in a very large measure, be ours. It will be a gift horse which will be required to run on a specific track, but the track will largely be determined by the British Government in their own designation of the areas which might receive benefit. Therefore, by almost any standards, the flexibility which the Government believe to be right, and which the House has insisted upon on previous occasions, will be endorsed if the rules are approved by the Council of Ministers on Monday.
Mr. Ted Leadbitter: Since the Government intention has been declared, and since it is important to the areas which we have already discussed, will the Minister give a further definition? The Minister said that the British Government may decide on the areas, and he has said, with reference to the matter raised by the hon. Member for Antrim, North (Rev. Ian Paisley), that the British Government will largely decide. Those are somewhat vague terms. Will the Minister be more precise about what he means?
Mr. Hattersley: I shall try. We have established the fact that all areas in Great Britain that are designated by the British Government as appropriate for grants are automatically eligible for grants from the Community. That seems to me to be no constraint. Since the Community grant is appreciably smaller than that which will be devoted to development areas, it will not be spread over the entire area of British technical assistance but will be spread according to the applications we make on behalf of the British development areas for receipt from the Community fund. In those matters the initiative and the determination of the

851
areas to benefit will be decided by the British Government. It is as simple as that—
Mr. John Nott: Will the right hon. Gentleman give way?
Mr. Hattersley: No. I must ask the hon. Gentleman to allow me to complete my speech—
Mr. Nott: This is a crucial matter—
Mr. Hattersley: I will give way to the hon. Gentleman but, knowing my own limitations, I fear that I cannot explain it more clearly than I have already three times.
Mr. Nott: I am sure that it is clear to the Minister, but those of us who are in these designated areas are anxious to know whether a given project in one of these areas is eligible for a direct application to the Community for assistance. Is it essential that this project is channelled through the British Government, or can an organisation which is prima facie eligible go direct to the Community if it is within one of the designated areas which the British Government have agreed?
Mr. Hattersley: I know the hon. Gentleman's views on these matters, but he is taking free enterprise to extraordinary extremes. The object of all development grants is to promote projects in special designated areas according to rules laid down by national Governments and supported by the Community. In that condition, clearly the national Government would have to take the initiative.
There are a number of issues which the national Government have to decide, such as the question whether grants are additional to national assistance or subsumed within it. All these are specified in the rules governing the scheme and, if the hon. Member for St. Ives (Mr. Nott) will read the submission, he will know that that is the way and that has to be the way.
Mrs. Elaine Kellett-Bowman rose—
Mr. Hattersley: I have given way on six consecutive occasions. I think that I
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owe it to the House to complete my speech.
Mrs. Kellett-Bowman: Will the right hon. Gentleman give way?
Mr. Hattersley: I will do so, but this must be the last time.
Mrs. Kellett-Bowman: My own county council wanted to get in touch with the London office of the European Commission to ask whether certain projects that it had in mind were worth proceeding with in the hope that they would be eligible for aid. They included a study of the county, giving disablement training to adults, and solving the drift from certain of our areas. Would it be worth proceeding with them?
Mr. Hattersley: The authority within the hon. Lady's constituency is best advised to apply to Her Majesty's Government. The entire tenor of what I have said is the establishment of the proper relationship between Her Majesty's Government and the Community. Therefore, the initial application for advice should be made to the Government, who will then. I am sure, advise her whether she and the organisation in her constituency are eligible for national assistance—
Mrs. Kellett-Bowman: It is the county council.
Mr. Hattersley: Whatever it is—and whether that national assistance is likely to be increased or augmented by the Government's application for assistance under the regional development fund.
Mr. Bob Cryer rose—
Mr. Hattersley: No. I really must not give way any more.
Mr. Cryer: I am not a member of the Opposition. I am on the Minister's own side.
Mr. Hattersley: I am so astounded by that remark that I can do nothing but slump into my seat.
Mr. Cryer: When my right hon. Friend says that the British Government will be responsible for the regional programme, does not Article 6 suggest that this will be only until 31st December 1975 and that then investments will benefit from

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the fund only if they form part of a regional development programme which is part of a programme towards economic and monetary union? Does not that suggest that that will be subject to the will of the Commission after 1975?
Mr. Hattersley: I hope that that is the last intervention. It does not imply that at all. It implies that there have to be rules for the scheme which meet Community criteria. The regional development fund is not simply a device to allow the Government of Federal Germany to provide money for Great Britain, Italy and Ireland. The object is to meet some Community needs and therefore there have to be Community criteria against which it is matched. But I hope that my hon. Friend will not be worried about the prospect of saying to the Community, "Here you are with money to spare. Here we are using and operating a regional policy of our choice. Will you augment us as long as there are certain minimal rules to which we shall subscribe in order that those benefits come in our direction?" To be worried in those terms seems to elevate theory above practice—
Mr. Douglas Jay rose—
Mr. Hattersley: No. I really must get on.
Mr. Jay: I am also on the right hon. Gentleman's own side.
Mr. Hattersley: Nothing would give me greater pleasure than to allow the right hon. Member for Battersea, North (Mr. Jay) to give me support. But I owe it to the House to complete my speech in order that other hon. Members may make theirs.
In those terms, I continue with what I said about the rules governing the fund. Clearly the new rules are much more acceptable to the Government than the previous list of complicated, specified districts. All the areas which the Government choose to make eligible for assistance are qualified for Community aid. We will have to make judgments ourselves within that qualification, but that is the basic principle of the operation of the fund, and one which we very much welcome. The preservation of our own priorities in the application of regional policy remains our crucial objective.
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If our requirements are met—the preservation of those priorities of our own—we shall be glad to see the fund established and shall welcome the assistance it gives in the solution of our regional problems. If the rules are right the existence of the fund will in no way diminish our ability to implement the regional policy of our choice. The existence of the rules will simply mean two things.
The first is that there will be proper financial control over the management of the regional development fund. We all support that. Secondly, there will be the creation of a fund which has a proper Community purpose. That is essential, because the regional development fund is not, I repeat, simply a device which enables the richer members of the Community to subsidise the poorer members. It is a Community institution whose rules must give it a Community objective. Our obligation is simply to make sure that those rules, while serving the Community purposes, do not hamper the implementation of the regional policy that we judge to be best for the United Kingdom. Having said that, I know very well that any reference to the regional policy judged best for the United Kingdom will inevitably raise in the minds of many hon. Members a separate problem concerning the co-ordination of regional aids within the Community.
Hon. Members will have read in the newspapers that we have today received from the Community a document proposing a way in which regional aid in member countries ought to be co-ordinated. It is a document which the Commission has been discussing in great detail with member Governments over the past six months. It would be wrong—worse than wrong; it would possibly be out of order—for me to go into that matter now. But I do make two points, with justification.
The first is that that document will be debated by this House. Secondly, the freedom to conduct the regional policy which we consider appropriate to the needs of the United Kingdom remains a cardinal renegotiation objective. That does not mean that we reject the idea of co-ordination in these matters. Indeed, each member nation has a great deal to gain from a policy which prevents wasteful competition, the bids and counter-bids in attempts to attract investment resources

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into areas of high unemployment. But we believe, and we insist, that the rules must be so constructed that the needs of British regional policy, as judged by us, can be met within them. That is a matter for future debate.
What is clear this evening is that we are on the point of establishing a successful regional fund. Among the Community members there is a desire to see that fund set to work at the first opportunity. Certainly the Governments of Italy and Ireland believe that its operation is of the greatest importance. We understand their wish and we share their desire to reach agreement on the text of the regulations at the first opportunity. That opportunity is Monday and Tuesday of next week, when the Council of Foreign Ministers meets. Providing our points are met, particularly our point about the eligibility of the regional development grants, it is our intention to see the regional fund given practical life on that date.
10.35 p.m.
Mr. Eldon Griffiths: I start by saying that I am glad to be back, since it is five or six years since I played some part in European debates. I have some sympathy with the right hon. Gentleman, as he has now become, because in that period he was taking many difficult orders in a different Department and was confronted with a problem similar to that which he may yet be seen to have tonight—namely, that he had to do a better job of convincing his own side than of convincing ours.
Having said that, may I be quick to shower one or two compliments around the House? My first would go to the right hon. Gentleman and to the Foreign Secretary, who spoke in such a relaxed manner in our earlier debate, on the way in which they have been conducting their negotiations with Europe. The Foreign Secretary has gradually come to espouse a cause which some years ago I for one doubted whether he supported. I congratulate both right hon. Gentlemen on the support which they are now giving to Europe.
I would also offer my congratulations to my hon. Friend the Member for Saffron Walden (Mr. Kirk) on the immense work that he does as leader of what is
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at this point the British delegation to the European Parliament, although it is made up solely from the Conservative Party. Whether hon. Members present tonight are for or against the EEC, one thing that no one would doubt is the diligence and care with which our parliamentary representatives in Brussels and Luxembourg look after the interests of this House.
Third, we are indebted to my right hon. Friend the Member for Knutsford (Mr. Davies), as well as to other hon. Members of the Scrutiny Committee, for the immensely valuable job they do in wading through enormous numbers of documents and alerting us to those which we should debate.
The Conservative side of the House generally welcomes this document. It and the regulation that I hope it foreshadows are very much better than the proposals that we had a look at some six months ago. The document is very much simpler. Instead of a whole series of rather complicated regulations, we have one consolidated regulation which is very much easier to understand. I think that it will also prove much easier to administer than the previous one, which had a whole series of different maps and rules.
I welcome it also because the details of how the fund is actually to work—with the regional fund committee having a general oversight and the new management structure being provided—are all spelled out. I believe these arrangements to be reasonably practicable and businesslike.
We are naturally bound to look at this matter almost exclusively from a British point of view but one of the things which slightly saddened me in our earlier debate is that very few hon. Members, particularly on the Government side, seemed to recognise that we are in a Community. This is a situation which may yet change, I accept, but we owe it to ourselves to look at these matters not only in a British light but in terms of the European Community as a whole, of which we are a member. I am glad that the Minister himself took that point.
Looking at it from a strictly British point of view, one can welcome the regulation for three main reasons. First, the establishment of this fund is something

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that successive British Governments have sought for a long time. My right hon. Friend the Member for Sidcup (Mr. Heath), my right hon. and learned Friend the Member for Hexham (Mr. Rippon) and my hon. Friend the Member for Saffron Walden have sought the fund for a long time, and have negotiated hard and skilfully to achieve it. The right hon. Gentleman and his right hon. Friend the Foreign Secretary have done so, too. At long last the original idea which was enshrined in the Treaty of Rome and which has gone through some very difficult passages along the way is now at the point of being realised. We can regard that as a useful British achievement.
The second reason why I welcome it is that it will provide some tangible assistance to this country. As the right hon. Gentleman fairly said, the total—some 1,300 million units of account—is much less than we would have hoped. The day may come when it will be more. As the right hon. Gentleman also very fairly said, although this works out in principle to some £150 million over the three-year period, in practice, taking account of our contributions, the net benefit to Britain will be only about £60 million, or some £20 million each year. I doubt, however—perhaps the Minister will correct me if I am wrong—whether it will be paid out over a narrow three-year period. It will probably spill over into a fourth and possibly even a fifth year.
The sum of £20 million a year is certainly not riches. It is certainly much less than we would have wished, and very much less than I hope one day to see. Nevertheless, it is all gain. Much of it is foreign exchange, across the balance of payments. It will do much good—and, never let us forget that we would not get it at all if we left the European Community. That point deserves to be stressed.
It is also fair to put this fund in the context of the many other forms of assistance which we are already getting from membership of the Community. I mention only a few. The grants for the coalmining industry from the European Coal and Steel Community, Very large sums of money have been made available to help redundant miners and I hope that that is recognised by both sides of the
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House. Substantial grants for the steel industry have been obtained from the European Coal and Steel Community. About £9 million, for example, has been made available to help redundant steelworkers. I hope that hon. Members on the Government side of the House will recognise that these are tangible gains to Britain from Europe.
I might add—although perhaps I should not stray along this path—that we have benefited from cheaper food for the British housewife in a number of instances—such as bread, sugar, beef, for some, and butter. Thanks to the operation of the monetary compensatory amounts by the CAP, the British housewife has been protected from the adverse effects of the decline in the value of the pound.
There are, therefore, tangible and real benefits which Britain is already deriving from its membership of the European Community. We have here in this fund the beginning—no more—of another range of real benefits for the people of this country.
Mr. Norman Buchan: I admit that the hon. Gentleman was making a throw-away remark, but if he will draw things about agriculture into an industrial debate, he must not mind being corrected. If he claims that the CAP is allowing us to have cheaper food for Britain than we would get by buying on world markets, why does the EEC insist on maintaining the levy? Either it is because some third country food is cheaper or, if it is dear, it has the effect of making it dearer. Why are we paying £300 a ton, for example, as a tax on top of the price of New Zealand butter? It is time that this kind of nonsense stopped. I do not believe—very few people involved closely with this matter believe it—that that claim is any longer valid.
Mr. Griffiths: I think I should be wise not to be tempted far along that road. If the hon. Gentleman will forgive me, I shall not pursue his argument for the moment.
I say simply that it is the fact that we are now obtaining cheaper food in those particular categories within Europe than we could possibly obtain from without.

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Therefore, I recognise, secondly, that this fund holds the promise of tangible gain.
The third reason why I welcome the prospect of this new regulation is that it is a demonstration of the Community's essential flexibility, its willingness, and its power to adapt its institutions and its arrangements to the very varying needs of its members and to the different pressures of time and events.
Very often, the Community has been portrayed on both sides of the House as a rigid unmoving monolith. This fund proves this is not true. After a great deal of argument, after a great deal of horse trading, after difficulties of accommodating the needs of some countries who need to be helped and the diffidence of others to provide that help what has emerged is an arrangement that reflects the essential flexibility and adaptability of the Community's institutions, its ability to make arrangements to meet the national needs of its members. I believe this flexibility, this ability to accommodate itself to circumstances and needs, is one of the most important aspects of the Community that have emerged in the negotiations on this matter.
Mr. Wyn Roberts: My hon. Friend referred to the net value of the benefit of this country as £20 million per annum, and the Minister referred to a total net intake of £60 million. Does my hon. Friend agree that that is a low net figure, considering that we start with a gross figure of £150 million?
Mr. Griffiths: With respect to my hon. Friend, I think that he slightly misheard me. I said that if from the £150 million over the three-year plus period one subtracts the contributions which we shall be making to the Community during that period, the net figure which we shall receive will be about £20 million per annum, or a total of about £60 million over three years.
I return to the point I was making, which is that the flexibility of the Community has been demonstrated, and I think I am entitled to remind the right hon. Gentleman that this was precisely what my right hon. Friends foresaw when they were negotiating the arrangements for British accession. It is right that I
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should once again quote the 1971 White Paper, when the then Government said:
"The Community has declared to us during the course of the negotiations that if unacceptable situations should arise the very survival of the Community would demand that the institutions find equitable solutions."
I believe that it is precisely because the Community is flexible and is willing to find equitable solutions to meet the needs of its members that the right hon. Gentleman and his colleagues have been able to negotiate improvements, which we too would have done.
I turn to some of the technical points within the regulation on which I hope the Minister will help when he replies. There are some welcome phrases in Article 4. It says that the fund may contribute to the financing of investments which are economically sound in undertakings that are competitive. I welcome those words. What a contrast they make with the language of the Secretary of State for Industry in the Industry Bill under which he proposes to disburse British funds in an entirely less prudent fashion.
Mr. Leadbitter: On a point of order, Mr. Deputy Speaker. This is a limited debate, and a number of back bench Members with considerable experience of this subject are waiting to speak. Is this a matter for the two Front Benches, or for the House as a whole?
Mr. Deputy Speaker (Sir Myer Galpern): Hon. Members will appreciate that the debate must end at 11.30 p.m. The Chair does not have the power—though I sometimes wish it had—to limit speeches. This is a matter which calls for co-operation and good will between hon. Members.
Mr. Griffiths: I assure you, Mr. Deputy Speaker, that I shall manage to confine my remarks to a shorter period than that taken by the right hon. Gentleman, and I shall be helped if Labour Members will allow me to get on.
I wish to deal with Article 4 and to say to the Minister that I very much welcome the requirement that this investment should be in projects that are economically sound and in undertakings that can show themselves to be competitive. With respect to what the right hon. Gentleman said, it is not a gift horse. There has to be a reasonable demonstration

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that the projects to which assistance is given are sensible and prudent.
Under Article 5 the Commission is expected to look at the consistency of the investment with the general regional policies of the nation in question. That also makes sense. I welcome such phrases as
"co-ordination of contributions from the Fund"
and references to the consistency of the development, and so on. How is all that to be achieved? I understand that when projects go forward they are to be monitored, and that this monitoring is to be done in the first instance by the national Government. But on occasions mixed teams of officials from the national Government and the Commission will examine the expenditure to see that it is prudent. I welcome that, but the Minister should come clean with the House on the question precisely how that monitoring is intended to be done.
Article 8 deals with the way in which applications for assistance are to be made. Who exactly can apply? The Minister suggested that it would be the Government alone. I am sure that he is right, but in the case of the Social Fund, under the European Coal and Steel Community, it is not only through national Governments that applications are made and money is paid out. I also believe that applications for assistance from the European Investment Bank may be made direct, and not only through the national Government. Is that not also the case in FEOGA? It may be that the right hon. Gentleman would prefer to take advice on those questions. If so, perhaps he could write to let me know exactly who can make applications. If it is exclusively the Government, we might want to consider the matter again.
In Article 10, concerning monitoring, it is stated that
"the competent authorities of that member State shall carry out audits on the spot".
That is right. However, I should like to be sure that the House will be informed of the conclusions reached when assistance is given to local projects.
My last detailed point concerns the Financial Regulation. Will the right hon. Gentleman assure the House that the arrangements for the annual budget of
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the fund will be communicated to the House as well as to the European Parliament?
I end as I started, by welcoming the regulation. Much of our debate has been rightly concerned with how much money we shall be able to get out of the Community because of our embarrassed circumstances. It is reasonable that we should do that. But I hope that the time has come when those who believe that the European Community is right for Britain and for Europe will get off the defensive, and stop just excusing and defending what we are doing, and get on to the offensive, and say with pride that we are taking part in a great human undertaking which is immensely worth while.
Europe is not just economics. I suspect that our debates will be read by members of the European Parliament and people in other Governments. I hope that it will not be said that the only interest of the United Kingdom in Europe is how much we can gouge out of it. I am interested in what we can contribute as well as what we can take.
10.55 p.m.
Mr. James Lamond: Although I am not a strong supporter of British membership of the EEC, I fully recognise the value of what this document outlines. I cannot accept the invitation of the hon. Member for Bury St. Edmunds (Mr. Griffiths), who suggested that we should look at the matter not merely from a British point of view but from an EEC point of view. I wish to look at it from the point of view of my constituency, which I think is equally valuable in a debate of this sort.
The question of regional development aid has aroused great interest in Oldham. After a considerable struggle during the period of office of the Tory Government, the area was given intermediate area status, which was very valuable. I shall not be churlish and say other than that. I give full credit to the then Tory Government for it. However, now the Oldham local authority is anxious to ensure that the area is not placed at any disadvantage by the new regulations. Only the other day it wrote to me in the following terms:
"It was pointed out"

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in the economic development sub-committee
"that, whilst the situation was at present somewhat uncertain,"
with regard to the EEC regional policy
"general principles had been discussed during the Prime Minister's visit to Paris late in 1974 and it was anticipated that the likely outcome would be that some £140 million of aid would be allocated from the EEC fund to development areas over a three-year period".
That hope has not been entirely realised. The £20 million per annum about which we have heard tonight is a small recompense and small advantage to set against our membership. Nevertheless, I recognise that there is something in it. [An hon Member: "It is net"] Yes, net. I am prepared to concede that it is of value, and we in Oldham look forward to sharing in it.
The letter continues:
"Whilst some 28 per cent. of this aid would be earmarked for the U.K., it was expected that the criterion for aid would clearly be the level of patent unemployment".
That is the telling phrase. The economic development sub-committee in Oldham was afraid having looked at a document containing a list of areas which would benefit, that Oldham would not enjoy these advantages. I am glad to say that we have made a considerable advance from that point. I welcome the change in the regulations to the effect that the areas which are recognised by the British Government as deserving of aid will still qualify. However, I was a little disturbed when I heard later that the Government would consider whether these areas should benefit.
I hope that my right hon. and hon. Friends will bear in mind that there are criteria other than unemployment levels which should be considered. Members representing constituencies in the North-West will confirm that in times of unemployment in areas which are dependant on the textile industry, for example, many women lose their jobs or go on short time and this is not reflected in the unemployment figures because many of them do not register as unemployed but merely go home and wait in the hope that business will pick up in the textile mills.
The economic development sub-committee in Oldham wishes the Government to take into account dereliction in the area. I hope that dereliction will be put
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forward as a reasonable criterion next week and that it will be pointed out that in the North-West industrial areas which have suffered greatly from dereliction because they were perhaps the first industrially developed areas in Europe are now behind the times and require considerable assistance in order to catch up with areas which are being helped merely because they have high unemployment rates.
I welcome this. I am sorry that the amount is so small and I take the point that my hon. Friend the Member for Keighley (Mr. Cryer) made, that it is not a guarantee for the future, that there is a date in the document, the end of this year, by which time some changes must be put forward, firm proposals about criteria which may not agree entirely with what we are discussing. I plead with my hon. Friend to bear in mind other considerations such as unemployment statistics.
11.0 p.m.
Mr. Russell Johnston: I want to say something of a critical nature, but basically the first thing is that we should all welcome the important and significant step which has been taken by the Community. The Community has, for the first time, accepted that resources should be shifted from the rich areas to the poorer areas.
The sum of money at present allocated is, I agree, small, but the basic decision has been made and it is of great importance. The Community, in passing it, runs against the argument which one heard from those opposed to our entry during the long debates about the Bill in 1972, that somehow or other the Community would wish to interfere with and stop British regional aid programmes.
What is significant about this is that it is hardly deniable that there will be great economic centralising forces in Europe—the golden triangle of Paris, the Ruhr and London, which is a reality—but that the regional fund offers to Britain an opportunity of correcting that centralising force from the Community's funds as well as from within our own resources. This is an important matter, whatever the broad-minded, tolerant, open-minded hon. Member for Renfrewshire, West (Mr. Buchan) may say from a seated position.

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I did not much care for the pattern of the Minister's speech, although one perhaps understood the reason it was so fashioned. First, he said, we are to receive 28 per cent. of the allocated £550 million, not 27 per cent. or 29 per cent., but 28 per cent. exactly. I am not sure on what basis it is possible, if we are talking about a shift of resources, from the richer to poorer areas of the Community, to make a tight allocation on a national basis in advance in that way. I do not think it is the best way of doing it because I am personally against the juste retour, against the allocating of regional policy or money from the regional fund in terms of "We are going to get just a bit extra and the balance of advantage which would otherwise be denied us."
If we look carefully at Article 4(e) we see that it says,
"it is now specified"
—and the Minister made much of this being an advantage—
"that assistance from the RDF may be used to supplement or reimburse national aids".
I imagine that the Treasury has been hard at work on this and that it regards the regional fund as a means of bringing to Britain the money she has been spending on the CAP, but if the regional fund is meaningful in terms of giving financial assistance to the less-well-off areas of the Community, in my opinion it should not be used as reimbursement but always as an additional sum of money to that country—certainly not as reimbursement of something which would have been spent otherwise in any event. If not, there will be no shift of resources and we shall not achieve our objective.
The Minister—to applause from the Government benches—emphasised that the disposal of the regional fund money which would come to the United Kingdom would be through, and only through, the British Government and would follow, and only follow, the determination of the British Government as to what was and was not appropriate. That is all very well, but if a regional fund operating throughout Europe is to have the effect of shifting resources from rich to poor areas, it should be administered on the basis of objective criteria which apply to every country. If it is to be based upon each individual country's own interpretation,
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there will be variations from one country to another and we shall not achieve our objective. I hope that the Minister will convey to the Council of Ministers who will be meeting on Monday and Tuesday that it is a question not simply of basic criteria—employment, sparsity of population, average wage levels, emmigration and so on—but also of the Community as a whole looking at the administrative geographical patterns within the various countries.
No doubt the regional development committee which will be set up will assist in this. When the Minister made one of his periodic statements to the House I asked him a question about it. He is a very calming Minister, and he said "Do not worry. The regions of England, Scotland and Wales will be taken care of"—or words to that effect. The regional development committee is to consist of two civil servants from each country plus, on an ad hoc basis, various extra officials. I am not convinced that that will be a helpful method of allowing the regions to express their needs on a Community level.
I am not sufficiently idealistic to believe that what we say tonight will have a galvanic effect on the meeting on Monday and Tuesday, but I ask the Minister to emphasise that Article 4 should be relatively broadly interpreted. We must not say that the money is to be spent purely on economic matters and exclude altogether expenditure on education, cultural facilities and so on. Those facilities are important in under-developed regions if we are to produce the right environment to attract the people who are able to create the wealth and persuade them to stay and be happy there. Regional development is essentially not a question of economics but of providing for people a reasonable social environment in areas where free enterprise does not do so.
My criticism of the Ministers approach is that unless there is national acceptance of supranational rules, the regional fund will have no Community meaning. I was sorry that the Minister seemed not only to be moving in the opposite direction but to be emphasising it, but perhaps that is merely part of the character of the debate rather than the character of the Minister's own views.

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The Minister said that the debate is being held because he wanted us to have some say in the final decision that is to be taken on Monday and Tuesday. Alas, I do not believe that we shall be able to change anything very much. However, perhaps what we say today may count, as each thought counts in these matters, towards some future amendment of the operation of the fund. I hope that that operation will move in the direction of objective criteria rather than intra-national bidding.
11.11 p.m.
Mr. David Marquand: I find myself in considerable sympathy with the hon. Member for Inverness (Mr. Russell Johnston) in a great deal of what he said. I find myself in this debate in a curiously divided frame of mind. I speak as someone who voted in 1971 in favour of entering the Common Market. I did so not because I liked the structure of the Common Market as it then was but because I thought that it was right to try to change it from within in a Socialist direction. I believed in the building of a Socialist Europe. I thought it was possible to achieve a Socialist Europe only if we were in the Common Market. From that point of view I must say that I am somewhat ambivalent about my right hon. Friend's speech and the document that has been presented to the House.
I believe that the sort of Europe that I want to see can be achieved only if there is a strong and supra-national regional policy that is operated, as the hon. Member for Inverness said, according to objective criteria from Brussels. I do not believe that we can create a Socialist Europe if our sole concern is to get the greatest possible return for this country. We can create a Socialist Europe only if we are as concerned about the poverty and unemployment in Southern Italy as we are about the poverty and unemployment in Northern Ireland. With great respect, I am a little concerned that my right hon. Friend seems to be concerned solely with the interests of this country.
Mr. Tom Ellis: Does my hon. Friend agree that apart from getting a Socialist Europe, the greatest return to this country would result from a supra
868
national arrangement for the whole of Europe?
Mr. Marquand: I believe that that is so. I shall develop that point later.
I am sure that we all agree that the size of the regional development fund is far too small. It does not begin to measure up to the dimensions of regional imbalances and inequalities in the Common Market. I find it regrettable that in the renegotiation exercise that my right hon. Friends have been conducting since the Government came into power they have not devoted more effort to increasing the size of the fund and less effort in achieving some of the other objectives set out in the Labour Party's manifesto. It would have been more important and more valuable to Europe and to us if some of the negotiating muscle that they have directed to other areas had been directed towards the fund.
None the less, it must be conceded that the regional development fund, although disappointingly small, is an extremely important step in the right direction. It marks a crucial change in the philosophy of the Community. The philosophy underlying the Rome Treaty was one of competition and of very little or no supranational intervention in economic activity. That philosophy has shown itself to be ineffective and to have led to increasing regional inequality in Europe.
By proposing the setting up of even a small regional development fund the Commission has shown that it has broken fundamentally with the philosophy which underlay the Treaty of Rome, and that is an extremely important step for the Community to take in its development. It is a small step but it is a step in the right direction, and it is one which I believe a Labour Britain in Europe could push even further in that direction.
The regional policy committee is in some respects far more important than the fund. All of us who have been interested in the regional policy of this country—I represent an intermediate area and many of my hon. and right hon. Friends represent intermediate and development areas—must surely by now acknowledge that the spending of money by government is only a very small part of regional policy. A whole lot of other policies are needed by government if jobs

869
and opportunities are to be steered into areas that need help. In this country, for example, I would say that the industrial development certificate has been far more important as a way of steering investment into the assisted areas than is the money which is spent by central government. The regional policy committee in the enlarged Community can develop similar instruments on a European level.
I ask my right hon. Friend the Minister when he goes to the Common Market next week to press that the regional policy committee should look not only at the disbursement of money but at all the other ideas put forward in the original George Thomson Green Paper on regional development some time ago, particularly the idea of a congestion tax for overcrowded areas. I hope he will look, too, at the idea of some sort of European investment bank which would steer investment to the areas which need help.
Mr. Buchan: I agree with what my hon. Friend says, but he is not describing the aim and purpose of the proposal. The document says that it is
"to give a high priority to the aim of correcting the structural and regional imbalances which might affect the realisation of Economic and Monetary Union"
and it has nothing to do with rich and poor areas.
Mr. Marquand: My hon. Friend has raised an extremely sensitive question. It is the existence of regional imbalances within Europe that makes it impossible to achieve the ideal of European monetary and economic union. All of the participants in the Paris summit agreed to that.
Mr. Nott: On a point of order, Mr. Deputy Speaker. Since the hon. Gentleman is taking up a fairly considerable amount of time when many other hon. Members want to speak, may I ask that he address himself to the House generally rather than to his hon. Friends. In that way we should at least be able to hear what he is saying.
Mr. Deputy Speaker (Sir Myer Galpern): I agree. I was about to draw the hon. Member's attention to the fact that this was not a dialogue between himself and the hon. Member for Ren-ferwshire, West (Mr. Buchan).
Mr. Marquand: I apologise, Mr. Deputy Speaker. I was misled by my hon. Friend. He raised an important point and I thought that I should at least try to reply.
The establishment of the regional development fund is important for Europe and for the United Kingdom. I urge my right hon. Friend, when he is in Brussels next week, to make sure that it is used in a European and not simply in a Gaullist, way.
11.21 p.m.
Mr. John Davies: The object of these debates is to inform the Minister of the feeling of the House. I shall have very little to contribute to the debate because of the time factor. So far two Government back benchers and one Liberal Member have been called. I am the first Conservative Member to be called. It is past belief that that can be considered an adequate way of impressing on the Government our views on the vital matter of regional policy. We have only to see how many hon. Members are present to realise how many people are concerned about the matter. Therefore I feel that the arrangement is unsatisfactory.
The hon. Member for Inverness (Mr. Johnston), correctly in my view, drew attention to the extraordinary importance of the words
"to supplement or to reimburse".
Although "gross" refers to the regional development fund, and "net" refers to the contribution to the budget of the Community, in terms of the amount allocated it is the larger figure of £60 million per annum which is available for us. Will the Minister say what is the Government policy on the matter?
It would be unusual if the intentions underlying the fund—we are all concerned with its inadequacy—were so far reduced as simply to devote the net figure, after the deduction of the Treasury discount, for the purposes of the regional policy.
I make no apology for referring to the co-ordination of regional aid since it has been stated in the Press and elsewhere that the two issues must go hand in hand. Some members of the Community insist that the co-ordination of regional aid should be agreed at the same time as the regional development fund. I should like

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the Minister to give us his assurance that next week, when he deals with the regional development fund, we shall have a chance of debating the question of the co-ordination of regional aid.
All areas in receipt of national aid now qualify for aid from the fund, but some preference will be given to national priority areas. I wonder whether that is entirely wise. Many intermediate areas in this country can suffer more in times of adversity than the development areas. There is a problem in the North West where we have recently seen Merseyside converted into a special development area, with dramatic effects on the rest of Lancashire, which the Conservative Government went to some pains to help. I hope that the preference for the national priority areas will not prevent the Government from making an objective judgment as to the place in which the need is greatest.
11.25 p.m.
Mr. Hattersley: With your leave, Mr. Deputy Speaker, and that of the House, I wish to make four points in reply to the debate.
First, I do not intend—and that is why I did not seek to rise earlier—to try to answer the matters of individual concern, because it would be wrong to impose any further on the time of the House. I paid the penalty for allowing nine interventions in my earlier speech, although I warned about the last two, and I am sure that the House will not expect me to take more time in answering individual questions, although I propose to do so in the next few days in letters to the hon. Members who raised them.
I must say to the hon. Member for Bury St. Edmunds (Mr. Griffiths) to whom I offer my congratulations on his appearance on the Opposition Front Bench to deal with these matters, that the points which I shall be making to him will be matters of explanation rather than correction. I am sorry to disappoint him about that, but they will be clarification rather than withdrawal and correction.
Mr. Cryer rose—
Mr. Hattersley: I made the mistake of giving way too often earlier, and I propose not to do the same in the remaining four minutes.
Mr. Cryer: On a point of order, Mr. Deputy Speaker. In an earlier intervention, the Minister said that my point elevated theory above practice. My point of order is to ask whether these documents are binding legal documents ultimately or whether they are merely guidelines which have no statutory definition or interpretation whatever.
Mr. Deputy Speaker: I am afraid that that is not a point of order. I am not a Member of the European Parliament.
Mr. Hattersley: No and, with respect to you, Mr. Deputy Speaker, even if you were a Member of that exalted body it would not affect the condition of these documents which go to the Council of Ministers on Monday or Tuesday of next week and, subject to the approval of the Foreign Secretary and the other Foreign Ministers will, if there is unanimous agreement on them, become the prevailing law of the Community, which is why we ask the House of Commons to let us have its judgment and comments about them before next Monday.
I have three remaining points to make. The first concerns the areas to which the right hon. Member for Knutsford (Mr. Davies) and others referred. I understand the right hon. Gentleman's point. My only point was that the judgment as to the use of these grants and as to which areas are most appropriate will remain in this House and with the Government. If the right hon. Gentleman believes that they have been used in areas less appropriate than others might be, it remains open to him to raise them with the Government and to make his criticisms to us.
Then there is the right hon. Gentleman's point about whether it is to be used as an addition to the grants made nationally or whether it is to be used to obtain for the Treasury what he described as reimbursements. That remains a matter for national decision. Again, it is for this House to explain to the Government its views on whether these should be additional grants or whether they can save Treasury expenditure. For my part, I believe that they should be additional grants, but I have to make it clear that that decision remains with the Government, and that decision has not been taken.

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I make one final point to those who suggested that I was being less than enthusiastic about the Community objectives of the fund and that I talked in narrow, nationalist terms about its benefits. I had the privilege in the Council of Ministers in December of making the statement, which amongst others, began to realise the concept of the regional development fund. I said that I believed that the Community could not exist, according to its beliefs and principles, if the least wealthy areas in its boundaries were not assisted by the most wealthy areas. That is essential to the principles on which the Community was founded.
But, every time that we, as a country with one of the lowest gross domestic products, ask for an extension of the fund, we ask the more wealthy nations to subsidise us, and there is a limit to the speed at which that can go. I want to see the speed increase. I want to see economic convergence. As one of the countries which number among the least wealthy in the Community, it is in our interests to converge with those countries at the top of the scale of gross domestic product per head. But there is only a certain speed at which that can go.
I believe that tonight's proposition represents that speed, and that we ought to welcome it.
Question put and agreed to.
Resolved,
That this House takes note of Commission Document R/2055/73, taking account of further developments brought to the attention of the House.

STATUTORY INSTRUMENTS

  SEA FISHERIES
  Motion made and Question put forthwith, pursuant to Standing Order No. 73A (Statutory Instruments),
  That the Fishing Vessels (Acquisition and Improvement) (Grants) (Amendment) Scheme 1975, a copy of which was laid before this House on 11th February, be approved.—[Mr. Coleman.]
  Question agreed to.

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

DYSLEXIA
11.29 p.m.
Mr. John Watkinson: In this short debate I wish to raise the problem of a small but significant percentage of schoolchildren, namely, those schoolchildren who suffer from dyslexia. The term "dyslexia" can be applied to children who have an inability to acquire, or a difficulty in acquiring, the skills of reading, writing and spelling. Many children have such a difficulty, but what sets dyslexic children apart from others is that their disability is unrelated to intelligence or to emotional or environmental problems. Also, it cuts across all social classes.
Thus, there can be a situation in which a child is bright but when confronted with the overwhelming problem of dealing with the written language he is unable to cope.
It should be stressed that children come to the written language at about the age of 5. They come to that meeting with the written language at different stages of development. Children mature at different rates, and at differing rates of maturity they come face to face with language.
Language is artificial. It is man-made. It moves from left to right. It is sequential. It follows certain rigid rules and patterns. Some children have great problems in absorbing, recalling and reproducing language. It is no fault of theirs. It is, rather, due to certain genetical factors so that there is a slowness in the development of the basic brain functions that underlie learning to read and to spell. This is why it has become known as the maturational lag.
The effect of dyslexia upon children can be considerable. The inability to read or write can be considerable in any child, but when the child is bright as well it can be doubly disadvantageous.
I came across the problem when I met the child of a constituent of mine—Andrew Frost, aged 11. The facts surrounding his case are probably typical of other dyslexic children. When he went to school at the age of 5 he was bright and lively. His progress was slow, but he was tested and on his intelligence quotient test he was shown to have a rating of over 100.

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His parents were told not to worry about this. He went on to a middle school at 8½ and was given a remedial teacher. He made some progress.
The effects over those three and a half years were to produce a nervous disposition in the lad, sickness and stomach troubles. He was taunted at school. He received sympathy from some teachers, but others treated him as a dullard. His mother says that it was heartbreaking to see him put so much effort into his work when the returns for the lad were so minimal.
Andrew moved into my constituency. Again he was tested, and again it was shown that the lad was intelligent but dyslexic. His parents were confronted with the problem of which school to send him to and decided, because of the emotional problems with which the lad was presented, that he should go to a school for the educationally subnormal. The school was totally unsuitable for the lad. Andrew very soon approached his parents and asked for extra tuition. The parents decided to make inquiries of the county council as to what should be done and whether the council would make a grant for the child's further education, possibly at another school.
The parents found such a school. It is an independent school in Swindon. The county was unable to make a grant for the purpose. Nevertheless, with the help of friends the parents were able to send the lad to that special school in Swindon. There he received the special training and treatment which he needed. He was taught on a one-to-one, regular basis each week, and the progress he made was dramatic. His faith in himself was restored. The problem now facing the parents is where and how they can find the funds to maintain the child at that school.
What it indicates, however, is that if children who are dyslexic are deprived of the special, remedial teaching which they need, there can be engendered in them a fear of school, and emotional blockages and inferiority complexes can develop. Reading can become a torment. It becomes something which has to be avoided. Indeed, we know from the rates of adult illiteracy how successful some people, through no fault of their own, are at avoiding reading.
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What is more, acute embarrassment can be caused at later stages of the child's development. Examinations become an almost insuperable problem. When the child leaves school and seeks a job, the job opportunities available are severely restricted because of his inability to read. Such people have to seek jobs which do not involve reading. They have to find jobs which involve the use of their hands rather than their head.
It is difficult to know the extent of dyslexia in this country. Some people say that it is as high as between 5 per cent. and 10 per cent. We know that its prevalence is mostly among boys in a ratio of four to one. We also know that when a programme was put out under the auspices of the British Dyslexia Association in midweek on Thames Television, a regional programme, it provoked over 1,200 letters to the association within three weeks. Perhaps that indicates the size of the problem.
There has been an official response to the nature of the dyslexic problem, notably under Section 27 of the Chronically Sick and Disabled Persons Act. Under that Act a duty is placed on local education authorities to provide the Secretary of State, at such times as he may direct, information on the provision made by those authorities for special educational facilities for children suffering from acute dyslexia. I might say that the adjective "acute" is unnecessary, because dyslexia is an acute condition in itself.
There was an Ombudsman's report in August 1974 which arose out of a complaint of parents as a result of the non-implementation of Section 27 of the Act. The Ombudsman declared that the duties imposed upon the Minister were discretionary, but he went so far as to say that the Department was unsatisfied with the progress which local education authorities had been making. He indicated that the Tizard Report, which had dealt with this problem, was unhelpful in dealing with the causes and the treatment of dyslexia. He indicated, however, that the Government were awaiting with expectation the report of the Bullock Committee.
I think it is fair to say that for those who are concerned with dyslexia the

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publication of that report has been a crushing disappointment. In that vast report only two paragraphs are given over to the problem of dyslexia. It ignores basically the research which has been done in the United States of America, Scandinavia and the United Kingdom. In particular, it provides no specific, realistic help to the class teacher.
The provision of services in our local education authorities is patchy. It is fair to say that increasingly they have become aware of the problem of dyslexia, but it is also the case that there is a desperate shortage of resources. In my local authority area we have only eight specialist remedial teachers.
What should be done in these circumstances? The first requirement is to remove the ignorance surrounding the whole subject, to remove from the language of teachers and headmasters this sort of comment, which has been made by a member of the teaching profession:
"How can a child be intelligent if he cannot read or write?"
It is particularly important that the ignorance which is still prevalent among the teaching profession on this subject should be removed.
The British Association tells me that as a result of the television programme I mentioned it has had many letters from teachers asking "What can we do?". It is also necessary for us to rethink and re-assess our assessment and screening procedures. If dyslexia is to be treated it must be identified. It should be possible to provide a simple pamphlet for teachers and local education authorities informing them of the nature of dyslexia and setting out certain alerting signals available to teachers so that they may recognise in their pupils the symptoms of dyslexia.
The sort of symptoms they should look for are problems which have existed in relation to reading, writing and spelling in the family, clumsiness in the children, a tendency to left-handedness, possible problems arising out of an at-risk birth, when the child began to write mirror-writing, and possible speech defects. Such a pamphlet has been prepared by the University of Aston and its known as "the Aston Index".
Once a child is identified as being dyslexic it is vital that he be introduced
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to structured learning in which over-learning and over-teaching is prevalent—a situation in which, if possible, there is a one-to-one relationship. It is also vital that there be special allowances built into all examination procedures. There should also be more in-service training within our schools.
What I have suggested would not cost a great deal of money. There are recommendations in the Bullock Report which I fully endorse. These concern the need to expand the number of teachers with remedial experience and the need to expand the number of teachers who have specialist training in dyslexia. We particularly want to get specialist training programmes into our colleges of education. I would like to see an increase in our remedial staff throughout the country, as quickly as possible. I would also like to see a reading or remedial centre in every local education authority, as has been advocated by Bullock: The Secretary of State has said that there are no available resources at present. I hope that the Department will be able to make such resources available in the immediate future.
While the debate about dyslexia continues to rage, while delay continues, while there is ignorance, the educational tide moves on and all the time it is carrying with it thousands of dyslexic children who will have to bear the social stigma of not being able to read and will be confronted with the sort of problems I have set out, unless there is action. I hope that the Department will be able to take such action in the immediate future.
11.44 p.m.
The Under-Secretary of State for Education and Science (Mr. Ernest Armstrong): I am grateful to my hon. Friend the Member for Gloucestershire. West (Mr. Watkinson) for raising a serious and fundamental problem which many of our youngsters experience, and also his reference to the constituency case, the boy Andrew Frost, who has a specific reading difficulty.
From what he has said, and from the information that I have received, I gather that the boys' family moved to the area from Surrey about two years ago. After discussion with the parents, Andrew was placed temporarily in a special school

879
pending his transfer in a year's time to a secondary school with a remedial department. At first the parents accepted the arrangement but after about six months—I understand their anxiety and eagerness to do the best for the child—they decided to send their son to an independent boarding school in Swindon and paid the fees themselves.
Parents are, of course, free to do that if they wish and if they can manage it, but they cannot then expect the local education authority to take over the payment of the fees unless the authority cannot in any other way provide the education to meet the child's needs. This is a matter within the responsibility of the local authority and the Government have no power of direction in these maters.
Mr. Watkinson: Does my hon. Friend concede that there are local education authorities which provide grants for the parents of children with dylexia to send them away to independent schools?
Mr. Armstrong: Yes. Indeed, we have knowledge of such cases, but in the case of Andrew Frost, the Gloucestershire LEA considers that he would be suitably placed at an ordinary day school with a remedial department, and it is not therefore prepared to pay for him to board at an independent school.
To make its remedial policy effective, the authority employs, under the supervision of its chief educational psychologist, a group of remedial advisory teachers, each responsible for an area of the county. They visit schools to advise teachers on their problems and arrange remedial teaching for children in need of it. This need is established through the standardised reading test given to all children in the county at the age of seven and by consultation with educational psychologists, remedial teachers, advisory teachers, parents and schools.
I have a great deal of sympathy with children like Andrew who have reading difficulties which cannot be explained by lack of general ability. Such a child's difficulties may extend to spelling, writing and arithmetic. We live in a world of writing and if someone cannot understand it, it is like living in a foreign country where everybody speaks a foreign language that he cannot understand. When one does not know what a word looks
880
like, even looking a word up in a dictionary becomes a painfully slow, hit-and-miss affair.
Another description from a sufferer which reveals the tensions and frustrations that beset dyslexic people is that one feels as though one is driving up the motorway on the wrong side. One is not blind, but one cannot see things in the way that other people can.
I assure my hon. Friend that he is pushing at an open door. A good deal of attention has focussed on these children in recent years. We are fortunate that two authoritative reports, one very short and the other very long, have been issued in recent years which have not merely had something to say about the detection and treatment of reading difficulties but have taken very much the same line about them. The first was the 1972 Report of the Advisory Committee on Handicapped Children on "children with specific reading difficulties"—the description it preferred to dyslexia. From the name of the chairman it is often known as the Tizard Report. The second was the Bullock Report on reading and the use of English in schools, which was published only 10 days ago. It, too, preferred the term "specific reading retardation" to "dyslexia". We welcome both reports, because to teach children to master their mother tongue is surely the very basis of education. We are giving urgent consideration to Bullock, which I regard as a call to action.
Both committees believe that these children, whose abilities in reading, and so on, are significantly below the standards which their abilities in other spheres would lead one to expect, are best considered as part of the wide range of reading difficulties.
Dr. Keith Hampson: I apologise for interrupting the Under-Secretary, but it is a very important point. His right hon. Friend the Secretary of State has said that the Government would have to hesitate about the implementation of the report because of the financial implications. Is the Under-Secretary saying that the Government will give financial help for this particular category mentioned in the report?
Mr. Armstrong: The hon. Gentleman should know better than that. We are

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doing what I said. We are giving urgent consideration to Bullock, which I regard as a call to action. That is not a promise that resources will be made available. We shall, indeed, consider the whole report. As Bullock himself said, there is a great deal that can be done immediately if we can change attitudes.
The first stage of the screening process should be systematic observation and recording by the teacher. The Bullock Committee thought that this should be followed by selective diagnostic testing of those pupils about whom detailed information is required. Until, however, the necessary support services and in-service training—I agree with my hon. Friend about this, but it is certainly not as inexpensive as he indicated—are available for teachers, the testing of the whole 7 to 8 age group will be required.
The two reports agree that the great majority of children with reading difficulties can be given the help they need in their own school. The Tizard Report recommended a remedial programme tailor-made to the needs of the individual child. It also recognised that a small number of children require to be withdrawn temporarily from their ordinary schools for intensive help and for these remedial education centres should be set up. The Bullock Committee similarly recommended that there should be a reading clinic or remedial centre in every LEA, giving access to a comprehensive diagnostic service and expert medical, psychological and teaching help. In addition to its provision for children with severe reading difficulties, the centre should offer an advisory service to schools in co-operation with the adviser on children with learning difficulties, an appointment every authority should make.
My right hon. Friend the Secretary of State has indicated in a foreword to the Bullock Report that many of its recommendations are addressed to schools and teachers and call for a change of approach and redirection of effort, rather than for additional resources which cannot be provided for the time being. He hopes that, within this limitation, local authorities and teachers will look carefully at the recommendations which concern them; and he has also said that he expects to have discussions with their
882
representatives after they have had an opportunity to study the report.
I think it is true to say that in recent years local education authorities generally have done much to improve their arrangements for helping children with the difficulties that my hon. Friend has described. Gloucestershire was ahead of many authorities in introducing, in 1968, a standardised reading test for all children at the age of 7. Its remedial advisory teachers make a valuable contribution to in-service education for remedial teachers by arranging seminars and discussions in teachers' centres. The authority also employs seven educational psychologists, who are closely concerned with the identification of children with reading difficulties and with training and guiding teams of remedial teachers. It is noteworthy that in England and Wales the number of educational psychologists employed by LEAs in whole-time equivalents has doubled in the last 10 years. Some authorities have concentrated on establishing remedial education centres and the number of these in several big areas runs into double figures.
There have been developments, too, in in-service training. This takes a variety of forms, ranging from one-year courses in university institutes and colleges of education to short courses and conferences arranged by area training organisations and LEAs for their own staff. There are now about 60 one-year and one-term courses annually which deal, to a greater or lesser extent, with reading difficulties. Another important advance has been a course in the development of competence in reading which the Open University introduced in 1973. A total of 1,176 have enrolled for the course beginning in March of this year, and 1,775 have chosen it as part of their degree course.
All that has been done so far provides a solid base on which to develop facilities further in the light of the recommendations of the Bullock Committee. Its report wisely emphasises that attitudes are more important than systems in helping children to read. The report says that the most valuable piece of advice that a parent can be given is to help a child
"to look on books as a source of absorbing pleasure".

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This attitude needs to be maintained and extended through the school years. Where children have reading difficulties,
"fundamental is the teachers' ability to create warm and sympathetic individual relationships with pupils, so that they are encouraged to learn through the stimulus of success".
A plea follows that
"remedial work is not work for the inexperienced or indifferent teacher, but for the one who combines a high level of teaching skill with an understanding of the child's emotional and developmental needs".
Sir Alan Bullock has commented:
"If every head and principal and administrator were to sit down with their staff and say: 'What can we do with existing resources and personnel?' we would see a dramatic improvement in the standards of language work in a few years. And if we don't get that
884
change in attitudes, lashing out millions of pounds won't do it."
The hon. Gentleman has raised an important fundamental educational issue. I assure him that the Government and, indeed, local authorities, take to heart the kind of plea that he has made tonight. I give him and the House the assurance that he is pushing at an open door. We shall not be satisfied until adequate facilities are provided for those who need special remedial teaching to enable them to read and speak their mother tongue. Literacy for all is needed as a first educational priority.
Question put and agreed to.
Adjourned accordingly at four minutes to Twelve o'clock.

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  Aircraft (USSR Orders)
  Aircraft (USSR Orders)
  Nomad Travellers' Club
  Nomad Travellers' Club
  China
  China
  Vicuna Cloth
  Vicuna Cloth
ENVIRONMENT
  Water Authorities' Staffs
  Water Authorities' Staffs
  Water Research Centre
  Water Research Centre
  Bus Services (Subsidies)
  Bus Services (Subsidies)
  Motorways (Southern England)
  Motorways (Southern England)
  Housing
  Housing
  Bournemouth
  Bournemouth
  Woolwich Reach (Shipping Cargoes)
  Woolwich Reach (Shipping Cargoes)
  Sports Council (Grant)
  Sports Council (Grant)
  Rate Support Grant
  Rate Support Grant
  Watercourses and Sewerage
  Watercourses and Sewerage

Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Wakefield.
The Earl of Devon—Took the Oath.
The Lord Armstrong—Took the Oath.

AUTHORS: PUBLIC LENDING RIGHTS
Lord CHELWOOD: 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 when the promised Public Lending Rights Bill will be presented to Parliament; and for an assurance that the Long Title will permit a lendings-related scheme to be introduced.
Lord STRABOLGI: My Lords, the Bill to establish a public lending right for authors is being prepared with a view to its early presentation to Parliament. I would ask the noble Lord, Lord Chelwood, to await the proposals that it will contain.
Lord CHELWOOD: My Lords, I am very grateful for that reply. May I ask the noble Lord to confirm that the Bill has not run into any drafting snags and that it will be published as soon as possible, so that there may be widespread public debate on a matter in which there is great interest? May I further ask the noble Lord whether a loan sampling scheme, or lendings-related scheme, is one which is favoured most by the Government, such a scheme being most favoured by the authors?
Lord STRABOLGI: My Lords, as to the first supplementary question of the noble Lord, Lord Chelwood, as he surmises, there have been considerable technical difficulties. A charge of unnecessary delay cannot be laid against this Government
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because the previous Administration also found great difficulties. But I can confirm that these are being resolved, and the Bill is in the process of being drafted. It is hoped to introduce it certainly this Session. With regard to the question of lending rights, it is certainly not the intention of the Government by the provisions of this Bill to exclude any practical way of measuring the entitlement of authors.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, will the noble Lord consider whether this Bill is not eminently suitable for introduction into this House?
Lord STRABOLGI: My Lords, we will take note of what has been said by the noble and learned Lord, Lord Hailsham of Saint Marylebone. I think this will be a question for the usual channels.
Lord DARWEN: My Lords, would my noble friend agree that the real difficulty is in establishing a method of levying a charge, rather than any other objection?
Lord STRABOLGI: My Lords, of course this has been a difficult matter. It was clear that a full technical appraisal was an essential prerequisite to legislation. This has been conducted with all possible speed by a body of experts, and I think we have arrived at a solution.
Viscount ECCLES: My Lords, since it has taken such a long time to work out a scheme, and I bear part of the responsibility, might it not be better simply to legislate for the right and then leave the authors to think up in which way they can get their money?
Lord STRABOLGI: My Lords, I am surprised that the noble Viscount asked that, because we found that trying to proceed through the Copyright Acts led inevitably, as we cut through the undergrowth, to a dead end. The essence of copyright is that the copyright holder is free to fix the price at which his works are used. As a result there would have to be a complicated system of licensing regulated by a tribunal, and even then there would be no means of knowing what a scheme would cost.

GOVERNMENT'S FOREIGN BORROWING
3.5 p.m.
Lord SELSDON: 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 much money they are borrowing abroad and how much more they intend to borrow.
Lord JACQUES: My Lords, I assume that the noble Lord has in mind the financing of our external deficit. The only direct borrowing by Her Majesty's Government for this purpose was the 2·5 billion dollars loan to which the Chancellor of the Exchequer referred in his Budget Speech in March 1974. Drawings on this loan financed some 15 per cent. of the current account deficit of £3·7 billion in 1974; the remainder was financed as to 35 per cent. through foreign currency borrowing by public sector bodies, 40 per cent. through net sterling inflows and the remainder through miscellaneous capital flows. Although there would be an improvement in 1975, the continuing impact of higher oil prices and the downturn in world trade means that the current account deficit is likely to remain substantial in the near future, and this will have to be financed.
Lord SELSDON: My Lords, I am most grateful to the noble Lord for his kind and confusing reply, but being a simple man who works in the financial world I have three questions to ask in these inflationary times. First, is the noble Lord aware of the concern generally at home and abroad about the dangerously high level of Government expenditure at home? Secondly, how much is this borrowing costing us? Thirdly, how much are we borrowing abroad at high interest rates in order to loan to other countries at low interest rates, and how much is this costing the nation? Fourthly, by your Lordships' leave, may I make the point that I feel that this borrowing is too high?
Lord JACQUES: My Lords, there has been no failure on the part of the Government. The Government, in financing the deficit, are very largely carrying out
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the policy of the previous Government. It was in fact the previous Government which reintroduced on the 6th March 1973 the exchange cover scheme which permits public bodies, including local government, to borrow abroad what they would have borrowed inside this country. That scheme has been continued, and I would say that it was an excellent thing that the previous Government did introduce it. It has been necessary in the management of the deficit and we have been glad to take advantage of it. So far as the cost is concerned, I should need notice of that question. What was the noble Lord's third question?
Lord SELSDON: My Lords, may I, on the second question, submit this point to the noble Lord? Surely it is bad economic management to borrow without knowing how much it is going to cost.
Lord JACQUES: My Lords, I would point out that under the exchange cover scheme our local authorities are getting the money at an advantageous rate. That is why, on their own initiative, they are going abroad to raise the money, because they get a lower rate of interest. They share that lower rate of interest with the Exchange Equalisation Fund, and the Exchange Equalisation Fund in turn gives the exchange cover. These loans, although they are negotiated by the public bodies concerned and on the usual commercial criteria, must have the sanction of the Bank of England so that the repayments are properly planned. It is for that reason that although the indebtedness is large we are confident that it is manageable.
Baroness GAITSKELL: My Lords, is this not a choice of the lesser evil, whether to borrow or to let unemployment rip? Some of us do not understand all these statistics that the Minister has given, but does it not really come down to this: that the Conservatives are always for letting unemployment rise and we are for borrowing?
Lord JACQUES: My Lords, it is an approximation of the choice. We either have to have great disruption in our internal economy or we have to finance the deficit, and in so far as it is not financed by other sources then it has to be financed by borrowing. I would remind the noble Lord—and he may take

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some comfort from this—that when we last took office there was a substantial deficit and after five or six years there was a substantial surplus.
The Earl of GOWRIE: My Lords, can the Government say under what kind of notice of withdrawal the bulk of this foreign borrowing falls?
Lord JACQUES: My Lords, the repayments are planned up to about the latter part of the 1980s.
The Earl of LAUDERDALE: My Lords, could the noble Lord confirm the story reported in the Press that the Chancellor of the Exchequer told the TUC and Labour Party Liaison Committee the other day that we were reaching the point where we could no longer borrow on commercial terms to finance the difference between this country's production and consumption, which was a 6 per cent. gap?
Lord JACQUES: My Lords, I am not aware of that statement. So far as public borrowing is concerned, we have several options open to us in the future; we have rights on which we have never drawn. For example, we have a drawing right on the general IMF fund of 3½ billion dollars. We have not exercised any of those rights. We have no plans to exercise those rights. There are several other avenues available to us if we need them.
The Earl of LAUDERDALE: My Lords, will the noble Lord deny the reports that the Chancellor made the statement to which I have referred?
Lord JACQUES: My Lords, I am not going to deny any report which I have not read.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, could the noble Lord tell me, in reference to his original Answer, and the last answer he has given, whether the word "billion" means, as I was brought up to believe, one million million, or as the Americans universally but heretically contend, one thousand million?
Lord JACQUES: My Lords, we have been Americanised. It is one thousand million.
Lord PARGITER: My Lords, could my noble friend say in more precise terms what are the amounts which it is anticipated local authorities and the nationalised industries will borrow in the foreign markets during next year?
Lord JACQUES: My Lords, it is impossible to say what they will borrow in the next year, for the simple reason that the loans are on the initiative of the bodies concerned and are negotiated with the ordinary commercial criteria in mind.
Baroness EMMET of AMBERLEY: My Lords, could the Minister answer the third question asked by the noble Lord, Lord Selsdon, as to why it is that we borrow at a greater interest rate than the rate at which we lend?
Lord JACQUES: My Lords, I was not aware that we were doing that.
Baroness EMMET of AMBERLEY: My Lords, I am talking about the money we borrow at 14 per cent. and the money that we lend out at 7 per cent.
Lord JACQUES: My Lords, if it is concerned with trade, then everybody knows, and particularly the Front Bench opposite, that when you are negotiating international agreements on trade you have to make concessions. That is a fact of life.
Lord PARGITER: My Lords, arising from my previous question, could my noble friend say whether or not the Government will have in mind some limits within which both local authorities and the nationalised industries will be allowed to borrow on the foreign market?
Lord JACQUES: My Lords, there are limits, and every loan must have the sanction of the Bank of England because of the need to plan the repayments. I think one can take it for granted that although the initiative is with the borrowing authority, they first of all make their enquiries at the Bank.
The LORD PRIVY SEAL (LORD SHEPHERD): My Lords, the noble Lord, Lord Mackie, despite his bulk, has been struggling to get into the scrummage. May I suggest that we allow him to ask his question, call it a day, and go on to the next?
Lord MACKIE of BENSHIE: My Lords, I thank the noble Lord. Could the noble Lord, Lord Jacques, tell the House when he expects this country to be able to repay borrowings out of earned income instead of out of further borrowings available to us? This appears to be the crux of the question: that at some point the Government must look forward to a time when we shall be able to pay our way and pay back these borrowings. Can he tell us by what year they expect that to happen?
Lord JACQUES: My Lords, it is quite impossible to say when that is likely to happen. I should say that it very much depends on how long we remain in office.
Lord SHINWELL: My Lords, in view of the frequent accusations that come from the other side and from the financial Press owned by the whole Conservative Party of the country that the Labour Government live on borrowing, may I ask my noble friend whether he would state the actual amount of the National Debt and how much of it has been built up in the past by borrowings by various Conservative Governments? We should then know exactly what the position is.
Lord JACQUES: My Lords, I think I should need considerable notice of that question.

HOUSING ACCOMMODATION
3.22 p.m.
Lord HYLTON: 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 guidance they are giving to local authorities to minimise the time that houses stand empty on reletting and, secondly, to encourage tenants with spare rooms to take in lodgers.
Lord MELCHETT: My Lords, my right honourable friend the Secretary of State for the Environment is examining a number of practical measures to secure that privately owned and local authority property which is vacant or under-used is occupied by people in housing need as quickly as possible. He is consulting representatives of local authorities and
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others concerned and hopes to make a statement soon.
Lord HYLTON: My Lords, I am grateful for that reply. Would the noble Lord agree that standards of housing management vary considerably from one part of the country to another, and that in the present crisis of homelessness it is essential to make maximum use of the existing resources of houses?
Lord MELCHETT: Yes, my Lords, I would entirely agree with that sentiment.
Lord ROYLE: My Lords, does my noble friend agree that his Answer is concerned with flats as well as with houses, because some flats have had up "For Sale" notice boards for years?
Lord MELCHETT: Yes, my Lords. One of the matters which my honourable friend the Minister for Housing and Construction will be looking into is the possibility of making arrangements between owners of empty properties and local authorities, or housing associations, with a view to using these properties on an ad hoc basis.
Baroness YOUNG: My Lords, with regard to the second half of my noble friend's Question, will the noble Lord say when the Government will produce a simplified version of the Rent Act, which would enable resident landlords more easily to understand it and so let rooms? Will they further consider an amendment to the Rent Act, so that resident landlords could regain possession of their own rooms on a second fixed-term letting?
Lord MELCHETT: My Lords, I understand the first part of the noble Baroness's question, but it is, I think, rather outside the scope of the original Question. However, I understand that the document will be available by Easter. On the second part, as the noble Baroness will know, we have no intention of amending the excellent Act to which she referred.
Baroness GAITSKELL: My Lords, can the noble Baroness remember—
Several Noble Lords: Order!
Baroness GAITSKELL: I beg you Lordships' pardon. May I start again? Can the Minister tell us whether he has read the Conservative Party's Rent Act,

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which was produced under a previous Government, and say whether that is very clear, obvious and simple to understand? Certainly we did not find it so.
Lord MELCHETT: My Lords, I have read the Act in question, and I confess that I find it very difficult to understand.

OIL WASTE AND SLUDGE DISPOSAL
Lord JANNER: 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 steps are being taken to expedite research in the United Kingdom into the conversion of contaminated oil waste and sludge into compost of value to agriculture.
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk): My Lords, a Working Group has recently been considering the disposal problems caused by oil waste and sludge and their potential for reuse. The findings of the Working Group will shortly be made available to the Waste Management Advisory Council who will wish to consider the need for further research. At present, there appears to be greater scope for recovering oil waste as oil, or for burning it as fuel, than for composting the waste for agricultural purposes.
Lord JANNER: My Lords, while thanking my noble friend for that Answer, may I ask her whether she is aware that considerable research has already taken place in Sweden by a professor and a team who are investigating the matter of converting this hazardous waste into something useful from the point of view of agriculture? Will she, or the committee she has set up, take into consultation those who are already working on the schemes in Sweden and Holland?
Baroness BIRK: My Lords, until my noble friend brought it to my attention I was not aware of this scheme of research, nor indeed is the Ministry of Agriculture. The principles upon which it appears to be based are well known, and I shall
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draw the report to the attention of my right honourable friend. The Waste Management Advisory Council will be considering this matter; it has it in hand.
Earl FERRERS: My Lords, while new methods of fertilising and composting are obviously extremely desirable for use in agriculture, would not the Government be better concerned in allowing agriculture to play the full part that it could play in relieving the balance of payments, instead of subjecting it to penal systems of taxation?
Baroness BIRK: My Lords, that is an entirely different question.
Lord JANNER: My Lords, would my noble friend take into consideration the fact that the investigations in Sweden have already resulted in very satisfactory results, and have produced an enormous amount of benefit? Consequently, will she, or the committee that has been set up, get in touch with those who have already completed their researches in certain directions?
Baroness BIRK: My Lords, there are a great many problems attached to this matter which I shall not go into today. As I have already assured my noble friend, it is being looked into.
Lord PARGITER: My Lords, would my noble friend agree that probably the most important aspect here is the recycling of the oil, and that if this is done properly very little residue is left? Will she consider whether it might then be economical to convert it?
Baroness BIRK: My Lords, this is in fact the line on which the problem is being dealt with at the present time.
Lord PEDDIE: My Lords, my noble friend says that this matter is being looked into. Can she let us know which body, committee, or department is doing the looking?
Baroness BIRK: My Lords, the Waste Management Advisory Council, which was set up last year, has taken in this and all sorts of other forms of waste and re-cycling.
Lord BROCKWAY: My Lords, may I ask the Minister whether the Working Group has taken into consideration the quite extraordinary way in which North

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African oil companies are using waste to fertilise the desert, and whether that might not be an example for this country?
Baroness BIRK: My Lords, I shall bring it to the attention of my friends who are concerned with this. I should point out that the Advisory Council has been working for only a few months, and therefore it is at the beginning of its deliberations. Any points such as those now being made will be of enormous help.

INDUSTRIAL AND PROVIDENT SOCIETIES BILL [H.L.]
Lord JACQUES: My Lords, I beg leave to introduce a Bill to raise the limit on the interest in the shares of a society registered under the Industrial and Provident Societies Act 1965 which any one member may hold and to authorise the further alteration of that limit from time to time. My Lords, I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read la. —(Lord Jacques)
On Question, Bill read la, and to be printed.

OFFSHORE PETROLEUM DEVELOPMENT (SCOTLAND) BILL
Returned from the Commons with certain of the Amendments agreed to and certain others disagreed to, with Reasons for such disagreement: the said Amendments and Reasons to be printed.

PIER AND HARBOUR PROVISIONAL ORDER (FISHGUARD AND GOODWICK HARBOUR) BILL
Lord MELCHETT: My Lords, I beg to move that this Bill be now read a second time. The purpose of this Order is to give the Preseli District Council powers to maintain and regulate the old harbour of Fishguard and levy dues and charges for the use of harbour facilities and services. The old harbour, in respect
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of which the new powers are required, is predominantly used by pleasure boats. The council are already owners of the quay and lessees of the foreshore and they have established a case for overall control of the harbour. I am sure that any noble Lords who have had the pleasure of visiting this beautiful harbour, as I have, will be pleased to learn that although Clause 5(1) refers to the conferment of
"powers of improvement, maintenance and management of the harbour",
this does not include a power to carry out any major new works.
The Committee on Unopposed Bills in another place were somewhat critical of the fact that the Schedule to the Bill did not indicate the particular powers which the district council were going to assume. Clause 5(1) of the Schedule was therefore amended to refer to the powers of improvement, maintenance and management of the harbour conferred by incorporation of the provisions of the Harbours Clauses Act 1847, except for those specifically excluded. I hope I have explained the narrow scope of this Bill to your Lordships at sufficient length. My Lords, I commend the Bill to the House and I beg to move.
Moved, That the Bill be now read 2a. —(Lord Melchett.)
On Question, Bill read 2a and committed to the Unopposed Bill Committee.

SUPPLY POWERS BILL [H.L.]
Read 3a, and passed, and sent to the Commons.
STATUTE LAW (REPEALS) BILL [H.L.]
Read 3a, and passed, and sent to the Commons.

SOCIAL SECURITY BENEFITS BILL
3.33 p.m.
Lord WELLS-PESTELL: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Wells-Pestell.)
On Question, Motion agreed to. House in Committee accordingly.
[The Earl of LISTOWEL in the Chair.]
Clause 1 [Rates of basic scheme benefits]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 1:
Page 2, line 17, leave out from ("substituted") to ("paragraphs") in line 23 and insert (" "£20" and at the end there shall be inserted—
"With effect from such day as may be prescribed in the week containing 6th April in a year mentioned in the first column below, this subsection shall have effect with the substitution for "£20" of the amount specified in relation to that year in the second column below—

1976

"£35"

1977

"£50""

(4) In ").
The noble Lord said: My Lords, when the Bill was before your Lordships' House on Second Reading I drew attention to the fact that subsection (3) of Clause 1 might not technically achieve the result which its sponsors in another place intended, and I assured the noble Lord, Lord Aberdare, that I would inform your Lordships about the difficulties and let you knew how best they could be overcome. The Amendment which I now move, with the related ones to come later on the Marshalled List, are the result. If your Lordships will allow me, I will speak to Amendments Nos. 1 and No. 3 and draw your Lordships' attention to the fact that the second part of Amendment No. 10 and Amendment No. 13 are also in some respects related.
The technicality to which I referred at Second Reading was in relation to what was to happen after 1977. As the clause came from the other place, it would have meant that the earnings rule would have finished completely at that period. The ambiguity was that the wording went something like this: that it should start the year after the coming in of the 1973 Act. If one refers to the debate in another place, one sees that there was more than one view as to when that would happen, whether it would be 1975 or 1976. In that sense there was an
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ambiguity. I think the whole matter could have been resolved successfully if the word "thereafter" had been inserted. But neither of these matters was cleared up and so we have this Amendment before the Committee. The effect of the Amendment is to put in to clear and unequivocal form the relaxation of the earnings rule which was agreed upon in another place.
The Government made no secret of their reluctance to commit themselves at this stage, to the substantial additional expenditure involved in such a relaxation, but I want to make it perfectly clear, particularly as the noble Lord, Lord Reigate, is here, that this Amendment is not designed in any way to reverse or to modify the clear intention of those who supported the relaxation. I should like to explain to your Lordships the detailed reasons for the Amendment. First, as Clause 1(3) left the other place the amendment it made to Sections 26(1) and to 35(2) of the Social Security Act 1973, was such as to render the text of those sections virtually unintelligible. I am sure that noble Lords who have tried to effect the substitution for which the Bill at present provides, as I have done, will readily agree with me that it is not easy to understand. The second reason for the Amendment which stands in my name is more practical and less aesthetic. The dates from which the various relaxations included in the Bill are to come into force are not as clear as they should be. Clause 1(3) of the Bill as it stands brings the £20 earnings limit into operation (I have already said this but perhaps I may be permitted to repeat it) and I quote:
" In the year following the coming into force of the said Act of 1973 "
that is the Social Security Act of 1973. But there is in fact no single date on which the Act comes into force. Although important provisions of the Act relating to contributions are to come into force from April of this year, there are other provisions which have already come into force on various dates from 1973. The Amendment I am moving removes any doubt by setting out in terms the operative dates for the staged relaxation of the earnings rule and these dates, I am confident, are those envisaged by the originators of the present provision and

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will, I hope, meet the approval of noble Lords opposite.
There is one other point which I must mention. As drafted, the Bill provides for no earnings limit once the £50 limit has been in operation for a year. The sponsors of the Amendment to the original Bill clearly did not intend the earnings rule to disappear in 1978; if they had so intended, there would have been little point in their voting for the subsequent Amendment to abolish the earnings rule by 1980 or in their resisting the later Government Amendment at Report stage in another place to delete this provision from the Bill. Nevertheless, the Bill as it stands would mean that once the £50 had applied for a year there would be no figure by reference to which the earnings rule could operate. This would not only produce a result not intended when the provision was passed in another place, but would also have a very odd effect on the retirement condition.
I am sorry to be so long about this, but it is really important. At present there is a provision which allows a person to be treated as retired if his or her earnings can be expected not to exceed, or only occasionally to exceed, the amount which at the time constitutes the earnings limit for purposes of the earnings rule; namely, £13. If there were no earnings limit this provision would be rendered ineffective, so that, at the very time when—and, I believe, quite unintentionally—the earnings rule was being withdrawn, the retirement condition would become more difficult to satisfy. This is because an intention to continue in paid work might, however small the earnings, be adjudged inconsistent with retirement. So while the earnings of people who had retired would not affect their pensions, quite small earnings could in some cases debar a person from being treated as retired for the purpose of receiving pension. This would be most inequitable. One could have a situation of a man doing full-time work on a very small income and this would debar him from his retirement pension. This, surely, was never intended.
The effect of the Amendment I am moving will be to continue the £50 earnings limit from April 1977 until amended by regulations under existing powers. I want to make it clear that there is no
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intention on the part of the Government, nor is it the purpose of the Amendment, to upset what has taken place in another place, except to make the position rather more clear.
I hope I have convinced your Lordships of the case for the Amendment which the Government propose to Clause 1. I trust that you will bear with me a little longer while I explain the consequential Amendments. I shall be moving an Amendment to Clause 2 which is intended to extend to the wives of unemployability supplement beneficiaries under the industrial injuries scheme the same relaxed earnings rule which will apply to the wives of retirement pensioners and invalidity pensioners. Clause 1(3) as it stands fails to make this extension. Your Lordships will know that unemployability supplement is an increase in industrial injuries disablement pension payable to persons who are likely to be permanently unable to work or unable to earn more than a limited amount in a year. I am sure noble Lords will agree that the earnings of the wives of such persons should continue to receive the more favourable treatment given to the earnings of wives of retirement and invalidity pensioners.
In dealing with the difficulties involved in the relaxation of the earnings rule I come now to a final and, in itself, a relatively minor aspect, but one which could have unfortunate implications administratively and could prove confusing for the beneficiaries concerned. I am deeply conscious of the pleas made during the Second Reading debate in your Lordships' House by, I think, my noble friend Lord Brace of Donington and the noble Lord, Lord Reigate, for simplicity in our dealings with members of the public. I could not agree more. I find it extraordinarily difficult to understand the language not only of our Bills but also of the advice that we give.
A problem arises from the fact that the pension for any particular week is affected by earnings in the previous week. Therefore, the change proposed in the Bill as it stands, which relates to earnings from 6th April—the "year" being the financial year for the purposes of the 1973 Act—would not affect pensions until the week beginning 14th April 1975. Pensioners will, however, naturally expect the relaxed rule to begin to operate this year in the week beginning 7th April and

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not 14th April when the increased rates of pension provided for under the Bill will themselves be payable. The Amendment which I am moving will enable that to happen this year. The reason why we seek a power to prescribe the precise day from which the second and the third phases of relaxation will be introduced is technical. Retirement pensions, invalidity pensions and industrial injury disablement pensions are payable on different days of the week. The power to prescribe days will be used to ensure that different dates are appointed for the different benefits so that the change can be applied to all beneficiaries in the same week. The "week containing 6th April", which is the phrase used in the Amendment, is of course the week in which the financial year begins.
Later, when we are dealing with Clause 8, I shall be moving Amendments designed to remove the need for the National Insurance Advisory Committee and the Industrial Injuries Advisory Council to have to consider regulations which simply appoint the precise days in the weeks already prescribed in relation to the operation of the earnings rule for 1976 and 1977. The present Amendment, together with those I shall be moving formally to accompany it, will tidy up Clause 1 (3) and make its provisions watertight. I am sure noble Lords will accept that the Government have no intention of tinkering with the spirit behind the subsection, but are merely amending its wording so as to ensure that it goes on to the Statute Book in a proper form without the serious defects which it now contains. I apologise for speaking for so long on a single Amendment, but it was necessary. I beg to move.
3.48 p.m.
Lord ABERDARE: We are grateful to the noble Lord, Lord Wells-Pestell. He said on Second Reading that certain difficulties would result from the Amendment which was made in another place and he has now explained what this new Amendment does. I am quite prepared to take his word that it does no more than put into the correct form the intentions of those who inserted the Amendment in another place. On the other hand, I must say that I believe there will be many people in this House
1002
and in another place who would have been only too delighted had the earnings rule ended after 1977, so I am rather sorry that the noble Lord has managed to avoid that trap. As the noble Lord said there was another Amendment to bring the earnings rule to an end in 1980, and the fact is that in the present inflationary conditions even this increase to £50 a year will not represent any particularly great relaxation by 1977. I am sure that, unfortunately, we have not heard the last of the earnings rule.
Lord REIGATE: The noble Lord, Lord Wells-Pestell, kindly referred to me in his remarks and I wish to echo what was said by my noble friend Lord Aberdare about our great appreciation for the trouble he is taking over this appallingly complex Amendment. I cannot say that I understood the noble Lord's explanation, but I feel that when we have had time to study his remarks in Hansard we shall be made somewhat wiser. Nevertheless, I am certainly grateful to him for the spirit in which he has accepted the changes in the Bill, which I know were not welcomed by the Government. I feel that the mild protest of the noble Lord, Lord Bruce of Donington, and myself may have some effect in the Department and I am sure that, in their case, the spirit is willing even if in some respects the language is appallingly obscure. I thought that the high peak of complexity in the wording of Amendments was reached by Amendment No. 3 in which we read that at the end of page 2, line 30 we have to insert—using words in the way one would have to dictate them—" open brackets, quote, open brackets, close brackets," there being nothing between the brackets. On the same score, Amendment No. 1 ends with the figure 4 in brackets and then has the following: In, quotes, close brackets. No wonder the layman is a little confused by some of our machinations.
I agree entirely with what my noble friend Lord Aberdare said, that we must face the fact that it is not the final end of the earnings rule. On the last occasion we discussed the matter, I said that I looked forward to seeing a final Te Deum, but I was a little premature in my wishes. I hope the fact that we have Social Security Bills at the rate of roughly two a year, including a Consolidation Bill which is already out of date although it

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is only about six weeks old, will result in the Government giving full consideration to the best way of removing the earnings rule altogether. Nevertheless, I must state my regret that those who were opposed to the Government's policy—the policy of previous Governments—were unsuccessful in getting the Amendment finally abolished by 1980. Part of the confusion that has arisen has been due to that fact. At some time I feel that both Houses must give a firm instruction to the Government, at present in power and in future in power, that it is time to get rid of it altogether.
Baroness SEEAR: We should like to welcome this Amendment, but I feel that I must join with those who have said that we greatly regret that we are not seeing the back of the earnings rule, for it is time that the whole thing was packed up once and for all.
Lord BRUCE of DONINGTON: I wish to add my voice to that of noble Lords and the noble Baroness who said that it is time that the Government decided definitely to put into effect the Amendments that were inserted in another place. I do not know whether my noble friend has had an opportunity to look further into the extent to which finance would be required to produce the money to enable this to be carried into effect. Several estimates have been given. In another place, in Standing Committee B, an estimate was given for 1975–76 of some £80 million. In a Memorandum to the Bill the amount was given as some £60 million. I wonder whether my noble friend has had an opportunity to look into it even further. I must of course point out that after tax considerations have been taken into account, the total charge during the next fiscal year will be of the order of £43 million. If one looks at the report of the actuaries which was made to the Secretary of State in another place, one finds that the excess of income over expenditure in the Fund during the fiscal year would be about £268 million. I wonder, therefore, if my noble friend can say whether it will be possible for this charge to be borne out of that excess. I say that because in another place my right honourable friend the Chancellor of the Exchequer appeared to indicate that the
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charge might have to fall on even heavier taxation during the next fiscal year. It might be for the convenience of the Committee if my noble friend could clarify this point, and in the meantime I earnestly thank him for the effort he has made in bringing forward this Amendment.
Lord PARGITER: It should be borne in mind, in defence of the earnings rule, which has been so strongly attacked— and I speak as one who was present when the measure was originally passed—that it was an integral part of the system of benefits; in other words, related to earnings actuarially ascertained, and the earnings rule had some bearing on the level of benefits provided. I am aware that since that time many changes have taken place and that it may be appropriate to abolish the earnings rule, but it should be remembered that it represented an integral part of the scheme, so that higher rates were thereby payable at the beginning of the scheme.
Lord WELLS-PESTELL: I am grateful to noble Lords who have given their approval to this Amendment. I am particularly grateful to the noble Lord, Lord Reigate, who has been most consistent about this and I hope that he will change the writing on his heart in case anything happens in the next three years, before the earnings rule ultimately disappears. In reply to my noble friend Lord Bruce of Donington, I did give the figures so far as I understood them on Second Reading, when I said:
" If an allowance were made for tax at current tax rates, I am informed that the cost in 1975–76 would be reduced by £15 million to £45 million … £15 million of the £60 million would be tax. In 1976–77 the cost would be reduced by £25 million, namely from £110 million to £85 million. In 1977–78 the cost would be reduced by approximately £35 million to £110 million."—[Official Report, 18/2/1975, col. 208.]
When one adds those three figures together, one sees that they are quite substantial, so the question that arises is whether, in our present situation, we can afford to take this step. It is often desirable that things should be done, even in our private lives, but one must face the facts and perhaps have to wait until one can afford to do them. The running of a country is not so different in principle from running a family, and this is a problem we have to face. I am

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not able to make a statement in advance of the Budget, but I rather imagine that any indication of the intentions of the Government as to how any relaxation of the earnings rule is to be financed would be mentioned then by my right honourable friend the Chancellor of the Exchequer and I do not think I should go beyond that at this stage.
Lord ABERDARE: May I ask the noble Lord to confirm that any extra money that has to be found will come from the National Insurance Fund and not from the Exchequer?
Lord WELLS-PESTELL: Obviously, I cannot do that. If I were Chancellor of the Exchequer I might be able to make some pronouncement on this, but I just do not know at this stage. Furthermore, I doubt whether anybody else knows where this money will come from.
Lord ABERDARE: But this is part of the moneys which come out of the National Insurance Fund.
Lord WELLS-PESTELL: Yes, I appreciate that, but I do not think I am in a position to give any undertaking.
On Question, Amendment agreed to.
Clause 1, as amended, agreed to.
4.1 p.m.
Lord CRAWSHAW Lord CRAWSHAW moved Amendment No. 2:
After Clause 1 insert the following new clause:
Rates of reduction of pension in respect of earnings of invalidity or non-contributory in validity pensioners
" .—(1) Where the earnings of a person entitled to an invalidity pension or to a non-contributory invalidity pension, being a person who has not reached pensionable age, have exceeded £13·00 for the week ending last before any week for which he is entitled to an invalidity pension or a non-contributory invalidity pension, the weekly rate of pension for the last-mentioned week shall be reduced—

(a) where the excess is less than £4, by 5 pence for each complete 10 pence of the excess, and

(b) where the excess is not less than £4, by 5 pence for each complete 10 pence of the excess up to £4 and by 5 pence for each complete 5 pence of any further excess.

(2) In this section "week", where used in the expression "week for which he is entitled", means such period of 7 days as may be prescribed by regulations made for the purposes of this section."
The noble Lord said: When I spoke in the debate on the Second Reading of this Bill, I said that I would be putting down some Amendments to deal with the earnings position of the invalidity pensioner. Since then, I have managed to collect some formidable support, and I am delighted to be assisted this afternoon by for one, the noble Earl, Lord Longford, whose powers of persuasion and light touch are well known to your Lordships. I should also be assisted by my noble friend who sits on my left, and I believe that I have a fairly strong case to put to your Lordships.
I hope that many of your Lordships from other parts of the Committee will speak, one way or the other, about the Amendment. I do not want to cross swords with the noble Lord, Lord Wells-Pestell, and I promise that whatever the result of our deliberations we will keep the party clean and respect the feelings of the Committee. My attitude as to how far to press this matter will depend on the amount of support that appears to be available. I am particularly glad that this discussion should follow so closely on the debate on the earnings rule for the retirement pensioners, because it was the relaxation and, as I thought at the time, the ultimate abolition of the earnings rule in their case—which was recently decided in the other place—that led me to put down this Amendment.
As your Lordships have just heard, the noble Lord, Lord Wells-Pestell, has proposed that the retirement pensioner should in 1977 be able to earn £50 a week without its affecting his pension. In contrast, the invalidity pensioner who is a person not of retiring age but who receives a pension because of incapacity, in one form or another, can, as things stand earn only £4·50 a week before he loses his entitlement to his entire pension. Is this fair? Many people are quite capable of earning their living well beyond the age of 65. I do not want to be personal but I know that the noble Earl, Lord Longford, will not mind my quoting him as a perfectly good example—
The Earl of LONGFORD: How does the noble Lord know I am over 65?
Lord CRAWSHAW: My Lords, the noble Earl told me yesterday. There is also the example of the noble Lord, Lord

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Shinwell, who I think is 65 years, plus about 25. All these people are, in my view, perfectly capable of earning and competing in the world at large—and of competing on extremely favourable terms. All are extremely articulate and, as I see it, have no great problem. On the other hand, many younger people, affected perhaps by heart trouble, multiple sclerosis and illnesses of that sort, find it quite a problem to hold down a full-time job in the outside world. I believe that the age qualification of 65 for men and 60 for women is a crude yardstick. In the same breath, I would be the first to agree that the proposal in this Amendment, to raise the earnings figure of £4·50 to £13 a week before affecting a pension, is also fairly arbitrary. It is certainly not a sacrosanct figure by any means, but it is a considerable improvement on the present position; although, as I say, it is comparatively modest compared with the £50 a week figure just mentioned by the noble Lord, Lord Wells-Pestell.
We put down the figure of £13, because it was the figure which the present Government thought ought to be applied in the case of the retirement pensioners, and the other place thought otherwise; but that was the original figure in the Bill. Depending on how matters go today, we could easily alter this present proposal of £13. It may be argued that the figure of £4·50 a week is adequate and should be regarded as therapeutic earnings. I gather from the noble Lord, Lord Wells-Pestell, that in the past he has tried his hand at weaving and I, myself, some years ago, tried my skill at basket-making, tapestry and things of that sort, but neither of us would be capable of earning much more than £4·50 a week in these trades. I hope that that is no aspersion on the dexterity of the noble Lord, Lord Wells-Pestell, but it is true in my case.
Unfortunately, this therapeutic principle, as I call it, is extended beyond the time that a person is in hospital and is trying to establish himself outside. I should like to give the Committee an example of what I have in mind. Recently I heard of a man aged 32 who was a chartered librarian and until 10 months ago he earned £2,000 a year. He now suffers from multiple sclerosis and has taken up some research work at home. He has recently received £47 for work
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done over a six weeks' period: in other words, about £8 a week. The Department of Health and Social Security promptly removed his entire invalidity pension for that period amounting to about £73.
I also heard of a man in my part of the world—Melton Mowbray—who is 54 and was formerly employed in the hospital service. He now suffers from a heart condition and has had to go on to an invalidity pension. He now feels able to do work for two or three days a week, and was offered a job at £5 a day He tells me that his employer made out a pay slip for £5 for his first day's work, but he had to be told that £4 50 was the maximum he could accept. These are just two examples. I know of many more, and I think that my noble friends will possibly cite others, but I think these examples illustrate the frustration which people feel. By this system of enforced idleness—and it is nothing else—we are, I trust unwittingly, creating publicly-funded cabbages. I do not want your Lordships to be confused by this doctrine of therapeutic earnings when applied to people after discharge from hospital.
In my experience, you do not really know what you can do until you try, but under the present system there is precious little incentive to try. It may also be argued this afternoon that there is no need to make a fuss about the earnings rule or indeed the rates of invalidity pension, because if people cannot manage their incomes will be made up by supplementary benefits. This is not the answer, because, first, people do not want to be publicly-funded cabbages, and, secondly, they resent the rigorous inquisition into their personal circumstances that this system entails. This may be necessary in the case of professional shirkers in society, but 99 per cent. of the people I am talking about resent this system, and the system itself is devised as a temporary safety net and is not intended as a long-term answer.
My noble friends and I moved a similar Amendment to this one to the Social Security Bill in 1973. A great many of the other proposals put forward on that occasion—for instance, the invalidity care allowance, the non-contributory invalidity pensions, and help for disabled housewives—have now been adopted by successive Governments. But this matter—and I am afraid this is rather

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a reflection on my advocacy as it was the matter which I took up on that occasion—has got stuck. To take account of inflation alone this figure of £4·50 really must be raised. We are not asking for the moon, and I respect the views of the Labour Government and of noble Lords who feel it imperative at this moment to curtail our demands on the Exchequer. But I do not believe that there will be a great increase in public spending; in fact there may well be a saving because, instead of drawing supplementary benefit, people will be earning something.
By accepting this Amendment we shall be moving away from a situation where people have to be written off as totally unemployable before they get some help from the State. I hope, as I say, that many noble Lords will air their views on this matter. I should particularly like to hear what my noble friend Lord Aberdare has to say. I know that on a previous occasion when it came to a relaxation of the earnings rule he felt that the invalidity pensioners should have priority over the retirement pensioners. Now that the other place has helped retirement pensioners to the extent that we have heard, and because this Amendment was not considered either in Standing Committee B of another place or in the light of their help to retirement pensioners. I ask particularly that your Lord-ships should give this Amendment favourable consideration. On matters of this sort we probably have more first-hand experience in this House than exists in the other place. I believe also that since this matter has not been properly considered in the other place your Lordships have a constitutional obligation to look at it very closely. I beg to move.
4.13 p.m.
Baroness DARCY de KNAYTH: I should like to support this Amendment which was so ably moved by my noble friend. As he has already said, in the summer of 1973 during the Committee and Report stages of the Social Security Bill, a similar Amendment was moved but we withdrew it because the Minister, who was then the noble Lord, Lord Aberdare said that we should wait for the review which was being undertaken by the Government, and the report of the Secretary of State, which was the review,
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promised to go further into the problems of disabled people in employment. We are still trying to remove the earnings stop, which is a very real and positive deterrent to a disabled person to enter or re-enter employment. We seem to be going round in circles and do not seem to have made any real progress.
My noble friend has already spoken of the therapeutic earnings of £4·50 a week. The word "therapeutic" is defined as "tending to the cure of disease". How can this paternalistic palliative be described as therapeutic when it actually prevents the full rehabilitation and realistically debars the disabled person from work? Let me read part of a letter from the father of a young man, an industrial psychologist, disabled in an accident. This man is married with two children but is living at present with his parents because, as his father said, it seemed rather much to expect his wife to have the additional care of looking after him. He is still very interested in the work he did as an industrial psychologist, but they have been told he will not be able to return to the demands and intensity of his old job and will have to be content with a job of a quieter character. He has been offered a light clerical part-time job by a local firm which is keen to help. The letter said:
"It will be a simple job, though that is necessary after absence from work for over two years and we are hoping that he will be competent to do it and that it may lead to something better and full-time. He is still receiving invalidity benefit to the amount of £13·60 a week which, I understand, will be increased at the beginning of October, but immediately he begins work this will cease. We are grateful that this part-time job has been offered and I suppose it could be regarded as continuing our son's rehabilitation. For this work he will be paid £10 a week, out of which we expect the cost of his insurance stamp will be taken. The amount remaining will not be so much as the amount which our son has been sending weekly to his wife.
Although the Local Employment Bureau officers are sympathetic in their view of the case, as also are the local officers of the Department of Health and Social Security, and would pay the difference between what our son will earn and what he would otherwise get for his invalidity benefit, the higher authorities rule that there is no precedent for such a step. In other words, our son is making an honest attempt to begin work; it is in the nature of rehabilitation and yet he will receive less than he would otherwise receive if he chose, as indeed he could justifiably choose, to continue to receive his invalidity benefit. One is well aware that rules and

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regulations do not cover every contingency, but there seems something deficient when a person, in his desire to start work again, is placed at a financial disadvantage."
This letter illustrates several important points. First, one often cannot return immediately to a job that is as full-time or demanding as the one previously held. Secondly, a part-time job is an important part of rehabilitation, a stepping-stone to doing a worthwhile productive job. This, if you like, is therapy. Thirdly, this young man is taking a cut, because of the earnings stop, and if he did not have parents who were able and willing to look after him at home, and if his wife was totally dependent on him for support he would be condemned to a life of forced inactivity, questionably enlightened by the therapeutic earnings of £4·50 a week. As my noble friend has said, from the point of view of cost a good proportion of invalidity pensioners, over one-third, will also have to resort to supplementary benefit, and I feel that this Amendment would certainly reduce the number of people on supplementary benefit and reduce administrative costs.
Paragraph 51 of the Report of the Secretary of State mentions the problems of extra expense, low income and incentives for disabled workers being closely related and it states:
"Such evidence as there is, here and abroad, points to the possible value of a separate standard benefit to be paid to severely disabled people who are working despite their disablement."
The Report says that this should not be confused with invalidity benefit, but it would give some recognition of what has been lost and of the wider implications of disablement. I feel very strongly that the Department of Health and the Department of Employment should get together and try to work out some form of wages supplement scheme. I hope that this proposed earnings rule may be a step towards the wages supplement scheme, so I wholeheartedly support my noble friend's Amendment.
4.19 p.m.
The Earl of LONGFORD: I should also like to support my noble friend's Amendment which he has moved so effectively. I sympathise with the noble Lord, Lord Wells-Pestell, because there is nobody here who would be more sympathetic
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than he to a plea of this kind. But he is a Minister, it is not his money, and he will therefore be uncertain whether he can meet us without taking the matter back. I hope that at the very least he will say that representations will be sympathetically considered, which will give us an opportunity for a vote—if not today, at a later stage—if he is not able to win over his colleagues. I also hope that he will not slap us down and say, "Nothing doing", because that would be very unlike him.
I think anybody listening to this debate today would feel that prima facie the noble Lord, Lord Crawshaw, made out a powerful case. The simple fact is that the retirement pensioner can earn up to £50 before there is a deduction, and the disabled person can earn up to £4·50. Something has got out of phase there. That must strike anyone at first sight. If the noble Lord is going to resist us, even temporarily, he will no doubt try to explain that the two things are not comparable. We must spend a moment to ask ourselves whether that argument, that you cannot compare the two, is a valid one. I am afraid that I have not given the noble Lord, Lord Aberdare, notice of a quotation of what he said— although I am sure that he has nothing to be ashamed of in it—when he was in Government and was dealing with this issue. He was explaining the difference between the retirement pension and invalidity pension, and he pointed out that the underlying purpose of the invalidity and sickness benefit is that it is paid when some physical or mental condition renders an insured person incapable of working.
The noble Lord went on to say that the £4·50 was not intended to be an earnings rule in the ordinary sense. He used that phrase with reluctance, I gather —the therapeutic earnings which the noble Lord, Lord Crawshaw, touched on. At any rate it was argued by him—and I do not know whether it will be argued today, although I hope not, in the same sense; and it may be argued by the noble Lord, Lord Wells-Pestell—that you cannot make the comparison. We may hear from the noble Lord that the retirement pensioner has earned his benefit. We may be told—I hope not, but it seems to lie behind a great deal of the thinking here—that the invalidity pensioner

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has not earned his pension in the same way. I do not think that the noble Lord, Lord Aberdare, used those expressions on an earlier occasion; but that is the kind of defence which may be made for drawing such a tremendous distinction between the two categories— that one has earned it and must expect better treatment, while the other has not earned it. I hope that that will not be said. It would be a sad reflection on our state of mind if we drew a distinction in that kind of way, if we talk of the disabled person as not entitled to it and as drawing his pension out of the benevolence, the charity, of the State. I would say that none of us in our family life would adopt such a criterion if, say, some of our children earned some substantial sums and another child, it may be, was incapable of earning in the ordinary legal sense. We should still feel that the disabled one was as much entitled to whatever was available as was the other who worked hard because he was able to work hard. I hope that that distinction will not be drawn. It is important to attend to the theory here; for unless the theory is brought in on the side of the existing proposal by the Government, there is no reason whatever to draw this distinction.
There is one practical example which came to me in the last few days. Someone was brought to see me who is a very heavily-handicapped spastic. He is incapable of speech, apart from being incapable of any action with his arms and legs. He cannot speak at all. He communicates in conversation by pointing his nose at a small blackboard which he brings with him; and he has some kind friend, in this case a student, who interprets for the benefit of anybody such as myself what he proposes to say. In spite of that colossal handicap he has a 21, very nearly a first-class, degree at Reading University, an M.A. degree at Sussex and he hopes to get a still higher degree. So he is entitled to look to a career, possibly in publishing—and he came to see me in that connection. One is entitled to ask whether such a person is to be described as incapable of work. Obviously he is not incapable of work; he just has a 21 degree at University and is capable of some work. But the question become urgent of whether the Government are to discourage him from working by a ruling of this kind. So the
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crude distinction between those who earned the money and those incapable of working and therefore entitled to therapeutic earnings, must be washed out; it is primitive, crude and somewhat repulsive. I hope that we will go back to the facts as set out by the noble Lord, Lord Crawshaw, and I hope that that very sensitive man, the noble Lord, Lord Wells-Pestell, at the very least will tell us that the proposal will be sympathetically considered before the next stage.
Baroness SUMMERSKILL: I would add only a few words to what has been said. Listening to the noble Lord who opened the debate on the Amendment, I was much struck by the way he expressed himself and by his knowledge of the position. I want to put the medical aspect of this question. It is a curious fact that today the Government attach so much importance to occupational therapy that they are willing to subsidise the training of occupational therapists in every field in order to reduce not only the disabilities of those patients who will eventually recover but, particularly, the helplessness of those patients who are unfortunately incurable but who have the courage to face up to life and who are determined that they will so far as possible make themselves familiar with some of the various activities to which they are introduced during their recovery state.
Here I find a most curious contradiction. While, on the one hand, the Government are saying—all Governments, not only this one; and the medical profession prods the Government to subsidise the training of occupational therapists—that occupational therapy is very helpful, that it will give the patient a new confidence in himself and his powers, that money must be spent on it and excellent young men and women trained in this field, on the other hand we learn here that the individual who has the energy and courage to decide to learn some particular pastime or job of work will suffer a penalty. He is asking for the same treatment as a retirement pensioner; and this, I think, is not unjust. Which of us in our retirement would willingly change our lot with the patient who has suffered from some incurable complaint for the whole of his life and is destined to suffer from it until he dies? I should have thought that at this stage of his life, if not before,

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the Government would say, "This is the time when, for his sake, we should do everything to encourage him to take up some occupation." Therefore, not only for medical reasons but for humane reasons, I feel that now that the whole question of retirement pensions is being looked at again, we should adopt a more practical and humane approach to the individual who is suffering from some incurable disease and who is desperately anxious to help himself.
Lord SOMERS: I should like also to support this Amendment. In considering the case one must remember the situation of the disabled person. Let us take, as an instance, a young mother with two children whose husband was perhaps killed in a car accident some years ago. She develops multiple-sclerosis or some such disease. She has these two children who must be fed, clothed and educated, and she is the only person who can in some way provide the necessities for them to survive. One must remember that the disabled do not find it as easy as others do to obtain employment, simply because some people have an odd reluctance to employ them—foolishly, as I think, because although they may be physically disabled, mentally they are often a great deal clearer than those of us who are physically able. Therefore, they are going to find things financially very difficult.
It seems to me that a rule such as that which exists at present is absolutely crippling. The disabled may not be able to do full-time work and so earn enough to keep them going and to supply the needs of their children, but they may be able to do enough to balance their earnings with an invalidity pension: the two incomes combined may be just enough. To cut that out altogether seems to me absolutely unjust—and if there is one thing on which Governments of all political colours are united it is surely that justice must be done. I sincerely hope that the Committee will accept this Amendment.
The Lord Bishop of WAKEFIELD: I support the Amendment. Whatever the noble Lord, Lord Wells-Pestell, has to say in reply to the contributions to the debate, I know that he will be kind in his reactions. I share the views of the noble
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Earl, Lord Longford, that we are quite sure that the noble Lord's intentions will be to help the disabled in every way possible. In my experience as a clergyman, I owe a tremendous debt to disabled people. I have had a lot to do with them over the years and they have given me far more grounds for encouragement in my view of human nature than many people who are not disabled. It is because of the heroic way they deal with their disablement that I feel that we who do not share their condition ought to be ready to give them every encouragement we can.
To support this Amendment in the hope that it may be accepted would give them encouragement. The most important point—if I may pick out one sentence from the speech of the noble Lord, Lord Crawshaw—is that this Amendment would give the disabled the will to try. If we can do anything here that will encourage people to try to overcome the disappointment that must suddenly come to them in discovering that they are disabled for life, we should all try to do it. They have so much to give to the community as a whole, in many cases more than those who are not disabled. I therefore wish to support this Amendment so that the disabled might be encouraged by us and find an even greater incentive to try.
Lord HYLTON: I should like to support this Amendment moved with such compelling arguments from my noble friends on the mobile bench. It is a modest Amendment and, probably, the proposed new ceiling hardly allows for the effect of inflation on the existing maximum earnings. I believe that this is one of the few occasions when it is possible to do something positive to assert the human dignity of handicapped people at very slight, minimal, cost to the Exchequer. I hope that the Government will accept the Amendment.
Lord ABERDARE: As my name has been mentioned by various noble Lords, I think I should say a word. I was honoured that the noble Earl, Lord Longford, should quote from what I had said in the course of proceedings on the Social Security Bill 1973. I am not in the least ashamed of what I said at that time. In fact, I remember the words very well, and should not be suprised if the identical words appeared in the brief of the noble Lord, Lord Wells-Pestell. I also said at

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the time, as the noble Lord, Lord Crawshaw, reminded us, that I had rather greater sympathy with this proposal, in terms of priorities, than with relaxation of the earnings rule. My mind goes back to the Bill of 1973 and to the demands that were made on the then Government from all around the House to make relaxations of one kind or another, or to help one kind of person in need or another by giving an extra allowance, an extra pension or by relaxing this or that rule.
At that time, your Lordships will recollect, I accepted an Amendment—I believe an Amendment of the noble Baroness, Lady Seear—requiring a review to be made by October last year. The present Government accepted that obligation and produced their review; and it is, as I understand it, as a result of that review that we now have this Bill in which there are two new benefits: the non-contributory invalidity pension and the invalid care allowance. Both benefits are enormously welcome and both a real step forward in providing for the needs of the disabled. Since then, as a result of what happened in another place, the Government have, against their will, been made to relax the earnings rule and also to include the disabled housewife within the provisions of the non-contributory invalidity pension. I honestly feel that it is difficult for this Committee now to ask for any more.
I do not know what the noble Lord, Lord Wells-Pestell, will say to this Amendment, but I feel that in this Bill the Government have already gone a long way. They have been made to go even further, and I feel that I could not myself responsibly push them to go yet further —much as I support the feeling and the arguments behind this Amendment. It was extraordinarily well moved by the noble Lord, Lord Crawshaw, and very well supported by other noble Lords. I hope that he will not put it to a vote, for the very reason I have tried to express: that I feel we are trying to get too much too quickly in this Bill. I am sure we are going to receive a sympathetic response from the noble Lord, Lord Wells-Pestell, who himself understands well the needs of the disabled. I hope that his answer will prove sufficiently satisfactory to the noble Lord, Lord Crawshaw, for him not to put this matter to a vote. If he did, I myself should feel bound to
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advise those who care to follow me to abstain.
4.40 p.m.
Lord WELLS-PESTELL: I am glad that we have had what amounts to a fairly long debate on this Amendment. I know there is a great deal of sympathy, understanding and even support in your Lordships' Committee for the Amendment which stands in the name of the noble Lord, Lord Crawshaw. I do not have, and the Government do not have, any difference of opinion regarding what the noble Lord, Lord Crawshaw, has said. However, we must get this matter into its right channel—not into its right perspective but into its right channel. This country has a vast area of social services. It has a vast number of different allowances for different kinds of disability. I say this kindly, but not a bit of what has been said is relevant.
The invalidity pension to which the noble Lord, Lord Crawshaw, referred—I want to say this for the benefit of certain noble Lords whose heads were nodding in agreement with the noble Lord—can be given only if the person who receives it is incapable of work. May I compare it with the position of a person who is unemployed. One cannot obtain unemployment benefit if one is employed. It may well be that there ought to be another category. If, however, the person to whom the noble Baroness referred is capable of earning £10 a week, which I agree is not a princely amount, he is not incapable of work; therefore, he is not entitled to this invalidity pension. It is given simply and solely for being incapable of work.
The Earl of LONGFORD: If I may interrupt the noble Lord, I think he will not disagree with the language used by the noble Lord, Lord Aberdare, who may have received a little of the same expert advice as the noble Lord has himself received. In 1973 the noble Lord, Lord Aberdare, said:
"It has always been recognised that there can be circumstances in which a person may be accepted as incapable of work and yet be capable of doing some work".
That is what the noble Lord, Lord Aberdare, said: that a person could be incapable of work but not incapable of doing some work—hence the £4·50.
Lord WELLS-PESTELL: There is nothing between the noble Lord, Lord

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Aberdare, and myself and the Government on this matter, because we realised when this benefit was introduced that it was possible and, what is more, desirable to encourage people who had a very serious disability to do some kind of work, if they can. The term "therapeutic value" has been used. This is very important to people who have limitations of one kind or another. Therefore they are encouraged to work, and they can keep anything which they earn, up to £4·50 a week. It is not taken into account when assessing what they need over and above that amount in order to live. However, that does not alter the fact that this benefit is given simply and solely on medical proof that a person is incapable of work. The noble Lord, Lord Aberdare, was right about that. Therefore, I must resist this Amendment. If a person can work—an example was given to your Lordships—and can earn £10 a week, one cannot argue that that person is incapable of work. We must keep within the terms of the various benefits.
It may well be that at some later stage we ought to do more, whether by way of a contributory pension or by way of a non-contributory pension. However, at the present moment we are in the situation where we must apply the conditions for a benefit. There is not a single noble Lord in this House who would approve of a person working and drawing unemployment benefit. Nor is there a single Member of your Lordships' House who would approve of people drawing benefits to which they were not entitled. If a person is incapable of work, he is entitled to the invalidity pension. As I have said, from advice which we have received over the years from the medical profession and others, one wants to encourage people who are in that position to do something for themselves. That is highly desirable, and I speak with a great deal of experience. It is highly desirable that one should encourage people to do something for themselves, in order to "get them out of themselves". If they can do a certain amount of work, we are saying that that is all right; we will ignore the first £4·50. Over and above that, however, so far as the invalidity pension is concerned, they will have to suffer some loss. I could go on, but I hope that your Lordships will feel that
1020
I have said sufficient. It is not that the Government are unsympathetic towards this Amendment; that must be clearly understood. It is a question that—
Lord HYLTON: I am grateful to the noble Lord for giving way. Before he leaves that point, is he asserting that it is possible to draw a rigid, cast iron line between those who can work and those who are incapable of work? Surely there must be many borderline cases. When doctors are assessing the ability of a person to work, surely they must tend to err on the generous side; namely, to give their patient the benefit of the doubt and to say that he cannot work when perhaps he could work. There are so many complicating factors. In this interim situation where there is doubt and where there are borderline cases, before we have some kind of tapering-off system, is it not reasonable to increase the ceiling in the way that is proposed in the Amendment?
Lord WELLS-PESTELL: I am grateful to the noble Lord, because he has helped me to make my point. Of course it is difficult to establish in every case that the person concerned is incapable of work. I am sure, and I hope that this will always be so, that a medical practitioner who makes the judgment will err on the side of the disabled person. We acknowledge that. That is why we say that in the case of those who can do some work we will ignore the first £4·50. However, it does not alter the basic fact, which is that this is an invalidity pension for those who are incapable of work. We can talk all the afternoon about this, but we cannot escape that fact. In the end, this is a requirement.
Baroness SEEAR: Surely the point that the Minister is making now he is making against himself. He keeps on telling us, rightly, that the Government are ignoring the first £4·50. Surely the issue is a much narrower one; namely, what is the level of the disregard to be? If one can ignore £4·50, logically one can ignore £5, £6 or an even higher figure. We are talking about how high should be the disregard. The noble Lord admitted the principle of a disregard. Now he is talking about the extent of the disregard. Surely that is the issue.
Lord WELLS-PESTELL: It may be the issue for the noble Baroness, but

1021
certainly it is not the issue so far as the Government are concerned. If the noble Baroness wants me to reply, I will reply quite bluntly and say that we cannot afford it. But that is not what is at stake at the present moment. What is at stake at the present moment is the idea that a person who is supposed to be incapable of work should be able to earn as much as he possibly can. What I am saying is that the two things are inconsistent. Therefore I must say, and I hope that the Committee will follow me on this, that while the Government have a great deal of sympathy with what the noble Lord has said, the crucial test in this particular matter is whether or not a person is incapable of work. If people are incapable of work they get the invalidity pension.
There is one other thing which has not been brought out that I should mention. It is that regardless of their age, if the wives of men who draw the invalidity pension go out to work, the first £13 that they earn is disregarded. I am the first to admit that not every man who has an invalidity pension is married, and if he is married his wife may not be able to go out to work. However, the fact remains that if she is able to go out to work, regardless of her age—the position is very different when one is dealing with retirement pensions—the first £13 of her income is disregarded.
I wish quite sincerely that we could do something to meet this situation. As the noble Lord, Lord Aberdare, has said, we have decided to introduce a number of fresh benefits in the Social Security Benefits Bill because we felt that there was a vast army of people who needed help, who had not been helped and had not been reached, and it may well be that at some later stage we shall be able to do something about this. However, bearing in mind the basic requirement I am afraid at this stage we cannot accept the Amendment.
Baroness DARCY DE KNAYTH: The noble Lord keeps saying that the Government cannot afford to help us, but would not he agree that if they encourage the disabled into full-time work by abolishing the earnings stop the Government would get them off supplementary benefit and would in fact save money?
Lord WELLS-PESTELL: I find it difficult to believe that people who are disabled will decline to do anything to help themselves financially simply because if they earn more than £450 it will be clawed back in some way.
Lord PLATT: With respect, I do not think the noble Lord, Lord Wells-Pestell, has at all answered the logical argument of the noble Baroness, Lady Seear, and others. If the argument is that at the moment the country cannot afford this, then we should be bound to listen to that argument: if the argument is that we cannot do this because it is only for people who are totally unemployed except that they can earn £4·50 a week, then surely with the same logic we could say that this is for unemployed people but they can now earn £5 or £650 a week, or anything else. Logically it is the same thing. The argument falls down completely as soon as one mentions the £4·50.
Lord O'HAGAN: I hope the Committee will press the Government In some way or other on this point. We all respect the noble Lord, Lord Wells-Pestell, but when he was trying to convince this Committee I had the impression that he was trying to convince himself, and perhaps not succeeding entirely. He did not mention any frightening figures that the acceptance of this Amendment would add to the burden on the Exchequer; he merely raised the bogey of unemployed people working and claiming unemployment benefit at the same time, when in fact that is not at all comparable.
Since another place has shown considerable humanity at great expense to the Exchequer in reducing the earnings rule for old age pensioners, surely we here can help the same course forward by exerting similar pressure on the Government in this much more limited and much less expensive sphere. I wish good luck to the movers of the Amendment.
Lord ABERDARE: This is a complicated matter but we seem to be getting into a terrible muddle. The noble Baroness, Lady Seear, and the noble Lord, Lord Platt, are talking about something quite different from what we are discussing; they are talking about raising the cut-off point at which a person loses the invalidity pension. That is not the

1023
Amendment. The Amendment is that the cut-off point should remain the same and that a graduated earnings rule should be introduced on the pension itself. I think we should stick to the Amendment under discussion. But having said that, I wonder whether the noble Lord, Lord Wells-Pestell, could perhaps go a little further to help the noble Lord and the Committee, and say that certainly when he is next looking at any further up-rating this particular matter will have very high priority?
Lord WELLS-PESTELL: I do not want to introduce a political element into this discussion but I think it must be patently clear that ever since this Government have been in Office they have looked carefully at the various forms and rates of benefit. They have unrated them and have undertaken to do so twice this year in line with wages, as distinct from prices; although the Government have reserved the right to switch over to prices if that is more beneficial to the recipients. We are constantly looking at these things. The added benefits that we are shortly giving will amount to about £1,100 million a year. Of course we look at these things, and we shall look at this one.
It would be wrong of me to say that we are going to do something about it immediately. Obviously, we must spread what money we have over the widest possible field and draw in the largest number of people who need help. Of course we are not unsympathetic, and I am sure that if my right honourable friend the Secretary of State can do something, she will. If I may say so with great respect, during the last year she has done a great deal for disabled people
(as I tried to explain during the debate that we had on the three-wheelers) bringing in 100,000 people who at present are not catered for at all. These things we have done; we are on the side of the disabled and their interests—there can be no question at all about that. Of course we shall look at this matter continuously, along with all the other benefits that we are able to provide for those who are unfortunate enough to be disabled.
Lord CRAWSHAW: May I thank noble Lords in all parts of the Committee for the great interest they have shown in this Amendment. I should like to take up one or two points. I do not agree with my noble friend Lord Aberdare that we want to raise the cut-off point from £4·50 to £13. But behind all the thinking on this question is an effort to establish some sort of wages supplement which will make up the income of somebody who is partially incapacitated. I realise that this Amendment is possibly not a perfect way of doing that, but it is one way of doing it and until somebody can produce a better way I am inclined to stick to my opinion.
This is the third time in the last two years that I have spoken to an Amendment of this sort and I feel that this discussion has gone on long enough. Also, I am anxious for the matter to be raised again in the other place. Therefore, with no feeling of animosity towards the Government or the Opposition, or anybody else, I would ask your Lordships for your opinion.
5 p.m.
On Question, Whether the said Amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 72; Not-Contents, 36.

CONTENTS

Amherst, E.

Dundonald, E.

Hylton, L.

Amherst of Hackney, L.

Ebbisham, L.

Hylton-Foster, B.

Balfour of Inchrye, L.

Elles, B.

Kilmarnock, L.

Banks, L.

Emmet of Amberley, B.

Kindersley, L.

Barrington, V.

Foot, L.

Lauderdale, E.

Beaumont of Whitley, L.

Gladwyn, L.

Lloyd of Kilgerran, L.

Boothby, L.

Goschen, V.

London, Bp.

Byers, L.

Greenway, L.

Longford, E.

Clancarty, E.

Grimston of Westbury, L.

Loudoun, C.

Crawshaw, L.

Guildford, E.

Lytton, E.

Darcy (de Knayth), B.

Hanworth, V.

Mackie of Benshie, L.

Darwen, L.

Harding of Petherton, L.

Masham of Ilton, B.

Daventry, V.

Henley, L.

Milverton, L.

Deramore, L.

Hunt, L.

Moyne, L.

Dudley, E.

Hunt of Fawley, L.

Newall, L.

Norwich, V.

Selsdon, L.

Teviot, L.

Ogmore, L.

Sempill, Ly.

Thomas, L.

O'Hagan, L. [Teller.]

Somers, L.

Thurlow, L.

Phillips, B.

Stamp, L.

Tranmire, L.

Platt, L.

Strathcarron, L.

Vivian, L.

Rochester, L.

Strathspey, L.

Wade, L.

Ruthven of Freeland, Ly.

Swansea, L.

Wakefield, Bp.

St. Davids, V.

Swinton, E.

Wardington, L.

St. Helens, L.

Tanlaw, L.

Wigoder, L.

Seear, B. [Teller.]

NOT-CONTENTS

Abinger, L.

Fletcher, L.

Plurenden, L.

Ardwick, L.

Gaitskell, B.

Shackleton, L.

Brockway, L.

Gordon-Walker, L.

Shepherd, L.(L. Privy Seal.)

Bruce of Donnington, L.

Greenwood of Rossendale, L.

Shinwell, L.

Caccia, L.

Henderson, L.

Stedman, B.

Camoys, L.

Houghton of Sowerby, L.

Stewart of Alvechurch, L.

Castle, L.

Jacques, L.

Stow Hill, L.

Davies of Leek, L.

Janner, L.

Strabolgi, L. [Teller.]

Douglas of Barloch, L.

Llewelyn-Davies of Hastoe, B.

Wells-Pestell, L.

Elwyn-Jones, L.(L. Chancellor.)

Lucas of Chilworth, L.

White, B.

Faringdon, L.

Mais, L.

Wigg, L.

Fisher of Camden, L.

Pannell, L.

Winterbottom, L. [Teller.]

On Question, Amendment agreed to.

Resolved in the affirmative and Amendment agreed to accordingly.
Clause 2 [Rates of benefit in respect of industrial injuries and diseases]:
5.7 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 3:
Page 2, line 30, at end insert—
("( ) In section 18(3A) of the said Act of 1965 (reduction of increase of disablement pension where beneficiary is residing with his wife and her earnings for the preceding week exceeded £13) for "£13" there shall be substituted "£20" and at the end there shall be inserted—
"With effect from such day as may be prescribed in the week containing 6th April in a year mentioned in the first column below, this subsection shall have effect with the substitution for "£20" of the amount specified in relation to that year in the second column below—

1976

"£35"

1977

"£50"")

The noble Lord said: When I moved the first Amendment I spoke to Amendments Nos. 1 and 3. This is the third Amendment to which I made reference. This Amendment extends to the wives of those industrial injuries disablement pensioners who are entitled to unemployability supplement the relaxed earnings rule which Clause 1(3) provides for the wives of retirement and invalidity pensioners. Noble Lords will recall that in the last Amendment I drew attention to that fact. Unemployability supplement is akin to invalidity pension, and the earnings
rule for the two benefits have always been the same. It is therefore desirable that they should continue to be the same. The Bill as amended in another place fails to extend the relaxed earnings rule to the unemployability supplement, but I am sure your Lordships will want to see the omission corrected. I beg to move.
Clause 2, as amended, agreed to.
Clause 3 agreed to.
Clause 4 [Duty to increase rates of certain benefits]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 4:
Page 4, line 9, after second (" 1 ") insert ("(a)").
The noble Lord said: This is a wholly beneficial Amendment which corrects an oversight in the drafting of the Bill. The Amendment ensures that where unemployment or sickness benefit is payable to persons over pension age any increases in respect of dependent wives, adults or children will be included in the group of long-term benefits which are to be up-rated in line with the general movement in earnings or prices, whichever is more advantageous for the persons concerned. Unemployment or sickness benefit is paid to a person over pension age at the rate of personal basic retirement pension to which he would be entitled. Dependency increases of these benefits are therefore paid at the rates appropriate to pensions

1027
and other long-term benefits. It was the Government's intention to provide for all long-term benefits to be increased in line with prices or earnings whichever would be more beneficial on a particular occasion. It would clearly be illogical for a long-term dependency increase to be included with the short-term benefits (which are increased in line with the movement in prices only). The Amendment, therefore, corrects this anomaly. I beg to move.
Clause 4, as amended, agreed to. Clause 5 agreed to.
Clause 6 [Non-contributory invalidity pension]:
5.12 p.m.
Lord CRAWSHAW Lord CRAWSHAW moved Amendment No. 5:
Page 6, line 43, at end insert—
("(10) For the purposes of section 11(5) of the Social Security Act 1973 entitlement to an invalidity pension shall be deemed to include entitlement to a non-contributory invalidity pension to allow payment of an invalidity allowance to a non-contributory invalidity pensioner out of the National Insurance Fund and regulations shall prescribe the basis on which the qualifying date shall be determined in such a case.")
The noble Lord said: This Amendment deals with the question of the invalidity allowance, which was a scheme devised to help the people who are incapacitated early in life. The logic behind this is that later on, or when one is fairly established in work, one has at least had some chance of building up a certain amount of income or capital and becoming established in a particular job or profession. The invalidity allowance was a welcome introduction to help those incapacitated at an early age, and most non-contributory invalidity pensioners will be those who became disabled early in life. I think that is a natural sequence of events. Their disability has probably prevented them from working at all. It seems something of an anomaly to us that the invalidity allowance under the Bill is available to the contributory pensioners but not to the non-contributory pensioners. It was with that in mind that we put down this Amendment. I beg to move.
Lord WELLS-PESTELL: The aim of this Amendment, as I understand it, is to pay an invalidity allowance on top of a non-contributory invalidity pension where the beneficiary satisfies the qualifying condition as to his age at the date of the onset of his incapacity. I am afraid there would be serious practical difficulties in trying to establish the age at onset of incapacity in many of the non-contributory invalidity pension cases. It is unlikely in such cases that there would be records still available anywhere so many years after the event, and people's memories of dates when ill-nesses began, some almost imperceptibly, are notoriously hazy.
The noble Lord, Lord Crawshaw, has argued that they have recognised the difficulties; hence the power in the Amendment to make regulations prescribing the basis on which the qualifying date is to be determined. I do not think that with all the power in the world to prescribe dates of onset one can overcome the facts that the age at onset cannot be properly determined in many cases and that an artificial solution imposed by regulations is unlikely to be a fair one between one invalidity pensioner and another.
Your Lordships will realise that there is more than this to the practical difficulties. I must again return to the question of cost. The non-contributory invalidity pension by itself as proposed in the Bill will cost an estimated £25 million net in a full year. Invalidity allowance would add another £7½ million net in a full year when the non-contributory invalidity pension is fully operative. In present economic circumstances, the Government cannot see their way clear to adding a further sum of this order to the cost, already massive, of the improvements and new benefits which this Bill and the Royal Warrants to increase war pensions will bring. We must also bear in mind that this is not the end of the story. Further measures to help sick and disabled people, the new mobility allowance and earnings related invalidity pensions, are on the way. These will add substantially to the cost of benefits, costs which, of course, have to be met in the end by the contributor and the taxpayer. It is for those reasons that at this stage we find ourselves unable to accept the Amendment.
BaronessDARCY DE KNAYTH: In supporting my noble friend's Amendment, may I ask whether we can really discriminate against those people who have not paid contributions, when it is their disability which has been the cause of their not working? The noble Lord mentioned cost again. Perhaps I may return to this aspect. Because of the difference in benefits for contributors and non-contributors, the non-contributors' income has to be topped up from supplementary benefits, and when non-contributors receive the invalidity allowance probably two-thirds of them will still need supplementary benefits. During the Committee stage of this Bill in another place a reply by Mr. O'Malley referred to the fact that people on supplementary benefits had to be dealt with individually by an officer, and by hand. The massive dependence on supplementary benefit was said to be one of the principle problems facing any Government. The only way to minimise the problem would be to reduce the number of those in receipt of national insurance benefits who also had to depend on supplementary benefits. As the numbers on supplementary benefit was reduced the problem would progressively become easier.
This individual assessment is very expensive, and so these Amendments would help the Government in that they would be very much cheaper in operation. I therefore urge the Government to reconsider and support my noble friend's Amendment, since they would be helping themselves as well as removing an illogical penalty from those who, by reason of their disability, have never been lucky enough to be able to work.
Baroness PHILLIPS: I should like to support the Amendment. For too long have Governments fallen back on this argument about the contributor and non-contributor. If we look at another aspect of the payment of insurance, the widow under 40 whose husband may well have contributed (Joes not draw by reason of the fact that she is not the right age. If the Government can adjust on one occasion, it seems totally illogical that they cannot adjust the other way in the case of these people who need the money and, as my noble friend has said, must have the money. It will merely come from the State in another form.
1030
I believe that these arguments were advanced when there was pressure for the over 80s, and eventually the Government of the day gave way. I would implore my noble friend to look at this again. I do not think that the question of cost can be determined. We know this all too well, just as we always had these strange figures about an earnings rule. I have always wondered whether a Chancellor sat down and actually assumed that a certain number of people would not draw their pension when he proposed his figures. I cannot believe that this is true. I feel that these figures are flexible, and probably would not stand up to close scrutiny. Would my noble friend look at this question? The amount concerned is not great. Surely our great scheme of welfare is not designed merely for those who can pay, but for those who need it. This was the basis of the Beveridge scheme.
5.24 p.m.
Lord ABERDARE: I do not want always to appear to be supporting the Government in this matter, because again I have great sympathy with the disabled. However, on this occasion I think that the noble Lord, Lord Wells-Pestell, has made two important points. The first is the matter of cost. As I understand it, extra money towards an invalidity allowance for the non-contributory pension would come out of Exchequer funds, and therefore your Lordships are asking the Government to find more money out of the Exchequer, which is a sensitive area for us to ask about. Secondly, he has pointed out the very real administrative difficulty in being able to put it into effect.
I would appeal to those noble Lords who are supporting this Amendment to consider carefully whether it is really right to send back to the other place another Amendment which involves further expenditure of public money, and, as I understand it, in this instance Exchequer money, when they have already won a considerable victory on the: last Amendment. We all need to have our priorities. The Government have had their priorities, and have put them in the Bill. Those who have put their names to this Amendment should have their priorities, and they have already got one Amendment. I should think that they ought. to be content with that.
Lord WELLS-PESTELL: I do not think that I can add much more, if anything, to what I have already said, or anything that would in any way improve upon what the noble Lord, Lord Aberdare, has said. My noble friend Lady Phillips said that it was unlikely that this would cost any more, but this is a very difficult area. My advice is that it will cost considerably more, notwithstanding the fact that, in the last analysis, 1 suppose that all money comes from the same source. But there is the difficulty of fixing a date, and this is going to be quite a costly operation. If money has to come out of the Treasury, this is certainly not the most propitious time to ask for it.
As we are always looking at these matters and keeping them under constant review, I should have thought that the Government's record over the last year is such that if those who represent, quite rightly, the needs of the disabled, would only look back over that period and see what has been done, and at what is going to be done in the forthcoming twelve months, they would realise that things have to be done by stages, and we cannot change all that needs changing in one, or perhaps two, years.
Lord CRAWSHAW: On this occasion I accept the advice of my noble friend Lord Aberdare and the noble Lord, Lord Wells-Pestell. As they have said, this whole concept of the non-contributory invalidity pension is new. There is an area here where we do not know what is going to happen. We shall probably return to this question because it concerns the congenitally disabled—those who have perhaps been disabled from birth, or at any rate from an early age— and we do not want to penalise them for it. I appreciate that we do not exactly know how the non-contributory scheme is going to work. For that reason, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.27 p.m.
Lord CRAWSHAW Lord CRAWSHAW moved Amendment No. 6:
Page 6, line 43, at end insert—
("(11) A person who becomes entitled to a non-contributory invalidity pension and who satisfies prescribed conditions relating to his
1032
previous dependence on a contribution to the National Insurance Scheme shall be entitled to an invalidity supplement, payable out of the National Insurance Fund, at a rate equal to the difference between the rates of invalidity pension and non-contributory invalidity pension specified in Part 1 of Schedule 4 of the Social Security Act 1973.")
The noble Lord said: Here again we are dealing with the non-contributory invalidity pension. We are once more dealing with possibly the worst off people in society as a whole. This Amendment is based on the view that an entitlement to invalidity pension should not depend on a contribution record because, as has been pointed out on the last Amendment, there are certain people who are not in a position at any stage in their lives to pay a contribution, and we do not feel that they should be penalised for this situation.
Again we come into this exploratory area of non-contributory pension. I recognise what the Government have done in introducing it at all. However, I think that this is an important principle. The question of ethics is involved here, and 1 should have liked the opinion of a right reverend Prelate, but unfortunately one is not present. This is an ethical question, and for that reason I beg to move.
Lord WELLS-PESTELL: Here again, I am in some difficulty because I cannot, on behalf of the Government, accept the Amendment. The aim of this Amendment, as we understand it, is to pay an invalidity supplement of £4· 70 to some non-contributory invalidity pensioners, thus giving them, in effect, non-contributory invalidity pensions at the full contributory rate of £11·60 instead of the proposed non-contributory rate of £690. In fixing this rate at about 60 per cent, of the contributory rate the Government are following precedent, and this has often been the precedent.
As noble Lords will know, in the discussion which we had on the subject of the selfemployed weekly payment it was said that they did not pay the full amount and, as a result, they were deprived of certain benefits. The Government justified the non-contributory rate for the new non-contributory invalidity pension in paragraph 56 of the Report to Parliament on Social Security Provision for Chronically Sick and Disabled People, which they stated in the following terms.

1033
Perhaps your Lordships will permit me to quote the relevant section, which reads:
"…it would be inconsistent with the maintenance of the contributory basis of (the insurance) scheme and inequitable in comparison with the treatment of those already over pension age—particularly those who have no or reduced pensions and are just as disabled as those under pension age—to pay non-contributory invalidity pension at the full contributory rates to people under pension age".
Paragraph 56 went on to cite the precedent of the non-contributory pension provided for people aged 80 or over.
I am sure your Lordships will appreciate that if one gives full-rate contributory benefits to those who have paid no contributions, one departs very radically from the sort of National Insurance scheme which we have had in this country since 1943; and, indeed, before then. I think that one of these days it could well be argued that we ought to depart from that course. What I am saying is that in the financial climate in which we exist today it is just not possible. It has been argued in some quarters that full-rate pensions for disabled people who had never been able to work would be accepted by contributors as being fair. But would this be accepted as fair by, for example, the disabled worker, who having struggled to work for most of his life, had a deficient contribution record and so received a retirement pension at a reduced rate?
In short, the borderline between potential non-contributory invalidity pension beneficiaries and others is by no means sharply defined. It is one thing to modify the advantage gained by having been a contributor; it is a rather different matter to make having been a contributor a positive disadvantage. I know that your Lordships will forgive me if I dwell on this aspect, but it is a key point. Both the congenitally handicapped and those in the wider group of potential non-contributory invalidity pension beneficiaries include people over pension age. Once the case for full-rate benefit below pension age is established, it becomes much harder to deny full-rate retirement pensions to those over pension age who are, in all other respects, identical.
One of the effects of trying to introduce provision on a residence-only basis at the full-rate as part of a system which otherwise pays full-rate benefits only in return for satisfaction of prescribed contribution
1034
conditions, would be to give the full benefit to a person who has just squeezed in through the residence gate-way, has not worked and has made no effort to work, but who at the age of 64 can be accepted as incapable of work; while paying a reduced rate of pension after pension age to somebody who has lived in this country all his life, and, given the disadvantages imposed by disablement in terms of job opportunities, education and so on, has not, despite his best endeavours, been able to piece together the necessary full contribution record. The cost of paying national non-contributory invalidity pension at the rate of £11·60 per week would be about £48 million net, compared with £25 million net at the £6·90 per week rate. This does not take account of the cost of any possible repercussions on the rest of the contributory scheme, including, for example, the cost of full-rate pensions for the over 80s, for non-pensioners, and for those with reduced rate pensions, which might well be enormous. This is a problem which no doubt, in better times, we might be able to do something about.
As we seem to be so very, and rightly, serious about the last two or three Amendments, I wonder whether the noble Lord, Lord Crawshaw, would object if I quoted something he said on 12th June 1973 at column 598 of Hansard of that day? He was,
"able to call in aid "
he said,
" the facts that the sun had been shining, England had won a good victory in the Test and we were in the middle of an economic boom."
The sun may have been shining recently, though I have not seen much of it, but in other conditions we are far from satisfied in the current difficulties of the economic circumstances. Bearing that position in mind, reluctantly we cannot accept the Amendment.
Lord BANKS: May I ask the noble Lord, Lord Wells-Pestell, whether he is able to answer this point? Is it a fact that the Government intend to introduce an earnings-related invalidity pension for contributors? If this were so, would it not maintain a differential between what contributors and non-contributors get? If this Amendment were passed, and subsequently the Government introduced

1035
the earnings-related invalidity benefit, there would still be a distinction between the two. But at least, in the meantime, something would have been done to bring the non-contributory and the invalidity pensioner nearer to the subsistence level.
Lord WELLS-PESTELL: That is the Government's thinking and at this stage I cannot go beyond that.
Baroness PHILLIPS: I am sure my noble friend will take the point made by the noble Lord, Lord Aberdare, but to put it more colloquially, perhaps the Opposition should not "push their luck" having been successful in one context. I know my noble friend is no grinder of the faces of the poor, but I think it is always a pity to rest an argument on precedent. After all, precedent sometimes mean that one has done the wrong thing for 20 years, and it is a pity that it cannot be changed. I think it is also a pity to base an argument on cost. Has there ever been a right time when one can spend money on the social services? I have lived long enough to have been through booms and slumps, and I have never known a period when any Government have stood up and said, "We are delighted to spend money on either social services or education".
Such progressive points have been won from Governments by people pressing them, either in this House or in the other place. So while I am sure that the noble Lord is sympathetic, it is not the best argument to suggest that precedent determines it, nor indeed that cost determines it; because, after all, those of us who are fit and lucky enough to work and to pay into the insurance fund do it for the very reason that those who are not so fortunate may have to draw out. This is the whole basis of our great Welfare State. Every time we produce this dreadful argument that only if you pay in can you draw out, we are ourselves denying a marvellous concept.
Lord CRAWSHAW: I should like to thank those noble Lords who have taken interest in these last two Amendments. I am glad that the whole question of the non-contributory principle has been so well-aired. I took up one of the sentences of the noble Lord, Lord Wells-Pestell, when he said that one of these days we ought to depart from our present system. I think that is right. I do not believe
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that these people we set out to help by this Amendment are being fairly treated by the community at large. However, I certainly do not want to appear greedy on this occasion and my noble friends and I were very grateful for the support which your Lordships gave to the first Amendment which we moved. I therefore beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 6 shall stand part of the Bill?
Lord ABERDARE: I should like to ask one quick question relating to Clause 6. During the Second Reading debate, I tried to stress the urgency of bringing in the provision for severely disabled housewives at an earlier date than the noble Lord himself contemplates, which is, I think, 1977. The noble Lord rightly stressed the very difficult task that faced the Department in bringing in a completely new provision of this sort, and of wording a new definition of "incapable of performing normal household duties". I fully appreciate that difficulty. However, I wonder whether the noble Lord would consider the case of a married woman in receipt of attendance allowance where, clearly, that person is incapable of performing normal household duties. Could the noble Lord introduce this new allowance more swiftly in the case of those who qualify for attendance allowance, because these are people who very much need the extra help and who, almost by definition, come within the category of those incapable of performing normal household duties?
Lord WELLS-PESTELL: I am most grateful to the noble Lord, Lord Aberdare, because we were mindful of what he said on Second Reading and we noted that, as he has just said, he appreciated that there would be considerable difficulties. He is quite right and those difficulties are very real. I am grateful to the noble Lord for the understanding which he has shown and for his suggestion that we might use the receipt of attendance allowance as a factor in identifying housewives for the purpose of paying non-contributory invalidity pensions immediately.
We have looked into this point very carefully and we have had some discussion upon it, and I am grateful to the

1037
noble Lord, as I so often am, for giving me advance notice, and sometimes, a reminder, of points that he wants to raise. We find at the moment that it would not be feasible for us to do this. The first reason—and it is a fundamental one —is that the conditions for the two benefits are not the same. For non-contributory invalidity pension, we shall require; a housewife to be both incapable of work and incapable of performing her normal household duties. The requirement for attendance allowance, however, is quite different. It is that the severely disabled person needs a lot of help from another person in connection with his bodily functions. For attendance allowance there is no requirement that the claimant should be incapable of housework and no inquiries are made about that.
However, it is known that some people receiving attendance allowance go out to work. For example, I have heard of a man who is a spastic and who is confined to a wheelchair. With commendable courage, he took a degree and is now working full time as a Principal in Whitehall. He is entitled to the attendance allowance. I could cite other cases. For example, there is the person who undergoes treatment on a kidney machine several nights a week, but who, nevertheless, works during the day. As regards the ability to do housework, there is no inquiry of this nature which is carried out in connection with claims for attendance allowance, so that, as I hope noble Lords will appreciate, a title to attendance allowance does not mean that the inability to perform normal household duties is a condition for the automatic receipt of the non-contributory invalidity pension.
Those are the main objections in the way of the noble Lord's suggestion, but there is also an administrative difficulty. Housewives receiving attendance allowance could not be readily identified from our records. In any case, even if they could, much of the information may already be out of date in those cases where the allowance was first claimed several years ago. Having said that, I can only assure the noble Lord that the Department will be tackling the problem of housewives' non-contributory invalidity with some sympathy, and I hope, with some vigour.
Lord BANKS: May I ask the noble Lord a further question relating to Clause 6? Would I be right in thinking that, whereas a contributory invalidity pensioner qualifies on retirement for the normal retirement pension, a non-contributory invalidity pensioner will, having received the £6·90 as of right up to retirement age, then be thrown entirely on to supplementary benefit until such time as he reaches the age of 80, when he will qualify for the reduced retirement pension as of right? If I have understood the matter correctly, there would appear to be a gap during which, the pensioner will receive no pension other than supplementary benefit, which of course would be subject to means test. If that is right, is that what the Government intend?
Lord WELLS-PESTELL: I think I can say that the noble Lord's conclusion is not right. This is not so. I will look into the point and will write to the noble Lord, but I am absolutely certain that what he has said is not the case.
Lord ABERDARE: Does not sub-section (4) make it quite clear that the noble Lord is not right? If one has a pension before one retires, that pension goes on after one's retirement. Subsection (4) says:
" A person who has attained pensionable age shall not be entitled to a pension …unless he was entitled … to such a pension immediately before attaining that age".
Clause 6 agreed to.
Clause 7 [Invalid care allowance]:
5.58 p.m.
Baroness SEEAR Baroness SEEAR moved Amendment No. 7:
Page 7, line 6, leave out from (" employed;") to end of line 9.
The noble Baroness said: I think I should declare an interest as the Chairman of the National Council for the Single Woman and her Dependants because it is particularly in the interests of members of that Society and people who are similarly situated that I am moving the Amendment. It may not be abundantly clear at first sight that the purpose of the Amendment to remove paragraph (c) is to make the invalid care allowance available to persons other than relatives who are in attendance on severely disabled persons, provided that they fulfil the requirements of paragraphs

1039
(a) and (b). The point of the Amendment is that, whereas I suppose the provision to be aimed primarily at a daughter who gives up work to look after a severely disabled parent, there are quite a number of cases in which, for instance, two single women have been living together and one becomes very severely disabled and the other attempts to go on working, because if she did not she would lose all source of income and, incidentally, some part of her own subsequent pension rights. The idea of the Amendment is that such a person should be able, just as a relative is, to qualify for the invalid care allowance.
The noble Lord, Lord Wells-Pestell, has spoken—and I have great sympathy with this—about the cost of the additional benefits which are being proposed. I make the point in relation to my proposal, however, that this is cost-saving rather than a cost-incurring benefit. In the case of severely disabled people, if there is no person who is prepared to be in the house for the long periods required to qualify for the benefits, those people will have to go into institutions. It will cost vastly more to keep them in institutions than to pay the invalid care allowance to a person who is not a relative, but who would, no doubt, in many cases greatly like to be able to stay at home to look after the friend with whom he or she has lived for many years.
It is even arguable, and sensible in some cases, that even where there is a relative it is more appropriate, for a variety of reasons, that that relative should continue in employment and that somebody else, not a relative but fulfilling the requirements of this provision, should do the caring. It is for these reasons that I move the Amendment.
Lord ABERDARE: As I raised this matter on Second Reading, perhaps I should say at this point that while I have considerable sympathy with the noble Baroness I did appreciate what the noble Lord said on Second Reading about feeling his way in a new field.
Lord WELLS-PESTELL: I am inclined to say that I am obliged to the noble Baroness for raising this matter because we have a great deal of sympathy with the point she has raised. I tried to deal with it on Second Reading and she
1040
might care to read my remarks on that occasion as reported in column 209 of Hansard for 18th February last. I do not think that I can say a great deal more than I said on that occasion, when I referred to the plight of the single woman devoting her life to caring for a severely disabled parent and that the invalid care allowance was of supreme importance. Nevertheless, the Government—I think it opportune that I should repeat what I said on that occasion— do not intend to restrict the invalid care allowance to this one situation and relationship. The intention is to prescribe a wide range of relatives, including ascendants and descendants in a direct line, nieces, nephews, uncles and aunts, who will qualify for the allowance right from the beginning.
I know that the noble Lady is concerned about non-relatives and I must say frankly that they will not be included at the beginning. However, I hope that the three words "at the beginning" will satisfy her in the sense that I made it clear, in replying to a plea made by the noble Lord, Lord Aberdare, for the inclusion of equally deserving cases where the person doing the caring is a friend or neighbour, that this does not mean that non-relatives are necessarily excluded from this for all time. The Government are proposing to proceed step by step and the reason for this is simple. It is that this is an entirely new field. It is a radically new departure which I am sure will appeal to the noble Baroness. It is not modelled on any existing benefit and we are therefore going into rather uncharted seas. Nobody knows what the initial load of work will be or how many additional people would be brought in if we accepted her Amendment. I hope, having said that non-relatives will not be excluded but that they will not be included at the beginning for the reason I have given, the noble Baroness will feel that I have met her needs.
Lord BYERS: Is this the right sort of thinking? Are we not going to penalise the person who just cannot find a relative but who has the same need as someone who has a relative who is prepared to do this work of caring for the disabled person? I suggest that the use of the words "at the beginning" is not the right or logical way of dealing with this

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matter. As my noble friend Lady Seear said, there must be a cost saving here. We all know that in the event of its being impossible to find someone to care for a disabled person, the only solution often available is to put that person into an institution. This is much more expensive than providing something like an invalid care allowance on a non-relative basis. I do not believe that there are a great many people who are not able to find a relative to do this work. Nevertheless, I do not believe that what the noble Lord has suggested is the right way to tackle the matter, nor do I understand why those who cannot find, for example, the fifth son of a second cousin should be debarred from having this help.
Lord WELLS-PESTELL: If the noble Lord, Lord Byers, wants a frank answer as to whether this is the right thinking, then, with respect, I must tell him that in my view it is. We know, as does the noble Baroness, Lady Seear, who moves in these circles, that the vast majority of people in this category are being looked after by a daughter or niece or some other relative. For this reason we want to start at this point, and that is why we have laid down the degree of relationship—because they are the people who are doing it now. What we are saying is, "For goodness sake! let us see what this involves in terms of money before we extend it to non-relatives." The principle of extending it to non-relatives is there and we are prepared to do it. We are simply asking for permission to put it a little further down the pipeline.
Baroness SEEAR: I cannot accept the noble Lord's argument. It seems extraordinary
that the Government should be indulging in all manner of expensive projects but should suddenly stick at providing an invalid care allowance for a very small number of single women who do not happen to be the relatives of severely disabled people. We hear about the Government pouring £700 million plus into food subsidies. Why should they refuse this allowance to a few poor old ladies who want to stay at home to look after someone who does not happen to be a relative? After all, people will not queue up to look after severely disabled people simply to conform with the requirements and get this allowance. This is not the sort of job which will attract all the idlers in the country, though it will save the nation a great deal of money. The noble Lord knows what it costs to keep a person at any level in any institution. We are not contemplating paying anything like such sums to these people and I should have thought that the Government would have been glad of an opportunity to get more people to look after the disabled in their own homes. Apart from these considerations, noble Lords know only too well how desperately many of these people want to stay in their own homes, and for this, if for no other reason, I cannot accept the noble Lord's argument. I propose to divide the Committee on this issue.
5.58 p.m.
On Question, Whether the said Amendment (No. 7) shall be agreed to?
Their Lordships divided: Contents, 89: Not-Contents, 28.

CONTENTS

Aberdare, L.

Drumalbyn, L.

Hylton-Foster, B.

Abinger, L.

Dundonald. E.

Inglewood, L.

Alexander of Tunis, E.

Ebbisham, L.

Killearn, L.

Amherst of Hackney, L.

Ellenborough, L.

Kilmarnock, L.

Auckland, L.

Elliot of Harwood, B.

Lauderdale, E.

Banks, L.

Elton, L.

Lindsey and Abingdon, E.

Beaumont of Whitley, L

Falmouth, V.

Lloyd of Kilgerran, L. [Teller.]

Byers, L.

Ferrers, E.

Long, V.

Campbell of Croy, L.

Foot, L.

Longford, E.

Cathcart, E.

Geoffrey-Lloyd, L.

Loudoun, C.

Coleraine, L.

Gladwyn, L.

Lyell, L.

Colville of Culross, V.

Glasgow, E.

Lytton, E.

Colwyn, L.

Glenkinglas, L.

Mackie of Benshie, L.

Cowley, E.

Goschen, V.

Macleod of Borve, B.

Crawshaw, L.

Grey of Naunton, L.

Malmesbury, E.

Cullen of Ashbourne, L.

Haig, E.

Mancroft, L.

Darcy (de Knayth), B.

Hanworth, V.

Masham of Ilton, B.

Daventry, V.

Harmar-Nicholls, L.

Massereene and Ferrard, V.

Denham, L.

Henley, L.

Newall, L.

Deramore, L.

Hunt of Fawley, L.

Northchurch, B.

Norwich, V.

Sandford, L.

Swinton, E.

Ogmore, L.

Sandys, L.

Thorneycroft, L.

O'Hagan, L.

Seear. B. [Teller.]

Tranmire, L.

Onslow, E.

Sempill, Ly.

Tweedsmuir, L.

Phillips, B.

Sharpies, B.

Vivian, L.

Rankeillour, L.

Somers, L.

Vickers, B.

Redesdale, L.

Strathcarron, L.

Warrington, L.

Rochester, L.

Strathcona and Mount Royal, L.

Wigoder. L.

St. Davids, V.

Strathspey, L.

Young, B.

St. Helens, L.

Swansea, L.

NOT-CONTENTS

Ardwick, L.

Henderson, L.

Shinwell, L.

Brockway, L.

Jacques, L.

Snow, L.

Bruce of Donnington, L.

Janner, L.

Stedman, B.

Castle, L.

Llewelyn-Davies of Hastoe, B.

Stow Hill, L.

Davies of Leek, L.

Lovell-Davis, L. [Teller.]

Strabolgi, L.

Douglas of Barloch, I,.

Mais, L.

Wells-Pestell, L.

Elwyn-Jones, L.(L. Chancellor.)

Pannell, L.

White, B.

Gaitskell, B.

Shackleton, L.

Winterbottom, L. [Teller.]

Gordon-Walker, L.

Shepherd, L. (L. Privy Seal)

Wynne-Jones, L.

Greenwood of Rossendale, L.

On Question, Amendment agreed to.

Resolved in the affirmative and Amendment agreed to accordingly.
6.6 p.m.
Baroness SEEAR Baroness SEEAR moved Amendment No. 8:
Page 8, leave out lines 11 to 17 and insert (" of whom there has been payable either an attendance allowance for an uninterrupted period of six months or for periods which together make a total of six months or such other payment out of public funds for a similar period or periods on account of his need for attendance as may be prescribed; ")
The noble Baroness said: The purpose of this Amendment is quite small and in a sense is technical. The invalid care allowance will, as I understand it, be available only to people in attendance on those severely disabled for a continuous six months' period, for which they qualify for the attendance allowance—but it has to be for a continuous period. We should like to suggest that it should not be a continuous period but a period in which the attendance adds up to six months. The period could have interruptions in it. At the early onset, or relatively early onset, of a very severe illness there could be a period when full-time attendance was required; there is then a break; and then the full-time attendance is resumed. What is suggested in the Amendment is that it should be possible to aggregate these periods of need for attendance, rather than to say that it must be a complete six months—one continuous period— before the invalid care allowance can be paid. I beg to move.
Lord WELLS-PESTELL: I wonder whether the noble Baroness will allow me
1044
to deal with both this Amendment and the next Amendment together, because it might save a little time, although I realise that she has spoken mainly to only one of them. These Amendments would alter one of the fundamental conditions for the award of the allowance. I should explain that Clause 7(8) of the Bill is drawn so as to enable the invalid care allowance to be paid where the severely disabled person who is being cared for is currently—and the operative word is "currently"—receiving an attendance allowance, or the equivalent allowance, under the War Pensions or Industrial Injuries scheme; for example, a constant attendance allowance at the full day rate or above. It follows that (other conditions being satisfied) the invalid care allowance can be put into payment from the first day for which an attendance allowance or an equivalent constant attendance allowance is payable.
The effect of the first Amendment and the first limb of the second Amendment would be to delay the payment of the invalid care allowance in such cases by up to about six months. That is how we understand it and I find it difficult to believe that this is the result which the noble Baroness really intended; but this is how I am advised by our legal experts. Be that as it may, it is without doubt a much more restrictive condition than that in the Bill. I am sure that if, on reflection, the noble Baroness feels that I am right she will not want to press her Amendment.
The second limb of the second Amendment would enable invalid care allowance

1045
to be paid on the strength of a medical certificate by a general practitioner. There is a deceptively simple ring about this suggestion, but its implications are not so simple. Again, as I understand the position and as I am advised, it would be possible for such a medical certificate to cover an absence from work lasting a very short period—for example, where a person needing care had an illness or a crisis in an illness lasting a mere two or three weeks. This would be contrary to the whole concept of the invalid care allowance as a long-term benefit for long-term cases because that is its intention. Invalid care allowance could be paid for a very long stretch of a claimant's life. In any event, it is important that the standards to be applied in judging whether a disabled person needs care should, in the very nature of things, be consistent. Bearing these considerations in mind, I am sure that your Lordships will agree that it would not be right to provide that this new long-term benefit should be governed, in effect, by general practitioners' certificates.
Furthermore, I said just now that the whole concept of the invalid care allowance was that it would be a long-term benefit for long-term cases. The Report to Parliament on the Social Security Provision for Chronically Sick and Disabled People put the point in this way—per-haps I could read it:
" Caring situations are not, of course, limited to households with a severely disabled member —problems of a similar sort arise where there is a small child, a temporarily sick person, or an elderly person; but it is important to set limits to the scope of a new benefit, and to concentrate on the most severe contingency. Thus the receipt of attendance allowance would be used to determine the disabled person's need for care …"
It is a fundamental part of the Government's proposals for the invalid care allowance that there should be an attendance allowance, or an equivalent constant attendance allowance, in current payment. This links the invalid care allowance to the severe contingency for which it is intended. Furthermore, it avoids entirely the need for a claim for invalid care allowance to be supported by medical evidence, for the disabled person to be examined by a medical board in connection with a claim for invalid care allowance or for his need for care to be assessed for invalid care allowance purposes.
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In view of this I am wondering whether I could ask the noble Baroness, if she disagrees with our interpretation of the Amendment—and, as I say, I base my reply on the advice, particularly legal advice, that I have received— whether she herself would like to take it back and look at it in the light of what I have said.
Baroness SEEAR: I thank the noble Lord for his helpful comment on the Amendment. I must say that my advice about the interpretation of the first of these two Amendments was not the same as his, but I may well have been incorrectly advised. Of course it was not the intention at all that it would restrict or make more difficult the invalid care allowance by saying that the time could be aggregated. However, in both these cases I should like to take it back for consideration and bring it up at Report stage. I fully accept that at this stage probably it is necessary to tie it to the attendance allowance, although I hope that that will be only a first stage. It could well be that later, when we have gone into the working of this matter, the medical certificate would be an appropriate way of doing it. I would, with leave, like to withdraw the Amendments and to bring them up again at Report stage if, on further consideration, that is appropriate.
Lord WELLS-PESTELL: May I express my gratitude for that action, and if after the noble Baroness has taken advice on this matter any useful purpose can be served by our meeting, I hope she will realise that I am at her disposal.
Baroness SEEAR: I thank the noble Lord very much.
Amendment, by leave, withdrawn.
Clause 7, as amended, agreed to.
Clause 8 [Minor Amendments]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 10:
Page 8. line 43, at end insert:
(" ( ) In Part III of Schedule 7 to that Act (claims, reviews and appeals) in paragraph 15(a) after the word "sub-paragraph" there shall be inserted the words "or sub-paragraph (b) below".
( ) In Part III of Schedule 12 to that Act (regulations not requiring prior submission to the National Insurance Advisory Committee)

1047
after paragraph 12B there shall be inserted the following paragraph—
" 12C. Regulations made by virtue of section 26(1) or 35(2) of this Act for the purpose only of prescribing a day." ")
The noble Lord said: This is a technical Amendment designed to restore to the attendance allowance board a power to review which was inadvertently lost in translating powers of review from the National Insurance Act 1970 to the Social Security Act 1973. The relevant power of review is one that has been used by the Board in favour of applications for allowance. It is important to correct the error in the translation from the 1970 Act because one would not want the Board to lose power to review on any ground a decision given at an earlier review. This is purely a technical Amendment and I hope your Lordships will feel able to accept it. I beg to move.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 11:
Page 9, line 21, leave out from ("by") to second (" an ") in line 22 and insert (" , or in consequence of the passing of, an Act include references to an alteration by, or in consequence of the making of,").
The noble Lord said: With your Lordships' permission, I should like to take Amendments 11 and 12 together. Again both of these Amendments are of a technical nature. The first of them amends Clause 8(5) of the Bill. Clause 8(5) amends Part II of Schedule 6 to the National Insurance Act 1969 so that its provisions, which apply generally when the main rates of National Insurance, Industrial Injuries or Industrial Injuries "Old Cases" benefit are altered by an Act or, in the case of reduced rates of benefit, in consequence of the passing of an Act, will apply to alterations made by uprating orders under Clause 3 of the Bill. This Amendment ensures that the provisions of Part II of Schedule 6 to the 1969 Act will also apply to reduced rates of benefit altered in consequence of the making of such an Order.
The second Amendment has a similar effect on the corresponding Northern Ireland legislation (the National Insurance Etc. (No. 2) Act (Northern Ireland) 1969). The Amendment also provides that references in that legislation to the Act include an Act of the Parliament of the United Kingdom. This is consistent
1048
with the new situation in which social security legislation for Northern Ireland is no longer made by the Parliament of Northern Ireland or by the Northern Ireland Assembly but by the Westminster Parliament. This is purely technical and I commend it to your Lordships for approval. I beg to move.
Lord WELLS-PESTELL: I beg to move formally Amendment No. 12:
Amendment moved—
Page 9, line 45, leave out from (" words") to second ("an") in line 1 on page 10 and insert (" and references to an Act include references to an Act of the Parliament of the United Kingdom and references to an alteration by, or in consequence of the passing of, an Act include references to an alteration by or in consequence of the making of").—(Lord Wells-Pestell.)
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 13:
Page 10, line 21, at end insert—
(" ( ) In section 62(3) of the National Insurance (Industrial Injuries) Act 1965 (which makes provision as respects the submission of regulations to the Industrial Injuries Advisory Council) after paragraph (b) there shall be inserted the following paragraph—
" (c) regulations made by virtue of section 18(3A) of this Act for the purpose only of prescribing a day".").
The noble Lord said: This Amendment makes a provision in respect of unemployability supplement under the industrial injuries scheme parallel to that relating to National Insurance benefits in Amendment No. 10. It would similarly be inappropriate for regulations concerning the dates of the relaxation of the earnings rule relating to unemployability supplement to have to be considered by the Industrial Injuries Advisory Council. I beg to move.
Clause 8, as amended, agreed to.
Remaining clauses agreed to.
Schedule 1 [Provisions to be substituted in Schedule 4 to the Social Security Act 1973]:
6.22 p.m.
Lord CRAWSHAW Lord CRAWSHAW moved Amendment No. 14:
Page 13, line 38, column 3, leave out (" 4·30 ") and insert ("6·90").
The noble Lord said: When I first read this Schedule, I wondered whether there might be a misprint. No doubt the noble Lord, Lord Wells-Pestell, will clear that up; but I could not quite follow why it is currently proposed that a non-contributory invalidity pensioner shall receive £4·30 a week for an adult dependant (who in most cases would be his wife) and a contributory invalidity pensioner shall receive £6·90. As your Lordships can see, in the Schedule the children are treated the same in both cases. I should have thought it logical that if you need the same for children in both cases, then you need the same for adult dependants in both cases. This is a small point. Perhaps it can be cleared up quickly by the noble Lord. I beg to move.
Baroness DARCY de KNAYTH: I should like to support my noble friend's Amendment, for the reasons that he has given. The anomaly is so glaring that I have nothing to add to what he has said.
Lord WELLS-PESTELL: I fear I am not going to be able to satisfy the noble Lord who moved this Amendment. Perhaps for the Record, I ought to point out that the reference is to page 13, line 38 but, I think, to column 4 and not column 3.
This Amendment would raise the rate of a dependency increase for a wife or other adult dependant, where one is payable with a non-contributory invalidity pension, from the non-contributory level of £4·30 to the full contributory level of £6·90. It is, I assume, consequential upon the noble Lord's earlier Amendment to Clause 6 which, by the device of paying an invalidity supplement, would, in effect, have raised the personal rate of the non-contributory invalidity pension itself from the non-contributory level of £6·90 to the full contributory level of £11·60. All the arguments against that earlier Amendment apply here too. The £4·30 rate is set at roughly 60 per cent. of the contributory rate; it applies, as your Lordships will see from Schedule 1, to the non-contributory old person's pension (described as "category C or D retirement pension"). As I indicated when we were discussing the earlier Amendment, it really would not be right to pay non-contributory benefits at contributory levels.
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This may be something where in the future we shall have to disregard the distinction, but a good many of our insurance benefits are based at the moment on that particular ratio. It may not be right, but at the present moment I do not feel that we can do much about this without having to look at a much wider field. I hope that the noble Lord will not press this Amendment because I have already given an assurance that this is a matter constantly before my noble friend, and in particular the Minister who deals with the disabled. As the noble Lord knows, there could not be, anyone more anxious to see that matters like this are put right I hope that he will feel able to leave it to see what can be done in the future.
Lord CRAWSHAW: I thank the noble Lord for his reply. I am still a little confused, I must admit, why children and dependent adults are treated differently. But I accept what the noble Lord says about the whole principle of the non-contributory system now being innovated. Having not pressed the two previous ones, I think it would be illogical to press this Amendment. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Schedule 1 agreed to.
Remaining Schedules agreed to.
House resumed; Bill reported with the Amendments.

CHILDREN BILL [H.L.]
6.28 p.m.
Report received.
Clause 1 [Establishment of adoption service]:
Baroness YOUNG Baroness YOUNG moved Amendment No. 1:
Page 2, line 12, at end insert—
"(5) The "Adoption Service" shall be approved by the Secretary of Stale who shall have regard in giving his approval to the following—

(a) the "Adoption Service's" adoption programme,

(b) the number and qualifications of its staff,

(c) its financial resources, and

(d) the organisation and control of its operations."

The noble Baroness said: My Lords, I have put down this Amendment again

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because when we debated Clauses 1 and 3 on Committee we had a very long discussion about not only the particular issues involved in those two clauses but on the question of the qualifications of staff to do this important work of adoption. The purpose of this Amendment, which I completely accept may be incorrectly drafted, is to make it possible, so far as it is possible, to ensure that whatever standards are applied to voluntary societies will apply also to local authorities. It is for that reason that we have taken from the Bill the exact wording that applies to voluntary societies and made it apply to local authorities. I was for a very long time in local government, and I appreciate that some local authorities may feel this to be completely unnecessary; but I believe that realism will lead one to recognise that local authorities will vary one from another in the standard of work that they carry out. Therefore, I think it necessary that we should make quite sure that the standard of work that we should expect, and rightly, of a voluntary society which has to be approved by the Secretary of State should apply to a local authority. I say this because of the people who are going to be concerned. Throughout all our deliberations on this Bill, we have all recognised the importance of the welfare of the child. It is, after all, the child who is to be considered. I do not believe there is any more important work for a child than that of the adoption service. Most adoptions take place in babyhood and, therefore, it is literally true that the whole of a person's life is changed at the moment of adoption. It is therefore important beyond measure that those doing this work should be properly qualified.
The first reason for the Amendment, therefore, is that one cannot be sure of the situation unless one knows what standards are to apply to local authorities. When the Secretary of State gives approval to a voluntary society he will take into account the number and qualifications of the staff, and the same should apply to a local authority. This is not only enormously important for the child; it is equally important that the public should be reassured that a standard is being set throughout the country on this matter. In areas where it is difficult to obtain staff, it is necessary to know
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that work of this kind is not being done by someone whose life's experience has perhaps been in some other part of the Social Services Department, such as old people or care of the mentally handicapped—good as social workers in those spheres may be in their own field. So this Amendment is designed simply to give equal treatment to local authorities and to voluntary societies; to ensure that those undertaking the awesome job of adoption are suitably qualified, that the service is good throughout, and that the public can be reassured.
Before the noble Lord, Lord Wells-Pestell, replies, may I say (at this stage of the afternoon he must be feeling a little tired having dealt with the whole of the Social Security Benefits Bill beforehand) how grateful I am to him for his letters and for the help he has given me on these matters. In putting down Amendments on Report we have considered the many points that have arisen on Committee and have chosen to deal with only those which we believed to be of great importance for the good of the Service. It is our view on this side of the House that this is such an important Bill, with such farreaching consequences for a number of children, that we need to give it our deepest consideration, and to try to do what we can in a constructive spirit to close any gaps we may have identified, and to try to tighten up some of the provisions, in the interests of the children concerned. My Lords, I beg to move.
6.33 p.m.
Lord WELLS-PESTELL: My Lords, may I first of all say that I am grateful to the noble Baroness for her kind remarks. I am sorry that some of the letters I promised to send her on various matters she raised in Committee were not sent to her sooner, and I regret she had to have one of them today. But we on this side recognise the value of her contribution and I would say, if it is not going to give offence to anybody on the Front Bench opposite, that we could not have a more experienced person in this field working—not against us but with us to do what we all want to do; namely, to establish the best possible Children Act. I do not think that any of us when we embarked upon it believed that we were going to run into so many difficulties. I read this Amendment with

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some interest and believe it has a great deal of merit. It is, however, an Amendment of perfection. As I look at its four provisions I wonder whether it is in the last analysis realistic.
The object of Clause 1 as drafted is to secure that an adoption service is available everywhere throughout the country —not in certain parts, where it is good, but throughout the land. Subsection (1) places a duty on every local authority to establish and maintain such a service, and for that purpose to provide the requisite facilities, or secure that they are provided by approved adoption societies. The facilities to be included in this service are described in subsection (2) of the clause. The intention of the Amendment would appear to be to place a duty on the Secretary of State to "approve" the adoption services maintained by local authorities under subsection (1), having regard to the "adoption programme" (which is not defined), the number and qualifications of its staff, its financial resources, and the organisation and control of its operations. Since the bringing into operation of Clause 1 will place a duty on the local authorities to provide an adoption service, and as some three-quarters of the relevant authorities already provide some kind of adoption service, it is presumably not intended to prohibit local authorities from providing such a service until they have obtained the Secretary of Slate's approval. Presumably therefore the underlying purpose of the Amendment is to secure that the adoption services provided by individual local authorities are monitored by the Secretary of State. I am not clear whether the Amendment is so far watertight.
However, may I deal with the proposal that the Secretary of State should be required to "approve" in detail this particular part of the local authorities' social services provision. It is wholly inconsistent with the statutory duty laid on the authorities to carry out a wide range of functions involving comparable responsibilities to those of the adoption service. The Amendment seeks to place a special statutory duty on the Secretary of State In relation to the adoption service. All these functions are carried out under the general guidance of the Secretary of State, who accordingly has adequate powers to set guidelines both for the methods to be adopted and for the
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staffing and other provisions to be made. Having regard to the statutory duties placed on them, and the guidance given to them by the Secretary of State, I submit that the authorities themselves are in the best position to judge, in the light of competing priorities, how to make the best use of the financial and manpower resources available to them; and they are of course directly accountable to the public for the services they provide.
I believe I explained during the Committee stage debate on 4th February that my right honourable friend the Minister of State for Health, Dr. Owen, in recent discussions with representatives of the local authority associations assured them that there would be detailed consultations with local authorities about the proposed timetable for implementation of the provisions of the Bill, particularly those with implications for manpower and financial resources. The Department of Health and Social Security will be continuing its discussions with local authorities about the estimated additional costs of an adoption service on the lines proposed in the Bill, and the need for recruitment and training of additional staff that may be needed, particularly by the minority of authorities that do not at present provide an adoption service.
Having regard to the pressure on social services departments, the Government would not wish to press for early implementation of the provisions for an adoption service against the judgment of local authorities. I can assure the noble Baroness and noble Lords that, through its officers in the field, the Department's Social Work Service will have an important part to play in guiding and assisting local authorities to develop and improve their adoption services as an integrated part of the services for children and families. There may not be many Members of your Lordships' House who really know the value of the contribution which is made by the Department's Social Work Service. The noble Baroness knows the value of its contribution and so do I, and there may be others who know about its value. However, as I tried to explain before, they are already in post on a regional basis and are available. The task of the Social Work Service was described in a Department Circular which was issued in 1971 as

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fulfilling the role envisaged by the Seebohm Committee. If your Lordships will bear with me—I am repeating myself, because I quoted from this Circular in Committee—the role envisaged by the Seebohm Committee is:
" To advise local authorities to promote the achievement of aims and the maintenance of standards and to act as a two-way channel for information and consultation between central and local government."
Their advice will be available to voluntary adoption societies which are preparing themselves for the new approval procedure, as well as still being available to local authorities.
I do not know whether I have satisfied the noble Baroness by what I have said, because she is probably thinking that we have been through all this before. And the noble Baroness is quite right; we have. However, I do not think that there is any other answer. I do not believe that her Amendment is realistic. As the noble Baroness probably knows, I do not say that in any unkind way. Nevertheless, I think that her Amendment is defective. I believe that she herself began by saying that it was defective. All I hope is that, as there is nothing between us, since we both want to see the same thing, she will feel able not to pursue her Amendment in the light of our understanding of her wishes and our own needs.
Lord HYLTON: My Lords, is the noble Lord, Lord Wells-Pestell, able to say what evidence there is that the 25 per cent. of local authorities who so far have not provided adoption services will do so? I can quite readily understand the position if he cannot give me that answer now. However, I should be grateful for an answer sooner or later.
Lord WELLS-PESTELL: My Lords, my recollection is that it is nothing like 25 per cent. of local authorities who have not done so. I thought it was about 27 local authorities out of the total number. This is my understanding of the situation, but I may be quite wrong about it. I was hoping that if I went on talking long enough I should get the reply now, so that I could tell the noble Lord and save imposing further written work on the Department. The noble Lord is
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quite right. It is about 25 per cent. I had not realised it was as high as that.
Baroness YOUNG: My Lords, by leave, may I say that I am very disappointed by the reply of the noble Lord. Lord Wells-Pestell. I appreciate that he had thought about it a great deal. Indeed, both of us have thought about it a great deal. In effect, what he is saying is that the same high standards which will be imposed upon voluntary societies—and I entirely agree with this—when they seek approval by the Secretary of State and when, as they will be required to do under this Act, they have to be approved every three years in order to make quite sure that the standards they apply are kept to, will not necessarily apply to local authorities. I think it is a double standard which will be applied. But perhaps that is not the most important issue. I think that those who will suffer will be the children in the bad authorities. We are tacitly accepting that this evening. I think, too, that the public will be concerned about it.
My Lords, this is not an Amendment which I intend to press this evening. I have put down another Amendment today which we shall debate later on the issue of inspections. At any rate, however, what the noble Lord, Lord Wells-Pestell, has said will be on the Record for those in another place to consider if they wish to raise this matter again. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 2 [Duty to promote welfare of child]:
6.46 p.m.
Lord WIGODER Lord WIGODER moved Amendment No. 2:
Page 2, line 14, leave out ("take full account of") and insert (" have regard to all the circumstances, first consideration being given to ").
The noble Lord said: My Lords, I beg to move this Amendment as being one of very considerable importance, because it goes to the crucial question of the extent to which courts or adoption agencies are to have regard to the welfare of the child in matters that relate to adoption. There appear to be three quite separate and distinct standards by which that problem can be approached. First, there is the standard which is applied in the

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custodianship Part of this Bill. The welfare of the child is to be paramount. In other words, it is to be the overriding consideration and it is to overrule any other considerations that there may be to the contrary. That test is not proposed in this Amendment or, indeed, in any other Amendment to Clause 2 which deals with the adoption part of this Bill, for the reason that it is generally accepted that it would not be applicable to adoption proceedings. It would not be applicable because this test is likely to be applied, particularly where there are proceedings under Clause 11 and it is proposed that the consent of the natural parent to adoption should be dispensed with on one or other of a variety of grounds, one of the grounds being that the parent is withholding his agreement unreasonably.
May I concede at once that if, on an application of that nature, it was contended that the child's interest should be paramount and should overrule every other consideration, there is a real danger that the claims of, perhaps, rather humble natural parents might be overruled in favour of the claims of adoptive parents who might be able to offer substantial material advantages to the child. That is why I think the paramouncy test is not applicable to Part I of this Bill, although clearly it is applicable to Part II of the Bill.
The second alternative is the one which is proposed in this Amendment. It is that courts or adoption agencies shall have regard to all the circumstances, first consideration being given to the need to safeguard and promote the welfare of the child throughout its childhood. That means, I think, what it says. It means that the most important consideration to be borne in mind is the need to safeguard and promote the welfare of the child, but that it is not to overrule all other considerations. It is one of a number of factors, but it remains one which is of prior importance.
The third alternative is the one which exists in Clause 2 as it stands in the Bill: that the courts or adoption agencies shall take full account of the need to safeguard and promote the welfare of the child. I venture to regard the guidance given in Clause 2 as it stands as being of very little assistance to the courts and very little protection to the
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child. All courts are presumed to take full account of every fact which is relevant in the hearing of a case. Indeed, if they fail to take full account of a matter which is relevant it might, in certain circumstances, be a ground of appeal. To invite courts or adoption agencies simply to take full account of the need to safeguard and promote the welfare of the child is doing no more than to remind courts that they are not to forget that the welfare of the child is one of the issues that they are considering.
There are three reasons why I venture to suggest that the Amendment proposed is more satisfactory than the wording in the clause as it stands. First, it follows precisely the recommendation of the Houghton Committee, which of course gave rise to this Bill. The Houghton Committee said in Recommendation 51, in exactly the words that are proposed in this Amendment, that courts should have regard to all the circumstances, first consideration being given to the welfare of the child. Secondly, the Amendment proposed appears to be more in line with recent judicial opinion on the subject than the wording of the clause as it stands. I need perhaps cite only first, the noble and learned Lord, Lord Simon of Glaisdale, who in one of the leading cases on the subject made the observation that,
"although the welfare of the child is not the sole consideration, it is a matter of great importance "
Secondly, there was Lord Donovan, who said that while the welfare of the child is not the paramount consideration, it is inferior in importance to no other. Thirdly, there is the observation of the noble and learned Lord, Lord Reid, in the most recent case on the subject when, dealing with the question of whether a reasonable parent would withhold consent, he said,
" No doubt the child's interests come first and in some cases they may be paramount."
That is an interesting observation, because it reveals at once the distinction between putting the child's interests first and making them paramount. It is an interesting observation also because that statement of the law, as indeed are the other statements which I ventured to read to your Lordships, is much more in accordance with the spirit of this Amendment than in accordance with the wording of the clause as it now stands. So we

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have first the Houghton Committee recommendation; secondly, the judicial opinion and, thirdly, the simple fact that the wording proposed in this Amendment puts greater emphasis on, and gives better protection to, the child's welfare.
I do not believe that this is really a matter of law, or of construction of law. It is really a matter of ordinary common English usage. If we were to proceed to a Division on this Amendment tonight, there would be a clear distinction in the minds of all your Lordships. Some of your Lordships might regard the Government's views on this Amendment as being paramount; some of your Lordships might give the Government's views first consideration; some of your Lordships might say, "We will take the Government's views into full account". I do not believe there is any matter of law involved; it is a question of ordinary standard English usage.
When this matter was raised at the Committee stage of the Bill, it was indicated that a document would be made available over the name of the noble and learned Lord the Lord Chancellor, and that no doubt has been read by many of your Lordships listening this evening. May I say that I respectfully agree with that document in so far as it makes it abundantly clear that paramountcy is not appropriate in this context, and I have certainly never ventured to suggest that it was. Where I find the document wholly unconvincing is in the reasons it gives for suggesting that the wording in this Amendment is unsatisfactory.
The document suggests, first, that there is no room for an intermediate position between paramountcy and taking full account. I can only say that I fail to follow the argument about that. It seems to me to be clear, as a matter of simple logic, that the wording in the Amendment is stronger and more forceful and gives greater protection to the child than the wording in the clause as it stands. Secondly, a point is made in the document over the name of the noble and learned Lord the Lord Chancellor which is really only a debating point; that if one advises courts to give first consideration to the safeguarding of the welfare of the child, courts will start to get troubled as to what they should give second, third or fourth consideration to.
I would certainly not wish to seek to adopt that argument, and I ask your Lordships to consider the difficulties that a court might be in if it were asked to take full account of the welfare of the child; whether a court would then get troubled as to what it is that it should take part account of, or a quarter account or whatever it might be. I know many noble Lords who sit as magistrates, who are accustomed to dealing with the difficult matters that arise in this context. I venture to think that the wording proposed in the Amendment, to "have regard to all the circumstances" and to give first consideration to the need to safeguard the welfare of the child, would be a test that the courts would find no difficulty whatsoever in applying without tying themselves up in the sort of contortions that have been suggested in the document to which I have referred. For these reasons, this Amendment would be of assistance in promoting the welfare of the child in adoption proceedings. I beg to move.
Lord SIMON of GLAISDALE: My Lords, I support this Amendment which seems to me to be a very important one indeed. I think we have all been conscious of this Bill as we have tried to wrestle with the legal niceties, to get the statutory language right and to adjust the administrative procedures. But there has been a sad wraith, pointing an accusing finger at society, which has haunted us all in these discussions, suggesting strongly that the existing emphasis is not right. I believe that in the very able memorandum, which was sent out from the Lord Chancellor's Department, it was made quite plain that the clause as drafted represents the existing law, and I think it has been shown that the existing law does not give sufficient protection to the child. I do not agree that the paramountcy test is inappropriate, but it is not before your Lordships, although I was sorry that the noble Baroness, Lady Fisher of Rednal, did not table her Amendments again.
I have no doubt at all that the Amendment tabled by the noble and learned Lord, Lord Wigoder, is an improvement to this clause. With great respect, I do not accept the argument in the memorandum that was circulated, that there is no central position between the clause as

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drafted and the paramountcy test. It seems to me that, for the reasons given by the noble and learned Lord just now, there is a perfectly adequate intermediate test, which one might call the primacy test, that first consideration shall be given. Indeed, there is not the smallest difficulty about that, because it is already a test known to the law. The test proposed for custodianship is for first and paramount consideration. Lawyers are frequently guilty of tautology, but that is not tautologous; a first consideration is something quits different from a paramount consideration.
The direction that social workers and courts shall look first to the welfare of the child is something quite different from saying that the welfare of the child shall be paramount. To say that the welfare of the child shall be paramount means that in case of conflict, but I think only in case of conflict, it is the welfare of the child which must overweigh all other considerations. But the direction that the welfare of the child shall be the first consideration does not mean that the welfare of the child must necessarily, even in case of conflict, overweigh other considerations. It means merely that that is the first thing the social worker, the local authority, the court must direct its mind to and, in fact, a direction that that is what most weight must be given too. That is what is meant by the "first consideration". That was what I am sure my noble and learned friend Lord Reid meant in the passage cited by the noble and learned Lord, and that seems to me to be entirely right—that where there are conflicting interests, conflicting considerations, I personally do not accept that the child's welfare should not be paramount, but at any rate it is the consideration to which most weight should be given. I therefore beg to support this Amendment.
Lord GORE-BOOTH: My Lords, perhaps at this stage it might be convenient for me to give a non-professional legal reaction. The Office of the noble and learned Lord was kind enough to send me a copy of the document. My reaction was the very simple one, that I do not accept the idea of paramountcy which, as the noble and learned Lord the Lord Chancellor says, does not arise any more. From the purely lay point of view, there is a difference between "first consideration" and the other alternatives.
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Provided that there was no objection from the legal point of view to making a distinction between "first consideration" and the other alternatives, I would prefer what is now proposed. On that simple basis, I have pleasure in supporting the Amendment.
Lord PANNELL: My Lords, if I come in rather late, it is not because I have not thought about this subject on previous occasions. May I say that there is no substitute for the word "paramount". It is a positive English word, with a punch from the beginning. Magistrates will not misunderstand it. They will not be drawn into tautological conclusions about "first consideration" or "primacies" and all those phrases which spring so easily to the forensic lips. I have been a magistrate, and have had to consider these things. The word "paramount" means "all other considerations being equal, this is the one you are going to give". When you give "first consideration". then the consideration of the natural parents, the consideration of the adoptive parents, consideration of all sorts of things creep into the argument. I think it would be a good thing if your Lordships' House put down a word on which there is no equivocation and which is well understood. If I speak shortly, I am sure your Lordships will understand that—
Lord BYERS: My Lords, if the noble Lord, Lord Pannell, will allow me to interrupt him, I am following what he is saying, but this is not the issue. The issue is what is in the Amendment, which is "first consideration", and what is in the Bill. If he thinks the word "paramount" should be in the Bill, the noble Lord should have put down an Amendment to that effect, but there is not such an Amendment on the Marshalled List.
Lord PANNELL: My Lords, the noble Lord, Lord Byers, is slightly off the wicket. It so happens that I have read the papers that have been circulated. This was the argument on a previous occasion which I thought, from what the noble and learned Lord, Lord Simon of Glaisdale, said, was a reconsideration of what had gone before. I also know the reservations that the noble and learned Lord the Lord Chancellor has about the word "paramount", so I am merely pressing that at least one noble and learned Lord knows his own mind on

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the subject. After brooding on this subject, and reading all the documents, I am still of the opinion that it is the only word which fills the bill.
Baroness YOUNG: My Lords, I have considerable hesitation in entering this very complicated legal argument on this Amendment. I venture to do so only because, speaking as a lay person, I think it is right that the arguments advanced by so many others involved in social work should be there for the record.
My Lords, if I have understood correctly the point made by the noble and learned Lord, Lord Simon of Glaisdale, whose memorandum I have read as well as the long letter from the noble and learned Lord the Lord Chancellor, it is that Clause 2 in effect is reenacting what is the present position. The present position in fact is not good enough, and I think this is what has worried people. I have had very many memoranda on this and other matters in the Bill. Nearly all have suggested an Amendment along these lines. This I think is not surprising, since this is almost exactly the wording of the Houghton Committee.
As I understand it, the legal point is quite simply the question whether "give first consideration to" is the same as "paramountcy". I quite accept that "paramountcy" is the wrong word to use here, and I know that this is the view of my noble and learned friend Lord Hailsham. I know that he, too, is worried about the phrase, "give first consideration to". He made this point in Committee. As a lay person, it seems to me there is a distinction. In trying to support what seems to be the concern of those involved in this work, that the present position is not satisfactory and that this provides a middle way out, I have attached my name to this Amendment. Of course, I shall listen with great care to what the noble and learned Lord the Lord Chancellor says about this, because I think it is a most important point, and one on which we must all take care to consider very carefully.
7.8 p.m.
The LORD CHANCELLOR: My Lords, we had a trial run on these issues when the Bill was in Committee. At that stage, the Amendment was withdrawn on my undertaking to the noble
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Lord, Lord Byers, to consider the matter again and if possible to consult the memorandum which, as has been referred to, was accordingly circulated in fulfilment of my undertaking. I am grateful to those who have sent me their views on the memorandum; namely, the noble and learned Lord, Lord Hailsham, the noble Lord, Lord Gore-Booth, the right reverend Prelate the Bishop of Leicester, and the noble and learned Lord, Lord Simon of Glaisdale, whose memorandum I have in turn circulated. Unfortunately, those noble Lords who put their names to the Amendments have not corresponded with me, no doubt preferring the spoken to the written word.
My Lords, we now face a moment of decision on this matter, which at first blush looks only semantic, but is quite important, I think, in its consequences. My broad submission is that Clause 2 as it now stands not only reflects the present state of the law, which I am not conscious of having given rise in any reported cases to a sense of dissatisfaction with its condition, but in my sub-mission the language proposed in the Amendment would add uncertainty and confusion both to adoption agencies and the courts which would have to apply it. Clause 2. as it now stands, substantially reflects the existing law so far as the courts are concerned. At present, the court must be satisfied under Section 7(1)(b) of the Adoption Act 1958 that the adoption order, if made, will be for the welfare of the child. As case law has shown, there has been in the past doubt as to what extent, if any, the welfare of the child is relevant in deciding whether parental consent to adoption ought to be dispensed with on the ground that it is being unreasonably withheld.
In the case of Re L. in 1962, this question was resolved by the Court of Appeal which decided that in considering whether a parent is withholding consent unreasonably the court must take into account— those are the words used in the decision —the welfare of the child, since a reasonable parent takes account of his child's welfare and the court is looking to see whether the parent has behaved reasonably. That passage was approved by your Lordships' House in the case of Re W. and the noble and learned Lord, Lord Hailsham, said it could now be regarded as authoritative.

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The noble and learned Lord, Lord Wigoder, has referred to the speech of Lord Reid in O'Connor and has quoted part of the judgment. He said this:
"No doubt the child's interests come first and in some cases they may be paramount, but I see no reason why the claims of the natural parent should be ignored. If the mother were deeply attached to the child and had only consented in the first place because of adverse circumstances, it would seem to me unjust that on a change of circumstances her affection for the child and her natural claim as a parent should be ignored. And the adopting family cannot be ignored either"
So that he really listed the relevant factors there, and indicated what factors should be taken into account.
So the law as it now stands provides that the welfare of the child is a factor, and in some cases a weighty factor, not only for the purpose of deciding to make an adoption order, but also for the purpose of deciding whether to dispense with consent to the making of the order. The Houghton Committee thought that that was right, but they suggested that the law established in decided cases should be expressed in statutory form, and this they sought to do, as indeed does Clause 2. But it goes further than Houghton recommended by applying the principle that the child's welfare must be taken fully into account to all decisions taken by courts and by adoption agencies. The words provide that the relevant welfare shall be, "the welfare of the child throughout his childhood". The House will note that there is the further provision in Clause 2, as it stands, that due consideration must be given to, "the wishes and feelings of the child".
The view which the Government take and which I invite the House to accept, is that the clause as it stands is more comprehensive and more emphatic than the Amendments now proposed. I say that for this reason. I will not enter further at this stage into the argument as to whether or not there is a middle ground between the clause as it stands and paramountcy. As I understand it, the proposers of the Amendment are seeking to establish the middle ground, and they put forward "first consideration" as the appropriate test. They do that in the context that they do not favour paramountcy, and paramountcy is disfavoured because it, in effect, shuts out the interest of the natural parent. That
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really would be quite unacceptable and, indeed, if that was accepted as the test it would render most of the provisions of the Bill in the field of adoption quite unworkable. However, as the noble Lord, Lord Byers, said, we are not discussing that issue on this Amendment.
What is clear from what has been said is that it is not intended at any rate that "first consideration" should mean an overriding consideration, and no doubt the intention is that the clause in the Bill when enacted should indicate to the court that the welfare of the child should be placed at the top of the list. But unless "first consideration" is to displace and override all other consideration, when it would indeed be paramountcy then, in my submission, the word "first" adds nothing. To make the child's welfare first consideration is clearly intended to mean that the child's interest is to be weighted. But the question of by how much it is to be weighted is not answered by the words "first consideration".
Difficulty would, I think, be caused by the requirement to marshal, so to speak, the various factors, the second and third factors coming after welfare, and it could well be that in some cases too much stress to the exclusion of the rights of the natural parents would result; in others, too little weight could be attached to the welfare approach. Furthermore, I do not regard those words "first consideration" as appropriate for adoption agencies, who may have to apply a higher standard in some circumstances—for example, in the caring for the child—and will have to take an objective view when they are advising the natural parents, as it will be their duty to do, about their own position in relation to their own natural rights.
My submission, accordingly, is that Clause 2 as it stands gives agencies at once a more flexible and a more comprehensive duty; that the words of the clause as it stands are more effective in seeking the purpose we are after; and that the use of the words "first consideration" could lead to the confusion of Judge A giving to the words the meaning of paramountcy, and Judge B merely regarding it as one of a list with no, so to speak, special weight to be given to the factor of welfare. In my view, the clause as it stands provides a clear guide to the court. It does not move the court

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into the field of confusion. I should like to repeat the fear that was expressed, that the use of the words might move the approach into one of paramountcy and achieve the very mischief that the noble and learned Lord, Lord Wigoder, was anxious to avoid; namely, that it might well result in a judge giving undue emphasis to the material advantage which might be offered by the adoptive parents, as against the somewhat meagre advantages which the natural parents might be able to offer in support of their child.
Your Lordships will remember that the point was forcefully echoed characteristically by the noble and learned Lord, Lord Hailsham, whose absence on this occasion I regret, because it might have been one of those rare occasions when he and I saw eye to eye on some of these matters. He spoke of the millionaire adopter who might be able to rely on "first consideration", and the approach of that language in order to ride roughshod over the rights of the relatively poor parents.
Therefore I venture, with due humility, to suggest that this Amendment is liable to create greater confusion than the words of the clause, and is no more liable to achieve the purpose we have in mind, which is clearly that the court should take full and careful account of the welfare of the child—and then there are the other provisions of the clause—but should also bear in mind the position of the natural parent.
As has been said more than once in the discussion of this Bill, adoption is, after all, a final and irrevocable act. After the order is made the natural parent ceases to have any relationship with the child at all. It is therefore imperative that the right of the parent must be given proper weight in adoption proceedings, and should play a significant part when adoption is considered. Accordingly, the view of the Government, and my advice to the House, for what it may be worth, is that the language of the clause achieves the intentions of noble Lords, but the language of the Amendment would be self-defeating and would add to confusion.
7.20 p.m.
Lord WIGODER: My Lords, I understand the argument that the Amendment might give rise to difficulties of interpretation by the courts, but I find it difficult to accept that argument. First, because the Amendment was, in effect, proposed by the Houghton Committee, which was presided over by a circuit judge of vast experience in this area of the law, and I find it difficult to accept that that Committee would have recommended a formula which the courts would find difficult to interpret. Secondly. I have no doubt that if there were any difficulties in interpreting the words used in this Amendment, the noble and learned Lord, Lord Simon of Glaisdale, would have drawn attention to that fact, because he again, if I may say so with every possible respect, is a judge who has vast experience of this particular area of the law.
I understand from the Lord Chancellor's reply that he has two basic objections to this Amendment. First, he says it is weaker and gives less protection to the child than does the existing Clause 2. Then, a moment later, we understand the other objection is raised, that it is more likely to imperil the rights of the natural parent than the existing Clause 2; in other words, that it is therefore somehow a stronger protection to the child. The wording of the clause with the Amendment would be:
"… a court or adoption agency shall have regard to all the circumstances, first consideration being given to the need to safeguard and promote the welfare of the child …".
I cannot believe that thereby the interests of natural parents will be in any way unjustly imperilled.
It may be, as the noble and learned Lord said, that this Amendment goes slightly beyond the existing law. If it does, I do not believe that it is any the worse for that. I believe that the time has come when we must strengthen the protection given to the welfare of the child, and that this Amendment does. In those circumstances, I must ask that your Lordships express your views on this Amendment.
7.24 p.m.
On Question, Whether the said Amendment (No. 2) shall be agreed to?
Resolved in the affirmative, and Amendment agreed to accordingly.
Clause 3 [Approval of adoption societies]:
7.30 p.m.
Baroness YOUNG Baroness YOUNG moved Amendment No. 3:
Page 2, line 28, after ("effective") insert ("and appropriate").
The noble Baroness said: My Lords, I beg to move Amendment No. 3. Once again I feel very considerable diffidence in speaking to this Amendment because this series of Amendments applies to Scotland. For the convenience of the Committee, what I should like to do is to speak to Amendment No. 3 and at the same time to Amendments Nos. 4, 5, 6, 7 and 8 and also to Amendments Nos. 67 and 68, the latter of which is to "Leave out Schedule 1." My noble friend Lady Elliot of Harwood is extremely sorry that she has had to go, but she has the same engagement as the noble and learned Lord, the Lord Chancellor, and I believe it to be important. So because this is a matter about which I know the Scottish adoption societies
Their Lordships divided: Contents 55; Not-Contents, 22.

CONTENTS

Aberdare, L.

Gladwyn, L.

Rankeillour, L.

Atholl, D.

Glenkinglas, L.

Redesdale, L.

Auckland, L.

Gore-Booth, L.

St. Davids, V.

Harrington, V.

Haig, E.

St. Helens, L.

Beaumont of Whitley, L.

Henley, L.

St. Just, L.

Belhaven and Stenton, L.

Hunt of Fawley, L.

Sandys, L.

Bledisloe, V.

Hylton, L.

Seear, B.

Brougham and Vaux, L.

Killearn, L.

Sharpies, B.

Byers, L.

Lloyd of Kilgerran, L. [Teller.]

Simon of Glaisdale, L.

Courtown, E.

Loudoun, C.

Somers, L.

Cowley, E.

Lyell, L.

Swinton, E.

Craigavon, V.

Macleod of Borve, B.

Terrington, L.

Cullen of Ashbourne, L.

Malmesbury, E.

Tranmire, L.

Drumalbyn, L.

Masham of Ilton, B.

Vivian, L.

Dundonald, E.

Monck, V.

Vickers, B.

Ellenborough, L.

Northchurch, B.

Wardington, L.

Elton, L.

Pannell, L.

Wigoder, L. [Teller.]

Ferrers, E.

Pender, L.

Young, B.

Foot, L.

NOT-CONTENTS

Emmet of Amberley, B.

Melchett, L. [Teller.]

Balogh, L.

Falmouth, V.

Morris of Borth-y-Gest, L.

Broadridge, L.

Harris of Greenwich, L.

Shackleton, L.

Castle, L.

Henderson, L.

Stedman, B.

Cathcart, E.

Houghton of Sowerby, L.

Wells-Pestell, L.

Davies of Leek, L.

Jacques, L.

White, B.

Douglas of Barloch, L.

Llewelyn-Davies of Hastoe, B.

Winterbottom, L.

Elwyn-Jones, L. (L. Chancellor)

Lovell-Davis, L. [Teller.]

feel strongly, I have said that on her account I will speak to the Amendments. My noble friend raised these points on Clause 3 in Committee on 4th February —Hansard, cols. 799 to 800—and the noble Lord, Lord Wells-Pestell, said he would look at the matter. I imagine that he has done so but has felt unable to return an Amendment to cover my noble friend's requirements. For that reason we have tabled these Amendments. The purpose of all of them is to make the principles of Clause 3, whereby a voluntary adoption society shall be approved by the Secretary of State when it becomes an adoption society, apply to the whole of the United Kingdom.
In Scotland there are nine adoption societies and all are unanimous in wanting central registration. I understand that the idea that the voluntary societies should register in every region in which they expect to operate is completely impracticable in Scotland. A national society, such as that of the Church of Scotland which has branches all over Scotland, and many other adoption societies who may work in several regions, would have to duplicate a great deal of

1071
their work and effort. The standards of the adoption societies should be set by the standards of the national organisations. Those are the ones which they would like to have approved by the Secretary of State for Scotland.
My noble friend Lady Elliot of Harwood has asked me to say that of course the voluntary adoption aid societies would work in the closest co-operation with the local authorities, and in this matter would continue as they do now. The difference would lie in simplification; that is to say, in the work of the societies of the local authorities. Instead of making each one work separately they would have a central registration, then each adoption society would work with the nine different regional authorities. This is a matter on which I understand opinion among the voluntary societies in Scotland is unanimous. I know that my noble friend Lady Elliot of Harwood has gone into the matter with great care. She has had a great number of representations. She feels, and not only for these reasons, that this is a matter which the Government ought to consider very seriously. From the point of view also of finding homes for those children that are hard to place, which is one of the principal reasons for this Bill, she believes it will be more effective to have a national registration scheme, with the voluntary societies working in close co-operation with the regional authorities. For these reasons she has asked me to propose the Amendments standing in her name. I beg to move.
Lord WELLS-PESTELL: I shall deal first with Amendments Nos. 3 and 6. Had the noble Baroness, Lady Elliot, been here, I would have said that I appreciate her wish to see these words introduced into Clauses 3 and 4, but I fear she may be acting under some misapprehension. The words "effective and appropriate" are included in existing provisions in the Bill relating to Scotland, which are the subject of several Amendments by the noble Baroness on the system of approval for Scottish adoption agencies. I can safely deal with the present Amendment without anticipating the result of the discussion which will ensue on these Amendments. The words "and appropriate" are correct in the context of the situation where an appeal system is provided,
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and are included in the Scottish provisions with the express intention of fitting in with the existing law in the legislation relating to the registration of voluntary social work establishments.
They would not, however, seem to contribute significantly to the wording of Clauses 3 and 4. In general terms, one could say that for England and Wales the very general term "effective" provides the framework into which detailed criteria for approval may be set, and for England and Wales to add the word "appropriate" would only duplicate this general requirement. It is, however, different for Scotland, because they do use the term "effective and appropriate" and the Bill, as I understand it, has been drawn with that in mind. I think that were the noble Baroness, Lady Elliot, here, she would want to preserve that difference. I do not know whether the noble Baroness wishes to deal with this before I go on.
Baroness YOUNG: My Lords, I think that under the circumstances, I should hear the whole argument before I comment at all.
Lord WELLS-PESTELL: My Lords, may I ask the noble Baroness whether she moves Amendment No. 4?
Baroness YOUNG: My Lords, I did move Amendment No. 4 and I can say that it seems to me that what the noble Lord, Lord Wells-Pestell, was saying about Amendments Nos. 3 and 6 is correct, and that I should be happy to accept that.
Lord DRUMALBYN: My Lords, I think the point here is very much whether or not the other Amendments are to be accepted, because if "appropriate" is appropriate for Scotland, then plainly what my noble friend Lady Elliot wants to do is to ensure that it remains in the Bill and is appropriate to Scotland. If her other Amendments were to be accepted, she would not like "appropriate" to be left out of the Scottish side where it is already. The noble Lord, Lord Wells-Pestell, said that he did not want to see it introduced into the English side, but I think we must hear the rest of the argument before we decide the question.
Lord WELLS-PESTELL: I said that I did not think it necessary to do so, as

1073
far as England was concerned. But, to take the Amendments in numerical order, Amendment No. 4 appears to be designed to provide for an appeal procedure in the event of a refusal to a voluntary adoption society applying for approval in Scotland. In terms of consistency—if I may say so with the greatest respect—the Amendment should be moved only if the noble Baroness's Amendment proposing the exclusion of Schedule 1 to the Bill succeeds. The words of the Amendment are lifted from paragraph 2(4) of the Schedule and are mere duplication as long as the Schedule stands.
Baroness YOUNG: My Lords, I am sorry to interrupt the noble Lord again, but I spoke to Amendment No. 68 which seeks to remove Schedule 1.
Lord WELLS-PESTELL: My Lords, perhaps I can deal with Amendments Nos. 5, 8, 67 and 68 by saying, first, that I want to apologise on behalf of my noble friend Lord Hughes of the Scottish Office, who, I know, was intending to write to the noble Baroness, for the fact that the subject of her Amendments is taking some little lime to resolve. I am advised by the noble Lord that the organisations in Scotland which have specifically raised the question of approval of voluntary agencies have asked for an opportunity to express their concern in a discussion with Scottish Ministers or their representatives. I must tell your Lordships that these meetings have not yet occurred, and I doubt whether it would be helpful to enter into a discussion on the merits of the case meanwhile. I can, however, assure the noble Baroness, Lady Elliot, through the noble Baroness, Lady Young, that the Scottish Office is very much concerned that the matter should receive proper attention in the manner that I have indicated.
Perhaps I might be allowed, on behalf of my noble friend Lord Hughes, and in anticipation of the letter which I believe will reach the noble Baroness shortly, to suggest that this group of Amendments should be withdrawn. I hope that noble Lords opposite will feel that that can be done so that a considered view can be reached on the matter in the light of the circumstances in Scotland. I should not wish to deflect the noble Baroness from her very legitimate concern in this matter if she were here, but I believe we should
1074
accept that the Scottish Office are arranging discussions. The same considerations apply to the noble Baroness's Amendments to Clause 6 and Schedule 1, and I hope that we can deal with those on the same footing.
Lord DRUMALBYN: My Lords, I think that what the noble Lord has proposed is right in the circumstances. Certainly, those of us who know a little about the working of the Scottish system would like to hear the arguments. I hope that it will be possible for us at least to hear those arguments at the next stage of the Bill in this House. It may be that, even by that time, it will be difficult for the noble Lord, Lord Hughes, to announce a decision in the matter. Nevertheless, I think it is only fair that we should at least hear the arguments at the next stage of the Bill. If the noble Lord is agreeable to that, I am sure that my noble friend will be willing to withdraw the Amendments. In those circumstances, I think it would be necessary to withdraw all the Amendments, because it would not be sensible to ask the House to accept the first Amendment which affects England as well as Scotland.
Baroness YOUNG: My Lords, I am bound to say that I find myself in a very great dilemma. My noble friend is, for perfectly good reasons, unable to be present. She feels very strongly in this matter and I know that she would have wished to press the Amendments this evening. However, in view of the arguments which have been put up, I think that the best course is to raise the whole matter on Third Reading. I think that I should give notice of this because, in the discussions through the usual channels about the procedure on the Bill, we had thought of having a formal Third Reading, but, in the circumstances, this will clearly not be possible. This matter underlines some of the difficulties that many of us have encountered in the proceedings on the Bill.
Through no fault of our own, and through no unwillingness to co-operate in any way we can, we have once again started at a very late hour, when people who must have expected the Amendment to come early will have been disappointed. We now find that the crucial letters which my noble friend must have expected to receive before Report, as the matter was clearly going to be raised on

1075
the first Part of the Bill, have not arrived. I find this a very extraordinary situation and one which must cause us some concern. However, as my noble friend Lord Drumalbyn has said, I think that this is a matter about which we should hear the arguments on both sides. It is a Scottish matter and is not one which, in the circumstances, I feel inclined to press this evening. However, I give notice that we shall raise all these Amendments on Third Reading and that we shall, if necessary, press them to a Division at that stage.
Lord WELLS-PESTELL: My Lords, the noble Baroness cannot have it both ways. It is all very well for her to criticise the handling of the Bill, but she must remember that on one occasion when I went home one night there were 22 Amendments down but when I came back the next day there were 102. This has happened again this week. When I went home on Tuesday night there were, I think, about the same number of Amendments down, and around midday the next day the number of Amendments had crept up to 92. If noble Lords want the Bill to be considered very carefully it will be done, but if Amendments do not come in until a very late hour it is difficult to give to them the attention which they require. I do not hold anyone responsible, but I should like to say that this is a serious Bill and that noble Lords cannot complain if we are giving a great deal of attention to these matters.
To return to the Scottish situation, that deserves very serious consideration in terms of Scotland. Fresh representations have come in within the past two days. These discussions with other concerns take time and that affects the passage of the Bill. My noble friend has not been in a position to write to the noble Baroness. Had he been able to do so he would have written to her. We have tried to keep the thing moving, so to speak, and one must bear in mind that from the beginning everyone has said that this Bill must leave this House having been thoroughly investigated, and this is precisely what we are doing today.
The Duke of ATHOLL: My Lords. I would remind the noble Lord that approximately 50 per cent. of the Amendments are in the name of the
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noble and learned Lord the Lord Chancellor and are therefore presumably Government Amendments. Many of these must have been put down since the noble Lord left on Tuesday night, and I do not see that his argument on this point is relevant.
Lord WELLS-PESTELL: My Lords, it is relevant because they are technical Amendments which could be disposed of in a minute or two. A considerable number of others have been tabled which cannot be dealt with so expeditiously.
The Duke of ATHOLL: My Lords, there are not, as the noble Lord implied, 92 Amendments, 70 of which have been put down since Tuesday night.
Lord SANDYS: My Lords, the noble Lord, Lord Wells-Pestell, has dealt most courteously with many queries which we have raised but he is a prisoner, just as we are, of the Government on this measure. Our real difficulty stems from the fact that due to its complexity, especially in regard to the Scottish clauses, it was unrealistic of the Government to assume that a programme of this nature—advancing only five or six days in which to table Amendments and hold discussions with the relevant bodies—would be satisfactory to your Lordships, and clearly it has failed to be so. I hope, therefore, that the noble Lord will accept my noble friend's suggestion, and then we will look forward to a further discussion of these very complicated Scottish Amendments on Third Reading.
Lord WELLS-PESTELL: My Lords, that is understood. I am simply commenting on what I thought was the implication that there was some laxity on the part of the Government, which I do not accept. We are facing today, as we faced last Thursday, dislocation on the railways. Last Thursday we had to stop our deliberations early, just as we will have to do so tonight within the next ten minutes. We have been overtaken to a large extent by events and I am prepared to give whatever time is necessary, as I am sure noble Lords opposite are prepared to do. But we will not get anywhere if noble Lords opposite start suggesting that there has been a certain amount of laxity on this side of the House.
Lord JACQUES: My Lords, I would remind your Lordships that we are not in Committee but on Report, and I hope that it will be treated as such.
Lord DRUMALBYN: My Lords, with respect for that guidance, I suggest that we are really on points of order, as it were, for we are not talking about the Amendments at all. I hope that the noble Lord, Lord Wells-Pestell, will accept it from me that nothing I said was intended to throw any reflection whatever on the Government's conduct of the Bill. Our difficulty is that we reached the Bill so late this; evening. It is always the case, as the noble Lord will have learned already, that on Report Amendments seem to go down rather late. But I know of only one starred Amendment on the Order Paper and I hope that the noble Lord will allow the Bill to go through in the unruffled way in which he has been able to conduct it so far.
Lord WELLS-PESTELL: My Lords, I am in no way ruffled. I simply wanted to get the record straight as I saw it. May I ask the noble Baroness whether, through the usual channels, any suggestion has been made about the point at which we should stop our deliberations tonight? Does she intend to proceed beyond Amendment No. 8?
Baroness YOUNG: My Lords, I understood we were going to take Amendment No. 9 and then stop. In the meantime, I beg leave to withdraw Amendment No. 3.
Amendment, by leave, withdrawn.
Clause 8 [Child to live with adopters before order made]:
Baroness YOUNG Baroness YOUNG moved Amendment No 9:
Page 5, line 29, leave out subsection (2).
The noble Baroness said: My Lords, this Amendment arises from a matter which was discussed in Committee when, on Clause 8, my noble friends and I made the point that subsection (2) was a loophole through which a private fostering could lead to adoption. I am grateful for a letter which I received from the noble and learned Lord the Lord Chancellor about this point. It seems that the noble and learned Lord takes the same view as we do about this—that it is, in effect, a loophole in the Bill. He asks
1078
whether we can find any way of closing this loophole and at the same time allowing those rare cases—and it seems that they must be very rare—of private foster parents who have been looking after a child for more than 12 months to adopt the child. Since I received that letter I have been trying to think of the kind of case that we could have in mind and it seems that they must be very rare indeed, for Clause 8(1) refers to the question of the parents or relatives of the children or the case of a child placed by an adoption agency. The only cases to which this can, I think, refer are cases where the parent of the child has placed the child privately without telling anybody.
This seems to present us with a difficulty. I have considered this matter and I think that what we are concerned with is the offence of private adoption. Under the Adoption Act 1958, it is an offence for an agency which is not a registered adoption agency to place a child for adoption, and under Clause 28 of the Bill private adoptions are prohibited and, as I understand it, the power in the 1958 Act is not repealed. I am wondering whether we could get round the difficulty posed by Clause 8(2) which provides that loophole for private fosterings by deleting sub-section (2) and adding a new subsection to Clause 17. The new subsection would read:
"Where the adoption applicants are not relatives of the child and the child has not been placed for adoption by an adoption agency, the local authority shall investigate whether an offence has been committed under Section 29 of the Adoption Act 1958."
I move this Amendment in this form and it is not one which I intend to press tonight because I received the letter only yesterday. It is a very complicated matter to consider and I was unable to contact either the noble Lord, Lord Wells-Pestell, or the noble and learned Lord the Lord Chancellor this morning. As I think the Government are as concerned about this issue as I am, I should like to leave it with them to consider. I very much hope that they will feel, if this Amendment is not appropriate, that they should move an appropriate one, having given the matter consideration in another place. I am sure that they agree, as my noble friends do, that it would be most unfortunate to leave this sort of loophole in

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the Bill, and it is for this reason that I move the Amendment.
Lord HYLTON: My Lords, in supporting this Amendment moved by my noble friend, I should like to make the point that there is a considerable volume of very well-informed opinion which maintains that at the moment in this country there are two classes of children most at risk. These classes are, first, the children of one-parent families and, secondly, privately fostered children. My noble friend has raised a very important point, and I hope that the Government will consider it.
Lord WELLS-PESTELL: My Lords, I am very grateful to the noble Baroness. I have before me a copy of the letter which the noble and learned Lord the Lord Chancellor sent to the noble Baroness only a day or two ago. The noble and learned Lord made a certain suggestion in that letter and I was hoping that the House would have adjourned before we reached Amendment No. 9, so that the noble and learned Lord could have dealt with it. Perhaps the noble Baroness is prepared to leave this matter with us, or to withdraw her Amendment. I know that the noble and learned Lord is giving further consideration to this question and that he has invited the noble Baroness to indicate to him whether she has any further Amendment to put down. Certainly I know that the noble and learned Lord wants to continue to look at this question. It is merely a matter of which is the best way to deal with it; whether it is better for the noble Baroness to withdraw the Amendment, or for the Government to try to see whether they can put down an Amendment. Having brought the matter before the House, we must resolve it in some way.
Baroness YOUNG: My Lords, with the leave of the House, with that assurance I am quite happy to withdraw this Amendment, and I will write to the noble and learned Lord the Lord Chancellor on this point.
Amendment, by leave, withdrawn.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, this is probably a convenient moment to conclude our deliberations.

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