Sitting of 9 June 1975

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  INDUSTRY

    Shipbuilding and Aerospace
    Mr. Pattieasked the Secretary of State for Industry if he can now give a timetable for the implementation of the Government's plans for the nationalisation of the shipbuilding and aerospace industries; and if he is yet in a position to give an estimate of the cost to public funds.
    The Secretary of State for Industry (Mr. Anthony Wedgwood Benn): We intend to do our utmost to see that the Shipbuilding and Aircraft Industries Bill is made law in the present Session. As I explained to the House on 17th March, it would not be appropriate to estimate the costs at this stage because of the large number of unquoted securities to be acquired.
    Mr. Pattie: Does the Secretary of State not agree that, although he has, as usual, neglected to answer the question about the cost, it is quite obvious that the British aircraft industry has not failed the nation and that, therefore, he should drop the disruptive proposals for nationalisation? Better still, in view of the decisive rejection by the British people last week of one of his other crackpot proposals, should he not resign?
    Mr. Benn: I need not explain to the House the Government's commitment to the implementation of their excellent election programme, which they put before the people twice last year and upon which they were elected. If the hon. Gentleman really believes that what happened last week represented an election victory for the Conservative Party he may have misunderstood the results.
    Mrs. Hayman: Is my right hon. Friend aware that his answer today will be greeted with much happiness by people who work in industry and who are extremely anxious to see these plans carried through as soon as possible? Is he further aware that at present delay is causing great concern to all aspects of the industry, and that the sooner this measure gets on the statute book the better?
    Mr. Benn: I agree with my hon. Friend that, whatever political view there may be about the measures that we are pledged to introduce, there is general agreement among management, unions and workers

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    that the uncertainty is damaging. Therefore, when I answered the Question I made it clear that we intend to proceed in accordance with our pledges to the British people.
    Mr. Hooson: Will the right hon. Gentleman not reconsider his proposal, particularly in regard to ship repairers? I have in mind particularly Bristol Channel Ship Repairers Ltd., which operates from small yards in South Wales and which depends on a specialist connection? Does he not agree that there is no case whatever for nationalising this firm?
    Mr. Benn: The hon. and learned Gentleman will know that the ship repairing industry was included in our proposals, but I am not surprised that he had Bristol Channel Shiprepairers in mind, as that company has spent, perhaps, £500,000 drawing the position to the attention of the people.
    Mr. James Johnson: Is the Minister aware that Hawker Siddeley shop stewards in my constituency have no doubt whatever about his sincerity and determination to carry out the measures? They are worried about future orders when we are in this position. Therefore, will the Minister please bear in mind that the HS146 is a good aircraft and that they want to build it?
    Mr. Benn: I am very well aware of the anxiety among Hawker Siddeley workers about the HS146, which my hon. Friend will know was dropped by Hawker Siddeley and not by the Government. One of the reasons we are anxious to proceed is that we want to remove the uncertainty and to look at the future of the industry. Meanwhile, the House knows that we are making arrangements to ensure that in the interim the damage is minimised. I shall shortly be making a statement about the underwriting of one foreign order to ensure that it does not go by the board before the Bill is completed.
    Mr. Heseltine: Does the Secretary of State for Industry agree that the one lesson of last week is that the country is tired of the doctrinaire and divisive policies that are associated with his name? Does he not understand that the saving of £300 million that could be achieved by dropping this measure is the easiest way of giving confidence to the industry
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    and of restoring the prospects of employment in it?
    Mr. Benn: It is comments like that that make it increasingly difficult for me to take the hon. Gentleman seriously as a Shadow Minister.

    Motor Vehicles
    Mr. Hal Millerasked the Secretary of State for Industry what his present estimate is of the export market for British cars and commercial vehicles to the EEC in 1975 and 1976.
    The Under-Secretary of State for Industry (Mr. Michael Meacher): Official forecasts of car and commercial vehicle exports by destination are not prepared. Despite depressed overseas demand, exports of these products to the EEC in the first four months of 1975 were 17 per cent. higher by value than in the same period last year.
    Mr. Miller: Does not the Minister agree that in order for the country to achieve the targets of car exports to the Continent laid down, for instance, in the Ryder Report, the Government must do something about the rate of inflation in Britain? In that connection, will he tell us what the present rate of inflation is, compared with the estimate of 221 per cent. in the Ryder Report for the year ending September?
    Mr. Meacher: The hon. Gentleman is well aware of the present position on the question of inflation. Our concern in motor vehicle production is to ensure that there is a level of investment, particularly in British Leyland, over which we have more direct influence, to ensure that labour productivity and capital productivity may be greatly increased. It is our firm belief that if this is done the increase that Ryder sees in exports to the EEC, from 3 per cent. to 4 per cent. of the market, in a rising market, can. and indeed will, be achieved.
    Mr. Carter: Will my hon. Friend turn his attention to a far more important export question, namely, the grotesque imbalance in trade in motor cars between this country and Japan? Will he make an immediate investigation—and inform his right hon. Friend of the results of it—to determine precisely what harmful effects this is having on the British motor car industry?
    Mr. Meacher: As my hon. Friend will know, the Society of Motor Manufacturers and Traders Ltd. has made an anti-dumping application in respect of Japanese car imports into this country. We are indeed reviewing that with all urgency. I ask my hon. Friend also to take into account that, although there has been a large increase—as he would say—of 88 per cent. or so in the level of Japanese imports compared with a year ago, there has been a similar marked rise in British exports to Japan of all manufactured goods.

    British Steel Corporation (Chairman)
    Mr. Skinnerasked the Secretary of State for Industry if he will now dismiss the Chairman of the British Steel Corporation.
    Mr. Benn: No, Sir; I do not intend to dismiss Sir Monty Finniston.
    Mr. Skinner: Does my right hon. and much-maligned Friend—much-maligned by the media, that is—agree that Monty Finniston may well be hoping that my right hon. Friend the Minister will be sacked? In that event Monty Finniston may be hoping that he can resurrect the idea to sack 22,000 steel workers and also refer back to the proposal to denationalise the steel industry once the taxpayer has put it on its feet?
    Mr. Benn: My hon. Friend knows that my sole concern in this matter was that the board of the British Steel Corporation should discuss fully with the trade unions concerned the problems caused by a downturn in the steel industry. I am very happy to say that out of the talks that took place in London between the TUC Steel Committee and the board of the British Steel Corporation the proposal for the 20,000 redundancies this year was dropped. That was my sole concern. The other matters that my hon. Friend raised are not for me.
    Mr. Patrick McNair-Wilson: How does the Secretary of State reconcile the Government's stated intention that nationalised industry should behave commercially and without undue subsidy with his own decision to interfere directly in the operations of the BSC? Is he so far removed from the chairman of the corporation that he must carry out his negotiations with him by public correspondence?
    Mr. Benn: If the House considers the latter point carefully it will appreciate that there is some merit in trying to get away from the private arm-twisting that has occurred under all Governments and to bring some of these issues into the open. The hon. Gentleman is wrong in supposing that I did more than suggest to the chairman that he should discuss these matters with the trade unions concerned, and not with me. I did not discuss the matters with him. I remind the House that when the steel corporation last cut back in production in 197172 and made closures it led to the massive imports last year that came in because the steel capacity was not there to meet the demand.
    Mr. Ashleyasked the Secretary of State for Industry what further discussions he has had with the Chairman of the British Steel Corporation; and if he will make a statement.
    Mr. McCrindleasked the Secretary of State for Industry what plans he has to meet the Chairman of the British Steel Corporation.
    Mr. Benn: I last met Sir Monty Finniston, the Chairman of the British Steel Corporation, on 28th April. No date for a further meeting has yet been arranged.
    Mr. Ashley: Is my right hon. Friend aware that the central issue in the steel industry is one not of personality but of policy and that the steel corporation, in its understandable search for commercial viability, must not be allowed to imperil the jobs of steel workers in efficient steel firms like those at Stoke-on-Trent, nor must it be allowed to place Britain in an unduly dependent position with foreign steel works?
    Mr. Benn: I make no apology whatever for having deliberately sought to ensure that the interests of British steel workers were taken into account fully by the board of the British Steel Corporation, for considering fully the implications on steel communities that depend on steel plants, and for trying to take a longer view ahead than some might think or appear to think necessary to safeguard our steel capacity, so that when world upturn comes that capacity will be there to meet it.
    Mr. McCrindle: Recalling the recent confrontation between the Secretary of State and the Chairman of the British Steel Corporation, may I ask whether the Minister is now satisfied that the chairman continues to have that freedom and day-to-day responsibility which is necessary to run a competitive and profitable steel industry?
    Mr. Benn: The hon. Gentleman speaks of confrontation, but he should not be guided entirely by what was reported. The chairman, who has total freedom of speech—I fully support that, and always have done—made a statement which caused great anxiety among steel workers and in steel communities. I asked him to see me, and at my meeting with him I asked him to have consultations with the TUC Steel Committee about the matter. That was what happened. The accounts given in the Press were ill-founded, for at no stage did I do more than seek to ensure that a nationalised industry chairman had good working relationships with his own employees, and I believe that that commanded wide support in the industry and outside.
    Sir G. de Freitas: Will my right hon. Friend say that before making important decisions affecting the steel industry he will always consider the views of the TUC Steel Committee, and particularly those of its chairman, Mr. Sirs, whose views are greatly respected by the members of our Parliamentary Steel Group?
    Mr. Benn: I am grateful to my right hon. Friend for what he said. I maintain the closest contact with the TUC Steel Committee. I saw the confederation, and it was with its good will that I urged the chairman of the steel corporation to discuss these matters with the steel workers and not seek to push through a proposal that did not have their understanding and agreement.
    Mr. Michael Marshall: I appreciate that the Secretary of State may not have further oportunities to meet Sir Monty Finniston, but will he nevertheless assure the House that he or his successor will try to meet the Chairman of the British Steel Corporation less frequently—perhaps once a year—and allow the BSC to get on with its day-to-day management unhindered?
    Mr. Benn: It is a good thing that the community interest, like the interest of the trade unions concerned, should be reflected in tripartite meetings taking place between the Minister, the board of management, and the workers concerned. Although I appreciate that the hon. Gentleman put his question in fun, I do not think it is sensible that there should be a division between a nationalised industry and the sponsoring Minister, and it is even more undesirable that there should be a gap between the board of a nationalised industry and the workers, who, after all, create the wealth in the industry.
    Mr. Mendelson: Does my right hon. Friend accept that there has been a longstanding tradition for the corporation to take carefully into account proposals from the people employed in the industry and that throughout the steel areas his own intervention and his insistence that the corporation and its board should again, on this occasion, carefully consider the alternative proposals put forward by the steel committee have been welcomed? Will he now further consider advising the steel corporation, in co-operation with the trade unions, that there should be a policy of stocking certain quantities of steel so that when the upturn comes British steel could be drawn upon and that some of those stockholders of steel who ordered great quantities of foreign steel last year should curtail some of those orders and not continue with their orders abroad, but switch some of those orders to our own steel corporation and private steel companies?
    Mr. Benn: I am grateful to my hon. Friend for what he said about the attitude of the trade unions, which, throughout—there is a long history in this matter—have been entirely constructive in their approach to the British Steel Corporation. I think that a measure of their constructiveness can be found in the fact that the BSC board accepted their recommendations.
    As to the matter of stockpiling, we are considering it. If a stockpiling scheme were to be introduced I would want to be sure that its employment implications were favourable. There are various types of stockpiling, some of which could be more favourable in that respect.

    RB211–524 Engine
    Mr. Whiteheadasked the Secretary of State for Industry when he will be in a position to announce further funding for the RB211–524 engine to be jointly developed by Boeing and Rolls Royce (1971) Limited; and if he will make a statement.
    Mr. Benn: The Rolls-Royce RB211–524 aero-engine is fully committed for use in the Lockheed TriStar. Rolls-Royce (1971) Ltd. has recently put forward fresh proposals for the use of the engine in the Boeing 747. These are being urgently considered and I hope to make a statement very soon.
    Mr. Whitehead: Is my right hon. Friend aware that the formal Boeing deadline for co-operation in this programme runs out tomorrow? Can he assure us that the programme will not lapse through a too ready insistence by the Government on the two-order guarantee, and certainly that Rolls-Royce will not be asked to go along with this project for a few more weeks purely with its own money?
    When will my right hon. Friend persuade his colleagues in the Cabinet that this is a most important project, not just for jobs but for the future of British technology in breaking into this great new market?
    Mr. Benn: I appreciate the concern of my hon. Friend, of others in Derby, and of other Rolls-Royce workers who know how important it is that other applications for the engine should be developed. I am in very close touch with Boeing. I hope that we shall find time to complete these discussions. I am sure that the Cabinet and my colleagues are all well aware of the importance of this engine. I must tell the House that at any time the placing of any further order for the Boeing with that engine would, of itself, trigger off full development.
    Mr. Rost: Is it true that the Minister has approved this loan but that it is awaiting Cabinet sanction because the Prime Minister has taken away from the Minister his executive powers to grant loans without Cabinet approval?
    Mr. Benn: The hon. Gentleman must know very little about government if he
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    thinks that any single Cabinet Minister would be in a position, without explicit Cabinet approval, to authorise the expenditure of sums of money running into tens of millions of pounds.
    Dr. M. S. Miller: May I impress upon my right hon. Friend the importance of this development? Not only will it have a tremendous effect on the Rolls-Royce areas which are producing the engine; it will have a spin-off effect in my constituency, where there are Rolls-Royce factories in East Kilbride and in Blantyre?
    Mr. Benn: Yes, I accept that. When it was originally decided to go forward with the RB211 the previous Government endorsed that decision in their arrangements, and we decided to authorise the engine with the TriStar—so successive Governments have shown that they are aware of the wide range of applications for this engine. It so happens that it is difficult that it should be happening at this time and that we should have to reach this decision when airline orders are a bit sluggish.
    Mr. Warren: I understood the Secretary of State to say that Rolls-Royce recently put forward proposals. Is he aware that these proposals have been before his Department for over 18 months and that Rolls-Royce needs a decision? The lack of decision is costing Rolls-Royce and Boeing money. Will the right hon. Gentleman attend to the matter and look after the jobs of the workers who are waiting for the engines and the customers who want it?
    Mr. Benn: The hon. Gentleman is unfortunately misinformed. Rolls-Royce made its proposals on 21st April. It made substantial amendments. It provided figures on which my Department could start independent calculations on 8th May, and the revised brochure putting forward its proposals was received on 16th May. The hon. Gentleman has, no doubt, been quite accidentally but wholly misinformed about this business.

    Planning Agreements
    Mr. Bryan Daviesasked the Secretary of State for Industry how many major firms in the private sector have indicated support for the concept of planning agreements.
    Mr. Meacher: A number of views have been expresed both to my Department and in the media. They reflect a range of attitudes and concerns. The Government have said that they intend to extend their consultations with both sides of industry about the best means of implementing planning agreements. Firms will be better able to form a view as those consultations progress.
    Mr. Davies: Does my hon. Friend accept that there is no area of our industrial policy on which the Opposition are less well informed than the degree of support for the concept of planning agreements? Does he recognise that amongst moderate opinion in this country there is a great deal of support for the development of planning agreements, which alone can set us on the path of economic recovery?
    Mr. Meacher: My hon. Friend is quite right. There can be no doubt that planning agreements are the best means of promoting the extra investment that this country desperately needs and for securing better industrial relations by widening consent through joint decision-making in industry. There is much wider support than the Opposition have indicated. After the White Paper was published in August last year, my Department discussed it with 13 of the largest manufacturing companies, of which nine generally favoured planning agreements.
    Mr. Richard Wainwright: Does the hon. Gentleman agree that there would probably be much more industrial enthusiasm for planning agreements if companies could look forward to the Government's being under a statutory obligation to reveal their plans for the economy and for particular industries?
    Mr. Meacher: The hon. Gentleman should well understand—since he has spent many hours in the Standing Committee considering the Industry Bill—that the Government have made it quite clear that they will provide short- and medium-term sectoral information to companies for the first time. This is of considerable advantage, and industry has told us how valuable it feels this will be.
    Mr. Heller: Will my hon. Friend give us an assurance today that in the discussions which are likely to take place with the various interested bodies, particularly
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    the CBI, there will be no retreat on the part of the Government in the face of the CBI's opposition? Will he also indicate that the views of his own hon. Friends on the Industry Bill Committee, calling for compulsory planning agreements for the larger companies, will be taken into consideration in relation to the whole question of the future of the Industry Bill?
    Mr. Meacher: I can certainly give my hon. Friend an assurance that following the consultations both with the TUC and with the CBI, which we have always been pledged to undertake, there will certainly be no secret changes. There will be full discussion in the light of any further representations that may be made to us by either side of industry, following the clarification of many points that have arisen in Committee.
    As to the further matter, of compulsory implementation of planning agreements, that is a point which has been made to us, but the Government believe that as a result of the guarantees that we shall give under Clause 14 of the Bill the great majority of large companies will see that it is very much to their advantage to undertake planning agreements with the Government voluntarily.
    Mr. Tom King: Since the hon. Gentleman has made clear that the bulk of public companies have no objection to voluntary planning arrangements with the Government, does he not realise the damage caused by the Government's insistence on compulsory disclosure powers and the damage that this could do to many companies' overseas competitive positions?
    Will the hon. Gentleman confirm that the suggestion in The Times today, that the Government may be prepared to drop these compulsory disclosure powers in return for voluntary planning agreements, is one which the Government will support?
    Mr. Meacher: The hon. Gentleman would be unwise to believe all he reads in the Press. I can certainly tell him that the Government have always been committed to the compulsory disclosure of information. It was in the White Paper, and we have not in any way departed from that position. The only change which was made—and that was in

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    response to representations from bodies which included the CBI—was that we have deliberately separated the compulsory disclosure powers from those associated with the planning agreements, in order to meet the suggestion that planning agreements should be wholly and completely voluntary.

    British Steel Corporation
    Mr. Michael Marshallasked the Secretary of State for Industry if he will publish his current estimate of the British Steel Corporation's investment programme for the succeeding five years, together with totals of the work force required over the same period.
    Mr. Meacher: The latest forecast of expenditure on the British Steel Corporation's capital investment programme was published in January of this year in the White Paper on Public Expenditure to 1978–79, Cmnd 5879. The forecast carried the qualification that the phasing of the programme is under continuing examination by the corporation.
    The corporation's development plans provide for a reduction in the number employed by the corporation from 225,000 at the present time to some 195,000 by the turn of the decade. These figures do not take account of further improvements in productivity which may be negotiated within the industry.
    Mr. Marshall: Does not that typically woolly answer hide the fact that the Government have spent 15 months trying to make up their minds about investment strategy as it affects Scotland and Wales? Does the Minister agree that we urgently need to hear the Government pronounce, given the confusion engendered by his right hon. Friend the Secretary of State, with all the queries and doubts he is raising about jobs lost within the EEC?
    Mr. Meacher: The Government have been carrying out the pledge which we made in successive election manifestos to undertake a full-scale review of the British Steel Corporation's closure and investment strategy. I do not believe that there is any delay or procrastination in the investment programme as a result of this review. All the major projects that were put to us last year—those that concern Teesside, Scunthorpe and Sheffield—have been authorised. The only major
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    project put to us this year was that concerning Port Talbot. We received it at the end of January, but did not get the additional information required to take a view on it until the beginning of May. It is a major project, with implications for Shotton, but I believe that even on that we shall be able to reach a decision shortly.
    Dr. Bray: Is my hon. Friend aware that many of the present difficulties of the corporation were caused by delays in approving investment proposals during the Conservative Government's period in office, up to 1974, and that had there been adequate investment then, not only would there have been more adequate steel supplies last year but employees in the steel industry would be in a much happier position today?
    Mr. Meacher: My hon. Friend is right. There certainly has been a marked lack of investment in the steel industry, particularly in the period before nationalisation. One of the great effects of public ownership will be to put the steel industry on a par with competitive industries abroad.

    Industry Act
    Mr. Crouchaskd the Secretary of State for Industry whether he will publish a further White Paper on the working of the proposed Industry Act.
    Mr. Benn: The Government will consider the publication of a further White Paper on the working of the proposed Industry Act in the course of the review of the Bill which we have undertaken to carry out.
    Mr. Crouch: I am sure that the whole House will be interested to hear that remarkable revelation from the right hon. Gentleman. May I remind him that neither the Bill nor the White Paper makes any mention of the Government's intention to nationalise one or more of the main clearing banks? In view of the committee which the right hon. Gentleman is chairing outside the House tonight, will he say whether it is his view that the National Enterprise Board has powers to nationalise one of the banks?
    Mr. Benn: As we say, that is another question. I invite the hon. Gentleman to consider very seriously whether a paper written in a party office and coming up

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    to a party committee—a paper which it so happens I had not read until I saw a reference to it in The Times, a document of options—is legitimately to be taken as the subject of a supplementary question. The House will know full well that in our programme for Britain, which we published two years ago, the Labour Party indicated our preliminary thinking about the matter and said that further work would be done on it. The matter does not arise on the question the hon. Gentleman put, but all political parties properly undertake forward policy work and it would be a great pity if that work were not undertaken and the results put before political leaders for consideration.
    Mr. Molloy: Does my right hon. Friend agree that while the Industry Bill, the related White Papers and the paper he may publish, are all very important matters for proper discussion, all these things will come to naught if we ever repeat the disastrous experiment which ended up in Britain's being put on a three-day working week, for which we are still paying a very heavy bill? Conservative Members should concentrate on that and the damage they have caused this country when they try to anticipate any evils that this Government may do.
    Mr. Benn: The House knows that this country's manufacturing industry suffers from a period of decline that has gone on for some time. That decline is due partly to a lack of adequate investment and partly to a failure to make necessary reforms in industrial policy. Undoubtedly, the final few weeks of the siege economy we inherited from our predecessors made it worse.
    Mr. Heseltine: Will the right hon. Gentleman answer the question put to him by my hon. Friend the Member for Canterbury (Mr. Crouch)? Do the Government intend to use the powers taken in the Industry Bill to nationalise a major bank? Do they intend to nationalise a major insurance company? If the powers exist—as it has been admitted in Committee they do—are we now to assume from the right hon. Gentleman that the Government have no intention of using them?
    Mr. Benn: No, Sir.

    European Community (Industry Ministers)
    Mr. Gowasked the Secretary of State for Industry when he next expects to meet other Ministers for Industry within the EEC.
    Mr. Dykesasked the Secretary of State for Industry what plans he has to meet his opposite numbers in the other EEC countries' Governments in the near future.
    Mr. Benn: I hope to meet the Ministers with industrial responsibilities in all the Common Market countries as soon as possible.
    Mr. Gow: What do the industry Ministers of the Eight think of the view of the Secretary of State that Britain's membership of the Community has cost us 500,000 jobs, and will cost us another 500,000? If the right hon. Gentleman still holds that view, how can he with any honour remain a member of this administration?
    Mr. Benn: The hon. Gentleman may somewhat misunderstand the process of the referendum. The degradation and humiliation of members of the present Government who took the view that I took ends with the people's vote. It does not begin with it. The thing that was hardest to take was to be a member of the Community on the diktat of a Prime Minister of a previous Government without the assent of the British people.
    Mr. Faulds: Diktat of Parliament.
    Mr. Benn: I have already this morning telephoned Mr. Spinelli, the industrial Commissioner in Brussels. He has suggested that he comes to London on Thursday for talks—a suggestion which I greatly welcome. I have already made informal contacts with the TUC and the CBI, because many people in this country are anxious about unemployment and will expect a British Government, now put into the Community by the British people, to work for the safeguarding of employment prospects and their interests within the Community.
    Mr. William Hamilton: Will my right hon. Friend now give an unqualified and unreserved assurance to the House that

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    he will work unremittingly with our friends in Europe to ensure the success of our continued membership of the Common Market?
    Mr. Benn: As I have just told the House, I have made contact with Mr. Spinelli. I have also written letters to my colleagues in the other Common Market countries. I do not require lessons in political morality from an hon. Member who regularly signs the oath of allegiance and continually snipes at the Royal Family.
    Mr. Dykes: Even if the Secretary of State wishes to dodge giving an exact and clear answer to the first supplementary question, will he at least explain to the other EEC industry Ministers, when he next sees them, why he thinks the British public overwhelmingly and decisively rejected his ludicrous assertion that unemployment of half a million was due to our membership of the EEC?
    Mr. Benn: I do not believe that this is the right place to refight the referendum campaign, but I do not apologise to the House for putting forward views that were honestly held in a referendum which I had played some part in bringing about. Having said that, the British people have invited the British Government to work constructively within the Community to safeguard their interests, to safeguard their jobs, to see that the policy of the present Government is implemented, and to work constructively within the Community. I shall do my best to do those things.
    Mr. Speaker: Mr. Gordon Wilson.
    Mr. Gow: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the right hon. Gentleman's reply I beg to give notice that I shall seek to raise the matter on the Adjournment as soon as possible.
    Mr. Speaker: Before that point of order I called Mr. Gordon Wilson.
    Mr. Gordon Wilson: In view of the many statements that were made during the referendum campaign to the effect that staying in the Market would safeguard industrial jobs inside the United Kingdom, will the right hon. Gentleman, at his first meeting with the EEC industry Ministers, discuss the possibilities of increasing investment to help extend the
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    manufacturing base in Dundee, in view of the loss of 800 manufacturing jobs in NCR plants in Dundee, notice being given on polling day? Will the right hon. Gentleman make an early statement on this matter?
    Mr. Benn: The hon. Gentleman's anxiety about jobs is shared widely throughout the United Kingdom, but it may well be that this anxiety is one that I shall need most carefully to assess and express. I am happy that I shall have an opportunity to do so. I have already made initial contact with the chairman of the Finance Committee of the TUC. I shall take the opportunity of discussing these problems not only with the British trade union movement but with trade unions in all other countries in the Community.
    Mr. Frank Allaun: Does my right hon. Friend concur that most of his duties are involved in discussions with trade unionists and not with Ministers in the EEC? As my right hon. Friend has established excellent relations with trade unions, will he note that many of us would strongly resent any removal of him from his present post and any appeasement of City gentlemen who are clamouring for his head on a plate? It is said that if that does not take place the City will not play. I quote Mr. Horace Cutler.
    Mr. Benn: It is my intention—this is why I spoke to Jack Jones in this sense—that my contacts, which have been close, with the trade unions in this country should be extended to link with the trade union movements of other countries. Having said that, if the Opposition want my head on a charger the leader of the Conservative Party will have to be a lot more seductive as a Salome than she has been so far.

    Manufacturing
    Mr. Costainasked the Secretary of State for Industry if he will publish figures, for actual and anticipated investment in manufacturing industry in 1973–74, 1974–75 and 1975–76.
    The Under-Secretary of State for Industry (Mr. Gregor Mackenzie): Investment by manufacturing industry, measured at 1970 prices, amounted to £1,975 million in 1973–74 and £2,110 million in 1974–75.

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    The results of the latest survey by my Department of manufacturers' investment intentions, covering calendar years, are published today and suggest that the volume of investment by manufacturing industry in 1975 could be of the order of 15 per cent. lower than in 1974.
    Mr. Costain: Does the Secretary of State not appreciate that investment in industry depends on confidence in industry? He suggests that my right hon. Friend the Leader of the Opposition has not been seductive enough. When will he become seductive enough to encourage industrialists to invest in this country without being clobbered in terms of his wish to nationalise industry?
    Mr. Mackenzie: I think that many of us have been disappointed in the investment record of manufacturers in this country for a number of years. That applies all the more when we compare our record with what is happening in other countries. No doubt that is why the Conservatives introduced the Industry Act 1972. That is why we have put forward an Industry Bill this year to establish a National Enterprise Board and to bring about the system of planning agreements. We have done so because we believe—I am sorry that I probably do not carry the Opposition with me—we can increase investment in that way.
    Mr. Canavan: With what degree of accuracy can we regard the estimates for 1975–76 in view of the unfortunate fact that private industry is still too dependent upon the whim of the private investor, far too many of whom appear to be too willing to take money out of industry and to invest it elsewhere?
    Mr. Mackenzie: The results for 1976 are necessarily more tentative, but they suggest that the figures will be of the same order as 1975. We hope that before then the plans which we have put before the House will be implemented in the form of an Act of Parliament and that they will inspire a great deal more investment than we have had over the past few years.
    Mr. Tom King: Is not the real reason for the Secretary of State's head being on a charger that, in fact, the answer given by his hon. Friend the Under-Secretary
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    of State is not the full answer, in that today his Department published its assessment of investment intentions which are 15 per cent. down for 1975 and provide for no recovery in 1976? Is that not a clear indictment of the Secretary of State's stewardship and an indication of the need for a change?
    Mr. Mackenzie: I have already said in my initial answer that we expected the figure to be 15 per cent. lower than the 1974 figure. I have also indicated why, in two General Elections, we felt it necessary to put forward some substantial changes in industrial policy. That is why we are pressing ahead with those measures as fast we we can.
    Mrs. Renée Short: Is my hon. Friend aware that the construction industry is one of the major transgressors of all British industries, in that it exports capital abroad to build, principally in the Common Market countries? Does my hon. Friend agree that we need investment in building in this country and not in building office blocks in Paris and Brussels? Will my hon. Friend ensure that some curbs are put on the building industry so as not to allow it to take money out of this country for that purpose?
    Mr. Mackenzie: The latter part of my hon. Friend's question, regarding exchange control, is a matter for my right hon. Friend the Chancellor of the Exchequer. Like everyone else, I am much more concerned that the construction industry should be involved in substantial works in industry in this country rather than in speculating, no matter whether it be in this country or abroad.

    British Leyland
    Mr. Budgenasked the Secretary of State for Industry if he will give his latest estimates for the numbers of people employed and the capital investment required in British Leyland for the next three years.
    Mr. Macfarlaneasked the Secretary of State for Industry if he will give his latest estimate of the investment and employment needs of British Leyland.
    Mr. Benn: Sir Don Ryder's report about British Leyland, which the Government have accepted as a basis for future policy towards that company, sets

    21
    out estimates of the company's future capital expenditure requirements. The company's future employment needs will be a matter for discussion between the work force and the management.
    Mr. Budgen: Does the Minister agree that sums coming from the Government can be raised only by taxation imposed upon private individuals and private firms, and that the burden of that increased taxation is likely to drive many private individuals and private firms out of business? Further, does the right hon. Gentleman agree that as a result more jobs will be lost by this support operation than may be preserved by it in the short term?
    Mr. Benn: I do not agree with the hon. Gentleman. The firm in question is responsible for £500 million worth of exports, upon which our capacity to continue as a major manufacturing nation depends. A large number of jobs are at stake both in British Leyland and in the various sub-contracting firms. I believe that what we have done in deciding to jobs and re-equip British Leyland for the future was right. I wish that the CBI, in its general approach to our industrial policy—whatever the general criticisms in any individual instance—would recognise that the firm, including the professional management, sees the merit of what we are putting forward. I wish that this approach to British Leyland had found a much wider favour among British industrialists.
    Mr. Edelman: Will my right hon. Friend make a statement on the important question of industrial democracy and worker participation—a matter touched upon but not developed in the Ryder Report?
    Mr. Benn: My hon. Friend has heard my comments about industrial democracy. It is an important idea. It is a wind of change blowing through British industry. I do not believe that it can be captured and frozen into a single manifesto statement or clause in an Act of Parliament. In general, what is happening is that the people who invest their lives in industry expect to have as much control as those who invest their money. Therefore, I am in full accord with the general proposition advanced by my hon. Friend.
    Mr. Macfarlane: Will the right hon. Gentleman reconsider the decision to give long-term investment to British Leyland and also reconsider giving short-term loans to British Leyland, so encouraging the firm to stand on its own feet and conduct its own financing?
    Mr. Benn: I do not think that that general proposition relates very closely to the problems of a major world motor car company—a company which, as the Ryder Report made clear, has suffered a systematic decline in investment and a company which requires substantial sums of public money to get itself on its feet again. I do not believe that the hon. Gentleman's proposition is either sensible or realistic.

    EUROPEAN COURT (INTERPRETATION PROCEDURE)
    Mr. Richard Wainwrightasked the Attorney-General whether he is satisfied with the procedure under which United Kingdom courts of justice may request the European Court to rule on points of interpretation.
    The Attorney-General (Mr. S. C. Silkin): Yes.
    Mr. Wainwright: Is not the Attorney-General gravely concerned that there are now serious areas of uncertainty in our law in relation to Common Market law, as instanced by that distinguished authority Lord Diplock in his remarks to a Select Committee? Will the right hon. and learned Gentleman and his colleagues encourage our courts to increase their reference to the European Court to help remove the area of uncertainty?
    The Attorney-General: It is a matter of discretion for the courts in the majority of cases—though there is an obligation in some cases—whether they refer to the European Court a matter which raises a point of Community law. It is not for me to urge them or to press them to do so. I have no doubt that where necessary they will continue to do so.
    Sir D. Walker-Smith: Has the right hon. and learned Gentleman yet given consideration to the judgment of the European Court of Justice on the second question referred to it by the Chancery Division of the High Court, in the case of

    23
    van Duyn v. the Home Office, to the effect that directives made under Article 189 can be directly applicable in member States in the case of individual rights? Do Her Majesty's Government propose to make recommendations to the Commission in regard to the formulation of directives following that important judgment?
    The Attorney-General: That is not a matter for me, but I shall see that my colleagues are made aware of the right hon. and learned Gentleman's remarks.

    DEPARTMENTAL INQUIRIES
    Mr. Skinnerasked the Attorney-General what further inquiries undertaken by his Department have not yet been completed.
    Mr. Wellbelovedasked the Attorney-General what is the number of inquiries undertaken by his Department that have not yet been completed.
    The Attorney-General: It is not clear to me what type of inquiries my hon. Friends have in mind. My Department rarely undertakes inquiries.
    Mr. Skinner: Will the Attorney-General say whether the Poulson inquiries are still continuing? Has he seen the letter in The Times today from Mr. Muir Hunter, counsel for the Poulson creditors, about remarks concerning outstanding materials still to be quarried? Does he still hold the view which he expressed last November, when speaking to the Oxford Labour Club, that 300 people have question marks over their names arising from the Poulson inquiry, including, presumably, the Shadow Foreign Secretary?
    The Attorney-General: The answer to the first two questions put by my hon. Friend is "Yes". The answer to the third question is that the number of 300 has in the meantime diminished.
    Mr. Wellbeloved: Since the Attorney-General's Department is responsible for inquiries conducted by the Director of Public Prosecutions, and since that Department plays a vital rôle in maintaining public confidence in the administration of the law, will he assure the
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    House that the DPP's office will be adequately staffed and will have a structure to ensure that it can fulfil its rôle efficiently and speedily?
    The Attorney-General: There is great difficulty in filling the legal establishment of Government Departments generally, and particularly the one which my hon. Friend mentioned. I am grateful to him for giving me the opportunity to say that work of that kind is extremely rewarding.
    Mr. Hooson: Will the Attorney-General make clear his function and that of the DPP in this matter? Is it not correct that the DPP conducts no inquiries himself but may direct that inquiries be conducted? There seems to be a great deal of ignorance in the House as to the exact functions of the Attorney-General's Department and of the DPP in relation to inquiries of this nature.
    The Attorney-General: The inquiries are of various kinds in relation to the Poulson case, to which I assume the hon. and learned Gentleman is referring. Such inquiries may be conducted by the Department of Trade or by the police. The Director of Public Prosecutions advises, and in necessary cases conducts the prosecution.

    BRITISH AND EUROPEAN COURTS
    Mr. Russell Johnstonasked the Attorney-General whether he is satisfied with the co-ordination between British courts and European courts.
    The Attorney-General: Yes.
    Mr. Johnston: Does not the Attorney-General agree that, for example, the absence of legal aid in the European Court is a serious shortcoming in the free availability of justice? Does he propose to make representations about the matter or to take any action?
    The Attorney-General: I am grateful to the hon. Gentleman for making that proposal. I am aware that there are many instances where the legal aid that is available in our courts is not available in the courts of other European countries. The hon. Gentleman referred to the European Court. These obviously are matters which should now be looked into.

    SMALL CLAIMS COURTS
    Mr. Cryerasked the Attorney-General if he will introduce legislation to extend the system of small claims courts which exclude legal representation.
    The Solicitor-General (Mr. Peter Archer): No, Sir. My noble Friend the Lord Chancellor is satisfied that the county courts, in which a new procedure to deal with small claims was introduced in October, 1973, meet the need for a forum for the disposal of small claims. The rules discourage legal representation in those cases where it is uneconomic or unnecessary.
    Mr. Cryer: Does my hon. and learned Friend not agree that the £75 limit for small claims in the county court is far too low? Does he not agree that it should be possible for claims involving sums larger than £75 to go to court without fear of having to meet the costs of lawyers engaged by well-heeled opponents? Is it not time that a Labour Government made civil claims open to all, without involving the fat fees which are so often payable to members of the legal profession?
    The Solicitor-General: My noble Friend the Lord Chancellor has invited the County Courts Rules Committee to consider increasing the £75 limit, and that will go a long way to meet my hon. Friend's point.

    WRITS AND SUMMONSES
    Mr. Greville Jannerasked the Attorney-General how many and what percentage of cases commenced by the issue of a writ or summons failed to reach trial in each of the last three years for which records are available.
    The Solicitor-General: About 1¾ million civil proceedings—not including divorce—are started annually in the High Court and county courts. Each year, about 45,000 are tried and nearly 1¾ million disposed of without trial. Records do not show, of the cases tried or otherwise disposed of in a year, what proportion was instituted in that year or in any other given year.
    Mr. Janner: Is my hon. and learned Friend aware that some years ago I was
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    promised that statistics would be made available concerning those cases which settle at the door of the court, with the result that a vast amount of time and expense is wasted? Will he ensure that those statistics are made available as soon as possible, so that justice may be done far more swiftly and cheaply than is the situation at present?
    The Solicitor-General: I shall bring my hon. Friend's comments to the attention of my noble Friend the Lord Chancellor.

RAILWAY ACCIDENT, NUNEATON
Mr. Leslie Huckfield Mr. Leslie Huckfield (by Private Notice) asked the Secretary of State for the Environment whether he will make a statement about the railway accident which took place at Nuneaton on Friday morning, 6th June.
The Minister for Transport (Mr. Frederick Mulley): Yes, Sir. At 01.57 on 6th June 1975 the 23.30 Euston to Glasgow sleeping car train became derailed on the approaches to Nuneaton station. The derailment started on a section of line on which alterations to the track were being made, and which was subject to a temporary speed restriction of 20 miles per hour.
The train was headed by two electric locomotives. These became detached from the train, the second one ending up across the down platform. Behind them, all but the last of the 15 vehicles in the train became derailed and several of the sleeping cars zig-zagged and were severely damaged.
I regret to inform the House that, according to my latest information, six people lost their lives in the accident and 38 were injured. Of the injured, 10 are still detained in hospital. I am sure the House will join with me in expressing condolences to the bereaved and injured.
An inspecting officer of railways from the Department went to the site immediately the accident was reported and examined the situation together with the railway officers.
An internal inquiry by British Railways opened this morning. This will be followed as soon as possible by a public inquiry, which will be conducted by

27
Major C. F. Rose, an inspecting officer of railways. The date and place of his inquiry will be announced shortly.
Mr. Huckfield: May I, on behalf of the people of Nuneaton and, indeed, the whole House, express my deepest sympathies to all those who suffered in any way as a result of this tragic accident? May I also pay tribute to the work of the emergency services involved—the police, fire, hospital and voluntary services, particularly the WRVS?
While welcoming my right hon. Friend's statement about the inquiry, may I ask whether he agrees that, instead of some of the widespread speculation which has taken place about the cause, in the interests of the railway industry, the travelling public and all those involved, it would be far better to await the outcome of the inquiry?
Mr. Mulley: I am very much obliged to my hon. Friend for his comments. He has given extremely sound advice in advising all to await the outcome of the inquiry. But, as in similar matters, I have no influence over what the media report. I am sure that the House will want to endorse my hon. Friend's very proper tribute to all those involved in the emergency services.
Mr. Fox: May I, on behalf of the Opposition, extend our sympathy to the bereaved and wishes for a speedy recovery to those who have been injured? We are particularly glad to see the right hon. Member for Workington (Mr. Peart) here and to know that he escaped serious injury.
Does the Minister accept that it is imperative that the travelling public be reassured that the warning system for speed restrictions on any section of line is an efficient as possible? Will he make representations to the British Railways Board to ensure that any improvements are carried out immediately, not after the two inquiries about which he has spoken?
Mr. Mulley: I am sure that the British Railways Board will want to take any action that seems appropriate without waiting for the inquiry. But it would be wrong to prejudge the inquiry by assuming that the accident was due to any particular cause. I thank the hon. Gentle-
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man for his kind references to my right hon. Friend.
Mr. Snape: Does my right hon. Friend accept that the National Union of Railwaymen will also wish to be associated with the expressions of condolence to the relatives of the bereaved and to extend its own good wishes for a speedy recovery to those who have been injured?
When temporary speed restrictions are in force or are enforced at short notice it is the practice of the British Railways Board to ensure that each train approaching such a restriction is warned, usually by means of a hand signal and a detonator. Will my right hon. Friend consider extending that safety provision to all temporary speed restrictions, particularly on high speed main lines?
Mr. Mulley: I think that my hon. Friend is getting a bit involved in what would be a proper subject for the inquiry. The inquiry, as well as establishing as far as possible the cause of the accident, will also have power to make recommendations, if it sees fit, as to how similar events might be prevented in future.
Mr. Monro: Does the Minister accept that many right hon. and hon. Members on both sides of the House frequently travel on that particular train and have a very high regard for the sleeping car attendants and catering staff for the services that they have provided for many years? May I ask the right hon. Gentleman to express the wish that, if any have been injured, they are soon out of hospital and back to work?
Mr. Mulley: I am obliged to the hon. Gentleman for his remarks. I will see that his message is sent. It is tragic that one sleeping car attendant was among those killed. In case the public get the wrong impression about railway accidents, I should point out that this is a very tragic and unfortunate matter. In 1974 only one passenger was killed on the railways throughout the whole of the country.
Mr. Stephen Ross: We on the Liberal Bench would like to extend our condolences to the relatives of those who lost their lives in this tragic accident. It is a pleasure to see the Minister of Agriculture, Fisheries and Food back on the Government Front Bench this afternoon, and I congratulate him on his narrow escape.

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Will the Minister assure the public that he is satisfied with the general maintenance of track in these days of highspeed travel? There have been a number of derailments, but, thankfully, not serious. Is the right hon. Gentleman satisfied that track maintenance is up to the standard of meeting the high-speed travel that the public get these days?
Mr. Mulley: Naturally, I am as concerned as the hon. Gentleman to ensure maximum safety. One of the features of the Railways Act that we passed last year was that the Government, by means of grants, now take responsibility for permanent way expenditure. I do not think that because of this accident there should be any cause for concern. The temporary speed limit here was invoked because maintenance of the kind that the hon. Gentleman wants to see continued was, in fact, being carried out.

EUROPEAN COMMUNITY (MEMBERSHIP)
The Prime Minister (Mr. Harold Wilson): With permission, Mr. Speaker, I should like to make a statement.
As the House knows, last Thursday the British people voted to stay in the European Community.
What has impressed all of us, and no less our friends in Europe, the Commonwealth and more widely, has been not only the high turn-out and the clear and unmistakeable nature of the decision, but also the consistent pattern of positive voting over almost every county and region of the United Kingdom.
It is now almost 14 years since the British Government first applied in July 1961 for negotiations to join the Community.
The issue of membership has cut across party lines, and the Government recognise the deep sincerity with which views have been held on both sides. The debate is now over. The two tests set out in our manifesto of successful renegotiation and the expressed approval of the majority of the British people have been met. The historic decision has been made. I hope that this House and the country as a whole will follow the lead which the Government intend to give in placing past
30
divisions behind us, and in working together to play a full and constructive part in all Community policies and activities.
I am well aware that the period of renegotiation and the referendum has been difficult for other members of the Community. I pay tribute again to the constructive spirit in which they have dealt with our renegotiation proposals. In his statement to the Council of Ministers in Luxembourg on 1st April last year, at the outset of renegotiation, my right hon. Friend the Foreign and Commonwealth Secretary said that, if we were successful, there would be
"a firm basis for continuing British membership of a strengthened Community".
I now say to our partners in the Community that we look forward to continuing to work with them in promoting the Community's wider interests and in fostering a greater sense of purpose among the member States.
I would also wish to say to our friends and allies in the Commonwealth who made clear their hope that we would remain within the Community—and to all the developing countries—that we shall hope to bring even more to our relationship with them following the clear decision of the British electorate last Thursday.
I have already made clear the Government's general approach to Community policies. But it also follows from the decision to remain in the Community that this country should be fully represented in all the Community's institutions. I have said that if renegotiation succeeded and if our recommendation was endorsed by the country we should feel it right that this House should be fully represented in the European Assembly. A recommendation to this end will now be made to the Parliamentary Labour Party.
The House will have noted the statements by the General Secretary of the TUC and the Chairman of the TUC International Committee making clear that the TUC is now likely to enter fully into the work of the Economic and Social Committee of the EEC and to work with the European Industrial Labour Movement in a way which can only mean strengthening the trade union movement throughout the Community and here in Britain.

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What we can achieve in our attack on both the economic problems we face at home and wider world economic problems depends basically on the efforts which we ourselves make. But, with the uncertainty over our membership of the European Community at an end, we can continue our efforts with greater confidence to find solutions to the great problems, both domestic and international, which confront us.
The decision will also, I am sure, give confidence to those overseas who have been considering plans for investment in Britain. There are signs that this is already happening.
The improvement of our own economic situation and our contribution to a more equitable world economic order can best be made from a settled position within the Community. We now have that settled position, and we are determined to make a success of it. But our future will continue to depend on what we are prepared to do by our own efforts, our skill, our technology—and our restraint, a restraint which demonstrates our concern for the interests of those members of our national community least able to help themselves.
Mrs. Thatcher: Is the Prime Minister aware that we join him in rejoicing over this excellent result, which confirmed the earlier parliamentary decision? We are particularly pleased with the number of people who came out to vote for Britain's staying in the EEC and also with the strong "Yes" from each of the four parts of the United Kingdom, which confirmed the strength of the British ties which unite us.
Secondly, I do not wish to enter into the controversy over the referendum, but is the Prime Minister aware that there have been lessons to learn from putting a single issue to the people, particularly a single issue in foreign affairs? I hope it will be the end to the time when people feel that most of the issues which interest the British people are domestic issues. This occasion has shown that the British people are fully aware of the importance to them of what happens in other countries and of the importance of Britain taking a full part in those affairs and having a clear voice in them.
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Thirdly, is the Prime Minister aware that all of us on this side of the House, and many on the other, would wish to hand the campaign honours to my right hon. Friend the Member for Sidcup (Mr. Heath) and the parliamentary honours to my hon. Friend the Member for Saffron Walden (Mr. Kirk), who, with his team of Conservative Members, has represented Britain in the European Assembly and has added greatly to that Assembly?
Also, one cannot let this occasion pass without paying tribute to the vision of Sir Winston Churchill and the courage of Harold Macmillan, who made the original application.
As we have supported the Prime Minister throughout on the European issue, it would hardly seem an occasion for controversy between him and our Front Bench—the controversy may be pursued elsewhere—but we regard it as vital now that he takes the necessary steps to restore business confidence and to deal with our economic problems, and we expect to hear more about that in the future.
The Prime Minister: I thank the right hon. Lady for what she said. [An HON. MEMBER: "What did she say?"] She said that the vote last Thursday confirmed Parliament's vote. That is so, but for the first time throughout these many years of controversy we have now had the full-hearted consent of the whole of the British people.
I noted—or at least I think I noted—what the right hon. Lady said about the meaning of the referendum. She will forgive me if I say that what she tried to convey was a little obscure. I shall need time and perhaps a little éclaircissentent to understand fully what she said because I recall that she argued strongly against and voted against the referendum. But when I have had time to study her statement I shall give close thought to it.
I shall obviously not comment on her fraternal or sororial comments on the activities of her right hon. Friend the Member for Sidcup (Mr. Heath), but I was very touched that she felt able to say that. In answer to the challenge from the Shadow Leader of the House, I should like to go along with it and endorse it.
With regard to what the right hon. Lady said about confidence in the economic situation, she is right, and that is

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what I was saying in the concluding words of my statement. She will recall with enthusiasm, I think, the economic debate that we had on the eve of the Whitsun Recess.
Mr. Thorpe: Is the Prime Minister aware that we should like to welcome his statement? Is he further aware that some would like to agree with the right hon. Lady the Leader of the Opposition that the contribution of the right hon. Member for Sidcup (Mr. Heath) amongst Conservatives has been outstanding as to both quality and quantity? Some of us believe that there have been others as well who played some part in the campaign, both for and against. Sometimes those against have been as much help as those who have been for.
Would the Prime Minister agree that this is a clear indication that the British people want this country to play its full part in the European Community, and is he satisfied that the members of the team that will be taking part in the day-to-day business of Europe will all be total in their commitment both to membership and to the policies, whatever they may have thought a week ago?
The Prime Minister: While I congratulate the right hon. Gentleman on improving on his Oxford Union speech, I agree, if he will allow me to say so, with what he said about the fact that in the referendum campaign there were some right hon. and hon. Members on both sides who contributed greatly to the support for their cause, and there were some about whom my own views on counter-productivity certainly applied, on both sides of the campaign. [HON. MEMBERS: "Name them."] Not at this moment. As for the right hon. Gentleman's speculations about the future, these are matters for me. In due course, when I have anything to say on the matter, I will say it.
Mr. Bidwell: In fairness, would not my right hon. Friend agree that, although one debate is over, inevitably a new one begins? Would he not agree that the full purpose of the Common Market is economic and monetary union? What are his views about that?
The Prime Minister: My hon. Friend is always right, that when one debate ends another begins. I have noticed that he
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often starts the new debate before the old one is over. He has taken a different view about this matter. As for EMU, I have nothing to add to what I said in the debate on 8th April or the statement that I made on 18th March when we reported the results of the renegotiations. Both my hon. Friend and I were elected on a manifesto which said:
"if these two tests are passed, a successful renegotiation and the expressed approval of the majority of the British people, then we shall be ready to play our full part in developing a new and wider Europe."
Since those two tests have been passed, I look forward to my hon. Friend showing the same enthusiasm as the rest of us in fulfilling the manifesto.
Mr. Marten: While of course one accepts the result of the vote in the referendum, would the Prime Minister, as the constitutional leader of the "Yes" campaign, formally reaffirm the basis on which the "Yes" vote was clearly obtained—namely, that the Government would oppose any move towards a federal State? Can we have a clear answer to that, please?
The Prime Minister: Since I have been asked by right hon. Members opposite to pay tribute to one distinguished campaigner sitting below the Gangway, I am sure that I am expressing the views of the whole House when I say that the hon. Member for Banbury (Mr. Marten), although he expressed views different from those that I was expressing, conducted his campaign with great dignity during the referendum. With regard to political unity, I have nothing to add to what we said in the campaign, including particularly the statement by my right hon. Friend the Foreign and Commonwealth Secretary, who said that he thought that the matter which the hon. Gentleman raises was one for our children and our children's children.
Dr. J. Dickson Mabon: While one would congratulate my right hon. Friend and the Foreign Secretary and the other Ministers—particularly the Home Secretary on the significant part which he played in the pro-Europe campaign—will he make it clear that the Labour Members who may go to the European Parliament will become full members of the Socialist group?
The Prime Minister: As I have said, this is now a matter for consideration by the Parliamentary Labour Party. I do not intend to give directions to it; indeed, I have no power to do so. I hope that the Liaison Committee, representing both the Government and the Parliamentary Labour Party, will consider this matter. I hope that there will be a delegation to the European Assembly, and I hope that that delegation will be fully representative of the party and not consist just of one point of view. I believe, if I may say so, that the Conservative Party showed great wisdom in including in its delegation a minority who had taken a different view from the majority view. As to joining the Socialist grouping in the Assembly, this must obviously be a matter for the Members and for the Parliamentary Labour Party. I hope that they will do so. I know that every Socialist in the Assembly and the Socialist-led Governments in the Community very much hope that this will be so.
Mr. Gordon Wilson: While not particularly happy with the result of the referendum and feeling that it would be honest to admit it right from the outset, I think it would be churlish not to offer some commendation to the Prime Minister on the success of his policies. But will he note, in so doing, that the Scottish people in their vote were less enthusiastically for the Market, that for over 42 per cent. of the Scottish people the Market will be on trial in future in what it does or seeks to do? Finally, as the pro-Marketeers fought the campaign in Scotland under the slogan "Scotland in Europe" rather than "Britain in Europe", will he seek to give substance to that claim by ensuring that when he brings forward proposals for the establishment of a Scottish Assembly he will give it powers to enable it to be represented directly by Scottish Ministers at the Council of Ministers? Will he also agree that many people in many parties apart from mine will agree with that policy?
The Prime Minister: I am grateful to the hon. Gentleman for his honest and frank admission and for his generous reference. The vote in Scotland must be a matter for interpretation—not, I think, by me. Everyone will make his own interpretation, and some may be different
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from mine. One of course recognises that there were dissociatory votes in the Shetlands and the Western Isles. My interpretation is that they were dissociating less from Europe and the United Kingdom than from certain politicians in Scotland.
Mr. Atkinson: Does my right hon. Friend recollect that many of us said that even if the "Yes" vote was no more than 43 per cent. of the electorate we would accept it, and that that is the position today? Does he also recollect that we agreed to put off until after the referendum the whole question of how Parliament delegates authority to a Minister to use a veto in the Council of Ministers, which, because of the fifth-rate democracy which still exists in the Community, is the one way Parliament decided that we could make our influence felt and be able to understand the decisions to be taken by an attending Minister at the Council of Ministers? Therefore, will he not now give some indication as to how Parliament can delegate authority to a Minister to use a veto in certain circumstances authorised by this Parliament?
The Prime Minister: My hon. Friend has been absolutely fair in what he has said this afternoon in recalling what he said on past occasions before the referendum about the acceptance of certain decisions in the referendum. Many of us saw him on television on Thursday. I particularly welcomed what he said early in the day, quite spontaneously—that it would be his view that the Parliamentary Labour Party should be represented in the Assembly, although I think that it was equally his view that that should be a representative delegation, as I said, and not just one representing the national majority.
With regard to parliamentary scrutiny, whether in respect of decisions taken or in respect of decisions still to be taken—where, of course, as some of us have argued, the political power in the Council of Ministers has become much clearer in terms of national interest, and also, as a result of the summits, in the summit meetings—the Government certainly intend, with the good will of the House, to develop the scrutiny arrangements to make them more effective. I trust that there will be an early debate on the

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recent Report of the Procedure Committee on European Secondary Legislation.
Sir John Eden: While one congratulates the Prime Minister on the result, will he keep to his determination not to repeat the constitutional experiment of the referendum? Second, since it is almost universally agreed that the outcome of the referendum was not only a vote to stay in Europe but a vote against extremism and abuses of power in this country, will he now make changes both in the policies and in the composition of his Government to meet the deeply-held desires of the majority of our people?
The Prime Minister: I certainly give the right hon. Member for Bournemouth, West (Sir J. Eden) the assurance he seeks in his first question. I regard this as a unique situation, necessary in the light of 14 years of disagreement in this country, which cuts across parties. The Government's insistence on going ahead with the referendum has been justified by the result and by the clear decision that has been taken. I would not read anything more into the decision than that it is a decision of the British people, having heard all the arguments, read the documents by both campaigning organisations and having had the report from the Government. It was limited to a clear view that Britain should remain in the Community. It was not a vote for anything else, nor were the questions put about anything else. I certainly would pot regard the right hon. Gentleman as the best judge of which side of the House is the side that generates more extremism as opposed to more consensus.
Mr. Powell: As it is agreed on all hands that in the Government's words:
"Continuing British membership must depend upon the continuing assent of Parliament"
is it not clear, whether anyone likes the deduction or not, that this result can be no more final than that of any single General Election?
The Prime Minister: I saw the right hon. Gentleman on television and I heard him put exactly that point of view. Of course, it is a fact and it has been laid down by constitutional authorities at all levels, including by the former Lord Chancellor, Lord Hailsham, that no Par-
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liament can bind its successor. That is true. The right hon. Gentleman would be the first to agree that the decision this time was not based on the shifting of parliamentary votes or on any vote in the House before or after General Elections. This was a first—and I hope it will not be necessary to have another—and total decision of the British people, where every vote counted as one—even more than they do at General Elections where there are safe seats one way or the other—where everyone had the right to vote or abstain and where there was a massive endorsement of the proposition put forward by the Government.
Mr. Mackintosh: Although I agree with the Prime Minister that this was, indeed, a famous victory—and I congratulate him and all those who took part—I was glad that the right hon. Gentleman read the section which said:
"play a full part in the future life of the Community".
Would my right hon. Friend ask his right hon. Friend the Leader of the House to look into the question of direct election to the European Parliament, in the hope that this country can accept the same agreement as the other members to try to achieve this by 1978?
The Prime Minister: I welcome the kind words of my hon. Friend about the result of a referendum which he totally opposed from start to finish, but nevertheless in which he played a distinguished part. The question of the future development of the Assembly is a matter for progressive consideration by all parties in this House and by every right hon. and hon. Member. I have said that this House should be fully represented there. There will be plenty of time—certainly there is no urgency about it at all and it was not an issue in the referendum—to consider the future methods of selecting those who take part in the work of the Assembly.
Sir D. Walker-Smith: Would the right hon. Gentleman give consideration to the possibility of raising with the Council of Ministers the implementation of a suggestion which I had previously made both in this House and in the European Parliament; namely, that where the Council is engaged in a strictly legislative function as distinct from a merely consultative one, it should deliberate in public?
The Prime Minister: Certainly we shall consider the right hon. and learned Gentleman's proposal. He will note that I had him in mind when I referred earlier to the fact that the Conservative Party had the wisdom to include in its delegation to the Assembly certain of those who had not been over-enthusiastic about entry. This is a matter that needs to be considered. The Council of Ministers has become a much more significant part of the Community institutions. It is now functioning much better because of the recognition by each member of the ministerial Council that they have to give full effect to the political concerns and anxieties of their colleagues. This is reinforced by the precedent set by President Giscard d'Estaing, which is now a regular part of the functioning, of having three summit meetings a year. Whether these meetings would gain by being in public, as the right hon. and learned Gentleman said, is something I should like to think about. We made great progress in Paris in December and in the summit in Dublin in the spring. I doubt if we should have made the same progress if the television cameras had been on us.
Mr. Spearing: Does the Prime Minister recall that at the Paris summit the Heads of Government requested Mr. Tindemans to undertake a mission to each member State to review the views of various members as to further progress to union? Does he also recall saying to me in a Written Answer that Mr. Tindemans will be coming later this summer if the British people so wish? Does he realise that there are many people in institutions in Britain who, although loyally accepting the burden and the existing obligations of membership, would not wish to go further towards union? Can the Prime Minister tell the House whether Mr. Tindemans is coming, what arrangements he has made for his visit and whether those persons and institutions will be able to make their views known to him?
The Prime Minister: I should like to thank my hon. Friend, knowing the strong line has has taken, about the way in which has has wholeheartedly accepted the result. We look forward to a visit by Mr. Tindemans in the near future. He will be coming within a week or two. I should like to consider with my right
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hon. Friend the Foreign Secretary, and in the light of the practice Mr. Tindemans has followed in other countries he has visited, whether he should receive representations from all sectors of opinion or whether he will deal with the Government.
Mr. Fairgrieve: In welcoming the Prime Minister's statement and further to the question by the hon. Member for Berwick and East Lothian (Mr. Mackintosh), may I ask whether the Prime Minister will urge his eight colleagues in the Community towards an early implementation of Article 138 paragraph 3 of the Treaty of Rome, which calls for direct elections by universal suffrage, because of the importance of this to Scotland? It will mean Scotland electing men and women direct to the European Parliament instead of them being selected for us by the Westminster administration.
The Prime Minister: I note that point. I have already answered it by saying that these are matters that we shall have to consider in this House.
Perhaps, Mr. Speaker, I might pick up a point from an earlier question by my hon. Friend the Member for Newham, South (Mr. Spearing). I should have said that although Mr. Tindemans will be dealing with the British Government direct, I am sure he will be meeting other parties. When the Tindemans' proposal was first aired, my right hon. Friend the Foreign and Commonwealth Secretary and I when welcoming it in Paris said that we hoped he would make it his business to feel free to receive representations, for example, from industry and commerce and the trades union movement, and to visit Wales and Scotland as well as London. On the point about Mr. Tindemans listening to views from those who took a different point of view in the campaign, this must be a matter for him to consider.
Mr. William Hamilton: Can my right hon. Friend say anything about the effect of the vote last week on the Government's proposals on devolution? Will the Government be going through with their proposals on that matter, and will they be doing that without any inhibition placed on them by Brussels or elsewhere?
The Prime Minister: There is no change whatever in what we announced

41
to the House about the devolution proposals. Whatever the various interpretations placed upon voting in Scotland or in Wales, I am not aware that anything was decided last week which in any way calls upon the Government to reconsider their proposals on devolution. I have made it clear, and so have my right hon. Friends, that so far as the Commission and the organisation of the European Community is concerned this has no bearing at all on the freedom of this House to decide its policy in relation to devolution.
Mr. Blaker: Is not one of the clear lessons of the referendum result that those trade union leaders who, at the Labour Party conference, cast massive block votes against British membership were entirely unrepresentative of the views of most of their members?
The Prime Minister: The country was asked to decide, and the country decided. Everyone can form a view about how persuasive any particular person or voter was—even how persuasive the hon. Gentleman was. The situation is that this was put for a decision to the whole British people and the whole British people responded with singular unanimity, area by area, on the propositions put to them. What I am proud and pleased about is that there has been this free debate in the country, in the Conservative Party, in our own party and certainly in the trade union movement. But the hon. Gentleman, who no doubt followed the proceedings of our party conference with great interest—as some of us sometimes follow the proceedings of his party's conference, which I think is held in his constituency—will have noticed, nevertheless, that the backcloth to the platform said "Conference advises—the people decide." The people have decided.
Mr. Roy Hughes: In his statement to the House after the Dublin summit and in his Glasgow speech a week ago, my right hon. Friend the Prime Minister referred to the need to open negotiations with the other Common Market countries on the need to reassert governmental control over the steel industry. Can my right hon. Friend now give us an assurance that these renegotiations will proceed with all possible speed?
The Prime Minister: Yes, Sir. I am grateful to my hon. Friend for raising this matter. He will recall that he intervened during my speech on 8th April, and I gave way to him because he was the Member for Newport, though I thought that he was about to raise a Newport question. What I then told him will be followed up. We have expressed anxieties about steel. We have outlined the basis on which we intend to follow it up. This could not be done while the referendum campaign was in progress. I am not sure whether my hon. Friend was at my meeting in Cardiff last Wednesday. He may have been otherwise engaged. I hope that he will study what I said in Cardiff on the steel industry of South Wales and the very full answer I then gave to my hon. Friend's question even before he put it.
Mr. Biggs-Davison: If the Prime Minister recognises that the European cause and the cause of the Commonwealth go together, may I ask him whether Her Majesty's Government are exploring the aim of Mr. Trudeau, the Canadian Prime Minister, expressed in the City of London for a contractual link between Canada and the Community?
The Prime Minister: Yes, Sir, certainly. I was in communication with the Canadian Prime Minister on that matter several months ago—indeed, almost a year ago. I discussed it on his recent visit. We discussed it at the Commonwealth conference. I discussed it with him in Ottawa in January and again, more recently, in Brussels a couple of weeks ago. Certainly we are very much concerned in pursuing these and similar arrangements between other Commonwealth countries. The hon. Gentleman will, I think, be aware of the wholehearted support of the Commonwealth for Britain's remaining in the Community.
Mr. Faulds: May I assure my right hon. Friend the Prime Minister, from very recent contacts with European parliamentarians, with what delight and relief this final resolution of the matter will have been greeted in Europe? May I congratulate him—wily old wizard that he is—after a a few false fits and starts, on a quite considerable political achievement, with which should be coupled the contribution, not inconsiderable, of the

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right hon. Member for Sidcup (Mr. Heath)? Does not my right hon. Friend agree that the result of this can only be enormously to enhance Britain's future prospects?
The Prime Minister: As an old student of R. D. Blackmore, I always take tributes from Carver Doone in the spirit in which they are intended. My hon. Friend, who I think was very active in a different sense on the Market some years ago, will know that from 1962 onwards—indeed, that was in the time of the leadership of Hugh Gaitskell—the party conference has always said it was prepared to support whole-heartedly the European effort with Britain inside it on certain conditions, but also it believed that we should not be in it if the terms were not right. That has been the position of every conference since then, saying "Never out on principle; never in on principle. It depends on the terms and whether it is best for Britain." The country has now decided that it is best for Britain, the Commonwealth, Europe and the wider world.
Sir John Rodgers: Following the referendum, will the right hon. Gentleman say whether he intends to appoint a special full-time Minister of Cabinet rank, under his right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs, to concentrate on European affairs and attend the Council of Ministers?
The Prime Minister: My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs will remain in complete charge of our relations with the Community, and he will have appropriate assistance in the form of Ministers of State as he has had up to now.
Mr. Heffer: Is my right hon. Friend aware of the fact that, while many of us are naturally very disappointed—we would not be honest if we did not say that—at the decision of the people in relation to continuing in the Common Market, we nevertheless accept that decision without any question? However, will my right hon. Friend now put to the Home Secretary and those who were pro-Marketeers in the accepted sense of the word and who fought strongly over the years on the argument that it is better for
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Socialism to be in the Common Market, that they should, together with us all, now formulate a very important Socialist programme, such as control of the multinationals, the extension of public ownership on a Community scale, the building of a national health service, and in this sense that we now get down to a full-blooded Socialist programme for Europe as a whole?
The Prime Minister: My hon. Friend is clearly on to a very important point. He is aware, I think—as was argued in the last two or three weeks; rather against him, I think—that of all the nine Governments there, six are either Labour Governments or Socialist Governments or of Socialist leadership under a coalition Government, or a Socialist minority participation. Then there is, of course, Italy, where the Socialist parties have supported a Government with no Socialist representation. I am sure that what my hon. Friend has said will bear fruit and be fully considered, not only by Her Majesty's Government but by all the others. Certainly there is very great interest not only among the Socialist parties of Western Europe but others, about the whole problem of multinationals in Europe.
Mr. Eldon Griffiths: The Prime Minister said that this was the end of the argument. Does he agree that it must be the beginning of a new chapter of more effective British influence within the Community? To that end, may I ask him to give two undertakings? First, will he undertake now to work—perhaps with a little more personal enthusiasm than he has sometimes shown in the past—to make the Community the success it was originally set up to become? Secondly—nearer home, and with that end in view—will he now ensure that Her Majesty's Government are composed of Ministers who wholeheartedly consent to the future developments of the European Community?
The Prime Minister: The hon. Gentleman is right that this is the beginning of a new stage. Of course, he probably underrates—because he may not have been following these things—the extent to which the ongoing work in the Community has been going on and has been helped by the positive contributions of

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my right hon. Friend the Foreign Secretary and my right hon. Friend the Minister of Agriculture, who has made a real success of agriculture negotiations in place of the shambles which characterised European agriculture when we took over the responsibility. When he talks about the situation nearer home, and refers to Her Majesty's Government, of course I have the responsibility always of considering changes in these matters. I do not propose to learn from anyone who is responsible for appointing the kind of panorama that I see on the Opposition Front Bench, including the hon. Gentleman. We have a far more purposeful and united Government than we have ever seen from those who now occupy the Opposition Front Bench.

ORDERS OF THE DAY

  STATUTORY CORPORATIONS (FINANCIAL PROVISIONS) BILL
  Order for Second Reading read.
  4.22 p.m.
  The Chief Secretary to the Treasury (Mr. Joel Barnett): I beg to move, That the Bill be now read a Second time.
  The main part of the Bill is a very short-term extension of the Conservative Government's Bill which introduced payments for price restraint for certain nationalised industries. There are three main reasons why we believe that these payments should be phased out quickly. First, it is essential to reduce the level of public expenditure, for with very limited financial resources, every pound spent on subsidies is a pound less for vital investment. We are determined to make room for that investment. Second, to prevent the wasteful use of scarce resources. It is, for example, crazy, at a time when we urgently need to conserve energy, to subsidise the price of energy—not least electricity which is generated at the margin almost entirely from imported oil. Third, to reduce the borrowing requirement, and encourage the industries to greater efficiency in order that they will be able to finance more of their own massive investment programmes.
  The Bill has five separate and distinct purposes. Apart from extending the powers under present legislation to compensate the gas and electricity industries and the Post Office for deficits which they incur because of price restraint, it increases the borrowing limit of the British Steel Corporation and of the National Bus Company. It makes some amendments to the borrowing powers of a number of the public corporations and it provides for the Government to take over from the industries concerned the financing of the Electricity Consultative Councils and the Gas Consumers' Councils. I propose to deal with each of the clauses briefly and then go on to discuss the implications for the public sector borrowing requirement and public sector wages.
  Clauses 1 and 2, together with Schedule I, deal with compensation for price restraint. They extend for a further period

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  of time, and with some changes in the methods of payment, the powers in Clause 2 of the Statutory Corporations (Financial Provisions) Act which the Conservative Government enacted in February 1974. The industries covered are exactly the same. The period is the financial years 1974–75 and 1975–76, and there is provision, subject to Affirmative Resolution of the House, to extend it to 1976–77.
  The first of these two years was intended to be covered by the previous Act. The 1974 Act set a limit of £500 million on compensation for the two years 1973–74 and 1974–75. My predecessor, introducing the Second Reading debate on 21st November 1973, estimated that the deficit for 1973–74 would be in the range of £175 million to £200 million. He thought it might even be more. He was right. It was £355 million, leaving only £145 million for 1974–75. However, on the latest information from the industries, the total deficits for 1974–75 look like being of the order of £650 million, and this is despite the very big price increases which we endorsed in 1974.
  We shall not know the exact figure of compensation until the audited accounts are ready and until we have decided whether or not to pay compensation for the whole of the deficits. But in the meantime, the breakdown in round figures is £255 million for the electricity industry in England and Wales, £23 million for the Scottish electricity boards, about £40 million for the gas industries and about £330 million for the Post Office. The total is in line with the estimates in the Public Expenditure White Paper and at the time of the Budget. As the residual amount still available under the 1974 Act is, of course, inadequate to meet these 1974–75 sums, we are seeking fresh parliamentary approval to deal with them.
  Turning now to 1975–76, I would point out that the Financial Memorandum states that the total subsidies for that year will depend on, among other things, changes in the industries' costs, prices and revenues during the year. At the time of the Budget we estimated, on the basis of the latest information from the industries, that the total would be £100 million. Of this, £70 million was for the Post Office and the rest for the energy industries.
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  It is hoped that the gas industry, subject to a price increase in the autumn, will break even this year and so will not need a subsidy. The electricity industry in England and Wales put their deficits at up to £30 million or so this financial year and the two Scottish boards hope to break even. It is, of course, far too early to forecast reliably what the results will be, but we hope that these industries will remain on target in phasing out their deficits.
  I turn now to the Post Office. It has—subsequently to its forecast of £70 million—reviewed its financial prospects for the year, and I regret to have to tell the House that this has revealed a substantial deterioration, mainly due to higher inflation. My right hon. Friend, the Secretary of State for Industry is having discussions with the Post Office and the trade unions to see what urgent steps might be taken to remedy this situation. Obviously the Post Office, along with the trade unions, is looking for further sensible economies. But I would be misleading the House if I did not make it clear that any such economies which may be achieved will not be enough to cover the revised deficit, and further tariff increases this year cannot be ruled out. I should also make it clear that the Government will look very critically at any claim for compensation above a level of £70 million. As my right hon. Friend, the Secretary of State for Industry, has already indicated, he will be reporting on the situation to the House when the discussions are completed.
  The Chancellor said in his Budget Statement that these price restraint subsidies were likely to have been phased out completely by April 1976. It remains our firm intention to keep to this timetable so that subsidies in 1976–77 will not be necessary.
  Mr. David Howell: The Chief Secretary was talking about £100 million for the possible deficit for 1975–76. I think he indicated that his right hon. Friend had mentioned that figure, but his right hon. Friend also mentioned a figure of £70 million for 1975–76. Are we to take it that the £70 million has grown to £100 million? What has happened?
  Mr. Barnett: The £70 million was in 1974 survey prices. It is £100 million in current price terms.
  Mr. John Stanley: Would the hon. Gentleman tell us what is the current revised estimate of the deficit of the Post Office in the financial year 1975–76?
  Mr. Barnett: It is too early to say precisely what the estimate will be, but, as I have indicated, every effort will be made—and discussions are going on between the industry and the workers in the industry to ensure that efforts are made—to reduce whatever the deficit might be. Certainly, concerning subsidies, as I have indicated, it is our firm intention to ensure that there will be no subsidies in 1976–77. We have provided, as a contingency, for the powers to be extended to cover that year 1976–77, should it prove necessary, but it is a provision which I very much hope we shall not have to use.
  Before turning to the next part of the Bill I would like to comment briefly on one point on the criteria for payment. The maximum sum for which an industry is eligible is the amount of its deficit on revenue account. I want, however, to make it quite clear that the amount of the subsidy could be less.
  Each industry has made its estimates of its likely deficits and the Departments sponsoring them will monitor those estimates and demand explanations of any variations from them. If these variations are not for acceptable reasons, the subsidy will be corespondingly reduced. We are not, for example, prepared to finance unacceptably high wage settlements. I will say more about that in a moment.
  I turn now to Clause 3, which provides for an increase in the borrowing limit of the British Steel Corporation from £1,250 million to £2,000 million. That would be a large increase at any time. But, when we have a borrowing requirement of £9,000 million, it is important that those employed in the industry should understand that it is not enough simply to say the funds are needed for investment. Given the obvious limitations on the amount that we should or could borrow, £750 million allocated here means that much less somewhere else. Consequently, the industry has to show good
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  reason why it should have a priority call on these scarce financial resources. It will not simply have to satisfy the Government that it needs the funds. It will have to show why it should have a higher priority than those in other industries to whom I shall inevitably have to say no.
  It is against this background that I want to turn to the case for Clause 3. The present limit has in fact lasted for a year longer than our predecessors expected when they introduced it in 1972. However, £900 million is outstanding against it, and, for reasons that I shall give, I believe that it is right to make an increase now to fund the corporation's increasing cash requirements and to leave a margin of safety for contingencies and monthly fluctuations in working balances.
  An important factor in this timing has been that the corporation is currently able to finance a smaller proportion of its requirements from its own resources than either it or the Government would wish. In 1973–74, it found 75 per cent. from its own resources and it made a profit of £56 million even though, in line with the policies of the previous administration, it held its prices substantially below justifiable levels at a time when demand for steel was strong and it had an opportunity to earn more.
  In 1974–75, the corporation expects to show a profit of a similar amount. This has been achieved in spite of disappointing production during 1974 which was partly due to disruption caused by the three-day week and partly due to difficulties with raw material supplies and labour disputes. However, its capital requirements in 1974–75 were substantially higher and its own contribution towards financing fell to an estimated 35 per cent. in the year.
  In recommending this increase of £750 million, I must make it clear that the corporation's financing requirement is likely to increase sharply in 1975–76 and to continue at a high level for some time. Although at constant prices its capital expenditure this year and next is likely to be in line with the figures in the Public Expenditure White Paper, the corporation is faced with sharp increases in plant costs, and it now estimates that the out-turn figure for this year may be more than £500 million.
  Mr. Michael Marshall: The right hon. Gentleman said that these increased costs reflected the rising costs of purchasing plant. Can he say how much of that increase came during the 15 months before the announcement about the review of the investment programme?
  Mr. Barnett: There is no real increase here. I am talking about an increase brought about by increasing costs of plant due to inflation expected in 1975–76. The £500 million is the higher out-turn over the previous figure given.
  The corporation also has to finance the increasing value of stocks, and a proposal for a counter-cyclical stock building scheme is under consideration. Coinciding with this, its ability for self-financing has been sharply reduced in the short-term by one of the worst recessions in international steel demand since the war.
  Taking all these factors into account, it is estimated that the corporation could require external financing of up to £550 million if it were to break even in 1975–76, and more if it were forced into a substantial deficit by present trading conditions. The increase proposed is, therefore, a short-term measure, and the House will have a later opportunity to consider, very probably in the next parliamentary session, what further adjustment of the limit is required.
  The proposed limit will enable the corporation to continue its major programme of modernisation and expansion, which is essential to meet United Kingdom demand, to compete in the world steel market with increased exports, and to provide an assured long-term future for its work force.
  I must, however, emphasise that in carrying out this programme we look to the corporation to be fully viable. There must be no doubt about this. We look to it to be viable and also to provide a return on the public funds, including public dividend capital which will continue to be invested in it.
  Mr. Tim Renton: I am interested to hear the right hon. Gentleman say that. I understand that, for the first time, the British Steel Corporation is considering what might be described as a stabilisation fund under which it will stockpile steel products rather than, as
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  before, exporting them at lower prices in order to keep plant working at 100 per cent. levels. Is that what the right hon. Gentleman meant? Can he say what is the total sum of money likely to be involved in this, and is it being done in conjunction with and in consultation with steel plants in the EEC?
  Mr. Barnett: It may be that the hon. Gentleman was not present during Question Time. If he had been, he would have heard my right hon. Friend the Secretary of State for Industry refer to this very point. The matter is under consideration. I am not saying that it will necessarily be done. We are discussing these matters with the corporation now.
  Dr. Jeremy Bray: In view of the enormous financing requirement of the British Steel Corporation and the need for a more adequate self-financing ratio, can my right hon. Friend say what is the Government's policy towards the revaluation of the corporation's assets? At present, the corporation is depreciating its assets at historic costs, which grossly underprovides for full depreciation. It is to be hoped that there will be an early revaluation.
  Mr. Barnett: Such matters as depreciation and inflation accounting will fall for discussion when we have the Sandi-lands Committee's Report. All these matters will be considered.
  The Bill also provides, in Clause 4, for an increase in the borrowing limit of the National Bus Company from £130 million to £200 million. The current limit was set in the Transport Act, 1968 which brought the company into existence. Its fleet now totals some 20,000 vehicles, and the company's subsidiaries operate about one-third of the stage carriage services in England and Wales.
  Substantial investment, which will in part have to be financed by borrowing, is required for replacement of vehicles and improvement of garages and bus stations. The cost of these has increased steeply over the last six years, and an increase in the company's borrowing limit, of which almost £100 million is accounted for by the company's commencing capital debt, is clearly justified. The extension proposed should, on present estimates, be sufficient to cover the company's borrowing for the next five years.

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  Clause 5(1) is a tidying-up measure. Its object is to bring the foreign borrowing powers of all statutory corporations into line with one another. In future, borrowing in foreign currency will in all cases simply need the consent of the Secretary of State and the approval of the Treasury. The simplification of the borrowing powers of the statutory corporations listed at Schedule 2 of the Bill will have no effect upon the ability of the Government to control the terms upon which they borrow in foreign currency.
  Clause 6, with Schedule 3, provides for the transfer of financial responsibility for the Electricity Consultative Councils and Gas Consumers' Councils from their respective industries, which currently provide their funds, to the Secretary of State for Prices and Consumer Protection or, in the case of the Scottish Electricity Consultative Councils, to the Secretary of State for Scotland.
  The clause will bring the councils into line with the other statutory nationalised industry consumer councils for transport, coal and the Post Office, which are already financed by the Government. It will increase the independence of their respective industries and so enhance the invaluable work they have done over the years on behalf of gas and electricity consumers.
  A paramount concern has been to ensure that the Bill has no adverse effect on the pay and conditions of service of the staff, chairman or members. In this connection, we have received assurances from the officers' present pension funds that no action will be taken to alter their pension arrangements without the fullest consultations.
  I turn now to the broader effect of the Bill on the public sector borrowing requirement and public sector wages, with particular reference to the industries named in the Bill. We have catered in our estimates for borrowing by the National Bus Company and for the relatively small new expenditure on consumer councils. So far, we are on target in our objective of phasing out the price restraint subsidies to the gas and electricity industries, so these provisions add nothing to the estimates of the borrowing requirement.
  It will, however, have been clear from what I have said that the situation of the
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  Post Office and the British Steel Corporation could lead to an increase. In the case of the Post Office, this would be so if its deficit in the year were more than £70 million, irrespective of whether any such addition was financed by subsidy or by borrowing by the Post Office. This underlines the importance of the current efforts to bring the Post Office's deficit under control. The British Steel Corporation will certainly borrow more than the £420 million estimated in the Financial Statement and Budget Report. I have said that the total could be up to £550 million and more if it is in substantial deficit this year.
  To a considerable extent, this is a situation to which we shall always be liable if nationalised industries are forced into deficit, as were the gas and electricity industries and the Post Office, or are not allowed to earn anything like adequate surpluses as in the case of the BSC. They start off with a high borrowing requirement and, if anything goes wrong, that is compounded. For example, as I have said, the BSC wishes to build up stocks as a counter-cyclical measure. There may well be good sense in that, and we are looking at it now. But if it were to go ahead the Government would have to advance the money for it because the BSC does not have the reserves to deal with it from its own resources.
  This brings me to the central problem, which is vividly exposed in two parts of the Bill—namely, that as a country we cannot go on finding finance for subsidies and at the same time have the resources that we desperately need for new investment. We have done that for far too long. It has been the perfect example of trying to have one's cake and eat it. We have eaten too much, in both public and private consumption. Inevitably, the result has been less cake, or, rather, less investment.
  A large borrowing requirement used for investment in viable industries would be of much less concern to the Government and—much more important—of less concern to our creditors than a large borrowing requirement used for consumption. That is why, as I have said, we have to phase out the price restraint subsidies as quickly as possible. Indeed, it is essential that the nationalised industries not only return to break even but

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  earn a surplus in order to finance a higher proportion of their capital requirements from their own resources and to build up reserves to cushion themselves in lean years.
  I hope, therefore, that, when these industries get out of deficit, there will be discussions with them on the setting of new financial targets which will give them clear guidance as to their financial objectives and a strong incentive to contribute to their own financing needs.
  Mr. Tom King: The right hon. Gentleman is putting the main emphasis of his criticism on price restraint. Will he comment on the position of the Post Office, from which it seems clear that the freedom to raise prices, with the consequent drop in traffic on the postal side, may itself be partly responsible for increasing the deficit?
  Mr. Barnett: I am coming to precisely that point. I am glad that the hon. Gentleman is so perceptive as to know the problem.
  All that being said, the fact remains—and I have no wish to conceal it—that the financing of the steel industry in 1975–6 and possibly the Post Office will add to the estimated borrowing requirement. This does not necessarily mean that the borrowing requirement as a whole will turn out higher, because, given the magnitude of the figures—total receipts and payments of £98,000 million and a whole host of different items—the outturn could well show offsetting reductions.
  One way of offsetting that increase could be smaller wage settlements in the public sector. Certainly it must be recognised that continuing high settlements must have serious consequences for the nationalised industries. It must affect demand for their products and services, and therefore affect their investment and employment, for there is no bottomless purse with which to pay for high wage settlements.
  Because we cannot both have our cake and eat it, we must put the resources into new investment. That is why, even if we could, we are not prepared to continue subsidies for the industries covered by this Bill. In the case of others, such as British Railways, which receive subsidies
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  for social reasons, they will continue to do so, but the levels of subsidy will have to be kept under the strictest control.
  It cannot be emphasised enough that, if we are to improve the total wealth of the nation and the wellbeing of the workers in these industries, limited resources cannot be used to subsidise overmanning and inefficient use of labour. It must be clear, whether for industries referred to in this Bill or not—and it is particularly true for labour-intensive industries—that high wage settlements must mean either big price increases or cuts in costs, or both.
  I hope that the reduction in costs can be made by increasing productivity. But the improvement in productivity would have to be real, and there can be no question of simply paying for a high wage settlement and living in hopes of increased productivity. We have done that for too long.
  The alternative of large price increases can be self-defeating in some industries. We are seeing signs of it in the postal services, where large price increases result in falling sales, making it even more difficult for the industry to pay its way, and in the longer term it must affect employment prospects. In short, it is crucial that workers in the public sector, as well as those in the private sector, see that their own financial prospects are bound up with the financial prospects of the industries for which they work.
  I hope that this Bill will be the last of its kind. It will be in the best interests of the workers, their industries, and the country, that it be the last of its kind. In that hope, I commend it to the House.
  4.48 p.m.
  Mr. John Nott: In the spirit of generosity which must mark our return from referendum politics, I congratulate the Leader of the House on showing all his customary imagination and verve in having chosen, as the first broadcast Bill in the House, something entitled the Statutory Corporations (Financial Provisions) Bill—hardly an exciting title. One hopes that if ever there is another such Bill—and we dearly hope that there will not be—we may change the title, for it does not really express what the Bill is about at all.
  If the British public, having been inflicted with several weeks of television

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  entertainment from the political stars and male prima donnas of the House of Commons, do not rush to their radios to hear more about the Statutory Corporations (Financial Provisions) Bill, it will be because of the title and not because of the very important contents which it embodies.
  Dr. Bray: On a point of order, Mr. Deputy Speaker. To put the hon. Member for St. Ives (Mr. Nott) out of his misery, would you explain that the present proceedings are not even being recorded for broadcast?
  Mr. Deputy Speaker (Mr. George Thomas): The hon. Gentleman has taken me by surprise. We are all disappointed that we shall not be heard, but we shall listen to the hon. Member for St. Ives (Mr. Nott).
  Mr. Nott: Of course, the media and the trade unions run the country, but I had understood, although I may have been wrongly informed—I do not want to dwell on the point—that this debate would be part of the edited broadcast of the House. The debate is being recorded, but whether it will actually be broadcast is not for me to say.
  Now that the referendum is behind us and the Labour Party's internal conflicts are resolved, Parliament can get down to some of the very real problems that face the country. In my view, the Bill will be of more importance to the income, employment and general welfare of the British people over the next year or two than the Common Market, about which I trust we have learned a little during the past three weeks.
  I do not believe that the House would wish to debate today what happened in the past. [Interruption.] If we are interested in what happened in the past, it is because it might teach us something about the future. But there is little point in jobbing backwards.
  We would all agree that so confused and unsatisfactory is the present relation. ship between the public corporations and Ministers that we should now go back to first principles and start again. I hope that the Government will take the view that I am making a relatively non-partisan speech. In putting forward a few ideas—I do not put them any higher than that—I must make clear which areas I
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  shall tackle, otherwise the hon. Member for Newcastle-under-Lyme (Mr. Golding) will leap to his feet and refer to the Post Office. Therefore, I want to set out what I shall and what I shall not deal with in the debate.
  Although I believe that many, if not most, of the problems of the public corporations derive directly from their ownership by the State and that the Government's financial problems are greatly enhanced by the present size of the public sector, I shall leave it to my hon. Friends, if they so wish, to advance the arguments for denationalisation and the folly of extending the public sector further. My concern today will be with the efficiency of the existing corporations contained within the Bill and perhaps with the railways, which are outside the Bill. For the sake of time, I do not intend to deal with the wider arguments for and against nationalisation or the present Government's policies in this area.
  Secondly, the Government have designated the Bill as a Treasury Bill. I do not want to deal with the problems of particular industries except in so far as they demonstrate some of the problems of financing these industries, ministerial control and investment procedures.
  Thirdly, I do not want to get involved in argument about whether the nationalised industries are more or less efficient than the private sector and to what extent this is the fault of the politicians or the fault of management. I leave that matter aside. There is plenty of statistical material which points both ways. The figures can be made to prove anything. The British public—the consumer—would need a great deal of convincing that the public corporations are more efficient than private firms. However, I leave the matter there.
  We can look at certain public corporations in isolation and judge them for what they are. In this connection I have seen the motion on the Order Paper in the names of the hon. Member for Motherwell and Wishaw (Dr. Bray) and some of his hon. Friends, criticising some of the management and some of the procedures of the British Steel Corporation.
  Fourthly, I am sure that the Government will agree that it is not possible to treat the public corporations as some kind

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  of homogeneous entity. Most of them are very different from each other. This is an extremely diverse sector, and the solutions that may well apply to one probably do not apply to others. One could perhaps divide them into three groups, although I noticed that in an Adjournment debate just before the Whit-sun Recess the hon. Member for Bristol, North-East (Mr. Palmer), who takes a great interest in nationalised industries, divided the nationalised industries into two groups.
  For my purposes, I should like to divide these industries into three groups. First, there are those corporations like the National Bus Company which are in open if not always fair, competition with private firms. Secondly, there are those potentially profitable public utilities like gas and electricity which, while competing with each other and also with coal and oil, are nevertheless, in the short term at least, monopoly enterprises. Finally, there are those corporations like the railways which, rightly or wrongly, seem to have been given a licence to opt out of the disciplines and rigours which are applied to most other public sector enterprises and to all private firms because they are said to be an essential service. I believe that is a very odd notion.
  Clearly the arguments against the subsidisation of public corporations are too well known to be rehearsed by me, but I shall list them briefly. Demand in the medium term is artificially increased, leading to a misapplication of resources. Consumer spending is increased at a time when it needs to be reduced. Energy consumption will be encouraged in the fuel industries, where it needs to be discouraged. The knowledge that the public purse—and I am glad that the Chief Secretary referred to this very important point—is always open will encourage a continuous and pernicious effect on wage bargaining, as exemplified by the recent comments of Mr. Weighell.
  I turn now to a few thoughts about a new financial régime for the industries. As I know how difficult it is for Treasury Ministers and Ministers generally when they are in office to get anything specific and positive organised on the question of targets and a new financial régime for these industries, I shall attempt to perform
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  a constructive rôle in this regard and make a few points about targets. First, the financial targets set out in Table I of the 1967 White Paper are inappropriate now to an era of high inflation and high interest rates.
  The price restraints introduced by the Conservative administration did no more than destroy what I believe is now an outmoded instrument of control. For instance, if we deal with the Gas Corporation with its large capital requirement to exploit the North Sea, or indeed any other of the major nationalised industries which is funding old debts at higher interest rates, the old targets could have been achieved whilst making a heavy loss. This is because the old targets which we were using were expressed as a gross return, without taking interest into account, on net assets taken at historic cost.
  I believe that if one looks back to the original financial obligations of the nationalised industries, as set out in their separate statutes, one will probably find something which is of greater relevance to modern conditions than the financial targets which were subsequently introduced after the 1961 and 1967 White Papers.
  I take the Gas Corporation as an example. Its obligation was to meet the total outgoings properly chargeable to revenue and to make such allocations to reserves as the corporation considered adequate. That was a very simple and specific set of criteria contained in the original statute which set up the Gas Corporation.
  I shall now explain why I believe that is probably a cleaner and simpler target, although not one that I am totally satisfied with, than the kind of targets expressed, without taking interest into account, on historic net assets. A new target of a sort is embodied in the Price Code. Under paragraph 98 of the order, the nationalised industries may achieve a surplus of 2 per cent. on turnover or 10 per cent. on net assets. Clearly, this is hardly adequate as the basis of a new regime, because it takes no account of the varying potential profit from one industry to another and it incorporates differences of treatment in accounting practice between the industries, particularly with regard to depreciation.

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  It would seem that in an era of high inflation and high interest rates any target involving a return on existing net or gross assets is largely meaningless unless there is to be an almost continual process of asset revaluation. This brings in the whole question of the Sandilands Committee. I cannot see that it is realistic or practical to contemplate a target which depends for its efficiency on an almost continual process of revaluation in the whole of this huge sector.
  The target was expressed, disregarding interest. Interest was not in, but if we were to bring it in, I do not think that it would be sensible to relate the interest rate to the National Loans Fund rate. It would be more sensible to limit it more nearly, to to what these corporations would have to pay, on the Government's credit rating. which I fear is declining but which is nevertheless still high in the domestic market, but to what these industries would have to pay, assuming that they were profitable, if they were borrowing in their own name.
  Over the years—I do not mean this as to the immediate future—we should look again at the question whether we should go only for the orderliness of the gilt-edged market. It was this reason which led the Radcliffe Committee to suggest that the nationalised industries should borrow via the predecessor of the National Loans Fund. In my view the committee may have placed too high a priority on a neat, orderly, gilt-edged market against, perhaps, the advantages in the medium-term of allowing some of these industries to come back into the market for their funds. This is a question that we should consider for the future.
  For instance, I cannot see that it is reasonable for the National Bus Company to be borrowing from the National Loans Fund at Government interest rates if it is in open competition with other bus enterprises. If we are to have competitive public corporations, we must put them on a fair and proper basis of competition with private sector firms. The present borrowing arrangements clearly must mean that the National Bus Company is not competing on a fair basis with private firms.
  However, whichever way we look at it, I think we are driven back to one basic principle in the 1961 and 1967 White Papers; namely, that financial targets are
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  secondary matters desirable for monitoring efficiency, but only on the basis that they differ in different industries, and only then after proper principles have been applied to the control of investment and the determination of prices. The White Papers made it very clear that targets should reflect sound investment and pricing policy and not vice versa.
  This brings me to the question of how we are to determine prices, if we say that pricing policy should be decided prior to targets being decided. We cannot do better than look at the 1961 White Paper's recommendation, which was that in the last resort pricing must be based on marginal costs, or; in layman's language, we must fix public corporation prices so that each extra unit of output is related to the resources necessary to produce it, or, if it is not a monopolistic system, the price which a competitive market will bear.
  I am well aware that that leads one into all sorts of difficulties about peak load, the trade cycle, cross and social subsidisation and about whether to take short-run or long-run marginal cost as the basis for the pricing of products. I nevertheless believe that we shall not do better than long-run marginal cost as the basis on which the prices of the nationalised industries are set.
  I am sorry to have burdened the House with that. I hope that I have not been too boring or too technical, but these are matters that we must discuss. Very little flows out of any Government in this area. When the Chief Secretary was in opposition and I was a Minister at the Treasury he made a number of suggestions to which I listened with great interest. It was very interesting to have the Opposition's views on the matter. I therefore hope that the right hon. Gentleman will not think that I am being unduly unhelpful in this debate.
  I do not know whether the organisation in Whitehall for dealing with the nationalised industries is properly arranged. I have an impression—I put it no higher, because things might have changed—that the Treasury-Department of Industry relationship is unsatisfactory with regard to the control and monitoring of the nationalised industries. I do not think that the Treasury's rôle should be one of detailed comment on each major investment project. I do not believe that

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  that is right. I think that the Treasury should set capital investment and subsidy limits at the beginning of a period or even perhaps have a bi-annual look at the subsidy and capital investment limits and then let the departmental responsibility flow from there.
  The responsibility is not ultimately that of the Treasury. The Treasury is in charge of the money. I do not think that we want to continue with a process whereby Cabinet committees continually meet, re-meet and meet again to discuss in large interdepartmental meetings whether a small investment project is justified for a particular nationalised industry. That does not seem to me to be the right way of conducting these matters within the Government.
  At Question Time today, the Secretary of State for Industry made a very arrogant remark to my hon. Friend the Member for Derbyshire, South-East (Mr. Rost). He said "The hon. Gentleman does not know how government works." My hon. Friend may not know how government works, but he has a better hunch about how it should work than the Secretary of State. Perhaps the Secretary of State should sometimes examine existing procedures rather than assume that they are for all time proper and right.
  Another feature requiring attention is the wholly unjustified statutory protection given to industries in the public sector against outside competition. There is no reason why private companies should not engage in electrical generation. There is no reason why the Post Office should continue to have a monopoly of letter delivery. It would be much more efficient if the milk, the newspapers and the mail were all delivered on a contractual basis in rural areas; it would save a great deal of money.
  I do not believe that the monopoly position of the statutory corporations is justified in the way that it has been upheld since the beginning of time. I believe that the Post Office letter delivery monopoly dates from the end of the seventeenth century. That is no reason why it should continue.
  Sir Geoffrey Howe: From the time of Oliver Cromwell.
  Mr. Nott: I believe that the monopoly of the Post Office in the delivery of the letter mail dates from 1697, so my right hon. and learned Friend or I have our dates wrong.
  Again, why should the Post Office have the monopoly in the installation of telephones? The gas and electricity industries do not have the monopoly in the installation of appliances. Why cannot the private sector apply to exploit a new coalfield? The licence for the exploitation of a new coalfield is issued by the National Coal Board.
  The existence of these monopolies within the public sector does not increase its efficiency. It would be a great help, certainly for pricing policy, if we had much less of this kind of statutory monopoly within the public sector.
  Again there is the matter of the whole relationship of the labour force to the management in the public corporations. I wish the Secretary of State for Industry were here. Why should we not have a number of the mining areas broken down into workers' co-operatives? I would be perfectly happy to see some of the public sector run on the basis of competing workers' co-operatives. Why is it that the whole basis of co-operation amongst workers has to be kept in the private sector? The idea of setting up workers' co-operatives in the public sector is very interesting. Let them compete with one another. It would help efficiency, and would make employees very much happier at the same time.
  I now come to the specific clauses in the Bill. First, however, I must make clear to the Chief Secretary that we are not seeking to deny to public corporations the finance necessary to meet the Chancellor's objectives of a phasing-out of price restraint subsidies. Neither do we wish to deny them the necessary public expenditure which is not financed out of revenue. But the Bill raises new issues of principle and of public expenditure control.
  The White Paper in January forecast price restraint subsidies of £250 million in 1975–76. That was a substantial improvement on the current year, which is about £650 million, and we welcome it. Even more did we welcome the Chancellor's Budget statement, not two months ago, that subsidies for price restraint

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  would come down from £550 million in 1974–75 to £70 million this year and were likely to be phased out completely by April 1976. Apart from juggling around with current prices, the Chief Secretary confirmed that that is the present position.
  However, that is not what we find in the Bill. Not two months later, in spite of what the Chancellor said in his Budget Statement, we find no figure whatsoever. All we are told is that the total subsidy in respect of 1975–76 will depend upon, among other things,
  "changes in the industries' costs, prices and revenues during the year".
  This is about six weeks after the Chancellor himself predicted a figure of £70 million.
  Why is the Bill open-ended if the Chief Secretary is right in saying that the Chancellor's figures are still relevant? Even in 1976–77, a year beyond the date at which the Chancellor said they would be phased out completely, the Treasury will retain order-making powers to bring forward unspecified amounts for price restraint. The legislation goes far beyond the legislative powers which we sought when we were in office. It is, in fact, contrary to the Chancellor's own expressed objectives. Perhaps the Minister of State, Treasury will say more about that when he winds up.
  In the Bill which we brought forward—and the Chief Secretary will remember that we were not particularly proud of our Bill—we set a figure of £500 million as the top limit. There is no top limit in this Bill, and we do not find it acceptable on that basis.
  However, we have to look behind the figures for price restraint, because they tell us relatively little. What we have to look at is the true financial position of these industries. What counts is the amount which they are forced to borrow. In Table 12 of the Financial Statement it appears that in the current year the public corporations will finance more of their capital expenditure out of revenue than in the year before. Apparently the borrowing requirement of the public corporations will be rather less than it is in the current year. If this materialises it will be a reversal of the trend, and one that we welcome.
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  Looking at the position over a period of years, we find that the self-financing ratio of the nationalised industries has greatly worsened. In 1971 the figure was about 42 per cent. This is the amount by which the nationalised industries were financing their capital expenditure out of revenue. That is approximately double the figure for 1974–75. Apparently less than £700 million was provided from internal resources towards the capital expenditure of nearly £3 billion in 1974–75. I am again referring to Table 12 of the Financial Statement. A figure of £700 million out of externally-generated resources is by no measure an adequate amount of capital expenditure to be financed out of revenue. Indeed, the Chief Secretary made that point.
  What we need to know—and perhaps the Minister of State will take this point on board—is the formula which Departments use to decide how much of capital expenditure is financed out of revenue. It is no use our fiddling around with amounts like £70 million of price restraint if as much as £700 million can be moving around the borrowing requirement because a particular industry is financing less of its capital expenditure out of revenue. We get nowhere unless we have a specific and published figure which will tell us exactly what we want to know namely, the movement of overall borrowing requirements of these industries. In this respect Table 12 is a great help to us.
  It appears that the Treasury is imposing some cash limits on the nationalised industries, and in some cases this is leading to a fall, in real terms, in the increase in capital expenditure. The Government are having to meet rising real incomes in the public sector. Capital expenditure is being cut back, as the Chief Secretary said, in order to finance escalating money incomes in the nationalised industries. It is not good enough just to talk about a cash limit overall. What we have to think about is a cash limit on the revenue accounts of the nationalised industries.
  Perhaps I may quickly suggest some guidelines. First, as we have repeatedly demanded, there must be a cash limit beyond which no public corporation can come to the Government for one single extra penny. That in the last resort is a matter of political will. That does not apply to a subsidy for price restraint. It applies also to any money received from,

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  the National Loans Fund or borrowed under a Treasury guarantee in the Eurodollar market or anywhere else.
  Secondly, each industry must have a fixed formula which requires it to finance a specific percentage of capital expenditure out of revenue. That formula should be published and may not be varied, so that we know exactly how much capital expenditure is going to be financed out of revenue. Publishing it will help to strengthen that discipline within the system.
  Third, in order to set the cash limit, the Treasury will have to take a view on the permitted increase in the total salary bill in the coming year. By all means, let the unions bargain with the management about the distribution of the increase, but the cash limit itself is a matter for the Government. It is not a matter for the trade unions. The actual cash limit which is imposed upon the nationalised industries is a matter for the House of Commons. It is not a matter for tripartite discussions. If it is decided to raise it in the NEDC, that is one thing, but the overall cash limit is a matter for the Government and the House of Commons. It is certainly not a matter for bargaining. It must be set in accordance with the overall needs of the economy at any one point of time. If a corporation goes beyond its cash resources, it can finance the increased salary bill only by raising its prices. In the case of the Steel Corporation at the present time, it could not raise its prices. Therefore, the only answer in that case is redundancies. It follows as night follows day.
  It is no use the Chief Secretary's saying "We are considering a stockholding scheme for the British Steel Corporation." We must have a figure and stick to it.
  I accept that there is a particular problem of recession in the steel industry which may be unique in its size since the war, but it is avoiding the issue if the Government provide more working capital for the holding of unlimited stocks. It is not an answer to the problem.
  In the case of a monopoly supplier the price increase must be subject to regulation by the Monopolies Commission or some other price regulation body, ideally outside the Government. The utility
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  industries are not monopoly suppliers in the long term, because, for example, gas competes with electricity, coal and oil, but over three to five years they are monopoly suppliers, and we must have an outside agency which can say "You are making use of your monopoly position. You cannot go beyond a certain point."
  My right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) has persistently mentioned these principles in debates in the House, although unfortunately the commentators are fixed upon an idea that one does not have a policy for pay and prices unless it is in the form of the policy we had in 1972. That is an over-simplification, a naive way of looking at the problem.
  The only alternative to the kind of cash discipline I have been talking about is a statutory pay policy. We know that the sanctions in such a policy do not work. We cannot put 100,000 railway workers in gaol.
  Mr. John Biffen: Hear, hear.
  Mr. Nott: I note that I have total agreement from my hon. Friend.
  The only sanction we can exercise is by controlling the purse strings, which are in the Government's hands.
  If we return to a statutory pay norm, backed up by legal powers, we shall have to have a statutory prices norm as well. Could there be anything more damaging to the economy than to have imposed upon the country a stringent price norm which would make the Government's £10 billion or £12 billion borrowing requirement, or whatever it may be now, look like peanuts? We should be back to subsidising the nationalised industries to an unlimited extent. Therefore, we cannot think of a statutory prices policy at present.
  Moreover, a more stringent prices policy would bankrupt the whole private sector. The private sector could not survive present rates of inflation with a more stringent statutory prices policy.
  We oppose the Bill, but not because of anything to do with the Government's nationalisation plans, which lie outside this measure. The Chief Secretary spoke bravely, but we do not see his words translated into Government action. There is still no real determination to impose

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  cash limits on the public corporations so that the total wages bill does not continue to be financed by endless printing of money. The Chancellor is already backing away from his brave words about price restraint. There are no limits in the Bill, which is open-ended. For those reasons we intend to divide the House at the end of the debate.
  5.25 p.m.
  Dr. Jeremy Bray: The House cannot but take very seriously the warning given by my right hon. Friend the Chief Secretary to the Treasury about the need for efficiency and the need to prove the profitability of any proposed new investment. But I would have found his warnings even more convincing if I did not believe that within two years he would be writing to his right hon. Friends asking them to increase the investment programmes of the nationalised industries for which they were responsible, to do so with maximum efficiency, but at all costs to do so quickly.
  However dire may be the warnings from Treasury Ministers, until the rules by which they seek to control nationalised industry investment and pricing are related to the general state of the economy, and those rules are clearly understood to adapt to the changing state of the economy, they will ring very hollow within the nationalised industries, where people know that no sooner will they have got round to implementing them than the advice will have been changed.
  Likewise, when the hon. Member for St. Ives (Mr. Nott) said that he felt the need for tighter cash control on the corporations, again one could not but be impressed by what he said. But I think that he would be the first to admit that he did not begin to explore the complexities of the problem as they arise in practice. I shall later make suggestions about how those complexities might be tackled.
  The hon. Gentleman's point about the valuation of assets is important, in terms not so much of a corporation's overall performance but of the relative profitability of different operations within a corporation. It is for this reason that the practice of annual revaluation has been regarded as good accounting practice in
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  some firms—for example, the firm for which I worked, Philips, where for 30 years there has been an annual valuation of assets, and has been found to be a viable basis of operation. It is a far more realistic way of taking account of inflation than expecting companies to produce a return on assets which follows the short-term or even the longer-term interest rates in the open markets.
  Mr. Richard Wainwright: Hear, hear.
  Dr. Bray: I am delighted to hear that the hon. Member for Colne Valley (Mr. Wainwright) agrees. I hope that the hon. Gentleman will speak on this matter, drawing on his own accounting experience.
  The corporation about which I should like to speak in detail is the British Steel Corporation, which makes heavy calls upon public finance in the Bill, and which faces severe problems not unrelated to its financial performance in the past year and in the current year.
  The overall background is familiar to hon. Members—new processes replacing old, with the inevitable result that there will have to be plant closures, redeployment of men and the introduction of new industries into the areas affected. The problems have been greatly exacerbated by the acute recession in the industry, not only in this country but in Europe and world-wide.
  No one who is used to working with the steel industry, steel workers as well as steel managers, will fail to acknowledge the realism with which the situation is understood by workers as much as by managers. We in the House are unfair to our constituents if we are not completely honest with them about the acute difficulties which they face. They see them on the shop floor, and feel let down when they see people skating around them and producing easy solutions.
  The pattern of events has now reached the stage where the Government's closure review has covered England and Wales and the results have been announced. The results for Scotland will shortly be announced. No sooner had the specific plans for particular works been announced than the recession led the BSC to break its commitments on the timetable of closures in England and

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  Wales. This happened within weeks of its having reached agreement on England and Wales, and led it to anticipate talks on the Scottish situation. The corporation claimed that this was merely the short-term closure of works. It said that it was going to close works in the short term for two years and thereafter perhaps in the longer term, but a closure is a closure is a closure for a worker who is sacked. Nowhere is that more obvious than in Ebbw Vale, in Lanarkshire, in Shelton or Shotton. There are communities throughout the country which are completely dependent on steel. They have been through this experience so often in the past that they know what is coming to them if certain policies are allowed to continue.
  The twisting of words—that is what it has been when talking about short-term and long-term closures—is behaviour which inevitably invites accusations of bad faith. However, no sooner had these problems been raised by the steel trade unions and by Members in the House than the BSC abandoned its proposals for redundancies of 20,000 or 50,000 of which the chairman had spoken.
  Overnight those proposals were abandoned. But were they abandoned? A statement was made jointly between the BSC and the unions that there would be no closures in the short term and no compulsory redundancies. However, the chairman of the corporation concluded with the elegant phrase that there was more than one way of skinning the cat. Quite who the cat was he did not say.
  The BSC and the TUC Steel Committee, in a joint statement of 19th May, make the position reasonably clear. For example, when referring to overtime it says simply and straightforwardly:
  "All unnecessary overtime will be eliminated."
  That is a common sense agreement which I am sure the unions had no difficulty in accepting. However, on 30th May the BSC explained to the unions that overtime is to be defined in terms of hours. It said:
  "Overtime is here defined as any hours in excess of 40 hours and any shift which carries premium time. Therefore, 42 hour rates should be reduced to a 40 hour week."
  Anyone who has dealt with shift cycles In process industries will realise that that
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  statement means that shift rates of pay will be eliminated by the overtime ban. That is not what was agreed by the unions. That is not what is said in the BSC-union agreement of 19th May.
  The BSC is now saying that the guaranteed week applies not to the earnings of the shift workers as they had been working previously but merely to day work rates without the overtime premium, without the 42-hour week. That has resulted in a reduction of earnings of one-third on the guaranteed week. In a works where the workers are on the guaranteed week for two weeks, and full earnings for one week there will be an overall reduction of 22 per cent. The workers are having imposed upon them not the status quo but a reduction of earnings. For the average production steel worker, that means a reduction of his income to a level below that which he would be receiving on social security benefits.
  The workers are driven to seek better pay. In the works which are threatened with closure there will be many workers who will seek to get out first to find a job in a trade. The tradition in the steel industry is that when the building industry goes into recession bricklayers, plumbers, plasterers and joiners find work in the steel industry. Those men will now leave—perhaps that is fair enough—but what will happen after that? There will then be affected the harder core of men who are dependent throughout their lifetime on the steel industry. They will be living below social security rates.
  The BSC and the steel unions agreed that redundancy payments should be made for voluntary redundancies. It was agreed that that should apply where both the BSC and the unions agreed that the manning was surplus to requirements. That was the clear statement that emerged from the meeting of 19th May. But now the BSC is saying that redundancy payments will be made only if it is mutually agreed that overmanning existed at full output level. For example, if there are four furnaces in a works and a certain manning level is required for them, and if only one furnace is operating, as in the case of the Lanarkshire Works in my constituency, the BSC will not pay redundancy payments for any worker who leaves below the level required to operate four furnaces. That is a twisting of the statement which was agreed between

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  the BSC and the unions. That is why the unions hold the corporation in such low regard at present.
  In the works threatened with closure there is already migration. For example, 40 men left the Lanarkshire works last week. There has been a migration of 3 per cent. of the labour force in one week, which means that within six months the manning in those works will be reduced to a level at which the works can no longer operate. The workers who depend completely on the works will not leave, but the works will cease to be viable in the longer term.
  In this situation it has been a matter of great concern to me that the steel workers and the responsible branch officers have not always been able to find the support to which I think they are entitled. In the difficult situation that they face they have not always been able to find support from the union hierarchy. There was no report back to the trade union branches from the joint BSC-union meeting on 19th May other than the published statement, until a meeting which is now going on in my constituency.
  In the Scottish office of the Iron and Steel Trades' Confederation there is only one telephone, which is constantly engaged. It is unfortunate that divisional organiser Arthur Bell has been off ill at this time. The men have an uneasy feeling in the works threatened with closure, which are the works needing union help most of all, they are not getting the support which they should have.
  I have the greatest respect for Bill Sirs, the new General Secretary of the Iron and Steel Trades' Confederation. I wish him every success in his job. He has a major task as regards the organisation of his union and the service which it provides for its members, as well as in the modernisation of a wage structure which at present allows members to have their wages arbitrarily reduced by approximately 20 per cent. in circumstances which were never anticipated by the men.
  The reaction to the present situation is that the men take whatever action is open to them. In the Clydebridge Works in the constituency of my hon. Friend the Under-Secretary of State for Industry—Rutherglen—the men have blacked any slabs from Ravenscraig. In the Lanarkshire works in my constituency ingots have been blacked from Glengarnock.
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  The BSC is losing control of the flow of work within the corporation itself. In my view, the works committee has put forward reasonably clear claims as regards the Lanarkshire works. It has submitted a claim for two furnaces and 10-shift manning and pay at the appropriate level compared with the one furnace 5-shift manning which the BSC is seeking.
  It is disturbing that little action is to be seen in terms of the provision of alternative employment. For years we have talked about the development of major industrial sites in Scotland—for example, Cambuslang and the Etna and Range Road sites at Motherwell. Not a stone has been turned on any of those sites. They have been in the ownership of the BSC since vesting. There has been no provision for the redevelopment of resources to help in the creating of alternative employment. Activities within the BSC should be expanding but in the case of the sites that I have mentioned—I am fully aware, Mr. Deputy Speaker, that you are looking at the clock.
  Mr. Deputy Speaker: The hon. Gentleman has a guilty conscience. I was just looking anywhere.
  Dr. Bray: I am grateful for that assurance, but I assure the House that my usual brevity has been overcome by the knowledge that the House is not over-full at present.
  In the case of subsidiary activities other than steelmaking which should be expanded to provide alternative employment, it is well known that there are acute management problems. Redpath Dorman Long has embarked on the construction of oil drilling equipment in partnership with ENI and I understand that the losses on platforms are running at about £l5 million. I also gather than ENI is disenchanted with the partnership and is trying to pull out of it. This is a serious reflection on the management which the British Steel Corporation has been able to put into its diversified activities. I hope that the corporation in its wider social responsibilities and also financially will see that its management problems here are put right forthwith.
  Mr. Michael Marshall: The hon. Gentleman seems to be unfairly attacking

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  the BSC for failing to take up its social responsibilities in associated industries. Does he not wish to pay tribute to the corporation for the work it has done in, for example, building up the existing stainless steel effort in the South Wales area, site clearance in Hartlepool, and so on? I hope that he will touch on some of those matters. Finally, does he accept the overall investment strategy of the BSC? He seems to be concentrating on the short-term problems on which he feels strongly from a constituency point of view.
  Dr. Bray: I pay tribute to the BSC for what it has done, but the effort has been totally inadequate in scale and is regarded by the workers as a cynical piece of window dressing. There is an entirely different scale of activity when we compare what the BSC has done with the activities undertaken by the Dutch State Mines in Limburg in South Holland. As regards the long-term investment programme of the BSC, I accept the need to introduce large-scale BOS steel-making backed by electric arcs. I will send the hon. Gentleman a note which I have written on this subject and which I have discussed with Ministers. I should like to have his support since it envisages a phased investment programme with a proper discharge of BSC's social responsibilities.
  I cannot help feeling that these problems of closure of works and the redevelopment of employment to take up the workers made redundant in communities which are totally dependent on steel are marginal to the economic success of BSC in the sense with which we are concerned in this Bill. We must ask how good BSC is in making steel and in selling it. The Press has built up the image of the BSC's chairman as a white knight ruthlessly seeking efficiency frustrated only by pettifogging complaints by trade unionists, Ministers and employees threatened with redundancy.
  I shall not weary the House with a catalogue of mistakes and disasters which have occurred in the BSC in the last couple of years. This encompasses blast furnaces needing relining simultaneously on the same site, a burnt-out mill motor, a spilled furnace, broken cranes, grandiose and impracticable planning sys-
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  tems, the shortfall of output below design capacity, defects of investment and pricing strategy, and industrial relations problems—the latter the only set of problems which BSC has been prepared to admit. There has been a total lack of realism by the BSC chairman in dealing publicly with problems which anybody who has been in large-scale industry knows exist and appreciates are inevitable. It is difficult to compare performance between one industry and another in these respects. Certainly it appears that the BSC has not yet had time in its eight years of existence to develop proper operating standards and management structures to deal with the difficult plant which it is now operating.
  On this wider perspective it cannot be said that the chairman of the BSC or anybody else in the corporation is being frustrated by Government policy. I have attempted to outline the problems which the BSC should be tackling instead of making such heavy weather of its closure programme.
  Action is certainly required to complete the closure review as quickly as possible. One accepts that the BSC should operate in the spirit of the Government's policy and of trade union objectives involving no closures without the provision of alternative employment. We need to get on with the creation of new jobs and to share work between works until the required phasing has been met.
  The corporation and the Government need to phase closures to fit in with alternative employment and to improve union lines of communication. I appreciate that this aspect is not a BSC responsibility, although the corporation can play its part in establishing trade union representation in planning committees at the works, divisional and corporate level. There should be proper training of management within BSC and a truce in the war with the Government. I very much regret the atmosphere which has built up between the corporation and the Secretary of State for Industry. I speak as a long-standing friend of Sir Monty Finniston. whom indeed I introduced to Dick Marsh in the first place when we were nationalising steel, but I certainly do not regard the blame as lying in the court of the Secretary of State. Undoubtedly, Sir Monty has given great service to the corporation. He has

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  designed a strategy with which the corporation will be occupied for many years to come. I would ask him to think carefully whether his own objectives, let alone those of the country as a whole, are best served by remaining in a state of armed opposition to the Government and by using all the implements available in the media.
  Mr. David Howell: The hon. Gentleman has embarked on a critique of BSC. but has left us a little unclear about his view of major policy. Earlier today the Secretary of State for Industry was asked whether he was in favour of day-to-day intervention by Ministers in the work of the nationalised industries, and replied that the community—by which no doubt he meant himself—was in favour of day-to-day intervention. Is the hon. Gentleman in agreement with that view, or is he saying that Sir Monty should go, or is he saying that Sir Monty, as chairman, should be left to employ his skills to maintain the industry in the best interests of the country and the work people?
  Dr. Bray: I do not think that Sir Monty should go. If he wishes to go, that is a matter for him, but I do not think that he should be asked to go. I believe that Ministers should have power to give specific directives not just general directives where there is always an argument from the lawyers. We are giving power to the Secretaries of State for Scotland and Wales to give specific directives in the legislation introducing the Scottish and Welsh Development Agencies. I believe that this is an omission in the main nationalisation statutes.
  This leads to a point on which I wish to conclude. In the relations between the nationalised industries and Departments—between chairmen of nationalised industries and Ministers—it is necessary to provide institutionally for a much fuller exchange than takes place at present. We have a staff college for the Armed Services, but there is no parallel in the public sector of industry. I suggest that we need a staff college for the nationalised industries to train a cadre of managers and governmental officials who properly understand each other and know how to co-operate in depth. We must have formulae, but the formulae for profitability, pricing, investment and re-
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  turn on assets are an inadequate guide to the more detailed exchange which must take place in the changing economic circumstances and industrial problems of industries as they evolve. There is a good precedent for the staff college. The National Coal Board staff college has fulfilled a valuable rôle in the development of new systems within the NCB as well as in the training of people in the operation of those systems.
  But to return to the immediate short-term problems, if the BSC does not tackle closure and redeployment in a spirit of constructive co-operation with the Government and the unions, the effects will be industrially and politically catastrophic.
  5.51 p.m.
  Mr. John Biffen: The hon. Member for Motherwell and Wishaw (Dr. Bray) speaks with an engaging charm and bears all the attributes of what I suppose one must now call a moderate in politics, but the argument that he has been elaborating about the British Steel Corporation has excited some anxiety on the part of those around me. I know that my hon. Friends the Members for Arundel (Mr. Marshall) and Shoreham (Mr. Luce) feel somewhat exercised by the line of argument adopted by the hon. Gentleman. Indeed, I shall in due course make one or two comments on what he has observed.
  Surely, we are all engaging in great innocence if we suppose that suddenly and recently some kind of aggressive intervention has been developed by the Secretary of State for Industry which contrasts with what used to happen in those halcyon days of Conservative rule between 1970 and 1974. As I listened to the debate, my mind went to the comments of my former hon. Friend, Mr. Jock BruceGardyne—who, I hope, will soon be back with us—on the Second Reading of the Statutory Corporations (Financial Provisions) Bill on 21st November 1973, when he said:
  "what on earth has my right hon. Friend the Secretary of State for Trade and Industry been discussing week in and week out with Dr. Finniston? Is he asking the House to believe that Dr. Finniston thinks that he is not subject to Government control in respect of his prices?"—[Official Report, 21st November 1973; Vol. 864, c. 1348.]

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  The House knows from its own experience over the years that, however much we would wish to have an arm's-length relationship between politicians and management in nationalised industries, the ideal has been remarkably difficult to essay in reality.
  Today we return to the vexed question of how to induce commercial behavour in the nationalised industries—this vital sector of our national economy—and how they can be compensated on those occasions and in those directions where they are obliged to behave in a non-commercial fashion.
  I offer the warmest personal congratulations to my hon. Friend the Member for St. Ives (Mr. Nott) on the way that he addressed himself to this subject. At least we got away from the sterile argument about whether we were in favour of public ownership. We may have strong views about what public ownership means and the problems implicit in it, but at least we fractured the historic mould in which so many of these debates have been cast in the past. I am grateful to my hon. Friend on that account.
  Clearly the House has had so many opportunities to consider the general principles governing the relationship between politicians and nationalised industries that it has got a veritable library of White Papers on which to draw. Some of the original wisdoms still remain the best to guide us, even in circumstances which, as the hon. Member for Motherwell and Wishaw said, are somewhat affected by a high and rising rate of inflation. I think that the comment in the White Paper Command 1337 of 1961—
  "Again, if the prices of the goods and services which the nationalised industries provide are uneconomically low, demand for them (and for investment to produce more of them) may be artificially stimulated."
  has been vindicated by our own somewhat unhappy experience over recent years.
  Again, I think that there is plenty of evidence to suggest the correctness of the view of the authors of the White Paper, Command 3437 of 1967, when they said:
  "Clear financial objectives will continue to be necessary so that the industries know what is expected of them by the Government. Thus
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  they serve both as an incentive to management and as one of the standards by which success or failure over a period of years may be judged. The alternative would be an indefensible lack of control over the return achieved on a very substantial public investment."
  We are in the somewhat unhappy business today of having a successor piece of legislation to the Statutory Corporations (Financial Provisions) Act 1973 because of a long and persistent and, to my mind, misguided period of price control in the nationalised industries.
  If we look in a spirit of constructive charity at the background to all this, we can at least say that the fault lay not initially with us in this House. The poisoned authoriship of the policy of depressed nationalised industry prices lies squarely with the CBI and its mistaken and ill-fated initiative of price restraint in 1972.
  Mr. Richard Wainwright: Hear, hear.
  Mr. Biffen: I am glad to have the endorsement of the hon. Member for Colne Valley (Mr. Wainwright), because, within two days of the CBI making that announcement, his hon. Friend the Member for Cornwall, North (Mr. Pardoe) said:
  "It would be extremely churlish for anyone in opposition or in Government not to welcome the measures announced yesterday."—[Official Report, 20th July 1971; Vol. 821, c. 1308.]
  The point is that we all tread the road to Damascus in one way or another, and it is a stony path. I do not hold it too harshly against the hon. Gentleman, but perhaps an increasing sense of scepticism should enter into all our judgements when we are presented with an overwhelming fashionable endorsement of one view or another by the moguls who inhabit the corridors of Tothill Street.
  Mr. Richard Wainwright: I am sure that the hon. Gentleman wants to be fair. Will he identify the hon. Member whom he claims as being on the road to Damascus?
  Mr. Biffen: I was hoping that the hon. Gentleman himself was on the road to Damascus. I am sorry if he wishes to remain firmly unconverted and unreconstructed and perhaps the one residual relic of Whiggery within the modern Liberal Party. I hoped that the hon.

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  Gentleman felt that the remarks made by the hon. Member for Cornwall, North seemed singularly inappropriate in the light of the experience that we have all suffered since. Be that as it may, it is not of overriding and overwhelming concern.
  The debate this afternoon has been much happier than the previous one. I agree with my hon. Friend the Member for St. Ives about the importance of trying to get some kind of cash limit disciplines into the relationship between the Government and nationalised industries because herein lies a much more constructive line of approach which can possibly avoid some of the confrontations within those industries to which we have become accustomed in the past. I felt, as my hon. Friend was speaking, that he had some support, at least in principle, from the hon. Member for Motherwell and Wishaw and, indeed, from the hon. Member for Colne Valley. Let me therefore say straightaway to my hon. Friend the Member for St. Ives that these views, radical though they are, bear the reasonable stamp of consensus.
  Mr. Richard Wainwright: National unity.
  Mr. Biffen: Indeed. This is the real national unity. This is the unity concocted inside this House of Commons and not hatched up in the talking shop of the NEDC office with the knights and the would-be knights.
  We know what we should like to see emerge from this legislation, but I still feel unhappy about it because of the points that were elaborated by my hon. Friend. There is a keen anxiety that there should be an early and speedy attempt to put the finances and revenues of the gas, electricity and Post Office industries on bases whereby they not merely break even but earn a target return on capital employed.
  I think that my hon. Friend the Member for St. Ives—I hope that he does not mind these constant and flattering references to him, but this is the least I can do on so happy an occasion—is right in saying that in any analysis of what is a target return on capital employed one has to take account of the inflationary circumstances which did not apply at the time of the White Paper originally elaborating the criteria for the target
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  return on capital employed in the nationalised industries.
  The House must be under no misapprehension about what this means, particularly for the Post Office. I know that my hon. Friend the Member for Ton-bridge and Mailing (Mr. Stanley) has made a special study of the shambles of the finances of the Post Office, and I am sure that if he is called in the debate he will be able to give the House an authoritative discourse, which I should not for a moment attempt to trailer. I believe that it will prove increasingly impossible to carry out so labour-intensive a pattern of postal distribution as we now have without pricing the service wholly without the range of a large number of people. In those circumstances, I think the House would be well advised to consider just what fundamental changes ought to take place in the distribution of mail again, as my hon. Friend the Member for St. Ives said, taking it alongside and in the context of other goods and services which involve a regular and daily distribution.
  Mr. John Golding: Is the hon. Gentleman aware that his hon. Friend and I are members of a Select Committee inquiring into this problem? The House is therefore engaged in doing the very thing which he is urging.
  Mr. Biffen: I am delighted to hear that, and delighted also that the hon. Gentleman, with his trade union experience in the Post Office—although in the Post Office Engineering Union and not in the Post Office Workers' Union—is on the Committee. Without wishing to be flattering in a fulsome fashion, may I say that I believe his membership of the Committee will give authority to whatever recommendations it makes?
  I turn back for a moment to the importance of trying to simulate for the nationalised industries as far as possible the conditions which operate in the rest of the economy which is more open to the workings of a market economy. That brings me again to the points raised by the hon. Member for Motherwell and Wishaw, when he was so anxiously concerned about employment in the steel industry. What I think is of paramount importance is that the nationalised industries should not have thrust upon them some special rôle of providing jobs during

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  a period of economic adjustment which may involve a temporary rise in unemployment.
  The Financial Secretary made a speech which implied that there was already overmanning in a number of public sector industries referred to in the Bill. If there is to be some attempt to produce additional employment it could take the form of a straightforward labour subsidy which is to be paid alike to the private and public sectors through, perhaps, provisions which will be introduced into the Employment Bill. That I could understand. I should not favour such a labour subsidy, but at least I could understand it as being an approach which did not seek to discriminate between the public and private sectors. What would be unfair is if the nationalised industries were expected to carry out a policy of job preservation which was not expected or required of the private sector.
  When this subject was last debated we did not have a frontal clash across the Floor of the House. There was a diversionary move by the Liberal Party which resulted in a Division. I was a reluctant supporter of the previous Bill. The debate was acrimonious, without any Labour-Tory vote. Today the debate is bland, but there will be a vote. The reason for the acrimony in 1973 was partly the presence of the Secretary of State for Industry, who was particularly vigorous in championing a number of advantages which he thought could flow from the subsidy implicit in the provisions of a Bill such as this. He mentioned two which he thought were being neglected by my right hon. Friends who introduced the preceding legislation, namely, provisions for industrial democracy, and import substitution.
  It is clear that there is growing concern over the development of industrial democracy within the nationalised industries. I was particularly interested to note the speech of my right hon. Friend the Member for Lowestoft (Mr. Prior) on this matter two or three days ago and even more the remarks of my hon. Friend the Member for St. Ives about the possibility of some kind of workers' control or workers' co-operative in these industries. I welcome those remarks of my hon. Friend. It seems that he is one of that growing band of Tory red shirts who will
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  be fighting for the thesis of worker participation as the alternative to the declining and somewhat discredited forms of managerial capitalism which are espoused by the CBI. I am sorry that my hon. Friend the Member for Hertfordshire, South (Mr. Parkinson) thinks that this is a little too lurid an interpretation of what is happening, but I think that the House would be unwise to scoff too quickly and too easily at some of the attempts to develop worker participation, or worker control, or whatever form of words one likes, in industries which have become immensely centralised and somewhat bureaucratic in their structure.
  I do not believe that it is felt on either side of the House that the Morrison form of nationalisation has necessarily provided the most appropriate answers, particularly in labour relations.
  If there is even a fraction of validity in the case presented by the hon. Member for Motherwell and Wishaw, it is ironic that it happens in the corporation which has deliberately had a major trade union figure at its top. This implies that there are problems related to size as well as merely to having distinguished former union leaders at top board level, so I hope that my hon. Friend the Member for St. Ives will not be intimidated by any of his friends about the fact that he is sporting the Tory red shirt in this respect.
  I confess that my comments are not closely related, or flow consequentially, but there was one other point in the Chief Secretary's speech which left me a little anxious. I hope that some of my hon. Friends will probe this further. I refer to the prospect of manufacturing steel for stock during bad times. This practice is becoming a fashion. I do not wish to open wounds which I hope are fast healing. We have got used to butter mountains and wine lagoons, and I fancy that there is now a fashion for steel mountains when demand is depressed.
  Heaven knows, the announcement about the textiles industry the other day suggested that we might have a textile mountain to help us during a period of depressed demand. Not so long ago, the machine tool makers thought it would not be a bad idea to have a machine tool mountain during depressed demand. All

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  these goods would be mothballed until demand had recovered.
  This could be an immensely costly excursion into Alice-in-Wonderland economics. It would hardly be undertaken by any of these enterprises if they thought that they were financing it from their own resources. It is only the knowledge that they can come to us which attracts them to the arguments.
  Mr. Roy Hughes: Does the hon. Gentleman not agree that it would be more illogical if, when the economy picked up again, there were a shortage of steel and the BSC could not supply requirements, thus inviting vast imports of the type from which the industry is suffering now? The steel industry is subject to violent fluctuations, and this could be a remedial measure.
  Mr. Biffen: I take the hon. Member's point. I still believe that it would be a costly way of trying to deal with fluctuations in that industry. Practically no aspect of economic activity does not have a cycle of one kind or another. The search for stability and the plateau in the world of economics is an illusion. The fact that it is practised in the common agricultural policy should not make it attractive to the hon. Member, above all people, in other aspects of our commercial and industrial life.
  I find the Bill's philosophy unacceptable. However one considers the matter, the public sector borrowing requirement will be intensified by these provisions—adding to a borrowing requirement which is already dangerously high. One of the more frightening statistics revealed in the past few days is that the Consolidated Fund figure of expenditure on supply services for the first two months of this year is running at 44 per cent. above that for the corresponding period 12 months ago. That is a terrifying insight into what may be happening in public spending.
  In the political situation within the Government which has developed since last Thursday, there now exists a quartet of powerful men—the Prime Minister, the Chancellor of the Exchequer, the Foreign Secretary and the Home Secretary—who have all, for various reasons, been identified with the referendum vote. Their authority is substantially enhanced at the moment, and they are a powerful com-
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  bination—the Prime Minister, his Chancellor and the two other men around the Cabinet table who, in their time, have held the post of Chancellor.
  If they cannot use that authority now, and speedily, there will be growing disillusion. It will be concluded that, once again, faced with the problems of inflation and mounting public expenditure, the Government have chosen to avert their eyes rather than face the immediate and undoubted unpopularity which would flow from doing something about public spending. If they are to do something about it, an early and tangible gesture has to be made. Such a gesture would be for them to use their authority to see that this Bill gets a decent burial once it has been sent to Committee.
  6.17 p.m.
  Mr. John Golding: I have listened to this debate with interest, particularly the speech of my hon. Friend the Member for Mother-well and Wishaw (Dr. Bray). I was shocked only at one point in his speech—the point at which, thinking to have seen you, Mr. Deputy Speaker, look at the clock, he halted in his stride. I chided him later, saying that even if you had taken a calendar from your pocket, he should not have been perturbed. That is the attitude that I have taken to this type of Bill since the first was introduced. The issues are enormous and the sums of public money involved are immense. It is a reflection upon the attitude of the House towards the control of public money that there should be so few hon. Members here for this debate.
  I agreed with my parliamentary neighbour the hon. Member for Oswestry (Mr. Biffen) when he said that the conflict between the British Steel Corporation and the Government is not new. The report of the inquiry by the Select Committee on Nationalised Industries into the steel industry during the last Tory administration drew attention to the strained relationship which exists. It appears to have been with us for a long time. It is not just a consequence of the personalities of the Secretary of State for Industry and the present Chairman of the BSC.
  The present issue raises important questions of policy. Sir Monty Finniston tried to frustrate the Government's longterm strategy, settled after review, by

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  day-to-day management methods. Then one faces a great dilemma—whether to support the Government who have ultimate responsibility for long-term strategy or the chairman, who has day-to-day responsibility. I sided strongly with the Secretary of State. He was right to insist that the Government's long-term strategy should receive priority.
  Certainly those of my constituents who work at Shelton steelworks, which have been reprieved by the inquiry believe that the Secretary of State for Industry acted quite correctly when he stood up against the chairman of the steel board and insisted that political policies be followed.
  This episode illustrates the importance of this House's defining more closely than it has so far the nature of the relationship between the chairmen of nationalised industries, the Secretaries of State and Parliament itself. One of the lessons of the past few weeks that I have learned is that the method of control is far less well defined than we thought it was. It appears that the power to give general directives does not carry with it that authority which previously we thought it did.
  I turn from steel, as you might expect, Mr. Deputy Speaker, to the subject of the Post Office. I declare my interest as an assistant secretary of the Post Office Engineering Union.
  May I say, in his absence, that the hon. Member for St. Ives (Mr. Nott) displayed in his speech an inordinate amount of cheek. He began by saying that he would not delve into the past, but shortly he became involved in a discussion with one of his hon. Friends on the Conservative Front Bench on the question whether it was Oliver Cromwell or Charles II who introduced the monopoly into the letter service.
  One point in the hon. Gentleman's contribution with which I particularly disagree was his opposition to the tripartite talks, which my right hon. Friend the Chief Secretary mentioned, that are now taking place between the Post Office, the Government and the unions over the question of the rising Post Office deficit. I should have thought that it was imperative, faced with a deteriorating financial situation, that there be such tripartite discussions. Of course, the ultimate deci-
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  sion about the amount of State money that will be put into the Post Office must rest with the Government. It is obviously sensible for the Government to discuss with the unions and the Post Office methods by which this deficit can be reduced. It would be an absurdity for Governments merely to send messages to the chairmen of nationalised industries who, in their turn, would pass them on to rank and file trade unionists without discussion having taken place beforehand. The hon. Member for St. Ives must rethink his position. He is confusing, as Tory administrations have often confused, ultimate responsibility to take decisions and the other responsibility to consult with those affected before such decisions are taken.
  I would cross swords with the hon. Gentleman, were he present, on the question of the monopolies enjoyed by certain nationalised industries at present. It is a nonsense to talk in terms of the abolition of some of the monopolies. I do not want to discuss the question of the letter monopoly because, as I intimated in a previous intervention, a Committee of the House is at present sitting to inquire into the future of the letter service, and it would be improper of me, as a member of that committee, to enter into controversy on that point.
  I make the general point that the reason we have monopoly at all in the nationalised industries and in the public service is because responsibilities are placed upon those services to handle everyone's business. For example, responsibility is placed on the telephone service to provide a facility for those who live in the Western Isles, the Orkneys, or the more inaccessible parts of the United Kingdom. It has generally been the policy of Governments to provide those services at pretty well a uniform tariff.
  The justification for a State monopoly is that were that State monopoly not to exist, private enterprise would come from outside, take over the profitable parts of the business and leave the unprofitable parts to the State service to undertake. I would be sympathetic to the breaking of a State monopoly were people coming from private enterprise to say "We want to take off the State the unprofitable part of the service which it now performs; we should like to leave the Post Office with the provision of telephone and telex

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  facilities in the City of London, but not carry the financial burden of having to provide that service in scattered, isolated rural communities".
  I should be happy to listen to the arguments under those circumstances. However, this is never the case. What happens is that the private entrepreneurs want to take the profitable business. From the point of view of the taxpayer, that is completely unacceptable. Were we to have that sort of situation, year by year we should be having to ask the House for further moneys to compensate the State services for running unprofitable businesses.
  It is time that the Conservative Party abandoned the proposals that it puts forward from time to time for hiving off. I was interested to see the hon. Member for Bridgwater (Mr. King) on the Conservative Front Bench. Had he spoken in this debate this afternoon I should have liked to ask him why it was that when his master, Chris Chataway, was Minister for Posts and Telecommunications under the last Tory administration, despite all the statements that have been made about hiving off in telecommunications, he abandoned the policy on which the Conservative Party had fought. I think he abandoned it because he realised that we cannot run big State corporations of this sort, which provide a national service, without monopolies.
  I agree with the hon. Member for St. Ives that we need to rethink the setting of financial targets in the nationalised industries.
  I was impressed by the speech of my right hon. Friend the Chief Secretary. I should certainly have no difficulty in giving him my full support in Committee if the Committee of Selection were to decide that I was to serve on the Committee. Of course, had he not popped out for a minute or two I should have chastised him for his omissions rather than for some of the things he said. When talking about wages he stressed the need for increased productivity in the nationalised industries, which are at present running at a deficit. If he had been feeling a little more generous at the end of his contribution, he could have mentioned that certainly the Post Office Engineering Union for many years has kept strictly to policies of encouraging productivity bargaining. The
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  latest calculation that I have heard is that at least 50,000 jobs have been saved—there are 50,000 fewer Post Office engineers employed than there would have been—because of manpower saving schemes introduced on the initiative of the Government.
  The Minister could also have paid tribute to the Union of Post Office Workers, which decided at its conference two or three weeks ago, at last to abandon opposition to mechanisation. Certainly the unions have been quite forward looking. The Chief Secretary could also have mentioned the fact that at the conference of the Post Office Engineering Union last week the delegates gave strong support to the social contract. There is that awareness that there is a need to be reasonable about wages in the public sector, particularly within the Post Office.
  I turn quickly to the Budget Statement of 15th April. I want to ask my hon. Friend the Minister of State to comment on progress in regard to two matters. In the Budget Statement it was revealed by my right hon. Friend the Chancellor that
  "two studies on the investment programmes of the nationalised industries are being made. The first is designed to give them a reasonable degree of assurance about the stability of their long-term investment, so long as it satisfies a stringent economic and financial scrutiny in the course of the annual investment reviews."
  That is an important statement about an important subject. What progress has been made in connection with this inquiry? The Chancellor also said,
  "The second concerns the industries' relations with their suppliers in manufacturing industry."
  I shall turn to that matter later.
  The Chancellor went on to say,
  "The measures we are now taking to restore economic pricing policies are an essential feature in bringing commercial criteria to bear on the industries' investment programmes. And I believe that these policies and the return to financial viability will do much to improve morale throughout the whole field of public enterprise and to help ensure its efficient use of resources."—[Official Report, 15th April 1975; Vol. 890, c. 291.]
  That statement, which is very much approved of by staff in the Post Office, is also absolutely consistent with the policy of the Labour Party as laid down at the annual conference.
  However, unlike the hon. Member for Oswestry (Mr. Biffen), I do not blame the

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  CBI for the situation we are in. I believe we must put the blame fairly and squarely upon the leaders of our parties. In 1970 it was promised that there would be a reduction in the increase of prices, "at a stroke", and nationalised industry prices were mentioned specifically in that context. Until two years ago, whenever I advocated economic pricing in the nationalised industries, leaders of the party to which I belong always resisted the idea because of the electoral consequence of pursuing such a policy.
  If hon. Members want to read an early account of difficulties in this field, I recommend Reginald Bevin's book "The Greasy Pole", in which he describes the difficulty of a Postmaster-General wanting to levy reasonable postal charges but being prevented from doing so because of the possible electoral consequence to his party. Therefore, I blame the leaders of both parties for the situation that the nationalised industries have been in.
  From the point of view of the Post Office, the deficit since 1972–73, the first year of deficit, has grown progressively worse. It is well known that it arose because the Government decided to hold down prices in the Post Office, as in other nationalised industries, far more stringently than prices outside the public sector. I believe that the Government must follow a rational pricing policy. For the sake of brevity I shall not go into this matter in detail. However, in Committee we ought to debate the failure of the 1967 White Paper and its proposals for pursuing a policy of marginal price setting. That has not proved to be adequate in any way.
  I do not believe this compensation procedure to be at all good. It affects the morale of staff. When the people I represent read of a substantial deficit on telecommunications, and that that deficit will become even greater, their morale is affected. Workers like to work in an industry which they believe is flourishing and efficient. Unfortunately, the yardstick of efficiency in our capitalist society is profit and not service. If a loss is made, even though the business is inherently efficient and even though the staff are making substantial contributions to increasing productivity, the general morale of the workers suffers.
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  The public's view of public ownership and nationalised industries is, in turn, governed by the announcement of losses. When deficits are announced it is often wrongly assumed by the public that nationalised industries just cannot pay. Deficit financing is harmful to the very concept of public ownership and harmful to the expansion of public ownership. It is also harmful because one fails to get the normal financial disciplines working, and one gets a misallocation of resources. This was dealt with at great length by a Select Committee on which I sat—the Select Committee on Nationalised Industries—in an enquiry into investment procedures last Session. For the benefit of my right hon. Friend the Chief Secretary, I want to put on record the view of the Post Office Engineering Union on this matter. It has set this out in a recently published document, "Telecommunications Today and Tomorrow". The union says,
  "The Post Office Telecommunications business has a record of increasing efficiency and rising labour productivity which is equal to the best in British industry. But the business can only operate to maximum efficiency if it is permitted to set its prices at economic levels which permit a satisfactory rate of return. We accept that in other areas of the public sector there may well be social grounds for restraining prices and then off-setting the industry's subsequent deficit by Government subsidy: but we can see no rational grounds for such general subsidies for telecommunications. Persistent underpricing of the service, apart from resulting in a net subsidy of all taxpayers to telephone users, may generate an artificially high level of demand and may generally lead to a misallocation of national resources."
  So the main union involved in Post Office telecommunications is utterly opposed to this system of compensation payments which can lead to the misallocation of national resources.
  It quite clearly affects the ability to invest. I think it is a matter of regret that the self-financing of investment within the Post Office dropped from 56·6 per cent. in 1970–71 to 39·1 per cent. in 1972–73. The higher the level of self-financing the better.
  Again referring to the publication, "Telecommunications Today and Tomorrow", the point of view put there is that it would be
  "unreasonable to expect that any Government will take no interest in telecommunications investment policy. The current telecommunications investment plan calling for some £700 million capital spending in the financial year

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  1974–75 is the highest in the public sector and clearly an economic factor of no mean significance."
  There is a recognition that however important the provision of efficient telecommunication services may be Governments may well from time to time have to decide, in the national interest, to revise expenditures.
  The document goes on to say—this has the support of the Public Expenditure Committee which reported in August 1974, and certainly has the support of the Committee on Nationalised Industries in its report on investment policy—that it is
  "imperative to avoid the breaks and discontinuities in telecommunications investment which have occurred in the past…".
  One of the major reasons for inefficiency—in so far as it exists—in the nationalised industries is that there has been stop-go in relation to investment. No management can manage if from month to month and from year to year the amounts available for investment are altered. It is imperative for us to get from the Government a statement that this stop-go investment policy will come to an end as quickly as possible.
  I conclude by asking the Government what progress they have made in the inquiry into the relations between the nationalised industries and the suppliers of equipment to them. I believe this to be a subject of great importance, because all nationalised industries are now spending many hundreds of millions of pounds purchasing equipment from private industry. It is my view that for years the private manufacturers of telecommunications equipment—Plessey, GEC-AEI and Standard—have failed both the Post Office and the nation. The prices that they have charged the Post Office for equipment have been too high. More important, the failure to meet delivery dates has been an absolute disgrace.
  I am told by workers in telecommunications that the situation concerning delivery dates is getting worse. I do not know whether this is true or not, but it is my impression that the long-standing delay in the provision of telephone services, due to the failure of the private equipment manufacturers, has shown no signs of ending. I ask the Government to let us know tonight what progress is being made on this subject.
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  I shall give the Treasury Ministers every support tonight, and in Committee—if I am on the Committee—to ensure that this Bill is carried into law.
  6.45 p.m.
  Mr. Richard Wainwright: The Liberal Members intend to vote against this Bill tonight, just as the Liberal Party alone voted against the Conservative equivalent of the greater part of this Bill in November 1973. Our reasons for persisting in voting against Bills of this sort do not derive very much from anything that has been said in this debate, with the honourable exception, so far as we are concerned, of the impressive speeches from the hon. Members for Motherwell and Wishaw (Dr. Bray) and Newcastle-under-Lyme (Mr. Golding).
  I am gratified that the admirable demolition job of the hon. Member for Newcastle-under-Lyme has spared me the need to have a go at the most extraordinary performance from the Opposition Front Bench. The hon. Member for St. Ives (Mr. Nott) actually proposed from the Opposition Front Bench that the delivery of mail could be contracted out, along with the delivery of milk and the copy of the Sun. It is an extraordinary index of the rapid demoralisation of the Conservative Opposition that from their Front Bench official spokesman there has been the proposition that precious, irreplaceable items of mail should be handled in this way. It might be, for instance, a proposal of marriage sent from the other side of the world, or an invitation to be the Liberal candidate in a Walsall by-election. It would be extraordinary if these items were treated in the same way as an easily replaceable carton of milk or an extremely easily replaceable copy of the Sun. So much for that absurd piece of phantasmagoria, which has been demolished.
  Dr. Bray: I hope it will not upset the hon. Gentleman to hear that the mail already travels on buses in parts of the Highlands.
  Mr. Wainwright: The hon. Member for Motherwell and Wishaw will have his joke. He knows perfectly well that even if the mail travels on buses it is under the strict authority of the Post Office, governed by very important Acts of Parliament.

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  One additional reason, further to those which were adduced by my hon. Friend in the debate of November 1973, for voting against this Bill—particularly in regard to the important Clauses 1 and 2—is that it is based on an entirely impossible proposition, namely, that the measure of loss sustained by any industry, due to compliance with the price restraint policy, can ever be accurately measured. This is impossible, and it is quite wrong, in my view, for this House to be giving its assent to measures which are based upon a piece of Treasury humbug.
  The Chief Secretary, in opening the debate, lamented the fact that the audited accounts for these particular nationalised bodies are not yet available. I hope that he was not intending to imply to the House that any auditor of a nationalised industry would ever dream of signing a certificate naming a particular sum as that which has been lost by compliance with price restraint policies, because this is immeasurable. Anybody is entitled to make an estimate—and some estimates are more intelligent and more thoroughly contrived than others—but the suggestion that there can be any accurate measurement of the sums we are discussing this evening is entirely out of court. This has been proved again and again by the wide discrepancies between the budgeted estimates of various nationalised industries and the actual outturn.
  I was astonished and somewhat dismayed at the tone of easy and rather bland complacency in many of the speeches to which we listened this afternoon. It seems to me that behind the great problems posed by this Bill there lurks the even more alarming problem of what is to happen if, even when freed from price restraint by the admirable policies of the Chancellor of the Exchequer, some of these nationalised industries continue to return appalling losses.
  It seems to have been assumed too easily that the enlightened reversal by the Chancellor of the Exchequer of Tory Socialism and his willingness to trust to the forces of the market—a policy which was long overdue—will ensure that the nationalised industries affected by this Bill
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  will therefore be able to break even or even to make a reasonable return on their assets. I hope that the Minister of State will dwell upon this alarming prospect that freedom from price restraint may not enable some of our nationalised industries to break even at all. In saying that, I have in mind especially the Post Office.
  This Bill moves in an area in which all is uncertain and in which any attempt written into the Bill to give certainty to the figures is sheer hypocrisy. As with the Conservative Bill, a large proportion of this measure deals with provision for losses which have been incurred already. It is a well-known dilemma agonising most hon. Members to know whether to refuse to take action to deal with a situation, however regrettable, which has occurred already. But, like its Tory predecessor, this Bill also provides for future losses, and we on the Liberal bench feel entirely free to express our strong opposition to that.
  These two measures—the Tory measure and now this one, which in my view has been presented to us more honestly than was its predecessor—are both examples of the way in which the country has been consistently misgoverned by a conspiracy of the two main parties during the greater part of the period since the end of the last war. The conspiracy has been assisted at some periods by the CBI, which makes matters far worse than they would be otherwise. At other periods, the conspiracy has been assisted by the TUC. Somehow, in the interests of the great mass of the electors, that conspiracy has to be broken. There was a time when I had hoped, being an optimist, that the frustrated and voiceless centre moderates might turn with faith and hope to the hon. Member for Oswestry (Mr. Biffen), who so often in the most independent way has challenged the fashionable nostrums of the two-party conspiracy. But, in view of some of the hon. Gentleman's remarks earlier in the debate, I feel that I must draw attention to the fact that he was not such a reluctant supporter of the Conservative Government's Bill as he seemed to imply just now. During the Second Reading debate on the Conservative Bill he gave the impression that he would not be supporting it. He told the House frankly that he wished

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  to see the Chinese exhibition at the Royal Academy, and he apologised in advance to his Chief Whip for the fact that
  "I was not able to anticipate the political behaviour of the Liberal Party".—[Official Report, 21st November 1973; Vol. 864, c. 1416.]
  Mr. Biffen: There is nothing unusual about that.
  Mr. Wainwright: In other words, the hon. Gentleman had not expected a Division on that occasion, with the implication that he was apologising to his Chief Whip for not being in the Division Lobby. But, even though only 79 Conservative Members voted for their own Government's Bill, I regret to say that the hon. Member for Oswestry was among them, when it was known that there would be only eight hon. Members voting against the Bill. It seemed not to show reluctance for the hon. Member for Oswestry quite gratuitously to have added his vote to those already far in excess of the number needed to carry the Second Reading.
  Mr. Biffen: The hon. Member for Colne Valley (Mr. Wainwright) has a copy of the Hansard report of that debate. Perhaps he would care to quote the opening sentence of my speech, in which I made it clear that I regarded participation in the Second Reading debate as a ticket whereby one could be appointed to the Standing Committee and have some fun.
  Mr. Wainwright: I may be wrong, but it had never occurred to me before that voting in the Division Lobby was a necessary qualification for being selected to serve on a Standing Committee. However, I must leave that, because there are other much more important matters to be discussed.
  In commendation of the Government's approach, I feel bound to say that they have been more honest with the House and much more encouraging than were the Conservative Government when they presented their Bill. Although, in this House, we are only too often accustomed to hearing that Governments are repentant, that the rot will stop if only we will go with them a little further, and that they will pull themselves together, there was nevertheless a genuine tone in the speech of the Chief Secretary when he said that the Chancellor of the Exchequer intends to persist in his admirable policy and return to the forces
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  of the market with these nationalised industries, and that he means to wipe out the losses caused by price restraint as soon as possible, although he did not refer to the other possible losses in the nationalised industries.
  When the Conservative Government introduced their Bill there was first, an attempt to keep the figures in the Bill absurdly low—and they have proved in the event to be hopelessly low for dealing with the situation that they were intended to cope with—simply so that the Bill could be carried within the Conservative Party. There was also an attempt to suggest that this was only a very temporary aberration and that as soon as possible the Government would return to a different approach. We still wait, no longer hopefully, to hear what this alternative Conservative approach may be.
  In the meantime, by the present Government's intention to persist for a time—we hope only a limited time—with their policy of subsidising an artificial price restraint, the ordinary taxpayer, especially those millions of people who, to my astonishment and horror, are still called upon to pay income tax on tiny incomes, will foot the bill provided for in this legislation. Hard-working people in low-paid jobs will pay through their taxes for the uneconomic delivery of football pool coupons to perfectly well-to-do people and for the monstrous products of the advertising industry using the post at uneconomic rates to the nation and thus as an industry profiting enormously from subsidies provided by the taxpayer. This is fundamentally unjust, and, in a time of horrendous economic problems, entirely unjustifiable.
  7.0 p.m.
  Mr. Roy Hughes: I support the hon. Member for Colne Valley (Mr. Wainwright) in his ridiculing of the attacks by the Conservative Opposition on the postal service. That service still has much to commend it. There is a tendency these days to criticise such organisations, even those with as great a record of service as this one has. It seems to be the spirit of the age to attack the postal service, but that attack is cheap. In my constituency is the headquarters of the postal service for the county of Gwent. By and large, it is doing a very good job.

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  Clause 3 of the Bill proposes to increase the limit of borrowing by the British Steel Corporation to a sum not exceeding £2,000 million, which is in substitution for the previous figure of £1,250 million. These huge sums are an indication of the great responsibility that the Government have for the steel industry.
  Bringing the British Steel Corporation into being aroused a 20-year controversy. I always favoured its creation, but even the most fervent supporters of public ownership must admit that the BSC has not exactly been a success story. That does not mean that people like myself wish to return the industry to private hands. Bearing in mind the massive financial provisions in Clause 3, there is, however, need for a great deal more public accountability by the Corporation. For some time there has been the need also for a full-scale debate on steel, although I appreciate that it has been blotted out by the Common Market and referendum debates.
  The steel industry loomed large in the referendum campaign. My right hon. Friend the Prime Minister made numerous references to it in his speeches in this House, in Glasgow, in Cardiff and elsewhere. He made certain promises, which we now expect to be carried out. He said that immediately after the referendum there would be negotiations in order to reassert Government control over the British steel industry.
  In particular, the Prime Minister referred to a private steel project in my constituency. The relationship between the public and private sectors of the steel industry is relevant to Clause 3, particularly in the context in which the hon. Member for St. Ives (Mr. Nott) referred to the question of monopoly. I supported this private steel project particularly because it was to bring 800 jobs to Newport, which was very necessary after the BSC had closed the tube works there with the loss of almost 1,500 jobs.
  The industrial development certificate for the new project was received last April, but recently there has been a minor hitch. It was reported to me on Friday lunchtime—I am sure that hon. Members will note the time—when two referendum results had been declared, that, in respect of the steel fabrication
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  work on the site, the BSC had either refused to supply or could not supply the steel required, and that consequently the contract had been given to a Swiss-based firm on a 12-months' fixed price basis. I was told that the steel would he coming via Luxembourg and that, in addition, the firm would be bringing in its own labour, which would be Italian.
  We have no racial prejudice in Newport, but we do have about 200 men unemployed who normally engage in such work. I have written to the firm in question and asked for its comments. We have fought hard to bring this project to Newport and we feel rather annoyed that our local labour is to be bypassed for this part of the work. But perhaps such questions would be better directed to my right hon. Friend the Secretary of State for Industry than to Treasury Ministers, since it may not be their responsibility.
  The Explanatory Memorandum to the Bill refers to compensating certain nationalised industries for their losses due to price restraint. How does the BSC fit in there? As I pointed out earlier, the British steel industry is subject to violent fluctuations. My right hon. Friend the Chief Secretary spoke of the need for finance to provide for the stocks which, apparently, the corporation is now to build up. I would certainly rather see stocks built up than people made unemployed.
  Not long ago, the corporation complained about not being allowed to put its prices up. It indicated that our steel prices were below those of our European competitors. But now the country is flooded with imports of foreign steel, and the corporation is making huge losses which, in turn, threaten the livelihood of many thousands of people in this publicly-owned industry.
  I wrote to Sir Monty Finniston, the chairman of the corporation, about this. In his reply, he speaks of the difficulties with which the corporation is faced. He blames the imports in particular on the three-day working week—and we all know who brought that about. In his letter to me dated 5th June 1975 he said:
  "The Corporation is doing all it can to meet this situation and I understand that the European Commission intend to enforce the Community's steel pricing rules even more strictly than before, which should be of considerable

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  help in combating import penetration of the United Kingdom market by steel sold at prices below those permitted by the rules."
  There is no doubt that the operative expression there is "dumping". Steel is being dumped in this country at below what would be considered normal market prices. I find it difficult to reconcile the arguments of the Chairman of the British Steel Corporation when on the one hand he is talking about the difficulties brought about by the three-day week and on the other hand he is talking about the difficulties due to dumping.
  As Clause 3 shows, there is certainly a need for huge investment in this industry. Investment in new plant and equipment involves cutting manpower, with all the problems that such an action creates in various communities throughout the country.
  I feel bound to refer to what I call the flights of fancy of Sir Monty Finniston. A few weeks ago he was talking about the Utopia of reducing the labour force from 220,000 to 50,000. This spread alarm and despondency throughout the industry. On that occasion, like my hon. Friend the Member for Newcastle under Lyme (Mr. Golding), I supported the Secretary of State for Industry, who acted with very great restraint in the difficult situation which confronted him.
  The Iron and Steel Act 1967 provided that the British Steel Corporation should show concern for the welfare of its employees. It also provided for the corporation to engage in any industry or commercial activity outside the steel industry. If Sir Monty Finniston is so anxious to reduce the labour force, why cannot the British Steel Corporation diversify into other industries, as the Act provides? By doing that, it will show some commercial enterprise, a quality of which it has not shown much up to now.
  Communities throughout the country have a right to refuse to be made redundant, especially when there is little alternative work available, as is certainly the case at present in an area like Ebbw Vale. There is a lot of skill in that area, as well as in Shotton in North Wales, which could be properly utilised for the benefit of the nation.
  I shall certainly not oppose the Bill, but I do not have much confidence in the British Steel Corporation. This lack of
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  confidence was manifested at a conference I attended of the Welsh Regional Council of the Labour Party on 9th May at Llandudno. There was a call at the conference for a further take-over of private steel in this country. Ironically the statement called for the take-over to be made not by the British Steel Corporation but rather by the National Enterprise Board.
  Although I do not wish to oppose the Bill tonight, I make the point that the story of the British Steel Corporation is not a happy one. Its industrial relations have been tragic for a publicly-owned concern. There has been considerable demoralisation in all ranks throughout the industry, a failure of overall strategy, and much more besides.
  In my view, major changes are needed at Grosvenor Place. A start could be made with the removal of the chairman, because he has had very limited experience of the steel industry outside head office at Grosvenor Place. A new, less bureaucratic structure is needed for the steel industry. There should be more accountability to the House of Commons. Moreover, perhaps there could be some form of regional structure for the industry. In Wales and in Scotland there could be some measure of accountability to the proposed new assemblies. Something radical needs to be done in respect of our publicly-owned steel sector. There must be more worker participation. Under the present management there has been failure both in efficiency and in accountability.
  Mr. Nott: If there were to be a reorganisation of the steel industry with perhaps more of a regional structure, would the hon. Gentleman agree that it might be wise to let the regional groupings price their products separately and competitively with one another, or would he think that the pricing structure should be bureaucratically and centrally organised?
  Mr. Frank Hooley: Since last Thursday?
  Mr. Hughes: As my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) has indicated, there are additional complications following the referendum last Thursday. I envisage an organisation with a much smaller staff than the 1,500 who at present are housed

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  at Grosvenor Place. In my view, there are 1,500 people trying to make many thousands more redundant. I should prefer a much looser organisation, much smaller at the centre, with units of control at the regions, which possibly could have some element of commercial enterprise left to them.
  7.18 p.m.
  Mr. Michael Marshall: I am very glad to have the opportunity of following the hon. Member for Newport (Mr. Hughes) because I, too, wish to address my remarks largely to Clause 3 and in particular to the problems of the steel industry.
  It is a salutary fact that we have not had, since the General Election of last year, an opportunity to debate the steel industry. I am sure that hon. Members on both sides will join me when I say that we feel frustrated that this should be so. I say with no disrespect to the Minister of State, Treasury, who I believe will wind up the debate, that it is part of our frustration that when we discuss great industries like the steel industry we have to look at them in a financial context, whereas many of us would wish to hear the views of Ministers from the Department of Industry. I regret that none of them is present at the moment and, therefore, many of the remarks made by hon. Members on both sides of the House will not be answered or at least will not even be hoisted in by Ministers responsible in that Department.
  So far we have had a generally constructive debate, especially about steel. I wish to address my remarks to one or two of the points raised by Labour Members.
  The hon. Member for Newport said—I think fairly—that the history of the British Steel Corporation had not been exactly a success story, and he went on to make the point about opportunities for private investment. He saw a place for such investment in his own constituency which would help to meet the unemployment created by the corporation's closures.
  Those are sentiments with which I wholly agree. In the same constructive spirit, I suggest to the hon. Member that part of BSC's problem and part of the reason for its failure is one that I shall develop later.
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  The hon. Member spoke, finally, about the concept of a more decentralised organisation. He should recognise that one of the difficulties about the nationalisation of manufacturing industry—this is another aspect to which I shall return—is that inevitably terrible teething troubles have to be gone through in trying to decide on the ideal structure. In the case of the British Steel Corporation we had, following the McKinsey Report, the decentralisation of the industry. When that was found to have failed, it was followed by a massive centralisation of the industry. Now, as the hon. Gentleman rightly implied, there is pressure for decentralisation once again.
  There is a fear that in the process of these changes the management and the workers are pawns in the game with a political element, which makes this a very difficult pattern to establish successfully.
  Mr. Hooley: Does not the hon. Gentleman agree that rationalisation, break-up, re-amalgamation and changes in organisation occur frequently in big private groupings, too?
  Mr. Marshall: Yes, I accept that. The difficulty that one comes up against—this is why I referred specifically to manufacturing industry—is that at least in the market there is a far greater element of flexibility, which provides opportunities for bringing companies together successfully. Here we are caught up, as the hon. Gentleman will recognise, with many of the social obligations which have been written into the British Steel Corporation's charter and which do not allow of quite the ease of shaping or reshaping of the great private corporations. This is why I do not agree with the Government's intention to proceed with the nationalisation of the aerospace and shipbuilding industries, for there we shall see these problems all over again. Some hon. Members opposite recognise the stony path which lies ahead of them. Many of them who have constituency interests will have to traverse this ground again and again.
  This is why tonight I want to try to touch on one or two suggestions, which I hope will have all-party agreement, for trying to get us away from some of the more stale patterns to a more effective industry. I speak on this subject as a Member who came into political life

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  because of the nationalisation of steel. I was in the industry for 16 years. It was for me a traumatic experience to see what happened on its nationalisation. However, there comes a time—I have accepted it—when we cannot for ever knock the industry backwards and forwards. I accept that it is nationalised and I want to make a success of it. However, I stress that both sides, should try to be more flexible in their thinking on the subject.
  The hon. Member for Newport said that everything should not be in private ownership. Would he not accept that there could be a BP-type solution? The fact that people like Sir Monty Finniston may have mentioned this should not be the signal for the battle cry to be taken up to rally round the nationalisation concept.
  The failures of the corporation are frequently spoken about. In the last few years it has undoubtedly had to face the operation of clapped-out plant. Many of us know that that clapped-out plant dates back many years. During the whole period when the argument was taking place as to whether the industry would be nationalised we saw the way in which investment ran down. From 1951 to the early 1960s was the one period in postwar years during which nationalisation was not a burning issue, and that was the one period when investment began to move again. However, the political argument built up again, and we have had another decade in which investment has run down.
  Mr Roy Hughes: Does not the hon. Gentleman agree that the difference between us is that, whereas he is calling for less public accountability, I called for more public accountability?
  Mr. Marshall: I am not sure that that necessarily follows. I am saying that there is much to be said for a BP-type solution. I am calling for less accountability in the sense that I want to get away from interference in day-to-day management.
  Although I believe that the hon. Member for Newport was generally constructive, he, too, fell into the trap into which other hon. Members opposite have fallen. I believe that hon. Members opposite are unfair in trying to use the chairman of the corporation as a scapegoat.
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  The hon. Gentleman was also unfair on the question of diversification. I do not believe that there is any company in the country, whether it be publicly or privately owned, which is involved in the business of diversification—in career counselling, in trying to provide opportunities for people made redundant within their corporate organisations—that can beat the record of the British Steel Corporation.
  I shall not take up the points made by the hon. Member for Motherwell and Wishaw (Dr. Bray) in this regard. It is taking the argument out of context to imply that the corporation should do a vast amount which it is very difficult for any major organisation to do outside its own sphere. Any dispassionate comparison of the BSC with other organisations will show that it has a good record in this respect. Examples are preparing an industrial site in Hartlepool and getting together with a stainless steel exhaust manufacturer in South Wales. Those are practical examples of major efforts made by a nationalised corporation. It would be wrong for hon. Members opposite in presenting arguments for constituency reasons to ignore the fact that the corporation has made these substantial efforts.
  For me the most telling observation made in this debate came from my hon. Friend the Member for Oswestry (Mr. Biffen). He said that it is right to put this argument in the context of difficulties between the chairmen of nationalised corporations, Ministers, and Member of the House going back over many years. My hon. Friend quoted the First Report of the Select Committee on Nationalised Industries, Session 1967–68. I quote parts of paragraphs 874 and 875 of that report, relating to the relationship between Ministers and the chairmen of nationalised industries:
  "… this lack of clarity about purposes and responsibilities has revealed itself in a lack of understanding and in some cases, a breakdown of mutual confidence between Boards and Ministries. … Lying still deeper than this lack of clarity, this confusion of responsibilities and this breakdown of confidence remains a failure to understand and to work towards the fulfilment of the basic purposes of Ministerial control in respect of the industries."
  Those basic observations made in 196768 are certainly true today. My hon. Friend the Member for Oswestry was

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  right: we cannot for ever use this as a short-term argument. The time has come to look at the fundamental basis on which the House and Ministers, particularly those at the Department of Industry, and nationalised industries' chairmen can at least understand the framework upon which their decisions about investment, social responsibility and other matters can be examined logically.
  That was where once more the hon. Member for Motherwell and Wishaw fell into the trap of putting too much emphasis upon the interests, activities and enthusiasms of Members of the House. I say that to the hon. Member with the greatest respect for his knowledge and experience of the industry and for his deep compassion and feeling for it, but the arguments he advanced today put out of their place many arguments which are best left to the trade union movement. The hon. Member was doing what I think the Secretary of State has tended to do; namely, to outflank the trade unions in their own field in their relationship with the British Steel Corporation. I am sure that hon. Members opposite are confident that the trade union movement can fight for its corner. Hon. Members in all quarters of the House with constituency interests are pushed into positions in which they have to take too much upon themselves, and I felt that the hon. Gentleman himself was falling into that trap.
  Dr. Bray: It seems to me that the hon. Gentleman is missing the root of the problem of the relationship between nationalised industry corporations and the Government, and that is that they are much too big fish to be regarded merely as atoms in the dust of the whole economy. They are enormous whales in a small swimming bath. Having such an enormous impact upon the economy, the relationship between the nationalised industry and the Minister responsible cannot possibly, in technical or economic terms, be an arm's-length relationship.
  Mr. Marshall: I shall come to my proposals to improve the arm's-length relationship. The hon. Gentleman is apparently advocating that we should never create nationalised industries on this scale and of such scope. However, I am trying to move on to what I hope is common ground in improving the dis-
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  astrous relationship which exists today. One must recognise that the British Steel Corporation and the trade unions have already reached agreement in a remarkable way on the question of redundancies, certainly in the first five years of the corporation's life. The problems arising from 40,000 redundancies were handled with skill on both sides, and a similar number of redundancies were planned for the successive seven years under the £3,000 million investment programme. One must recognise that the political element reopened that issue, and the whole problem has been compounded by the downturn in trade, with the haggling and negotiating as between the Chairman of the British Steel Corporation and the Secretary of State for Industry.
  In the first few years of the corporation's existence, the trade unions and management of BSC were able to make effective arrangements which offered a great deal of scope for re-employment of many of the employees in the corporation. The hon. Member for Motherwell and Wishaw was right when he spoke about the defects and the rundown of plant from which much of the industry suffers today. I have already agreed that much of the investment hiatus cannot easily be put right tonight, but the Government must make up their minds on certain aspects of the investment programme.
  Hon. Members will today have seen the Ministers from the Department of Industry coming to the Dispatch Box and hiding behind the skirts of the British Steel Corporation, saying "We are not sitting upon any proposals. We have done all we can." Yet every hon. Member knows that unless and until the Government make up their mind whether or not Port Talbot is to be a 6 million-ton plant and whether Shotton is to continue, we shall have this problem of the investment hiatus over a large part of the British Steel Corporation.
  It is no good Ministers trying to imply that there is no actual increase in real costs. The British Steel Corporation's calculations show that the £3,000 million investment programme is now £4,500 million, and so the cost will creep up unless the Government grasp this nettle.
  I come to one or two constructive points on what should be done to help in

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  this situation. First, if the Government are indeed to help they must grasp the economic nettle, particularly in the matter of the total investment programme. They must also recognise that the British Steel Corporation has been working at a profit and that, in fact, that profit came as a result of EEC membership. It was EEC membership with freedom on pricing policy which allowed the BSC to move into profitability. Now it is running into massive deficits, the causes of which can be tackled by the Government. This is part of the grasping of the economic nettle.
  There is the matter of industrial disputes. It is no surprise to anybody that there are industrial disputes in every major plant of the British Steel Corporation. All of this has to be considered by hon. Members speaking up for their constituency interests; and, with the closure review, the whole idea that the plant closure is a starting point for negotiations, the Government must state loudly and clearly their intentions if they are to ease and, indeed, end many of those problems.
  The British Steel Corporation has missed the market. It is very sad for those of us who want to see an effective industry to recognise that had the corporation been able to get its investment programme going earlier, it could have capitalised on the major market boom. Instead, it has had to allow the doors open to steel imports. Many people are now signed up on long-term contracts with EEC membership and we shall not see much of that import business stopped.
  All of this comes back to the problem of the relationship between Governments and the nationalised corporations, and I do not exclude my own Government from this. When my party came into office in 1970, our own process of deciding what to do with the BSC occupied valuable time. By the time that the 1972 programme was announced and was then brought to a halt by the closure review, we had dramatically missed the great market opportunities which lay open to us. The present Government have shown no intention of facing up to the vital necessity of playing a constructive part in redeployment and retraining.
  It is easy to say that the BSC should do this, that or the other. We hear so
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  little about what the Government are doing. If we are talking about redundancies in a modernised industry and adopt a constructive approach, the Government should at least appear to have ideas on the subject, and the present Government seem to be short of such ideas.
  Mr. Ted Leadbitter: I am aware of the hon. Gentleman's association with Hartlepool. Surely it is self-evident that the representations that have been made over the years, and particularly during the past 12 months, to the Government have been appreciated and taken into account. It is certainly evident to me. The hon. Gentleman is mistaken in saying that the present Government have not done anything in the situation in which the British Steel Corporation finds itself.
  Mr. Marshall: The hon. Gentleman states that view, but I think the Government could have done more. There has been a lot of talk of what the BSC ought to do, but, recognising the problems which the country faces, this is a massive issue and there is very little new thinking by the Government.
  I conclude with some constructive ideas. I have spoken earlier of the BP solution and the increase in steel exports. I believe there is still scope for the BSC to increase its exports. In terms of the crucial problem of the relationship between Ministers, the corporation and, indeed, this House—this triangular relationship—it is no purely partisan point to say that this is a problem of the first magnitude.
  On 23rd May there was an Adjournment debate on nationalised industries when the hon. Member for Bristol, North-East (Mr. Palmer) raised a number of pertinent points on this subject. He referred to what he described as
  "the bizarre case of the defiant steel man."
  He said:
  "Here my right hon. Friend the Secretary of State for Industry achieved the remarkable feat of appearing on both sides of the fence at the same time."
  He added:
  "… this situation should not be allowed to continue."
  He said:
  "… the … balance between day-to-day responsibility of the board and the reserve

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  power of the Minister to give a direction in the national interest was not in evidence."—[Official Report, 23rd May 1975; Vol. 892, c. 1823–4.]
  Those observations reflect the worries which many of us feel.
  I wish to suggest one or two points which might be put forward in considering the role of the House in this matter. First, should we not at least recognise that we have a Select Committee on Nationalised Industries that looks at the annual reports of the corporation and will consider the industry's problems on a year-to-year basis, providing a convenient time to question the chairman and senior officials of the corporation? Why should not the Secretary of State carry out an independent but simultaneous operation, seeking to put himself on an annual general meeting relationship with the corporation? That would give a convenient focal point and a much more commercially-oriented approach. It would be worth trying.
  Secondly, should we not seek opportunities for the costing of the corporation to give greater cognisance to both its social and commercial activities, as my hon. Friend the Member for Guildford (Mr. Howell) described? That differentiation would make sense. I agree about the revaluation of assets, which the hon. Member for Motherwell and Wishaw suggested. There are ways in which the corporation's viability might be improved and the financial criteria made more recognisable to both sides of the House.
  I believe that in allowing the corporation and trade unions to get on with their own activities to a far greater degree the House and Ministers will provide the industry with opportunities for greater success.
  The Minister of State spoke in the Adjournment debate on 23rd May of an arm's-length but not hands-off relationship. What I have tried to argue is in accordance with that general spirit. We need an assurance from the Government, if the money provided under the Bill is not to be simply more money down the drain.
  7.42 p.m.
  Mr. Frank Hooley: I congratulate the hon. Member for
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  Arundel (Mr. Marshall) on a thoughtful and helpful speech, although he was unfair to my right hon. Friend the Chancellor of the Exchequer when he talked about lagging in terms of training facilities, and the problem of redundancies. The first public expenditure proposal in my right hon. Friend's Budget speech was for an extra £20 million to be made available to the Manpower Services Commission to deal with the problem of training and retraining. This Government created the commission. They have done a great deal in developing training centres, skillcentres, and so on. In fairness, the hon. Gentleman should admit that the Government and my right hon. Friend have not lagged so far behind in this matter as he suggested. However, the hon. Gentleman made a useful contribution with some of his other points.
  My concern is also about Clause 3—the extension of the British Steel Corporation's borrowing power from £1,250 million to a maximum of £2,000 million. We must deal with the whole question of the steel industry in the context of our membership of the European Communities, now that we have been told that we must stay inside the Common Market.
  On 8th April the European Commission made a somewhat gloomy report about steel production in the Common Market. The report envisages that Community steel mills will run at only 75 per cent. of capacity in the current year, taking into account an estimated 11 million-tonne increase in productive capacity, against an 85 per cent. utility in 1974. Total production is expected to fall by 9·3 million tonnes. Export markets are not thought to be good. In fact, the report suggests that exports may be 4 million tonnes down this year, and says that stocks overseas are a factor working against overseas sales. A run-down in stocks within the Community of 2 million tonnes is also forecast, which will not help the general market.
  The only bright areas identified by the Commission are in steel pipes, marine construction and mechanical and electrical engineering, in respect of which it says that demand could be relatively buoyant. Obviously, the demand generated by the exploration for and exploitation of North Sea oil will be very important for steel use.

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  In the face of this gloomy situation, which one cannot seriously challenge in the light of what is known in this country and in Western Europe generally, it is important that in the context of the Bill the House should examine the powers which the Coal and Steel Community possesses, under the Treaty of Paris, to deal with the situation. Article 57 gives the Commission powers to act in co-operation with the Governments concerned
  "to regularise or influence general consumption, particularly that of the public services".
  The Commission also has power of
  "intervention in regard to prices and commercial policy as provided for in this Treaty."
  Perhaps more significant than Article 57, which the Commission has contemplated using, are the powers in Article 58, which go somewhat beyond co-operation with Governments and give the Commission powers to impose quotas on the steel industries. It is important to quote at least part of the article, because it would have some impact on the productive capacity of British steel firms and steel plant if it were applied. More significantly, there has been pressure from the French steel industry to invoke Article 58 and introduce a system of production quotas in the present situation.
  Article 58.1 states that
  "In the event of a decline in demand, if the High Authority considers that the Community is confronted with a period of manifest crisis"—
  that is the operative technical phrase—
  "and that the means of action provided for in Article 57 are not sufficient to deal with this, it shall, after consulting the Consultative Committee and with the assent of the Council, establish a system of production quotas, accompanied to the necessary extent by the measures provided for in Article 74.
  If the High Authority fails to act, a Member State may bring the matter before the Council, which may, acting unanimously, require the High Authority to establish a system of quotas."
  So far the Commission has been reluctant to move in that direction—possibly, it has been suggested, because of the referendum debate going on in the United Kingdom, and possibly because to introduce a system of production quotas would be taken ill in other parts of the world. The fact remains that the power exists. Article 58 is in force. As members of the Community, we must subscribe to it and accept it. The House
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  should be aware of the possible consequences.
  The introduction of a system of production quotas might well have an impact on the BSC's investment programme. If the productive capacity of certain plant is set below levels envisaged by the corporation, the chances of expanding the capacity of that plant in the future may be jeopardised or called into question.
  I bear in mind the ambitious and, to my mind, necessary expansion of stainless steel production capacity in Sheffield. There is a scheme, which will ultimately cost about £60 million, to restore capacity for the manufacture of stainless steel in this country to something like a reasonable level. The decline in the British capacity to supply the home stainless steel market over the past 10 or 15 years has been appalling. The consequence is that we have been importing from all over the world a product which we could very well produce ourselves. If some form of quota were introduced it might imperil or call into question the excellent and ambitious plans of the BSC for expanding productive capacity of stainless steel in Sheffield and elsewhere.
  The investment programme is not only concerned with the plant already under the corporation's control or envisaged to be constructed by the corporation; there is the question of an extension of acquisition in the present private sector of the steel industry—namely, on extension of the acquisition that has occurred already to some extent. That is an area in which difficulties may arise.
  It is reasonable to mention that a good deal of rationalisation of the private sector has taken place—certainly in Sheffield—over the past five or six years. We have had the Johnson Firth Brown and Dunford-Elliott amalgamations and, most recently, the creation of Edgar Allen Balfour by the merging of two important private companies in Sheffield.
  The point which we may have to bear in mind is the need or desirability of the corporation expanding its control or interest into what is the present private sector, and the problems that may arise. This is not a purely theoretical consideration. In June 1974 the corporation acquired a controlling shareholding interest in Sheffield Rolling Mills, an organisation which had been partly hived

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  off to the private sector in 1969. The corporation bought back that capacity into its holding.
  Earlier this year the corporation expressed a strong interest in acquiring a controlling shareholding in Johnson Firth Brown, following the collapse of the Jessel financial empire. As required under Article 66 of the Treaty of Paris, the corporation formally approached the European Coal and Steel Community for permission to make that acquisition in an important steel engineering company. The Commission did not refuse permission but gave agreement subject to certain conditions, namely, that the Johnson Firth Brown set-up should divest itself of certain important subsidiary companies in Glasgow and Manchester. That would have had serious repercussions on employment in those areas. In those circumstances the corporation thought it could not go forward with the acquisition of a holding in Johnson Firth Brown.
  The question which the House must consider when dealing with the borrowing powers and the use of the moneys provided by the Bill is whether similar problems will arise in future, and how the House and the Government will be prepared to deal with the problem vis-à-vis the European Community.
  Another problem which has arisen and caused serious difficulty has been the repeal of Section 15 of the Iron and Steel Act 1967. That measure gave the Government a degree of control over capacity in the private sector. When we consider an industry as far ranging and important as the steel industry it is clear that attention must be paid to investment programmes and investment intentions in the private sector as well as the public sector. It is clear that there should be some co-ordination. Unfortunately, by the repeal of Section 15, as a result of accession to the Common Market, the Government have lost power over investment and development in the private sector.
  The House needs to examine what is required to restore that power, or at least to make certain that in this vital industry there is effective co-ordination of the investment programme in the public sector as well as the private sector. In their White Paper on the Common Market the Government suggested that
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  that might require some revision of the treaties. If we are to approve borrowing powers up to £2,000 million we should know whether that money can in future be used effectively to extend the interests of the corporation or to create other publicly-owned companies, perhaps independent of the BSC, in the steel industry.
  Apart from investment the other great issue in steel is manpower. In some ways it is a much more difficult and sensitive issue. It has a bearing on the livelihoods of many thousands of men and their families. It is probably reasonable that there should be some decline in total manpower in the steel industry and in the British Steel Corporation over the next few years. This is not a problem which need startle or terrify the House. After all, the rundown of manpower in other public corporations, such as rail, coal, gas and electricity, has been infinitely greater and more drastic than anything envisaged within the steel industry. In some of those other industries it has been accomplished with good sense and with the full cooperation of the unions concerned.
  The co-operation and sensitivity of the trade unions involved in steel must be taken fully into account. I could not approve of the rather high-handed tactics—if, indeed, they were merely tactics—of the chairman of the corporation earlier this year. He seemed to think that at this most awkward time, in terms of unemployment, he could announce, off the cuff, that 20,000 men would be got rid of within a few months. Unless the corporation changes its attitude and techniques it seems that what could be essentially a rational process, spread over a period, will result in frustration, anger and bad relations, when it is of paramount concern that relations should be good.
  The most tragic failure of the steel industry in the past 15 years has been that every time we have had an economic upturn the industry has been incapable of fulfilling the requirements of the rest of our industry. Whenever there has been an economic upturn the steel industry's capacity to supply steel pipes, plates and billets, for example, has been insufficient to meet reasonable demands. The fundamental problem of capacity, in terms of manpower, plant and investment, should be considered and should figure high in the Government's economic thinking.
  8.0 p.m.
  Mr. John Stanley: I should like to confine my remarks to the provisions in the Bill on Post Office finance. The justification for doing this is that I calculate that the Post Office will obtain the major share of the money that is to be provided under the Bill. I am sorry that no Minister from the Department of Industry is present, because two nationalised industries are being dealt with in this debate for which that Department is responsible. I also regret their absence in view of the fact that the debate on Post Office finances on 2nd December, when the topic was last debated, was so unsatisfactory. However, no doubt the Financial Secretary to the Treasury will be able to help the House by answering the questions which were left unanswered on that occasion.
  Let me return to the debate on 2nd December when the House debated the Post Office compensation order. On that occasion the House approved a compensation payment to the Post Office of £123 million as compensation for price restraint in the financial year 1973–74—compensation justified in respect of the Statutory Corporations (Financial Provisions) Act 1974, which states that compensation was on account of
  "compliance with the national policy relating to limitation of prices …".
  In my remarks on that earlier occasion I said that from an analysis of the Post Office's 1973–74 accounts the great bulk of the £123 million that was being sought had nothing whatever to do with trading losses incurred by the Post Office and was in no way attributable to a national policy of price restraint. The sum involved—£98 million out of £123 million—arose solely on account of an extraordinary provision charged to revenue to meet the deficit in the Post Office Pension Fund.
  I should like to explain briefly the background to that deficit. It arises solely out of the way in which the Post Office Pension Fund was reconstituted following the Post Office Act 1969. The then Labour Government appear to have been ill-advised in deciding to meet the liabilities of the pension fund solely and wholly out of the issue of gilt-edged stock. With the growing inflation we have seen in the 1970s, predictably there has been a mounting actuarial deficit in
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  that fund. When the last public assessment of that deficit was made by an actuary on 30th September 1972, the actuarial deficit in the fund was at that point assessed to be no less than £1,100 million. Since that date, in every year there have been huge extraordinary charges to revenue to meet deficits in the Post Office Pension Fund. On 2nd December I asked a question to which I was given no answer and I hope that an answer will be forthcoming today. I asked whether it was legitimate under the provisions of the Statutory Corporations (Financial Provisions) Act 1974 to seek compensation which in large amounts was represented not by trading losses but by an extraordinary charge to revenue to meet a deficit in the pension fund.
  I raise the same question today because it is of great importance, and I know that the hon. Member for Newcastle-under-Lyme (Mr. Golding) will agree with me. It relates to whether the substantial funds which are being put into the Post Office Pension Fund legitimately come within this legislation. If there is a question mark on this matter, it is important that it should be obliterated by a ministerial answer.
  I raise the matter again today because it is clear that in regard to 1974–75 and onwards the greater part of the money which has been provided under this Bill is being claimed by the Post Office, and that in turn the greater part of the money which the Post Office will obtain under the Bill is to meet the continuing deficit in the Post Office Pension Fund.
  Let me give the figures. The Chief Secretary said in his opening remarks today that in the financial year 1974–75 compensation of £650 million will be paid. He said that of that sum £330 million, just over half, will be for the Post Office. In the following financial year 1975–76, the Chief Secretary said, he estimates at the moment that there will be the need for a further £100 million of compensation for statutory price restraint. Of that £100 million he said that £70 million would be directed to the Post Office. In those two financial years it would appear that large sums will arise on account of the deficit in the Post Office Pension Fund. If we take the last three years, the position is that in 1973–74 of the £123 million compensation payment which has already

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  been authorised by the House, £98 million was represented by the extraordinary charge to revenue of the deficit in the Post Office Pension Fund. In the following year 1974–75, of the £330 million compensation which is envisaged to be paid to the Post Office under this Bill, there will be £100 million which is estimated to be the deficit on the pension fund as shown in the Written Answer of 19th February 1975 in c. 426. If we take the next year, 1975–76, we see that £70 million of compensation is due to go to the Post Office in that year. We do not know what the deficit will be in the Post Office Pension Fund in that year, but given a deficit of £100 million in each of the three preceding financial years, 1972–73, 1973–74 and 1974–75, it would be reasonable to assume that the deficit in respect of the pension fund in 1975–76 will again be not less than £100 million.
  I should like to make three points about the fund, to which I hope that we shall have a clear answer in the interests of beneficiaries. First, I hope we shall be told whether it is proper for Parliament to apply substantial sums to the pension fund through legislation solely concerned with compensation for a national policy of limitation of prices. Secondly, is it not time that the Post Office Pension Fund was put on a sound financial footing? I do not believe it is right or prudent year after year to go on making extraordinary charges to revenue.
  Mr. Golding: Will the hon. Gentleman make clear that the pensions of Post Office staff will not be put at risk in any way?
  Mr. Stanley: I do not believe there is any evidence that pensions are at risk. I am pointing out that I have had no answer on the legal situation for a period of five to six months. I hope that the Financial Secretary in reply will be able to say that it is legitimate and proper that the present legislation should be used to make extraordinary provisions in respect of Post Office pension funds. If that information is given to the House, there can be no danger. However, if it should prove to be otherwise, any Government would make certain that the deficit was made up in another way. I do not believe there is
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  any great point of substance between us, but we should know whether this charge should properly be made under the present legislation. That is the matter on which I am seeking an answer.
  My third point about the fund is that there is a substantial public case for the Government to institute an inquiry, the results of which should be made public, into the handling of the Post Office Pension Fund since 1969. The cash cost of the accumulated deficit is already over £300 million to the period 1974–75. In addition, there is no evidence that the present deficit has been successfully eliminated. Sir William Ryland, the Post Office Chairman, was reported by the Sunday Telegraph on 17th March to have said that it would cost a further £800 million to put the Post Office Pension Fund on a sound financial basis. That figure would appear to be right. If we add the £800 million to the £300 million already paid out in cash we get a figure of £1,100 million, which was the actuarial deficit estimated on 30th September 1972.
  I suggest that, in view of figures of this magnitude, there is a strong case for a Government inquiry into why a deficit of this size has emerged. I do not know whether there has been major mismanagement or misjudgment. But there is a strong case for finding out why a deficit of this order should have accumulated over the last five or six years.
  Taking a parallel, if a deficit of 1 per cent. of the £1·1 billion which has accumulated in the public sector had occurred in the private sector, the people responsible would definitely be held to account. Therefore, there is no case for Parliament turning a blind eye to the fact that a monumental financial deficit has occurred in the handling of this pension fund. In the interests of other nationalised industry pension funds, I believe that an explanation should be given to this House and to the public at large for this deficit having occurred.
  I turn now to the present budgeting position of the Post Office. I appreciate that the Post Office is a labour-intensive industry and, therefore, is particularly vulnerable to inflation. But the Chief Secretary in his opening remarks has not helped the situation by not indicating the Government's assessment of the deficit

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  facing the Post Office in the current financial year 1975–76. By not giving that figure, the right hon. Gentleman has considerably circumscribed the debate. I believe that there are grounds for doubting whether the system of financial forecasting by the Post Office is sufficiently good, given the importance of the service that it provides and the magnitude of the sums of which it is disposing.
  The budgeting for the previous financial year seemed to be more or less en target. In the debate on 3rd December the Financial Secretary, estimating the deficit for 1974–75, said that it was currently expected to be a little over £300 million. When the hon. Gentleman was asked to quantify this point in Hansard on 19th February, he gave the breakdown of the figures, which came to £304 million. Today we have been told by the Chief Secretary that the deficit for the financial year 1974–75 will be £330 million.
  It is clear, however, that in the budgeting for the current financial year 1975–76 there has been a serious failure on the part of the Post Office to quantify the commercial repercussions on its own business of the combination of inflation and of the market impact of the recent price rises which it has secured.
  The figures are remarkable in the way that they have escalated over the last six months. The Post Office made its detailed submission, as it is statutorily obliged to do, for its proposed increases to the Post Office Users National Council in January last year. In that submission it estimated that if the POUNC and the Government agreed to the price increases—and the increases were essentially agreed—the deficit in 1975–76 would be reduced to only £50 million.
  Today the Chief Secretary said that the Government's estimate of the deficit for 1975–76 was £70 million, but in his remarks he made it clear that the real deficit was substantially larger than that. For example, in The Times of 28th April it was reported that the actual deficit for 1975–76 may be as much as £300 million again. If there is any credence and substance in that report, it means that the forecast Post Office deficit for 1975–76 will have gone up six times in the space of six months. If so, the management of the Post Office has a major question to
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  answer as to why its budgeting and forecasting have not proved more accurate than would seem to be the case for the current financial year.
  The time has come to pose some fundamental questions about the Post Office. We should be asking whether, if the Post Office is given complete price freedom, as is the welcome policy of the Government, it can be profitable or whether some parts are inherently unprofitable? If some parts are inherently unprofitable, is it desirable that the postal services perhaps should be treated organisationally wholly separately from the telecommunications services? If parts are inherently unprofitable, is it right to begin to loosen some of the statutory monopolies of the Post Office Corporation? Can the existing level of postal services be justified if they require continual subsidisation from one year to another? Can the Post Office's considerable consumption of capital resources be justified against the Government's huge overspending in the public sector? These are fundamental questions which must be posed.
  I believe that the time has now come for the Government to come forward with a White Paper setting out the forward strategy of the Post Office, quantifying the various options and alternatives, the costs of those alternatives, and the types and levels of services implicit in them. I hope that such a White Paper will be forthcoming after the Government have completed their review of Post Office finances.
  I hope that this will be the last occasion on which a Government of any political complexion come to the House with legislation which seeks hundreds of millions of pounds for the Post Office Corporation without at the same time producing an up-to-date financial assessment of the corporation's position and a clear background to the future course and options open to that important nationalised industry.
  8.18 p.m.
  Mr. Ted Leadbitter: I expect that in making his last comments the hon. Member for Tonbridge and Malling (Mr. Stanley) was attempting to be sincere. I hope that he will not be disturbed when I suggest that no previous Government have asked the House for extra borrowing powers on the Second

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  Reading of a Bill in the manner that he suggested. I suggest that he pursues the latter part of his argument upstairs in Standing Committee, where the Bill can be scrutinised line by line. If I felt as he does I should certainly be posing pertinent questions to the Minister and demanding answers.
  I believe that on Second Reading one has to consider the extent to which one's contribution—I do not minimise the hon. Gentleman's contribution; his speech was thoughtful and well prepared—may breach confidence when dealing in a general way with pension funds. I do not deviate from the hon. Gentleman's concern. I believe that he expressed a genuine view, which he wants the House to consider. Unfortunately, the House is not master of what is read and heard outside. There could be unnecessary concern and representations made relating to what the hon. Gentleman said about a particular pension fund.
  I want to come straight to the point that worries me—the steel industry, particularly in my constituency. I propose to keep faith with what I said to the hon. Gentleman. It would serve no useful purpose to go into too much detail about the finances and investment policies of the steel corporation, but it is pertinent to say that the steel industry is the largest manufacturing industry in this country, not in terms of employing people, but in terms of manufactures, in terms of its effect on the car, shipbuilding and construction industries, and in terms of its valuable contribution to exports. It is because of that situation that the state of affairs in the industry worries me considerably.
  It was said earlier that we have never found ourselves in the situation in which, when there has been an upturn in the demand for steel throughout the world our industry has had the capacity to meet it. I do not think that any hon. Member on either side of the House can argue against that fact. It is not sufficient to say that someone is to be blamed for that situation, because if we are talking about the largest manufacturing industry in the United Kingdom we have to realise that the managerial problems are complex and that technological developments and research requirements, when placed against present levels of production con-
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  siderations, are beyond human calculation and determination to achieve the kind of precision that is needed to meet future demands for steel. But that does not mean that because there is imperfection in dealing with managerial, technological and research problems we should be condemnatory about the rôle that we have to play in a democracy in order to protect the people who work in that industry.
  The hon. Member for Arundel (Mr. Marshall), who made an excellent speech—and on many occasions I have listened to his well-prepared speeches—made a slight error when he suggested that the Government should do more, bearing in mind that at Question Time today my right hon. Friend the Secretary of State for Industry was being maligned because he was interfering too much in industry. On one day the House cannot claim to be right in both instances, so if I accept the hon. Gentleman's concluding thoughts I draw the conclusion that he concedes that in the largest manufacturing industry in the United Kingdom it is imperative that there should be a rôle for the Government, for the trade union movement and for the management of the steel corporation.
  The number of jobs is of paramount importance. This affects not only those in the industry itself but those in the ancillary and supply services. The numbers employed affect project planning in local authorities from the point of view of schools, roads and housing. Therefore, the magnitude of the problem demands that Parliament and the Government have a rôle to perform. I accept that the hon. Member for Arundel, who at Question Time, following the general euphoria of the aftermath of the referendum, had some sport with my right hon. Friend the Secretary of State for Industry, is now conceding that the Government should do more.
  Mr. Michael Marshall: I appreciate what the hon. Gentleman is saying, but I was urging the Government to look at the whole question of redeployment and retraining in the widest sense. There is not enough thinking on this subject. I was not talking purely about steel. My earlier questions were related to what I see as the Government's failure to grasp the nettle of investment decisions and

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  closures. I do not think that these things are related.
  Mr. Leadbitter: One of the things about a democracy is that we can discuss our ideas with friendly impartiality but with conviction, and I remind the hon. Gentleman that the first Chairman of the British Steel Corporation, in a speech to the New York Chamber of Commerce, said that one of his greatest problems was that of intervention by the Government, and the Government of that day was not a Labour Government.
  I believe that there are areas in which we are in agreement. There is no problem when we are arguing about extra borrowing powers that we give to a corporation such as the British Steel Corporation, but what I am trying to say is that the House should not find itself in the situation that because one party is on one side of the House at one moment of time and on the other side on another occasion we should play ducks and drakes with the industry as if it were separate from us in some way and is suffering merely because the Government of the day happen to have been carrying out an investigation or examination in order to measure the borrowing requirements of an industry which has endemic problems.
  The steel industry is of such a size and complexity that it will never be able to reach the ideal in terms of having the capacity to meet future world demand, because that cannot be done. We do not have a crystal ball to gaze into, but one of the errors that we have made is to reduce the capacity of the industry in such a way that it has been criminal in the sense that the things about which the hon. Gentleman is concerned and the things to which I have referred have fallen by the wayside and we have not obtained a maximisation of the benefits that we would have had if common sense rather than friction had prevailed.
  During the referendum a report was put about concerning Redcar which, as far as I am aware, had no signature to it, but it has caused some concern in the area in which I live. I am glad that my right hon. Friend the Member for Middlesbrough (Mr. Bottomley) has come into the Chamber because he and I and all our colleagues from Teesside are con-
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  cerned about this. We have enjoyed a great deal of co-operation with the Government. Indeed, we had some interesting meetings with Ministers of the previous Conservative Government and with the Chairman of the British Steel Corporation.
  The Redcar steel complex is part of our national interest and it should not be tampered with by anyone. My right hon. Friend the Member for Middlesbrough and I fully agree on this point. We do not feel that the development of this complex, which it is estimated will eventually produce a third of our steel capacity, should be tampered with.
  A question of honour is involved in the argument. Under the previous Government, there was a two-year examination of the investment programme for the industry which caused the BSC a good deal of heartache, but one thing which emerged was that one of the major steel production centres would be in Redcar. My colleagues and I have heard no evidence from the trade unions, the councils or anyone else in the area to suggest that this development will be diminished, but because I have said this is a matter of honour and of investment calculation, I hope that the Government will be able to say tonight that this development will go on.
  Just north of the River Tees is Hartlepool, which I am proud to represent. I raise this matter because I believe that the House will have considerable sympathy with my efforts and those of other hon. Members on both sides to present the problem reasonably and without acrimony. Because of the inability to meet future world demand, the number of closures is sometimes excessive. Since 1972–73, Hartlepool has been under the shadow of closure, which would affect the jobs of more than 4,000 men. In my constituency, now and in the past, unemployment has probably been higher for longer than anywhere else in the United Kingdom. With many redundancies likely in the near future, throwing more than 2,000 people out of work in steel works and other organisations. I want my contribution to the argument about the corporation's borrowing powers to be answered with some recognition that what is at stake is not just steel production but the livelihood of thousands of men and the well-being of their families

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  —probably 10,000 souls—with about 2,000 or 3,000 more liable to be affected in the ancillary industries.
  On 12th May, a director of the Teesside and Workington Group of the BSC, Mr. Saul, said that places like Hartlepool would be affected by what he called a recession. This is the problem that I have been discussing—making decisions in the face of a recession which cannot be pulled back in time when steel demand rises. If a closure is likely in Hartlepool, where, so far, our argument has changed the corporation's mind four times—the closure was postponed from 1974 to 1975, to 1976, to 1977, and now there is a further breathing space until 1978—when one considers the numbers employed in this industry in a constituency of only 100,000 people, one can see the economic effect that this would have.
  For a director of a BSC group to talk of places like Hartlepool being cut down because of a recession makes me want to say, "Take care". I shall not argue the matter now, but I do ask him for God's sake to listen to men like me and to the trade unionists concerned, who approach the argument fairly and objectively.
  For example, a colleague of mine in Hartlepool, Mr. J. B. Close, at the recent conference of the group I have mentioned, told the director that it was nonsense to talk about putting steel plants in mothballs. He was talking about a situation he knew. Another member, Mr. Tindall, of Hartlepool, said that the chairman, Sir Monty Finniston had given an undertaking that he would not use the recession to bring forward closures and redundancies. Another member, Mr. Linighan, said that the group was really saying that Hartlepool could no longer have its steel plant. Finally, Mr. P. Hynes, who is the secretary of the "Campaign to Save the Steel Plant Group", said that consultation on plate mill strategy was nothing more than a charade.
  In the Second Reading debate let us talk about matters in general, although they affect people in particular. Let us recognise that if men who have worked all their lives in the steel industry talk like this—and they are used to consultation—there must be something wrong with the relationships between the steel corporation and the trade union movement
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  at that level. For example, seven years ago the chairman of the corporation said that he wanted 180.000 people to produce 37 million tons of steel. He calculated those figures as a scientist and industrialist. Seven years later he was found to be wrong. Only the other week he said that he wanted 50,000 people in the industry to produce 37 million tons of steel. Is it so difficult for us to imagine that seven years from now we shall say "We are sorry, Sir Monty, but again you must be wrong"?
  The Government are struggling hard to deal with an extremely difficult problem. Discussions are taking place day in and day out in order to find answers. More fundamentally, the House has to reassert itself, use its natural instinct and suggest that when we make the larger decisions on closures and investment we must bear in mind the lessons of the past, and what I have said to the chairman on previous occasions, namely, that the only consistent thing about the British Steel Corporation, because of its size and complexity, is its inconsistency, in terms of making judgments that have not produced the right answers. The solution can be found not because the chairman and his technical officers claim they know it, but only if the House of Commons, the Government, the British Steel Corporation and the trade union movement work together so that they can eradicate as far as is humanly possible some of the dangers of previous judgments which affect men, their work and their families.
  8.40 p.m.
  Mr. Tim Renton: The hon. Member for Hartlepool (Mr. Leadbitter) has just referred to the inconsistency of the British Steel Corporation in reaching the right judgments that led to the best answers. The point I should like to make to him is that that inconsistency has been due very often—more often than not in the past—to decisions taken by politicians, rather than to the commercial judgment of the British Steel Corporation if it had been left to itself.
  I will develop that point during my remarks, but first I should like to say that when the hon. Member for Hartlepool referred to the remarks made by my hon. Friend the Member for Tonbridge and Mailing (Mr. Stanley) in regard to the Post Office Pension Fund, he should have borne in mind that my hon. Friend was

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  calling for an inquiry into this pension fund in order that the fund should be put into proper financial shape. Surely the fact that that concern exists on the Opposition side of the House should give great comfort to members of that pension fund. It should give them far more comfort that we wish to see the fund put into proper shape than their knowledge that it is now in deficit and is financially non-viable. This information is, of course, available to every one of them through the Post Office accounts.
  Professor Galbraith commented not long ago that in this country we already put most of our social energies into shoring up the weak sectors of our economy. What I fear is that it is not just our social energies but a very large part of our financial resources which are going into shoring up those weak sectors. In this Second Reading debate it is to that point that I want to direct my remarks. I feel that just as bad currency drives out good, so the weak sectors in an economy can undermine the strong. Unless we can get financial disciplines right in the nationalised industries and get the interface between politicians, the Civil Service and the management of those nationalised industries right, our chances of strengthening the whole of British industry are poor indeed. Surely in the potentially exciting years which lie ahead of us following the massive decision to stay within the EEC, the prime task of this House must be to help to create an economy in which both nationalised industries and private enterprise are successful.
  In listening to the Chief Secretary open the debate, I was encouraged when I heard him comment that £1 spent on subsidies is £1 less available for vital investment. That refers equally to food subsidies and council house rents. But in the case of nationalised industries not only is £1 spent on subsidies El less available for vital investment; it is also true that by not charging economic prices and if the nationalised industries run more or less permanently at a loss due to Government interference, virtually all incentive within those industries to enforce cost control to try to run an economic business disappears. Inevitably an attitude develops of "What the hell! Why try to make minor cost improve-
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  ments? The Government will bail us out. The Government will pay in the end in any event."
  There is the further fact that if one subsidises prices one rapidly gets into a position in which one cannot raise them to the customer sufficiently because the rise needed to return to the proper economic level is simply too great. We have already seen this to a degree in, for example, off-peak electricity prices. It is this symptom of not being able to make up past deficiencies that the Post Office is going through at present. If we had all become accustomed to a rise in the cost of stamps of ½p a year, this would not be so. What the Post Office is suffering from is a massive rise of 2½p.
  There should be as little distortion of market demand and forces as possible in the nationalised industries as in other industries. If there is market distortion, this leads to incorrect investment decisions. A classic case of this has been the non-economic price of coal. This has led in the steel industry to a failure, because coal was available so cheaply, to develop away from blast furnaces towards an increased study of powder metallurgy that far higher prices for coal would have brought about.
  The theme running through this debate, and certainly in the speeches from Opposition Members, has been that the Morrisonian principle of interference in the nationalised industries only when national interest demands it is now far more honoured in the breach than in the observance. With all due humility, having been a Member for only 15 months, and of the Select Committee on Nationalised Industries for three or four months, I am horrified not only by the degree of interference by Ministers and by Members of Parliament but also by the degree of judgment and decision making required of us in matters on which quite simply we do not have sufficient technical competence. There are obvious exceptions to this: in the case of the steel industry, my hon. Friend the Member for Arundel (Mr. Marshall) and the hon. Gentleman the Member for Motherwell and Wishaw (Dr. Bray). Time and again we must all have been aware, for example in the case of nuclear reactors and in regard to energy questions, that matters conic up through Ministers to this House on which

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  we simply do not have enough knowledge to take the decisions required of us.
  I had great sympathy with the Chairman of British Rail when he said recently that a large part of British Rail's trouble resulted from incorrect decisions, primarily taken by politicians.
  The ability of all of us—I am just as much to blame as anyone else—to ask Parliamentary Questions concerning the nationalised industries leads to a very great distraction for the management of those industries who have to find replies to those Questions. It is not unlike having an annual general meeting five days a week. The only difference is that here there is a warning two weeks in advance of the questions that the shareholders are going to ask.
  Against this background I think that a great many changes are needed. I should like to see a cadre of civil servants developing with far more technical knowledge and far more technical competence than, with all respect, we see at the moment in the Department of Industry. It would be necessary for these civil servants to go out into industry for long spells in order to find out within an industry how that industry works, obtaining thereby a great degree of knowledge which can be used subsequently.
  In the longer run we shall have to see in this country a divorce between the executive in the public sector, which is bound to grow, and the legislature. I do not pretend to have any magic answer to this, but at a time when the nationalised industries are consuming more and more of the investment in this country we should study the American and French models. It is true that in France the permanent civil authority possesses far more authority to produce more logically considered policies and to ensure a greater consistent life for those policies, free of party political prejudice, than is the case in the United Kingdom.
  Tied in with this, ideally, the nationalised industries should be able to produce investment plans for periods up to 10 years that would be more or less immutable. Those investment plans would, of course, anticipate price increases, inflation, and increases in labour costs. I realise the great difficulty of expecting any Government to bind
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  themselves to decisions taken a few years before—particularly those taken by their predecessors—but we have to face the fact that there is nothing worse than saying to a nationalised industry, in the middle of an investment programme, either "We now expect you to change that investment programme because our political objectives are different from those of our predecessors" or "Because money is short, we authorise you to spend 75 per cent. of your next year's capital budget and we will let you know about the balance in due course." This leads to a mess in the ordering of capital equipment and creates uncertainty throughout management.
  The total losses of the nationalised industries in the year just ended will greatly exceed £1 billion. We are told that British Rail's losses in the year ahead are likely to exceed £340 million and that British Rail may soon find itself in the situation where its wages bill alone is as high as its total income. However, when the general secretary of the NUR says that the argument that British Rail cannot afford more wages is irrelevant, he is only telling the historic truth. The ultimate financial sanction of going bust, of being driven out of business, does not exist in the nationalised industries. There has always been endless recourse to the Treasury.
  Given the argument that a nationalised industry might go to the wall, the Treasury has always given in to such financial pressures. If some means of changing this is not found, there will be no end to the size and sort of bill that we are debating today.
  Over the weekend, the Under-Secretary of State for the Environment said:
  "When the customer does not pay the full costs of the services, we must monitor performance to ensure that there is a continuing search for economies, and a proper social return on the subsidies we pay."
  That is bosh, because
  "a proper social return on the subsidies we pay"
  is a meaningless phrase. No one can quantify what is a proper social return. The result is that the nationalised industries have always suffered from an incompatibility of objectives. They have been told first that they have to provide a social service and that, in this, Government interference is inevitable. But

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  then they have been told that they must make a reasonable return on their capital. The two are incompatible.
  At a time when public resources are so short, I suggest that a reasonable return, whatever the definition of that is, must be the predominant aim and that the social service must be properly costed out by the Ministry which requests it and paid over on a monthly basis to the nationalised industry in question so that it can run itself as much as possible as a market company.
  I should like to sec the discipline imposed on the nationalised industries of the Government, through the Treasury, allocating a certain global sum to the totality of the nationalised industries grouped together of possibly £1 billion a year on a five-year rolling programme. In saying that, I come back to an idea which has been mooted before. This total would be allocated out by a holding board for the nationalised industries. On it, naturally, sponsoring Ministers and their permanent secretaries would be represented. But the bulk of the small holding board would be made up of industrialists. They would allocate funds within the conflicting claims based in some instances on commercial return and in some on social need. But the underlying discipline would be that in no event would more money be available from the Treasury than the global sum initially allocated. If one nationalised industry needed more, it would have to be at the expense of another.
  I should not like to see this holding company become just another tier of civil servants. I should prefer, to use Lord Rothschild's word, a "membrane" which would scrutinise the major investment plans of the nationalised industries, allocate resources and evaluate the results while the respective managements got on with their regular executive tasks.
  It would be the job of this holding company to argue with the Treasury about the level of subsidy for social objectives and how this was to be fed into the nationalised industries with least disturbance to the pursuit of commercial objectives. I submit that this membrane could act as a buttress between the managements of the nationalised industries and politicians and civil servants.
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  My hon. Friend the Member for St. Ives (Mr. Nott) said that he felt that the measurement of return of assets, particularly in the days when inflation accounting is with us, needs looking at. I hope that the Minister of State will take on board the fact that, in my judgment, the whole principle of test discount rates is wrong in the nationalised industries, which are, in effect, conglomerates active in many sectors. The test discount rate is effective for a single investment project, but not as a means of measuring return in a very large industry which has many different activities.
  The reason is simple. When the returns start to come in, under the test discount rate in a nationalised industry, the profit available instead of being reinvested in projects which will yield a comparable return necessary to achieve the rate originally required, is absorbed in much less fruitful and rewarding projects—perhaps in the replacement of old assets that need replacing but that could never achieve the sort of rate promised in the first place on the individual project.
  The whole question of a proper financial criterion for the nationalised industries needs to be examined, and in this connection I quote the remarks made by the Minister of State in an Adjournment debate last month. He said:
  "Nobody dealing with nationalised industries will want to revert to a situation in which the rate of return on these assets is not in accord with the best principles of their efficient use."—[Official Report, 23rd May 1975; Vol. 892, c. 1829.]
  Unfortunately, after that Delphic utterance, the Minister did not develop the theme, but I hope that, in reply tonight, he will tell us what he feels to be the appropriate measurement of adequate return in the nationalised industries.
  This is of particular concern at the moment because in the case of the National Enterprise Board—that new animal to be unleashed upon us—the Prime Minister has said that it will be subject to the sanctions of Treasury approval, and we all know, since it is one of the reasons for this debate, that those sanctions have failed in the past. Why should Treasury approval work in the case of the NEB when it has conspicuously failed in the past?

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  Something needs to be brought forward to replace the failed nostrums of yester-year. I hope that tonight we shall hear what it is to be. I welcomed the Chief Secretary's statement that this ought to be the last Bill of its kind, but I fear that, unless the Government put more teeth into their argument as to what are to be the restraints on wage demands in the nationalised industries and what are to be the new financial criteria, his optimism will be unjustified and in another year or two, under the present Government, we shall be debating another such deplorable Bill as this one.
  9.0 p.m.
  Mr. David Howell: I think the House will agree that the debate has been marked by some excellent speeches from both sides of the House, delivered with great authority and familiarity with some of the industries with which the Bill is concerned. I pick out in particular the speeches by my hon. Friend the Member for Arundel (Mr. Marshall) on the steel industry, and my hon. Friend the Member for Tonbridge and Mailing (Mr. Stanley) on the devastating situation which he exposed in the Post Office Corporation, and the authoritative speech by the hon. Member for Newcastle-under-Lyme (Mr. Golding), from his considerable experience in his trade union. My hon. Friend the Member for Mid-Sussex (Mr. Renton) touched with accuracy on some very important aspects of the need now confronting us to come to grips with what has been accurately described not as the hard core of the British industry and the British economy but as the soft centre of the British economy.
  No one pretends—certainly not my hon. Friend the Member for St. Ives (Mr. Nott), who opened on behalf of the Opposition, nor I—that there are simple answers to the problems that we have been discussing, and particularly to the question of the relationship between Ministers and the chairmen and managements of nationalised industries in terms of working out price strategies, wages strategies, investment strategies, and so on. It would be impudent to put such a view forward.
  There are too many errors of commission by Ministers of successive Governments, even to begin to claim that we can
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  now lay down simple answers or point the finger across the House and say that this should be done. We are still struggling to define what a nationalised industry is.
  Never since the time of the Morrisonian concept, when the guidelines were first laid down, have we had a clear idea whether a nationalised industry should be treated as a business or as a social service. Mr. Sydney Weighell states as a principle that the railwaymen are entitled to a given percentage, the going rate—the just wage, as it were—in the railways. I do not agree with him. In my view, that is the road to disaster and even more lack of control than we have in the railways at present. That is a point of view which is widely held—in other words, that the wages that should be paid, and, furthermore, the labour costs incurred in a certain nationalised industry, as we call it perhaps wrongly, should bear no relation to the finances of that particular institution or industry, but should be decided by other determinants—in this case the going rate, which appears to be about a 30 per cent. increase on the previous year.
  Do not let any of us pretend that we have a common view about what a nationalised industry is. Obviously there are sharply divergent views, not merely between the different industries—they are all very different animals, as my hon. Friend the Member for St. Ives said—but about what the whole sector of nationalised industry really is.
  I make it clear that we are not seeking to divide the House tonight because we have a simple solution. I put the matter a different way. I should like to put into context our reasons for dividing the House tonight. In doing so I should like to go a little—I shall try not to be too controversial—into recent economic history. It would not be too fanciful to depict the past year or 18 months of Labour economic policy, at any rate as expounded by Treasury Ministers and by the Chancellor, in two phases. This afternoon the Chief Secretary made a speech which was full of very strong words and warnings about the dangers of regarding Government as a bottomless purse. He said a great many sensible things. Some of them might have been drafted in the Conservative Central Office. However, last year

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  he did not talk quite so much about the danger of the bottomless purse.
  I should like to divide Labour economic policy into two phases. Phase 1 was last year when, far from being constantly reminded that there was no more in the kitty, we were being told by the Chancellor almost from the start of the Labour administration that the circle could be squared, that it did not matter if the figures did not add up, because there were the rich to be soaked, and they would fill the gap. We were told last autumn that Britain alone, by reasons and means to be later revealed, could escape the levels of unemployment which the world recession was bringing to other countries, such as France and Germany. We were told that we could do this by maintaining generous levels and degrees of reflation and high public spending. That was the position last year, which led to more difficulties, which I shall come to later.
  Above all, the rule of the day of the first period of Labour economic policy was to let public spending rip—and, by heaven, rip it did, as we all know by now to our cost. Indeed, it may be—perhaps I am being too optimistic—that it has reached its crazy crescendo with the development that my hon. Friend the Member for Oswestry (Mr. Biffen) pointed out—the 44 per cent. increase in April and May in supply public spending, which is a staggering figure and one which I hope marks an apogee in the enormous growth of public spending that has been going on up to now. That is phase 1.
  We are now into phase 2, when Ministers are rising one after another—the Chief Secretary today, and the Secretary of State for the Environment and the Chancellor twice a week—saying "There is no more in the kitty. We must now cut spending". The soaking of the rich which was supposed to square the circle turns out to be a soaking of everybody on the most enormous scale, disguised by the fact that the income tax thresholds are not indexed, so we have possibly the most enormous increase in money taxation in this country's fiscal history.
  So the order of the day changes from "Spend" to "Cut spending"; from "Soak the rich" to "Soak everybody".
  Now we see almost bloodcurdling comments in the newspapers. I quote one item by Mr. Peter Jay in The Times.
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  Mr. Jay reports that the Chancellor
  "intends to stick through thick and thin to the relatively restrictive monetary policy set out in the Budget. Excessive pay settlements, if they occur, will automatically interact with that restraint on monetary demand…"
  This is the new tough talk and this is the end of phase 2—and we are hearing plenty of it.
  The most favourable interpretation that we can put upon the Bill is that it is a hangover from phase 1 and that it does not belong to—indeed, it does not even fit in with—the harsh and stern words of the Chief Secretary but belongs to the "Spend everything" régime which was prevalent last year. We must conclude that, because obviously it is extraordinary that what amounts to a no-limit subsidy Bill can be brought forward against a terrifying background of spiralling public spending and the hideous developments in the rates of inflation and the rates of rise of average earnings that we now experience.
  That is the only construction that we can put on it, and that is one reason why we think that it is totally unacceptable that in this new phase, when realism is coming out of the mouth of the Chief Secretary on the question of public spending, we should be asked to approve a Bill which provides no checks on the additional sums that are to be wheeled out for the various purposes which I shall come to later.
  I suppose that it would all be acceptable if it all ended here—if it really were the case, as the Chancellor has said, that it will end at the conclusion of the 1975–76 financial year, and that that will be the end of compensation for price restraint and of payments under Clause 1 of the Bill. It might be just acceptable if that were so.
  The trouble is that most hon. Members and most members of the public must by now have the feeling that we are running very fast to stay where we are, that enormous price increases in nationalised industries—in gas, in electricity, in the cost of sending a letter and making a telephone call—are the order of the day. Price increases and the swollen bills come popping through the letter box, but the losses that these are supposed to make up for do not shrink very much.

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  Much of the comment today has pointed to that central uncomfortable fact, because the theory is that the combined deficit for price compensation for 1975–76 is to be £100 million. To start with, the Chancellor said that it was £70 million, but the Chief Secretary told me on 9th May—
  "It is impossible at this stage to say by how much it may vary from the current price equivalent".—[OFFICIAL REPORT, 9th May, 1975; Vol. 891, c. 537.]
  The Chief Secretary then revealed to me that the current price equivalent was about £100 million, which he went on to say was equivalent to £70 million at 1974 survey prices.
  That £100 million is already on the escalator, and that is just covering the price component for gas, electricity and the Post Office Corporation. The combined current deficit of all nationalised industries in 1975–76 might be anything from £700 million to £1,500 million. We do not know. Anyway, there is going to be a very substantial current deficit, and this is before we get on to the question of borrowing at subsidised credit rates. For the nationalised industries with which we are here concerned—gas, electricity and the Post Office Corporation—the Chief Secretary tells us that the deficit is £100 million, but many of us have bitter experience of these estimates, and we shall believe it when we see it.
  We have already heard hints that the Post Office Corporation, despite its high expectation of more revenue from higher prices, has misjudged the market and may fail to get anything like the revenue which it hopes. The £70 million deficit for the Post Office may become £100 million, or even £300 million, as one newspaper has suggested.
  We are this evening a month or six weeks away from the Budget and we are already way out into the area where all these figures are swelling before our eyes. That is why, no doubt, the Chief Secretary is reluctant to put any figure on the amounts which Parliament is supposed to be voting. In theory, all that has changed. The Chancellor of the Exchequer has made ferocious speeches and has said that the losses are going to be ended in 1976. But first there is the small but very central point of what ending the losses really means, as my hon.
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  Friend the Member for St. Ives and the hon. Member for Colne Valley (Mr. Wainwright) have said. If one is not clear how much investment is supposed to be financed by internal revenue sources, how do we know what the revenue deficit is going to be? It is an absolutely meaningless concept to talk about a revenue deficit when we do not know what idea the Government have about the level of revenue which should be generated by the nationalised industries.
  That is a side issue in a sense, but it just happens to be that the concept is meaningless and makes it impossible to define what the revenue deficits are going to be, except by referring to the generalities in the Explanatory and Financial Memorandum to the Bill—and this takes the 1975 prize for generalities—which says that the total for 1975–76
  "will depend on, among other things, changes in the industries' costs, prices…
  and so on. That is evidently as far as the Revenue feels it can go.
  Suppose we take the Bill at its face value and imagine that there are revenue deficits which can be identified and that the Chancellor's aim is to kill off the current loss in 1976. If that is so, the innocent might ask: why is the period allowed to be extended by Treasury order to include 1976 and 1977? Why is it that, without any effective parliamentary intervention, we are to be taken for another ride into next year on the same tiger as has already grown teeth which we were told did not exist a few weeks ago? Surely Parliament should be able to supervise and check this terrifying process.
  The previous Bill brought forward by my party when in government was certainly not perfect. [Laughter.] I thought that would produce squeals, roars and grunts from certain hon. Members opposite. At least it had in it a clear cash limit. The hon. Member for Colne Valley said what a dreadful thing it was that the cash limit was exceeded, and that it was too low. I think it was important that there should be a cash limit in order that Parliament should have a chance to put its oar in when that cash limit was exceeded. At least we have the chance now, but if the Bill goes through unamended we shall not have it again. The sums, unspecified here, that will have to be pumped out will not be subject to

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  further Bills. They will be churned out without adequate parliamentary control. That is a substantial reason for voting against the Bill.
  Mr. Richard Wainwright: Does not the hon. Gentleman think it scandalous for the House to be deceived into passing a Bill by the inclusion of a figure which was unrealistic even at the time?
  Mr. Howell: With due respect to the hon. Gentleman, whose skills I appreciate, he is being a bit naive. There is no deception in merely announcing that one intends to seek from Parliament the voting of X hundreds of millions of pounds. That seems a frank and honest approach, much more honest than using a vague formula and apologising when the sums turn out to be far larger than was imagined. I would rather have a specific sum, so that when it runs out Parliament has a chance to have another say on the matter, than have generalities in the Bill, with Parliament allowed no further adequate control over what is to be voted, spent and turned away from other national priorities to blow on this kind of operation.
  We believe that as a start there should be predetermined cash limits on all public programmes, certainly on the major public industries and their deficits which will be financed. I mean not only the revenue deficit, in the sense of covering current costs, but the amount of subsidies needed over and above that amount of investment financed by internal revenue sources. We believe that that is the starting point, and that the deficits should be calculated after far more realistic allowances in calculating the return on assets for a contribution to investment from internal sources. That is certainly necessary.
  We believe that cash limits are the right approach first because they are the hard reality. The Chief Secretary recognises this. He now has increasingly to deal in the harsh realities of cash. The Chancellor has recognised that this is the way our thinking should be going, that we should get away from the humbug of offsetting the effects of inflation and of wage increases on public sector programmes, and begin to think in cash terms and to show that money really matters. Cash limits are the reality which breaks through the clouds of generalities
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  surrounding the social contract approach to what the level of wages should be in the railway industry or any other industry.
  The second reason is that cash limits make the nation face hard choices. We can debate them now in a way that we would not when there was always an implication that there was more in the kitty or that the rich could be soaked. Now we know that there is no more, we can debate whether we want to pay the electricity workers more and pensioners less, whether we want more for the miners and less for school equipment and hospital services. We can debate the fact that more for the railwaymen over and above anything the industry can afford will mean less for widows and welfare services. It is very healthy that the nation should be debating these choices in hard and realistic terms not pretending that there is always a bottomless purse, a magic fruit tree on which Government money grows and can always be produced.
  The third reason why we believe that cash limits are the right approach is that they are much more flexible, in that one gets away from the tangle of statutory prices and incomes controls, a return to which I would never favour. Cash limits allow firm control by the Government to be combined with relative flexibility as to who gets what kind of wage or salary increase within a nationalised industry.
  Fourthly, and perhaps most important, they let management know where it stands. They let management know that if it decides, for purposes which it is entitled to have, that it will give in to an excessive wage demand there is no question of returning to the taxpayer, to the Exchequer. Because the cash limits are laid down, management will have to look elsewhere, and a number of interesting and important developments will begin. If management wants to pay everybody more, that must mean that "everybody" must be fewer. One method is to recoup by wastage and redundancy and by cutting down on services and jobs. That is the unpleasant way, but the inevitable way if cash is firmly limited.
  The alternative is to finance wage increases through higher prices. In that

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  direction we have seen some interesting developments. For example, the Post Office has discovered that the passing on of higher prices is not working any more. It is beginning to realise that recouping through higher prices may be running into the often forgotten area of consumer resistance. People are voting by means of their pockets and by not sending 7p letters. It seems that some business men are finding other means of transmitting information instead of using the postal services. There is evidence that they are using magazines and other forms of communication. The hope that higher costs in admittedly a labour-intensive industry could be recouped by higher prices is not working out. One reason for having the Bill before us is that that avenue has been cut off.
  We are having to consider these matters again. As the Chief Secretary has said, the Government are having to discuss the question of the substantially higher deficit that will be incurred by the Post Office—much higher than either the Chancellor or himself hoped or feared at Budget time seven weeks ago. The easy formula by which it can be said "Do not worry about wage increases; they can always be recouped by piling higher prices on the consumer" has had a question mark put over it, to put the matter no higher.
  There are other areas where the monopoly force is stronger. One area that is very much in mind is that of commuters facing higher passenger charges by British Rail. That situation is not, strictly speaking, covered by the Bill, but it is an example of where there is, to all intents and purposes, a monopoly. It is a monopoly where the consumer has no immediate means of escape. I believe that most people would feel themselves trapped in that situation.
  There is no doubt that where public utilities are using or abusing their monopoly positions to recoup the costs of excessive wage increases by putting up prices they must expect the Government to be ferocious in their use of anti-monopoly powers. That is familiar language to the Treasury Bench. It is the language that the Chancellor is now using. He is arguing that if the railwaymen or other nationalised industries persist in seeking settlements far beyond anything that the
  144
  industries concerned can pay he will be forced to make cuts in public expenditure and cuts in welfare expenditure. If I may put it in personal terms, that is Healey Mark II.
  We are complaining that the Bill is Healey Mark I. It comes from the era when public spending did not matter very much. That is why there is no check in the Bill. There is no check on the process which we believe must be halted—namely, the fiesta of increasing public spending. The financing of higher wages in the public sector leads to higher public spending, which in turn leads to more and more inflation. That is the process which many of our friends outside the country are watching with horror. They are wondering at what point there will be something more than words, when some effort will be made by the Government to cut into the process that I have described and to slow it down. At root that is our objection to the Bill.
  We can be quite blunt about our attitude. If we supported the Bill we would be voting unspecified sums. Anything that is voted under this vague Bill will be sucked up by higher wage demands like water into sand. That is our fear. We feel that it is a fear that is perfectly justified. We see no serious attempt to halt the process of higher wage demands involving more public expenditure, thereby piling more on to the consumer where the consumer pays the price.
  There is something ludicrous about Minister after Minister warning us on television of something that by now is almost beyond the obvious. We are told that if we go on with a 25 per cent. inflation rate or wage increase of 29 or 30 per cent., we shall be on the road to suicide. There is something absurd in seeing those words reported or hearing interviewers solemnly asking Ministers whether they really meant that while the Government remain paralysed in taking any action. It is all words and no action. "What speech shall I make on Sunday to stir things up in the Labour Party? How far can I go?"—that is the kind of approach we are getting, but it lacks action to back it up. We need something very much more definite, and we certainly do not see it in the Bill.

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  We are not against efficient public industries, despite their inherent ambiguity. We do not intend to go over the whole argument that is raging about whether we should rush into any enlargement of the present nationalised sectors. In face of our present situation, the absurdity of any such move is apparent. We believe that the time has now come, if not for an elaborate scheme of control—and it would be difficult to devise a comprehensive scheme of control—for a re-statement of how the nationalised industries should be controlled so that we may prevent these enormous sums having to be generated, with Parliament constantly being asked to vote, on vague grounds, gigantic sums which are taken from other people and interests that need them more.
  First, we must look upon the nationalised industries less as "nationalised" industries and more as State enterprises. We must for all time get rid of all aspects of Morrisonian social concepts while retaining some of the basic criteria to which my hon. Friend the Member for Oswestry referred. We have to have a crisper and more realistic definition of the criteria required by the Government in terms of the revenue generated and also of the contribution made from internal sources and return on assets. We must again try to define social costs in those industries where there is a heavy social requirement. I refer for example to railways. Ever since Sir Toby Low, now Lord Aldington, brought out his report which gave a clear definition of social costs, the House has struggled to be fair in this respect. We welcome that attitude, and in turn we must reach the correct cash limits—but we must then stick to them.
  I also think that we must encourage far greater worker participation and worker involvement in these grossly over-centralised institutions. That is the case against a further extension of nationalisation—namely, that, far from bringing industry to the people, it takes industry away from the people and centralises it in the most damaging way. Therefore, in the existing nationalised industries enormous efforts are required—and this is the area in which the Secretary of State for Industry should have made more effort—to think out more effective means of worker participation. Finally, we must
  146
  appoint good management and then back it or sack it, but we should not then niggle about small matters and make management's life impossible.
  Mr. Golding: Should it not be put on record that the present Secretary of State for Industry is doing a great deal in terms of worker participation in the nationalised industries? The hon. Gentleman must not give a false impression in that regard.
  Mr. Howell: I should like to hear from the right hon. Gentleman the Secre-of State for Industry more about that aspect and less about plans for taking over industries in which there is already effective worker participation and in relation to which nationalisation will only make things worse. If the hon. Gentleman wants to put that on record he is entitled to do so.
  I emphasise that the Bill has no cash limits, and that is why we shall oppose it tonight. There is a rattle in the Bill—not merely of stable doors being closed but of their being dismantled altogether. We believe that the Bill is being brought forward with a cavalier attitude in view of the present situation in regard to public spending, and it is a Bill which in the present situation we cannot afford. That is why we shall vote against it.
  9.30 p.m.
  The Minister of State, Treasury (Mr. Robert Sheldon): During the debate, which was serious and valuable, there were a number of references to the steel industry. I understand why those references were made, particularly by my hon. Friends the Members for Newport (Mr. Hughes), Sheffield. Heeley (Mr. Hooley), Motherwell and Wishaw (Dr. Bray) and Hartlepool (Mr. Leadbitter) and the hon. Member for Arundel (Mr. Marshall). If time permits, I will speak briefly on this matter, although it does not form the main part of the Bill. I listened to all contributions with interest, and I will ensure that the representations that have been made are brought to the attention of my right hon. Friend the Secretary of State for Industry.
  The debate has been valuable. There was a certain amount of cross-party as well as inter-party agreement on both sides.
  I should like to start by taking to task the hon. Member for St. Ives (Mr. Nott), who made a constructive speech to which

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  the House listened with great interest. I think that the opening speakers from both sides set the tone of the debate. However, I must take issue with the hon. Gentleman about the statutory protection given to the nationalised industries against competition. The boundaries which are set at any time do not remain irrevocable. The hon. Gentleman failed to take account of the real reason why those boundaries were set and why in so many, although not all, cases they are still relevant.
  The whole principle rests on the famous doctrine of Rowland Hill, who, when he set up the penny post, pointed out that, in order to provide the same standard of service throughout the country, it was necessary to obtain a monopoly of the post. It was fundamentally dependent on that premise.
  Many of our nationalised industries have similar responsibilities. Therefore, they need to obtain monopoly rights to prevent the creaming off of the profitable services. Many nationalised industries have to supply goods and services to all. Private industry has the enormous advantage of being able to cut out those services and undertakings which it does not wish to provide.
  Mr. Nicholas Ridley Mr. Nicholas Ridley (Cirencester and Tewkesbury) rose—
  Mr. Sheldon: I know what the hon. Gentleman wishes to raise and I shall be happy to give way to him, but perhaps I may finish what I have to say on this point. I have read his pamphlet with interest, and shall be glad to take up the point that he may wish to make.
  Private industries have the advantage of being able to excise those services or production undertakings that they do not wish to provide. They are, therefore, judged on standards of their own making. That is a big advantage. Where that can be done, it is right that it be done in that way.
  Mr. Ridley Mr. Ridley rose—
  Mr. Sheldon: I will give way to the hon. Gentleman in a moment. Unfortunately, nationalised industries do not have that kind of advantage. They are frequently judged on how they perform in areas from which they would happily
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  withdraw but from which, in order to provide the service that the community requires, the community does not allow them to withdraw.
  Mr. Ridley: Will the hon. Gentleman provide coal in my constituency as cheaply as he provides it in his own constituency?
  Mr. Sheldon: The hon. Gentleman fails to understand the situation. This does not apply in every case. There are variations. There is the requirement to provide coal in his constituency and in my constituency. Certain industries will not provide a particular service because it does not pay. That is the difference, and this point can be seen in many areas of welfare provision with which we are concerned. The nationalised industries do not have the advantages open to private industry. Although here and there we try to approximate to some of the disciplines which, quite rightly, can be thrust upon them, to draw the complete parallel is frequently impossible.
  I should like to turn to what I consider to be the essential problems facing the Government in their relations with the nationalised industries. We can all draw our own parallels and divisions as to the way in which nationalised industries can be split up. I noticed with interest the division drawn by the hon. Member for St. Ives. We can look at the nationalised industries in three categories: first, public utilities; secondly, services, and, thirdly, quasi-monopolies. But, in whatever way we split them up, public corporations were originally envisaged as bodies with Ministers having general oversight and boards having managerial control.
  As time went on, we rapidly came to the understanding that this view of the nationalised industries and each industry was rather too simple. The way in which the relationship of Ministers to nationalised industries could be compared to the relationship of a holding company with its subsidiaries was also seen as too simple. The idea that a Minister has the option of finding himself with a successful board of a nationalised industry or of sacking it is a difficult one, and the hon. Member for Oswestry (Mr. Biffen) was right when he pointed out the difficult relationship that exists because of the way in which nationalised industries operate at present. I see great danger in

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  making use of nationalised industries for wider Government policies. They have been used in this way, and they will continue to be so used, but there are certain guidelines within which the Government will need to operate.
  My hon. Friend the Member for Newcastle under Lyme (Mr. Golding) rightly pointed out the important rôle of the nationalised industries in their investment procedures and the rôle which they can play in the success of those industries which supply them with the products they require. In more recent times we have seen problems concerned with the policies of the nationalised industries and the location problems of those industries, and under the Conservative Government in particular we saw the problem that resulted when the Government moved into the area of price control.
  When we survey these problems, and the way in which the Government interact with nationalised industries, we have to try to obtain a proper balance between the two. All Governments since 1951 have reinterpreted and redefined the relationship between Government and industry, but I draw attention to the White Paper of 1967 which was referred to by the hon. Member for Oswestry and others as providing a particularly definitive statement and one to which we shall have to return, if only to modify it from time to time in the light of experience.
  The 1967 White Paper, Command 3437, said that subject to taking account of social costs the Government's policy was to treat the nationalised industries as commercial bodies. They were to have financial targets, and the underlying concept behind the control of nationalised industries' investment by the rate of return was that the most efficient distribution of goods and services in the economy as a whole could be secured only if investments were made where the return to the economy was greatest. The White Paper noted that if an industry had to act against its own commercial interests the Government would accept responsibility and where necessary would make a special payment or an adjustment to the financial objective.
  That was an important attempt to clarify the aims and responsibilities of the industries and so to strike the sort of balance on the relationship to which I have
  150
  referred. The policy in the White Paper was endorsed by the Select Committee on Nationalised Industries in its 1968 report on ministerial control of the nationalised industries.
  Unfortunately, since then there has been a retreat from these objectives because since about 1970 the prices of most of the industries have been restrained, as part of the successive counter-inflation policies, and a number of industries, in particular gas, electricity and the Post Office, have been forced into deficits for which they have had to be subsidised. That was the important change that came about. It was not that the Government were making use of nationalised industries for purposes which included the future of those industries. They were doing it for their own pricing policies and thereby souring the relationship between themselves and the nationalised industries. Now it is this Government's policy to phase out those subsidies. While there is always a risk of set-backs because of continuing cost increases, we hope to have done so by the next financial year 1976–77. Once these industries are back into surplus, it will be possible to discuss with them the setting of the new financial targets. The fact that they will be restored will be very good both for the morale and for the efficiency of the industries concerned.
  I turn now to the way in which these subsidies will be phased out. There has been the problem with subsidies incurred by the previous Government, common to all kinds of subsidy, whereby the more one uses expensive services such as the telephones, electricity and gas, the more one saves and the more the rest of the community has to pay for the advantages of those who gain that benefit. The way that we have been using public expenditure in order to subsidise this kind of consumer has been clearly wrong but understandable in the short time that we have operated it.
  The priority in public expenditure must go to those areas where investment is required, as well, of course, as to the social services. There could be no sense in, for example, subsidising £300 million for the Post Office which would mainly help the business user when at the same time there are those in need whose needs are not being met just because of that

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  kind of mistaken expenditure. If the industries are to be underpriced, we shall see a gross inflation, a distortion of demand and, therefore, a need for artificial investment to meet it. Particularly when energy conservation is so necessary, we shall go to the absurd extent of subsidising electricity which is produced at the margin from oil imports.
  Finally, of course, there is the public sector borrowing requirement, which needs to be reduced. When there is a gap between the spending and the revenue of the nationalised industries, it is right that those industries should contribute more—we believe substantially more—to the investment programme. At present, the investment programme of the Post Office is £800 million and that of the electricity industry £700 million. The hon. Member for St. Ives was right to draw attention to the fact that these ratios will need to be looked at, although obviously the time is not suitable now for a close examination of the kind which eventually will have to be made.
  Mr. Nott: The point that I was trying to make is that unless the House knows what the ratios are, we do not know the extent of subsidisation of the nationalised industries generally. I hope that the Minister of State will try to deal with that point.
  Mr. Sheldon: I certainly give an undertaking that information about the official requirements of the nationalised industries, the disciplines which will be obtained following the ending of the price subsidies, will certainly be in a form which will enable the House to see for itself precisely what their performance is. I will come to that in a moment, but perhaps I might now say something about the problem of the Post Office pension fund which was raised by the hon. Member for Tonbridge and Mailing (Mr. Stanley).
  In the summer of 1974, the Post Office referred to the Government an actuarial valuation of the Post Office Staff Superannuation Fund as at 30th September 1972, which revealed a large deficiency, some of it in respect of service before October 1969, when the Post Office was a Government Department. The Post Office has asked the Government to review the funding arrangements so as
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  to help in making payments into the fund to eliminate the deficiency.
  However, the circumstances surrounding the deficiency are complex and we are still discussing with the Post Office the best way to deal with it. In the meantime, the Post Office has been making payments into the fund in respect of the deficiency at the level recommended by the independent actuary. These payments, together with the fact that current contributions at the normal level are quite sufficient to pay current pensions, mean that the pensions of Post Office staff are not at risk.
  In normal circumstances deficiency payments into pension funds are met out of the revenue of the body concerned. This is common practice in both the public and private sectors. As an example, a previous deficiency in the Post Office fund, revealed by a valuation in 1965, gave rise to annual payments by the Post Office into the fund which, in turn, were reflected in tariff increases. It would therefore have been expected that the Post Office, in the absence of outside help, would finance the payments it had made as the result of the latest valuation by raising its tariffs. However, it was prevented from doing so by price restraint and for this reason it was thought right to pay compensation to the Post Office in respect of 1972–73 and 1973–74, which took account of these payments. In similar circumstances it is to be expected that compensation in payments for 1974–75 and later years will also take account of whatever payments are made in these years. I hope that answers the question.
  Mr. Stanley: Will the Minister also comment on the suggestion which I made that in view of the enormous actuarial deficit which built up to a total of £1·1 million by 30th September 1972, it would be wholly appropriate to set up an inquiry—the results of which should be published—into the question why the funding of the Post Office pensions fund was so badly mismanaged in the late 1960s and early 1970s?
  Mr. Sheldon: We are very much aware of the performance of the previous Government. [Interruption.] This is where it all started. The policy of price restraint was responsible for many of our current ills, including the public sector borrowing requirement, which went out of hand

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  at roughly the same time. I shall gladly go further into this matter. If there are any other details which I can pass on to the hon. Gentleman, I shall be glad to do so.
  I want to turn to the important point made by the hon. Member for Guildford (Mr. Howell) who said, in his massive criticism of the Bill—a criticism which went well beyond all that ordinary antagonism ought to provide—that there will be no adequate control by this House if we pass this legislation. I am trying to moderate my language in this age of moderate people, but I find that absolute nonsense.
  Each of these four industries is subject to an Affirmative Resolution of this House in respect of payments each year. Therefore, in respect of the subsidies for 1974–75 we can have four Affirmative Resolutions, the same for 1975–76 and, if it were to continue, the same for 1976–77. A further Affirmative Resolution has to come before the House if we intend to operate for 1976–77. I should have thought that that was such a circuit of parliamentary control that it must satisfy even the keenest person on these matters.
  I should like to turn to the points made about the payments from the Consolidated Fund and the rather extreme language that has been used about the way in which public expenditure is getting out of hand.
  An article published in The Times Business News on 7th June referred to a total of £1,100 million issued in payments from the Consolidated Fund. Perhaps I can help the House by listing some of those figures and explaining some of the circumstances. Of that £1,100 million, £85 million concerns food subsidies, £175 million concerns defence, £200 million concerns trade, industry and employment, £275 million concerns health, and £370 million is in respect of the rate support grant.
  I assure the House that it is extraordinarily difficult to predict the way in which the public sector borrowing requirement will continue by looking at these particular forms of payment. It is even harder to predict the course of the public sector borrowing requirement from such figures than it is to draw conclusions from the monthly trade figures. The variations, reasons and explanations are
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  much more complex than even the trade figures. Anyone who tries to interpret the trade figures month by month knows the problem. These are matters of close understanding and interest. However, I certainly would not consider that the conclusions that have been drawn in the way they have, here and outside, are as valid as perhaps the uninformed observer may consider.
  Perhaps I may turn to the central criticism of the Opposition. In a disarming manner the hon. Member for Guildford (Mr. Howell) accepted that the previous Conservative Government were not perfect and that this was a Bill that had something to do—I do not think the hon. Gentleman denied its affinity—with the actions of that Government. He was talking about his great solution—that of limitations by cash. I do not mind hon. Members of the Opposition voting against the Bill if they wish, but they must understand what the Bill is about. The Bill is about the winding down of the price restraint policy of the Conservative Government. We are ending their policy, and we are having to pay for it, and they seem prepared to vote against that.
  At a time of considerable accusations of humbug, I should have thought that that was as near humbug as anything could be. We all understand the reason for this. It is because they are ashamed of the part they played and they have people behind them who are prepared to attack them for the part they played.
  Mr. Richard Wainwright: Will the Minister explain the grounds for his apparent confidence that winding down price restraint will inevitably enable the nationalised industries to move into surplus? Nothing has been said today to indicate that there is any evidence for that.
  Mr. Sheldon: I shall be coming to that and showing how we intend to move from that policy into a policy of target setting.
  Although we note and welcome the various apologies made by the hon. Member for St. Ives about the previous Conservative Government and those of the hon. Member for Oswestry, who also chipped in his apologies on behalf of that Government, they went ill with the kind of accusations made about what we are

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  doing in the Bill. As I have said, what we have done is to wind down the legacy we inherited from the previous Government. There are long time lags here. This is something not easily understood. From the time when a nationalised industry understands the need to increase prices, from the need for increases to the decision to increase prices, from the decision to the obtaining of approval of the price increase from the Price Commission and from the obtaining of that approval to the revenue actually coming in, is more often than not almost a year.
  It may be said that this is one of the defects of the nationalised industries. Indeed, there are those who will willingly say that. However, that is the kind of time lag which occurs. That is why we have been late in finally bringing this price restraint and price subsidies scheme to a close.
  However, this is only the start of the matter, because once one ends the subsidies one must then return to the discipline of targets. One of the worst things about price subsidies was that they destroyed the discipline of the nationalised industries. The hon. Member for St. Ives talked about self-financing ratios. Of course we shall consider the self-financing ratios. These are obviously part of it. But it was the previous Conservative Government who destroyed them. When they went to price subsidies they took away the surpluses the nationalised industries received, and those industries were not able to finance their own investment. The previous Government actually destroyed the capacity of the nationalised industries to do that.
  The hon. Gentleman asks us what we are doing about self-financing. We are putting right the errors made by the previous Government. We shall be returning to self-financing ratios of a much better type than we have at the moment. We know that price restraint damaged this. When we come to the formulation of targets in the light of inflation, and read what the Sandilands Committee on Inflation Accounting has to say, these targets will obviously have to be seen in the context of these solutions. These targets will be published, and we are fully determined that once they are published the industries
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  themselves will be fully accountable in the way that I have indicated.
  Many of my hon. Friends mentioned their interest in the steel industry. The issues covered in the Government's closure review are particularly distinct from those involved in the present steel recession. The BSC has to plan for demand during the peaks as well as the troughs in the economic cycle, and the rate of permanent plant closure is geared to meeting demand and boom as well as providing time for adjustment in any areas where the retention of steelmaking can, unfortunately, not be justified in the longer term.
  The BSC has given an assurance that any plant temporarily shut down because of present market conditions and not rescheduled for permanent closure will be kept in such a condition that it can be reopened when demand picks up.
  The corporation has reduced its manpower substantially in the 1970s and the Government are fully aware of the need for it to develop its output per man. We understand that the corporation will be carrying out this development in a socially acceptable fashion.
  I am sorry for the brevity of those comments, but time prevents my going very much further than that into the corporation's problems. I shall, however, refer many of the problems to my right hon. Friend the Secretary of State for Industry, who I am sure will take into account what has been said in this debate.
  I am not saying that the problems of the nationalised industries—problems that we have seen practically magnified in recent months—began with the previous Government, but the relationship between Government and industry was made immeasurably worse by the previous Government's ill-considered policies and, as part of the various phases of pay and price policies since 1970, the prices that were charged by the nationalised industries were restrained. As a result of this, the gas industry, the electricity industry and the Post Office were forced into deficits, which had to be subsidised.
  The nationalised industries were singled out from all the other industries for this treatment precisely because they were under the control of the Government and

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  could be treated in this way. This was to the disadvantage of the nationalised industries and the commercial criteria which in the long term must underlie their successful operation.
  In this Bill we are providing the road back, so that those criteria may operate
  in the interests of the nationalised industries and their customers and the public at large.
  Question put, That the Bill be now read a Second time:
  The House divided: Ayes 295, Noes 263.

  Division No. 219.]

  AYES

  [10.0 p.m.

  Abse, Leo

  Dunwoody, Mrs Gwyneth

  Jones, Dan (Burnley)

  Allaun, Frank

  Eadie, Alex

  Judd, Frank

  Anderson, Donald

  Edelman, Maurice

  Kaufman, Gerald

  Archer, Peter

  Edge, Geoff

  Kelley, Richard

  Armstrong, Ernest

  Edwards, Robert (Wolv SE)

  Kerr, Russell

  Ashton, Joe

  Ellis, John (Brigg & Scun)

  Kilroy-Silk, Robert

  Atkins, Ronald (Preston N)

  Ellis, Tom (Wrexham)

  Kinnock, Nell

  Atkinson, Norman

  English, Michael

  Lambie, David

  Bagier, Gordon A. T.

  Ennals, David

  Lamborn, Harry

  Barnett, Guy (Greenwich)

  Evans, Fred (Caerphilly)

  Lamond, James

  Barnett, Rt Hon Joel (Heywood)

  Evans, Gwynfor (Carmarthen)

  Leadbitter, Ted

  Bates, Alf

  Evans, Ioan (Aberdare)

  Lee, John

  Bean, R. E.

  Evans, John (Newton)

  Lestor, Miss Joan (Eton & Slough)

  Benn, Rt Hon Anthony Wedgwood

  Ewing, Harry (Stirling)

  Lever, Rt Hon Harold

  Bennett, Andrew (Stockport N)

  Faulds, Andrew

  Lewis, Arthur (Newham N)

  Bidwell, Sydney

  Fernyhough, Rt Hon E.

  Lewis, Ron (Carlisle)

  Bishop, E. S.

  Flannery, Martin

  Lipton, Marcus

  Blenkinsop, Arthur

  Fletcher, Raymond (likeston)

  Litterick, Tom

  Boardman, H.

  Fletcher, Ted (Darlington)

  Lomas, Kenneth

  Booth, Albert

  Foot, Rt Hon Michael

  Loyden, Eddie

  Boothroyd, Miss Betty

  Ford, Ben

  Luard, Evan

  Bottomley, Rt Hon Arthur

  Forrester, John

  Lyon, Alexander (York)

  Boyden, James (Bishop Auck)

  Fowler, Gerald (The Wrekin)

  Lyons, Edward (Bradford W)

  Bradley, Tom

  Fraser, John (Lambeth, N'w'd)

  Mabon, Dr J. Dickson

  Bray, Dr Jeremy

  Freeson, Reginald

  McCartney, Hugh

  Brown, Hugh D. (Provan)

  Garrett, John (Norwich S)

  McElhone, Frank

  Brown, Robert C. (Newcastle W)

  Garrett, W. E. (Wallsend)

  MacFarquhar, Roderick

  Buchan, Norman

  George, Bruce

  McGuire, Michael (Ince)

  Butler, Mrs Joyce (Wood Green)

  Gilbert, Dr John

  Mackenzie, Gregor

  Callaghan, Rt Hon J (Cardiff SE)

  Ginsburg, David

  Mackintosh, John P.

  Callaghan, Jim (Middleton & P)

  Golding, John

  Maclennan, Robert

  Campbell, Ian

  Gould, Bryan

  McMillan, Tom (Glasgow C)

  Canavan, Dennis

  Gourlay, Harry

  McNamara, Kevin

  Cant, R. B.

  Graham, Ted

  Madden, Max

  Carmichael, Neil

  Grant, George (Morpeth)

  Magee, Bryan

  Carter, Ray

  Grant, John (Islington C)

  Mahon, Simon

  Carter-Jones, Lewis

  Grocott, Bruce

  Mallalieu, J. P. W.

  Cartwright, John

  Hamilton, James (Bothwell)

  Marks, Kenneth

  Castle, Rt Hon Barbara

  Hamilton, W. W. (Central File)

  Marquand, David

  Clemitson, Ivor

  Harper, Joseph

  Marshall, Dr Edmund (Goole)

  Cocks, Michael (Bristol S)

  Harrison, Walter (Wakefield)

  Marshall, Jim (Leicester S)

  Cohen, Stanley

  Hart, Rt Hon Judith

  Mason, Rt Hon Roy

  Concannon, J. D.

  Hattersley, Rt Hon Roy

  Maynard, Miss Joan

  Conlan, Bernard

  Hatton, Frank

  Meacher, Michael

  Cook, Robin F. (Edin C)

  Hayman, Mrs Helene

  Mellish, Rt Hon Robert

  Corbett, Robin

  Heffer, Eric S.

  Mendelson, John

  Cox, Thomas (Tooting)

  Hooley, Frank

  Mikardo, Ian

  Craigen, J. M. (Maryhill)

  Horam, John

  Millan, Bruce

  Crawshaw, Richard

  Howell, Denis (B'ham, Sm H)

  Miller, Dr M. S. (E Kilbride)

  Cronin, John

  Hoyle, Doug (Nelson)

  Miller, Mrs Millie (Ilford N)

  Crosland, Rt Hon Anthony

  Huckfield, Les

  Mitchell, R. C. (Soton, Itchen)

  Cryer, Bob

  Hughes, Rt Hon C. (Anglesey)

  Molloy, William

  Cunningham, G. (Islington S)

  Hughes, Mark (Durham)

  Morris, Alfred (Wythenshawe)

  Cunningham, Dr J. (Whiteh)

  Hughes, Robert (Aberdeen, N)

  Morris, Rt Hon J. (Aberavon)

  Dalyell, Tam

  Hughes, Roy (Newport)

  Moyle, Roland

  Davidson, Arthur

  Hunter, Adam

  Mulley, Rt Hon Frederick

  Davies, Bryan (Enfield N)

  Irvine, Rt Hon Sir A. (Edge Hill)

  Murray, Rt Hon Ronald King

  Davies, Denzil (Llanelli)

  Irving, Rt Hon S. (Dartford)

  Newens, Stanley

  Davies, Ifor (Gower)

  Jackson, Colin (Brighouse)

  Noble, Mike

  Davis, Clinton (Hackney C)

  Jackson, Miss Margaret (Lincoln)

  Oakes, Gordon

  Deakins, Eric

  Janner, Greville

  Ogden, Eric

  de Freitas, Rt Hon Sir Geoffrey

  Jay, Rt Hon Douglas

  O'Halloran, Michael

  Delargy, Hugh

  Jeger, Mrs Lena

  O'Malley, Rt Hon Brian

  Dell, Rt Hon Edmund

  Jenkins, Hugh (Putney)

  Orbach, Maurice

  Dempsey, James

  Jenkins, Rt Hon Roy (Stechford)

  Ovenden, John

  Doig, Peter

  John, Brynmor

  Owen, Dr David

  Douglas-Mann, Bruce

  Johnson, James (Hull West)

  Padley, Walter

  Duffy, A. E. P.

  Johnson, Walter (Derby S)

  Palmer, Arthur

  Dunn, James A.

  Jones, Alec (Rhondda)

  Park, George

  Dunnett, Jack

  Jones, Barry (East Flint)

  Parry, Robert

  Pavitt, Laurie

  Silverman, Julius

  Ward, Michael

  Perry, Ernest

  Skinner, Dennis

  Watkins, David

  Phipps, Dr Colin

  Small, William

  Watkinson, John

  Prescott, John

  Smith, John (N Lanarkshire)

  Watt, Hamish

  Price, C. (Lewisham W)

  Spearing, Nigel

  Weetch, Ken

  Price, William (Rugby)

  Spriggs, Leslie

  Weitzman, David

  Radice, Giles

  Stallard, A. W.

  Wellbeloved, James

  Richardson, Miss Jo

  Stewart, Rt Hon M. (Fulham)

  White, Frank R. (Bury)

  Roberts, Albert (Normanton)

  Stott, Roger

  White, James (Pollok)

  Roberts, Gwilym (Cannock)

  Strang, Gavin

  Whitehead, Phillip

  Robertson, John (Paisley)

  Strauss, Rt Hon G. R.

  Whitlock, William

  Rodgers, George (Chorley)

  Summerskill, Hon Dr Shirley

  Willey, Rt Hon Frederick

  Rodgers, William (Stockton)

  Swain, Thomas

  Williams, Alan (Swansea W)

  Rooker, J. W.

  Taylor, Mrs Ann (Bolton W)

  Williams, Alan Lee (Hornch'ch)

  Roper, John

  Thomas, Jeffrey (Abertillery)

  Williams, Rt Hon Shirley (Hertford)

  Rose, Paul B.

  Thomas, Mike (Newcastle E)

  Williams, W. T. (Warrington)

  Ross, Rt Hon W. (Kilmarnock)

  Thomas, Ron (Bristol NW)

  Wilson, Alexander (Hamilton)

  Rowlands, Ted

  Thompson, George

  Wilson, Gordon (Dundee E)

  Ryman, John

  Thorne, Stan (Preston South)

  Wilson, Rt Hon H. (Huyton)

  Sandelson, Neville

  Tierney, Sydney

  Wilson, William (Coventry SE)

  Sedgemore, Brian

  Tomlinson, John

  Wise, Mrs Audrey

  Selby, Harry

  Tomney, Frank

  Woodall, Alec

  Shaw, Arnold (Ilford South)

  Torney, Tom

  Woof, Robert

  Sheldon, Robert (Ashton-u-Lyne)

  Tuck, Raphael

  Wrigglesworth, Ian

  Shore, Rt Hon Peter

  Urwin, T. W.

  Young, David (Bolton E)

  Short, Rt Hon E. (Newcastle C)

  Varley, Rt Hon Eric G.

  Short, Mrs Renée (Wolv NE)

  Wainwright, Edwin (Dearne V)

  TELLERS FOR THE AYES:

  Silkin, Rt Hon John (Deptford)

  Walden, Brian (B'ham, L'dyw'd)

  Mr. J.D. Dormand and

  Silkin, Rt Hon S. C. (Dulwich)

  Walker, Harold (Doncaster)

  Mr. David Stoddart.

  Sillars, James

  Walker, Terry (Kingswood)

  NOES

  Adley, Robert

  du Cann, Rt Hon Edward

  Heseltine, Michael

  Aitken, Jonathan

  Durant, Tony

  Hicks, Robert

  Alison, Michael

  Dykes, Hugh

  Higgins, Terence L.

  Amery, Rt Hon Julian

  Eden, Rt Hon Sir John

  Holland, Philip

  Arnold, Tom

  Edwards, Nicholas (Pembroke)

  Hooson, Emlyn

  Atkins, Rt Hon H. (Spelthorne)

  Elliott, Sir William

  Hordern, Peter

  Awdry, Daniel

  Eyre, Reginald

  Howe, Rt Hon Sir Geoffrey

  Baker, Kenneth

  Fairbairn, Nicholas

  Howell, David (Guildford)

  Banks, Robert

  Fairgrieve, Russell

  Howell, Ralph (North Norfolk)

  Beith, A. J.

  Farr, John

  Hunt, John

  Bell, Ronald

  Fell, Anthony

  Hurd, Douglas

  Bennett, Sir Frederic (Torbay)

  Finsberg, Geoffrey

  Hutchison, Michael Clark

  Bennett, Dr Reginald (Fareham)

  Fisher, Sir Nigel

  Irvine, Bryant Godman (Rye)

  Benyon, W. L.

  Fletcher, Alex (Edinburgh N)

  Irving, Charles (Cheltenham)

  Berry, Hon Anthony

  Fletcher-Cooke, Charles

  James, David

  Biffen, John

  Fookes, Miss Janet

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

  Biggs-Davison, John

  Fowler, Norman (Sutton C'f'd)

  Jessel, Toby

  Blaker, Peter

  Fox, Marcus

  Johnson Smith, G. (E Grinstead)

  Body, Richard

  Fraser, Rt Hon H. (Stafford & St)

  Jones, Arthur (Daventry)

  Boscawen, Hon Robert

  Freud, Clement

  Jopling, Michael

  Bowden, A. (Brighton, Kemptown)

  Fry, Peter

  Joseph, Rt Hon Sir Keith

  Boyson, Dr Rhodes (Brent)

  Gardiner, George (Reigate)

  Kaberry, Sir Donald

  Braine, Sir Bernard

  Gardner, Edward (S Fylde)

  Kellett-Bowman, Mrs Elaine

  Brittan, Leon

  Gilmour, Rt Hon Ian (Chesham)

  Kershaw, Anthony

  Brotherton, Michael

  Glyn, Dr Alan

  Kimball, Marcus

  Brown, Sir Edward (Bath)

  Godber, Rt Hon Joseph

  King, Evelyn (South Dorset)

  Bryan, Sir Paul

  Goodhart, Philip

  King, Tom (Bridgwater)

  Buchanan-Smith, Alick

  Goodhew, Victor

  Kitson, Sir Timothy

  Buck, Antony

  Goodlad, Alastair

  Knight, Mrs Jill

  Budgen, Nick

  Gorst, John

  Knox, David

  Bulmer, Esmond

  Gow, Ian (Eastbourne)

  Lamont, Norman

  Burden, F. A.

  Gower, Sir Raymond (Barry)

  Lane, David

  Carlisle, Mark

  Grant, Anthony (Harrow C)

  Langford-Holt, Sir John

  Carr, Rt Hon Robert

  Gray, Hamish

  Latham, Michael (Melton)

  Chalker, Mrs Lynda

  Grieve, Percy

  Lawrence, Ivan

  Channon, Paul

  Griffiths, Eldon

  Lawson, Nigel

  Churchill, W. S.

  Grimond, Rt Hon J.

  Le Merchant, Spencer

  Clark, Alan (Plymouth, Sutton)

  Grist, Ian

  Lewis, Kenneth (Rutland)

  Clark, William (Croydon S)

  Grylls, Michael

  Lloyd, Ian

  Clarke, Kenneth (Rushcliffe)

  Hall, Sir John

  Loveridge, John

  Clegg, Walter

  Hall-Davis, A. G. F.

  Luce, Richard

  Cockcroft, John

  Hamilton, Michael (Salisbury)

  McAdden, Sir Stephen

  Cooke, Robert (Bristol W)

  Hampson, Dr Keith

  McCrindle, Robert

  Cope, John

  Hannam, John

  Macfarlane, Neil

  Cordle, John H.

  Harrison, Col Sir Harwood (Eye)

  MacGregor, John

  Costain, A. P.

  Harvie Anderson, Rt Hon Miss

  Macmillan, Rt Hon M. (Farnham)

  Crouch, David

  Hastings, Stephen

  McNair-Wilson, M. (Newbury)

  Crowder, F. P.

  Havers, Sir Michael

  McNair-Wilson, P. (New Forest)

  Dean, Paul (N Somerset)

  Hawkins, Paul

  Madel, David

  Dodsworth, Geoffrey

  Hayhoe, Barney

  Marshall, Michael (Arundel)

  Drayson, Burnaby

  Heath, Rt Hon Edward

  Marten, Neil

  Mates, Michael

  Price, David (Eastleigh)

  Stainton, Keith

  Mather, Carol

  Prior, Rt Hon James

  Stanbrook, Ivor

  Maude, Angus

  Pym, Rt Hon Francis

  Stanley, John

  Maudling, Rt Hon Reginald

  Raison, Timothy

  Steen, Anthony (Wavertree)

  Mawby, Ray

  Rathbone, Tim

  Stewart, Ian (Hitchin)

  Maxwell-Hyslop, Robin

  Rawlinson, Rt Hon Sir Peter

  Stokes, John

  Mayhew, Patrick

  Rees, Peter (Dover & Deal)

  Stradling Thomas, J.

  Meyer, Sir Anthony

  Rees-Davies, W. R.

  Tapsell, Peter

  Miller, Hal (Bromsgrove)

  Renton, Rt Hon Sir D. (Hunts)

  Taylor, H. (Croydon NW)

  Mills, Peter

  Renton, Tim (Mid-Sussex)

  Taylor, Teddy (Cathcart)

  Miscampbell, Norman

  Rhys Williams, Sir Brandon

  Tebbit, Norman

  Mitchell, David (Basingstoke)

  Ridley, Hon Nicholas

  Temple-Morris, Peter

  Moate, Roger

  Ridsdale, Julian

  Thatcher, Rt Hon Margaret

  Molyneaux, James

  Rifkind, Malcoim

  Thomas, Rt Hon P. (Hendon S)

  Monro, Hector

  Rippon, Rt Hon Geoffrey

  Thorpe, Rt Hon Jeremy (N Devon)

  Montgomery, Fergus

  Roberts, Michael (Cardiff NW)

  Townsend, Cyril D.

  Moore, John (Croydon C)

  Roberts, Wyn (Conway)

  Trotter, Neville

  Morgan, Geraint

  Rodgers, Sir John (Sevenoaks)

  Tugendhat, Christopher

  Morgan-Giles, Rear-Admiral

  Ross, Stephen (Isle of Wight)

  van Straubenzee, W. R.

  Morrison, Charles (Devizes)

  Rossi, Hugh (Hornsey)

  Vaughan, Dr Gerard

  Morrison, Hon Peter (Chester)

  Rost, Peter (SE Derbyshire)

  Viggers, Peter

  Mudd, David

  Royle, Sir Anthony

  Wainwright, Richard (Coine V)

  Neave, Airey

  Sainsbury, Tim

  Wakeham,John

  Nelson, Anthony

  St. John-Stevas, Norman

  Walker, Rt Hon P. (Worcester)

  Neubert, Michael

  Scott, Nicholas

  Walker-Smith, Rt Hon Sir Derek

  Newton, Tony

  Shaw, Giles (Pudsey)

  Wall, Patrick

  Normanton, Tom

  Shelton, William (Streatham)

  Walters, Dennis

  Nott, John

  Shepherd, Colin

  Weatherill, Bernard

  Onslow, Cranley

  Shersby, Michael

  Wells, John

  Oppenheim, Mrs Sally

  Silvester, Fred

  Whitelaw, Rt Hon William

  Osborn, John

  Sims, Roger

  Wiggin, Jerry

  Page, Rt Hon R. Graham (Crosby)

  Sinclair, Sir George

  Winterton, Nicholas

  Pattle, Geoffrey

  Skeet, T. H. H.

  Wood, Rt Hon Richard

  Penhaligon, David

  Smith, Cyril (Rochdale)

  Young, Sir G. (Ealing, Acton)

  Percival, Ian

  Smith, Dudley (Warwick)

  TELLERS FOR THE NOES

  Peyton, Rt Hon John

  Speed, Keith

  Mr. Adam Butler and

  Pink, R. Bonner

  Spicer, Michael (S Worcester)

  Mr. Cecil Parkinson.

  Powell, Rt Hon J. Enoch

  Sproat, Iain

  Question accordingly agreed.
  Bill read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

  STATUTORY CORPORATIONS (FINANCIAL PROVISIONS) BILL

    BUSINESS OF THE HOUSE
    Ordered,
    That the Motion relating to the Standing Committee on Regional Affairs may be proceeded with at this day's Sitting, though opposed, until any hour.—[Miss Margaret Jackson.]

  STATUTORY CORPORATIONS (FINANCIAL PROVISIONS) [MONEY]
  Queen's Recommendation having been signified—
  Resolved,
  That, for the purposes of any Act of the present Session to provide further (by extending section 2 of the Statutory Corporations (Financial Provisions) Act 1974) for compensating certain nationalised industries for their losses due to price restraint, and to make other pro-
  162
  visions with respect to finance and administration in the public sector, it is expedient—

  (a) to authorise payments, out of money provided by Parliament, to the Central Electricity Generating Board and Area Electricity Boards, the North of Scotland Hydro Electric Board, the South of Scotland Electricity Board, the British Gas Corporation and the Post Office in respect of—

  (i) their losses in 1974–75 and 1975–76, in consequence of compliance with the national policy relating to the limitation of prices, and

  (ii) also (but subject to Treasury order) such losses in 1976–77;

  (b) to increase from £1,250 million to £2,000 million the sum specified in section 3 of the Iron and Steel Act 1969 as the limit on borrowing by the British Steel Corporation and the publicly-owned companies, together with advances by the Secretary of State to the Corporation;

  (c) to increase from £130 million to £200 million the sum specified in section 27(3) of the Transport Act 1968 as the limit on the principal of money borrowed by the National Bus Company, together with the commencing capital debt of the Company;

  (d) to authorise, in the case of Electricity Consultative Councils and National and Regional Gas Consumers' Councils, the payment, out of money provided by Parliament, of—

  (i) remuneration of chairmen of the Councils and pensions, allowances and

  163
  gratuities payable to or in respect of them, and

  (ii) expenses of the Secretary of State in respect of the Councils under or in pursuance of the said Act of the present
  164
  Session or the Gas Act 1972 (as the case may be); and

  (e) to authorise payments into the Consolidated Fund.—[Mr. Sheldon.]

  STANDING COMMITTEE ON REGIONAL AFFAIRS
  10.20 p.m.
  The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): I beg to move,

  1. There shall be a Standing Committee, to be called the Standing Committee on Regional Affairs, which shall consider any matter or matters relating to regional affairs in England which may be referred to them.

  2. All Members sitting for constituencies in England shall be members of the Standing Committee, together with not more than five other Members to be nominated by the Committee of Selection, who shall have power from time to time to discharge the Members so nominated by them and to appoint others in substitution for those discharged, and the provisions of Standing Orders Nos. 62 (Nomination of standing committees) and 63 (Attendance of law officers and ministers in standing committees) shall not apply.

  3. A Motion may be made by a Minister of the Crown at the commencement of Public Business to the effect that a specified matter or matters relating to regional affairs in England be referred to the Standing Committee for their consideration, and the Question there-on shall be put forthwith: and if, on the Question being put, not less than twenty Members rise in their places and signify their objection thereto, Mr. Speaker shall declare that the Noes have it.

  4. The Committee shall consider the matter or matters referred to them on a motion 'That the Committee have considered the matter or matters'; and the Chairman shall put any Question necessary to dispose of the proceedings on such a motion, if not previously concluded, when the Committee shall have sat for two and a half hours after the commencement of those proceedings; and the Committee shall thereupon report to the House that they have considered the matter or matters without any further Question being put.

  Hon. Members will be only too well aware of the recent pressure on parliamentary time on the Floor of the House and the effect this pressure has had on our working hours. In the present Session we have sat on average for two and a half hours each working day after 10.30 p.m. A number of factors have contributed to this. The major one is that the Government have a very large legislative programme. Secondly, we have had great pressure for debates on EEC matters. Thirdly, we have direct rule of Northern Ireland and this itself causes pressure on our parliamentary timetable.
  166
  One of the effects of this has been that over the past few months the House has had quite insufficient time to debate on the Floor a number of very important issues. There is very little time for general debates, including matters affecting the English regions. Scotland and Wales have their Grand Committees in which such debates can be held. The prospect for such debates on English regional issues has been extremely poor and is likely to continue to be poor.
  The purpose of this modest proposal is to try to improve the situation by making provision for a Standing Committee of the House to consider any matters relating to English regional affairs which may be referred to it. Under the provisions of the motion, if accepted by the House, it will be possible by general agreement for specific matters relating to a particular region to be remitted to the proposed Standing Committee for its consideration.
  The House will recognise that under the terms of the motion it would not be possible for such matters to be referred to the Standing Committee unless there were a very wide margin of general agreement, since it would not be possible to proceed in this way if 20 or more Members signified their in to the proposal by standing n their places.
  The powers of the Committee would be only those of consideration and subsequent report to the House that such consideration had taken place; but to debate specific matters of this kind with a Minister present to answer would, I believe, be a valuable additional facility for hon. Members.
  All Members of English constituencies would be able to sit on the Committee with a nucleus of five Members nominated by the Committee of Selection.
  I emphasise that this would be a sessional Committee—that is, it would be set up anew each Session. The proposal is, therefore, put forward on an experimental basis.
  I emphasise also that there is no question of taking debate away from the Floor in this way except by general agreement. This is an additional facility for debate of specific regional matters and is not an alternative to debate on

  167
  the Floor. In my view, this would be a modest but useful improvement in the scope for discussion by the House of English regional matters and experience will enable us to judge whether this is so.
  10.25 p.m.
  Mr. John Peyton: The right hon. Gentleman moved the motion in a pleasant enough fashion and would have the House believe that it is designed to help the House and not the administration. We should get it quite straight that this is just another of those devices which is designed to facilitate life for the executive and to chip away at the powers of Parliament and its rights.
  This is a very oddly timed proposal and indicative of the Government's piecemeal approach to such problems. It is worthy of mention that at present the procedure Committee is considering the workload on Parliament. It is, therefore, rather odd that the Leader of the House should propose a motion of this kind without even referring to this not irrelevant fact. Nor does he refer to the fact that the Procedure Committee has in its first report of the Session proposed that a committee be set up to deal with European legislation. This is a matter which has become of increasing urgency since last week's decision. But no mention is made of this. We are merely going to have this rather new Committee.
  It is a very odd proposal to set up an extraordinarily odd body. It is to be a Committee of over 500 Members, all English Members, and if the House will refer to the motion they will find that the Committee's duty will be to report that it has considered the matter or matters referred to it after a period of two and a half hours—whether or not, of course, it has in fact considered such matters or matters.
  I believe that the increasing burden of Committee work is making Members of Parliament the drudges of the executive and not the servants of Parliament. I hope that at some time or other we shall take a serious stand on this matter.
  It is worth noticing that on Thursday next we shall be debating two subjects which concern Members—Members interests and the position of the right hon.
  168
  Member for Walsall, North (Mr. Stonehouse)—and there will be five Standing Committees that afternoon. Members of those Standing Committees will be seriously embarrassed, if not wholly prevented from playing their part here or even in listening to discussions.
  There are currently 43 Select Committees and their sub-committees sitting. There are eight Standing Committees, and I do not include the Committees on Statutory Instruments.
  The right hon. Gentleman modestly referred to what he called a very large legislative programme, though other people might have found some rather rougher adjectives with which to describe that legislative programme. Perhaps I may remind the House of what we have had before us this Session. Thirty-eight Bills have already received the Royal Assent. [HON. MEMBERS: "Hear, hear."] All right, I hope hon. Members will be content to live with the consequences of those measures. Twelve are awaiting Second Reading; one is awaiting its place in Committee; eight are in Committee now, two are awaiting Report, and one is awaiting Lords amendments. There are three Commons Bills in the Lords, and there are four Bills which have started in the Lords. At this stage of the Session this is a fairly heavy diet for Parliament to digest.
  It would not be improper or irrelevant if I were to mention the burden placed upon the rather limited staff of the House of Commons, and in addition the growing difficulties for the Hansard staff. Again and again, there are well-founded complaints from both sides of the House about the impossibility of getting reports of Committee proceedings in time for them to be useful in Standing Committee.
  Nobody should for a moment suppose that the changes now proposed are designed for the benefit of Parliament. They are instead designed purely for the convenience of the executive. In my view, they are born of the desire of Governments to do things, to do as many things as possible, whether they be good or ill, and without too much regard for the consequences, either for the national or for Parliament.
  The other day the Secretary of State for Employment, in an interesting article which came as an echo from his earlier

  169
  days, referred to the danger of Parliament being elbowed off the centre of the stage. He was of course referring to the danger of this happening as a result of activities in Europe, but the real danger comes from something much closer home—the greed of the executive to absorb parliamentary time and to use any tricks that it can to erode the privileges of Parliament for its own convenience. Parliament always gets the blame, and the executive takes none.
  No Government ever look at their own horrible procedures and their own beastly organisation, which on the whole is not changed year in and year out. The only major changes that I can recall are the establishment of great big Heffalump departments such as the Department of the Environment, in which I languished, and other creatures of that kind, which do not increase the efficiency or competence of any administration.
  We have the system of annual accounting, which enables the Treasury to blame the House of Commons for this rather ridiculous system of preserving a ritual which is far more cherished by the Treasury than by any Members of this House.
  We are frequently told when proposals for increasing public ownership are put before us that there will be the closest parliamentary control over the nationalised industries. A more hollow joke has seldom been made, even within the walls of Westminster. We all know that the control over nationalised industries has declined to a horrible farce of rather ill-informed control by officials and Departmental Ministers who know little of what they are interfering with and care much less for the consequences.
  The problem of parliamentary congestion lingers on, no matter what remedies or expedients are resorted to. We virtually abolished counts. We have special procedures now for dealing with statutory instruments. The Finance Bill Committee stage has been exiled upstairs. The guillotine procedure has been modified. All these proposals were designed to suit the convenience of the executive and to make life more comfortable for Ministers, with no consideration for the House of Commons.
  Now, on top of that, we have this strange new addition, which will mean,
  170
  to put it simply, more pressure on the time, resources and energies of Members of Parliament. It will mean less pressure on the Government to find time which will afford adequate opportunity for Members to discuss matters of urgent public interest.
  I remind my right hon. and hon. Friends that we never in these days hear words spoken about the need for the redress of a grievance to precede the Vote of Supply. Nobody really worries about grievances. They are just brushed on one side in the excited rush of a greedy executive to push through a rather stupid legislative programme on the ground that it was contained in its manifesto. Instead of being equated with almost total folly it is treated as if it were Holy Writ.
  Parliament has been progressively weakened by these devices. It will not be strengthened by the proposal now made by the Leader of the House. The House of Commons finds itself increasingly carrying in the public's eyes a degree of responsibility which is in no way balanced by the crumbs of powers which still belong to it. This place used to be a great arena of discussion, a forum of debate. Today, often enough, its very conduct sadly indicates its discontent. We are left regrettably with the impression that for the most part Parliament sees no alternative but sulkily to accept the dictates of its masters.
  I hope that the House will reject this seeming gift from the Leader of the House ostensibly designed for the convenience of the House of Commons to give it a new opportunity. In effect, it will further drain from the Chamber the attendance of Members of Parliament and will give them less opportunity to take part in our debates. This Chamber should be the main scene of our operations.
  10.32 p.m.
  Mr. John Mendelson: The right hon. Member for Yeovil (Mr. Peyton) has introduced early in the debate a great deal of his own partisan spirit which does not help serious discussion on this matter. My concern and that of my colleagues—and, I dare say, the concern of some Conservatives—must be to examine precisely the proposal that my right hon. Friend has put before the House. I shall also echo some of the

  171
  views which have been indicated to me by some other Members who represent Yorkshire areas.
  There are some doubts about the wisdom of the proposal that has been put before us, but in view of the tone of his speech there will be very little understanding among my colleagues of the wholesale attack upon the democratic credentials of my right hon. Friend that we have heard from the Shadow Leader of the House. Surely my right hon. Friend is well known to most of us as a good House of Commons man. Those who have served with him over the years in this assembly know that he is at least as much concerned with the principles of democratic Government as the right hon. Member for Yeovil.
  I entirely reject the silly attacks that were made against my right hon. Friend in the speech of the right hon. Member to which we were forced to listen. Furthermore, all the nonsense about the lack of supervision of the nationalised industries is wholly extraneous to the debate. It has nothing to do with the matter we are debating and is a complete waste of time. We have had another example of the right hon. Gentleman making life easy for himself instead of studying the subject. The right hon. Gentleman has merely repeated his propaganda nonsense once again instead of starting the debate properly.
  I am concerned about the proposal concerning regional business. On 19th June 1972 the Yorkshire group pioneered a regional debate which was of some significance. That debate was widely reported at the time in the Yorkshire region. It dealt in detail with all the economic problems of the area and was of great interest to a population of about 5 million people. At that time it was recognised by all who listened to the debate that it had been a most useful exercise. I suggest that some of the decisions to declare certain parts of the Yorkshire region as intermediate development areas were based on evidence produced in that debate.
  Other regions, such as the North-East and the Northern Region, organised similar debates and all who played a part in preparing those debates, either in drafting motions or in replying to matters
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  raised, felt that from many points of view they had been important and useful occasions. Publicity in the regions was widespread and the nitty-gritty relating to the people who live in the areas was fully reported.
  I can think of no business that comes before the House that is of greater importance than the matters which were raised in those debates. We are not now debating one more proposal about saving time in the House of Commons. We are debating a particular proposal. In view of the remarks made by the right hon. Member for Yeovil, I stress that I fully support the Government's legislative programme. It is to the Government's credit that so many of the things that need to be done are in fact being done by the present administration. There is certainly no issue between my right hon. Friend the Leader of the House and me—and I know this applies to my Labour colleagues—on that score. But whereas a general case might be made for the need for time to consider necessary legislation, careful consideration must be given to any proposal which will lead to less time being devoted to matters on the Floor of the House.
  I also wish to refer to the feelings of any hon. Member who feels great concern because of some important development in his part of the country. When a matter involves the future of industry in an area which affects the economic life of the community, of course it is the duty of the hon. Member concerned to seek to raise the topic in the House—and I emphasise that it should be in the House, the centre of our political life, rather than in a Committee. A matter of that nature should not be tucked away somewhere in a Committee, however many many experts or Ministers are present at its sittings. Our present system has resulted from the exercise of the political genius of our people and has developed over many years. It would be a very sad thing if any of that facility were to be lost.
  This aspect of the matter is being neglected in the present proposals. A Committee upstairs is no substitute for a full debate in the House of Commons. We might then be told that this would mean fewer debates in the House of Commons. I would rather have more major debates in the House of Commons even

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  though in total it may mean fewer debates. That surely is preferable to our having debates tucked away in Committee Rooms upstairs.
  These points have been underlined in correspondence which has passed between my right hon. Friend the Leader of the House and some of my hon. Friends. Apparently my right hon. Friend has in mind not only the problems affecting one region, but also the more general problems concerning regional policy—and certainly that they should be discussed upstairs in Committee. That would be a far more dangerous proposal than the original proposal that problems affecting one particular region should be discussed upstairs. That point needs to be clarified when my right hon. Friend replies to the debate.
  The next reason I advance in entering this caveat to the proposal concerns the House of Commons itself. I have grave fears—I do not know whether I carry with me on this subject all my hon. Friend who might have agreed with me so far—lest the House of Commons should go the way of the House of Representatives in Washington. Every American parliamentary historian and academic in political science agrees that what has virtually destroyed the House of Representatives as a debating chamber is that its many committees have been made to substitute for the House itself. All the real life in the House of Representatives takes place in the committees, and there is hardly any life left in the chamber.
  We are a long way from any such danger—I do not want to exaggerate it—but if we ignore the potential danger in the long term we might be on the road to such a development. Now is the time to be warned. I know that my right hon. Friend and the Government do not want that. I know that they believe in the House of Commons just as I, my hon. Friends and hon. Gentlemen opposite in all parties do. But there is that danger.
  One of the great things about the House of Commons is that at 3.30 in the afternoon this place is the true political centre of the British people. If a regional problem which concerns the interests of the nation arises, it can be raised here. Anything which might
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  detract from that central position in political and public dife is dangerous.
  My right hon. Friend said that this proposal is for an experimental period only. I do not believe, as the right hon. Member for Yeovil suggested, that my right hon. Friend has made this proposal because he wants it as a convenience for the executive. He does not take life as lightly as that. Those who have worked with him on Select Committees know that is so. But, if the House accepts this proposal for an experimental period, will he take due note of the many doubts that have been expressed by hon. Members and undertake that, if those doubts are confirmed, he will take the initiative and not continue the experiment after the initial period has taken its course? In other words, will he assure the House that this is not the experimental beginning of a long-term policy and that, if, as I believe, our fears are truly realised, he will take the initiative, on behalf of the Government, of abolishing what he has proposed tonight?
  10.44 p.m.
  Mrs. Elaine Kellett-Bowman: I have been trying for a very long time to get regional problems discussed properly on the Floor of the House. As has been said, Yorkshire affairs have been discussed. Indeed, I was successful in getting an Adjournment debate on a vital matter to the North-West—the strategic plan.
  I look at this proposal with considerable dismay, because I fear that it is a bromide solution. I am not being partisan in this matter. I believe that this proposal is an excuse to satisfy the consciences of those who have to prepare the business of the House and that the happiness of tens of millions of people in the regions will be swept to one side.
  The situation in some of the regions is desperate. In the North-West we have unemployment well above the national average. In my small corner of North Lancashire we have almost double the national average, and it is 50 per cent. up on the rest of the region. That is the sort of problem that we should be able to discuss on the Floor of the House and not out of sight and out of sound upstairs.

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  We had a brief reference, at short notice, to some of our regional problems on the very day that the House went into recess when we had a sort of flutter with the desperate problems of the textile industry. We want to get to grips with these problems and go into them in real depth in the place where action can be taken.
  What shall we get at the end of two and a half hours debate in Committee? The answer is absolutely nothing. We shall be told that we have had our say, that the dog has had its day, and nothing will be achieved.
  I hope that the Leader of the House will reconsider this decision. Those of us who come from the further parts of the country feel that we are sadly neglected on many counts. When I was first chosen as the candidate for Lancaster we had just had a report called Strategy 2, a detailed review of the North-West, which showed that at that time, in 1967, we were at the bottom of the poll for everything; we were at the bottom of the poll for schools, hospitals, roads and housing. We pulled ourselves up by our boot strings, and by the time we had this huge volume, the further strategic plan for the North-West we had got virtually halfway up the list. But there is still a massive amount of industrial obsolescence in that part of the country which pioneered the Industrial Revolution.
  Those are the sorts of problems that we want to go into, and we cannot deal with all the regions of the country in a Committee upstairs in two and a half hours. I feel very strongly that if we accept this proposal it will be a retrograde step. Nothing is so permanent as a temporary solution. We shall have this solution wished on us for ever and we shall no longer be able to press the Government to take the action that is so urgently needed, particularly in my part of the world. We shall not be able to come to the Minister and say, "For heaven's sake help us with our unemployment problem. Give us some assistance. Make us into a proper development area and give us the assistance of the regional employment premium which can save thousands of jobs that are now going down the drain". That is the sort of thing that we must have the chance to
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  discuss where action can be taken, and I beg the right hon. Gentleman not to press this proposal before the House tonight.
  10.48 p.m.
  Mr. Mike Noble: I rise with some diffidence to address myself to a matter which concerns the procedure of the House as I am a relatively new Member, but I give a cautious welcome to this proposal.
  I should like to comment on some of the remarks of the right hon. Member for Yeovil (Mr. Peyton) and echo the comments of my hon. Friend the Member for Penistone (Mr. Mendelson). I was surprised at the partisan approach of the right hon Gentleman the Shadow Leader of the House. His problem seems to be that he feels that too much is going on in this Chamber. Perhaps he is having problems with his hon. Friends who are far more attracted to the shade and sunlight of the croquet lawns of the shires than to the Chamber.
  We know what is behind the comments of the Shadow Leader of the House. He commented on the number of Bills which have received the Royal Assent and those which are going through the House. We have repeatedly heard from Conservative Members that the answer to our problems is to reduce the amount of legislation instead of dealing with the problems with which we are attempting to grapple.
  My case rests very largely on a reply that I received from my right hon. Friend to a Question on 26th February. I asked him
  "…how many hours of debate have been spent discussing the affairs of Scotland, Wales, Ireland and the North-West Region of England, respectively, since the beginning of the present Parliament."—[Official Report, 26th February 1975; Vol. 887, c. 183–4.]
  His answer was: Scotland in this Chamber 39 hours 56 minutes and in Standing Committee 32 hours 13 minutes; Wales, half an hour and 6 hours 59 minutes; Northern Ireland, 41 hours 43 minutes and 1 hour 26 minutes; for the North-West, nil.
  That puts the matter in perspective. Despite the desires of the right hon. Member for Yeovil, the Leader of the House cannot manufacture time, and we are determined to see our legislative programme through. As a Northerner, I have always been brought up to believe

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  that half a loaf is better than no bread. If we are to consider the affairs of the regions, and particularly those which are in great difficulties at the moment, this proposal should be supported for an experimental period. I share the concern of my hon. Friend the Member for Penistone. If this arrangement does not work to the satisfaction of hon. Members, it should be withdrawn. I also look for that assurance from the Leader of the House.
  In my region, the number of job opportunities is the worst in the country. The level of public expenditure on hospitals, schools, housing and so on, is well below the national average, and we have to find a way of debating the structure plan for the North-West. If all this meant sacrificing our legislative programme, many of us would be very concerned, but this proposal gives us the opportunty to examine these matters in depth. Not many more than those concerned with the particular region would attend a regional debate, and there is no reason why these matters should not receive detailed consideration.
  This proposal will enable us, at least for a short time, to examine a new way of discussing regional affairs instead of the lack of consideration that we have had in the past.
  10.53 p.m.
  Mr. Cranley Onslow: When the hon. Member for Penistone (Mr. Mendelson) reads his speech tomorrow, I believe that he will be surprised to find how closely he followed the arguments of my right hon. Friend the Member for Yeovil (Mr. Peyton). Although—we understand that he must do this—he felt it incumbent upon him to defend his Government's legislative record, when he turned to defending the rights and standing of this House, he had a great deal more in common with my hight hon. Friend than he seems prepared to admit.
  I hope that in our consideration of the value of this curious proposal we can recognise the extent to which we in opposition are duty bound to tell the Government that their legislation is wrong in purpose and excessive in quantity. They would, of course, just as sincerely say the same in our place. It is remarkable that the chief effect of this proposal must be to make more room on the Floor of the
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  House for business of the Government of the day. In that it frustrates one of the fundamental purposes of Parliament, which is not to give Government an easy ride but to raise the voice of the people in this place where it can be heard by all of us. That becomes more and more difficult as time passes.
  I asked the Library to do a little research about the burdens which lie upon Members today as compared with ten years ago. In the Session of 1964–65, the total number of Select Committees upon which the hon Members might be invited to serve was ten. There were 20 Committees, including sub-committees, and in those relaxed days, we were able to have three sub-committees of the Kitchen Committee, including one dealing with wine. The total number of Members involved in this process of Select Committees, or the total number of names, was 169, although the number of individual Members may have been rather smaller because there must have been some duplication between Committees.
  Today, by contrast, we have 19 Select Committees. The total, including the sub-committees, is 38. The total number of names is 282. The figures speak for themselves.
  When one takes into account the increasing demands which Europe makes upon the time of hon. Members—of both sides of the House, as it soon will be—one can appreciate that the total demands upon Members' time become greater all the while. The effect of that is that the House itself becomes less significant all the while, because hon. Members can spend less time here and matters of importance cannot be focused here both because the Government pre-empt so much of the scarce time available and because so much of Members' time is also preempted in Select Committees and Standing Committees.
  We ought to rescue the House from the immediate threat it faces, but broadcasting our proceedings will not be the kiss of life. The hope of survival for parliamentary democracy rests in our insisting as Members that anything that matters shall be debated here. On that matter I am at one with the hon. Member for Penistone. What the Leader of the House has suggested is that any Minister who thinks he can sneak something

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  through at the commencement of Public Business without 20 Members rising in their places can come before the House with a decision that some subject should be taken to the attic and discussed there. Only if 20 Members do not rise in their places will this be prevented.
  But that is not the end of it. Let us suppose that day after day the same proposition is greeted by the same resistance from hon. Members and that Thursday after Thursday the Leader of the House is questioned during Business Questions about having a debate upon the matter on the Floor of the House. His reply will always be "I am sorry. It has been proposed that the matter should be debated upstairs, but some obstructive people are trying to prevent this happening." He would say that instead of saying "I recognise that there is genuine and urgent pressure for this to be discussed down here and I shall find room for it ahead of other less important business, which may include Government business."
  That is the real question which the Leader of the House must settle for himself.
  I hope that the motion will not be passed and that hon. Members on the Government side of the House will join with us ultimately in voting that it should not be passed. If it is passed it will become an alibi for incompetence on the part of the Government's business managers. It will become a means of avoiding debate rather than a means of stimulating it. If there are some measures which are thought to be sufficiently unimportant to be taken upstairs, what promises then will our constituents be given, on matters debated in a corner, with no Press comment, no Gallery, no "Yesterday in Parliament" and no report of substance? These will be secondary questions, shuffled away up on the corridors which no one seriously considers or visits.
  Is that really what the Leader of the House wishes to become of the rights of the people?
  Mr. Alexander Fletcher: Having listened to my hon. Friend's argument about things being lost upstairs and business being discussed there, receiving no publicity and having
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  no importance attached to it, may I ask him whether he suggests that the Scottish and Welsh Standing Committees should be abolished?
  Mr. Onslow: Having once served on the Scottish Standing Committee, I shall not attempt to reply to my hon. Friend. But I notice how much time Scottish matters still get on the Floor of the House in spite of that Committee. I suppose that Scottish Members have some means of insisting that matters important to them should be discussed here. I believe that we English Members have equal rights to insist that important matters should be discussed in this Chamber.
  Mr. Alexander Fletcher: That is what we are getting here.
  Mr. Onslow: I am interested to hear that. We are tonight being endowed by the grace of our Scottish colleagues with an opportunity to discuss our matters away in some corner. No. I am sure my hon. Friend and I can be at one on this. He presumably would wish to see Scottish matters discussed where they can be seen and heard at any time. Whether he thinks that should be in the Scottish Grand Committee or on the Floor of the House is a matter for him. My fear, and that of others as well, is that if they are taken upstairs somehow they will not attract the same magnetic attention that the Scots manage to take to the upper committee corridor with them.
  I hope that the House will be very careful indeed before it passes this measure. If Members use their right to object, I hope the hon. Leader of the House will understand that it is because we do not necessarily trust or like this experiment, and that in objecting to it, as we may still continue to do, we shall still be seeking to make Parliament work as it should.
  11.1 p.m.
  Mr. T. W. Urwin: It is not my intention to follow the hon. Member for Woking (Mr. Onslow) along his somewhat diverse path. I shall address myself to the question as objectively as I can, and say to my right hon. Friend the Leader of the House that I give a somewhat cautious welcome to his proposition. I do that quite deliberately, with the full knowledge that

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  in the years I have served as a Member of this honourable House far too little time has been allocated for debating regional affairs. I mean by this the whole complexity of regional affairs—all the English regions together, as well as the individual regions which from time to time we are able to debate only because someone has been lucky enough to win a place in the Ballot for a Private Member's motion.
  I recall one or two of my hon. Friends doing so, including the hon. Member for Whitehaven (Dr. Cunningham), who has the distinction of being the very last Member representing a constituency in the northern region to have the advantage of debating—and in turn providing for us the advantage of debating—the very complex and difficult problems of economic development in that region.
  There is a suspicion in the minds of some of us that my right hon. Friend is not, by proposing this particular form of Committee, giving the full attention to regional affairs that the importance of the subject demands. One cannot help but feel that, with the number of English regions involved here, there will be too little time available for the multiplicity of subjects which fall to be debated and which hon. Members feel ought to be debated in a committee of this kind.
  The hon. Lady the Member for Lancaster (Mrs. Kellett-Bowman) has quite properly attempted to make a case for more frequent discussions based upon the requirements of her constituency. I want to say to her, through you, Mr. Deputy Speaker, that those of us who represent constituencies in the northern region have continually made representations to the Leader of the House and to his several predecessors concerning the allocation of time for regional debates. We have also made it abundantly clear that we continue to be highly dissatisfied with the altogether too high rate of unemployment which exists in the northern region. For too long now we have been top of the unemployment league.
  One can be excused for feeling that the difficult problems of economic development, of the relief of unemployment, in a region like ours, will not obtain the kind of priority which we think they deserve to have. The same thing can be said, of course, for those other regions
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  in the country which, whilst not having the same degree of unemployment and the same difficulties as we have in the North, are in a position to warrant more attention being paid to debating their problems.
  My hon. Friend the Member for Rossendale (Mr. Noble) has reminded us of what I have always considered to be a very unfair position concerning debating time in this House for the English development areas. He quoted the number of hours allocated to debates on Welsh, Scottish and Northern Ireland affairs. We realise that what he said about the time available to the North-West is equally applicable to the lack of time for debating the affairs of the Northern region.
  There are those of us who have claimed over the years that because of the enormity of our problems and the almost imponderable difficulties that we confront in relation to economic development and unemployment, we are at least entitled to a fairer measure of time, even if it cannot be as much as that allocated to Scotland, Wales and Northern Ireland. Certainly we should have more time than we have had over many years. My right hon. Friend spoke about the time spent on the Floor of the House on these three regions. But it is not just a matter of the time spent on the Floor of the House. It is the fact that there are Grand Committees for Scotland and Wales, with a similar Committee about to be set up to deal exclusively with Northern Ireland affairs. The establishment of a Committee to deal with Northern region affairs is an aspect of regional debate in this House which I hope that my right hon. Friend has not overlooked completely.
  I join my hon. Friend the Member for Penistone (Mr. Mendelson) in saying to my right hon. Friend that, although Government supporters welcome what I am sure is a genuine attempt to provide more time to debate regional affairs away from the Floor of the House, it will be regarded as something essentially to be embarked upon on an experimental basis and that, before too much time elapses, my right hon. Friend will report back to the House to discover whether there is still the same support for his idea as there seems to be at the moment.
  11.6 p.m.
  Mr. A. J. Beith: I echo the remarks of the hon. Member for Houghton-le-Spring (Mr. Urwin) about the difficulties of finding time to debate issues affecting the northern region, although I cannot agree with his misgivings about whether the experiment will be continued if it is found to be unsuccessful. Our experience has been that Committees which have proved to be successful, especially in exercising scrutiny over the Government, have tended not to survive. The example of the Select Committee on Agriculture suggests that the success of such an experiment seems to confer no guarantee of continuance at all.
  I regret that the right hon. Member for Yeovil (Mr. Peyton) should have said, in effect, so little about the reason for this discussion, namely, the problems of the regions and the contribution that they make to our debates. Following the right hon. Gentleman's remarks, however, other hon. Members have brought us back to the reason for discussing the subject, which is the real concern of many of us about the need to ventilate the difficulties of our regions on the Floor of the House.
  The question is why this proposal is before us. In seeking to answer it to my own satisfaction, I come to different conclusions from those of the right hon. Member for Yeovil. I do not attribute it to the desire of the Government to make their life easier, although I attribute a number of other things to that. I see another and more commendable explanation, which I hope that the Leader of the House will not find it necessary to challenge, although he may disagree with my conclusions.
  On a number of occasions outside this House, the right hon. Gentleman, speaking as Member of Parliament for a North-East constituency, has rightly pointed to the fact that the North-East cannot look on unmoved when substantial devolution is being granted to Scotland and Wales while its own affairs continue to be conducted in the same old way. He has said publicly that we must look again at the way the English regions are treated.
  The North-East faces very similar problems to those of Scotland. It has the same kind of industrial legacy, the same problem of under-development in terms of new industrial progress, the same
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  problems of unemployment, the same problems of outworn and outdated housing stock and the same problems of remoteness as those applying to Scotland. What is more, of course, the North-East is further from London than all of Wales. All these features tend to be even more obvious in a constituency like my own which lies on the border between England and Scotland.
  If, as I hope, we get rapid development of devolution for Scotland and it proves successful, it will be painful for my constituents to look only a short distance down the road to where power is being exercised by bodies closer to the people and more readily accessible to them than they themselves enjoy. Indeed, it is apparent in my constituency that the attention that can already be given by the degree of devolution which the Scottish Departments enjoy is often closer than they can get from London-based English Departments. The contrast is more marked if that comparison is made.
  The Leader of the House is concerned with devolution as part of his responsibilities, and I am sure that he has noted that point. I take it that the introduction of this new Committee is in part a recognition that the English regions must have some treatment of their own, but those of us concerned cannot be satisfied that this proposal will meet the sort of problems to which I have referred. I would rather see the right hon. Gentleman paying closer attention to the points made by Lord Crowther-Hunt in his dissenting memorandum to the Kilbrandon Report. I should welcome progress based on those principles.
  What can we expect from this new body? It is to be an all-region body not specifically concerned with any one region. Its membership is to be drawn from English Members. An exchange which I hope will be classified has already caused hon. Members to wonder to what extent it will be concerned with regional matters affecting the whole of England and to what extent with matters distinctive to any one region.
  What is meant by "regional affairs"? There is the matter of regional policy and the instruments we might choose for it, but that is a crucial issue which must be discussed on the Floor of the House, for it could not be discussed in

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  its entirety elsewhere. But beyond that where do we go, since many matters of concern to different regions are seen differently in others? In the North-East, we might make common cause in certain matters with Yorkshire or with Scotland but would be at odds with the South-East or the South-West.
  The notion that the English regions have some identity of interests which can be readily subsumed under one heading is misleading. If all that the Committee will do is provide a place where we can discuss those matters which are of common regional interest in the absence of Scottish and Welsh Members, it will not get us very far. Already one only has to put the word "English" on the Order Paper in large letters and there will be no Scottish National Members sitting behind me. If one places it late on a Thursday night, there will be very few Welsh or Scottish Members present, and many North-East Members will regret the departure of the one o'clock sleeper without them.
  Mr. Frank Hooley: Does not the hon. Gentleman agree that there will be a few issues of serious importance which concern only one region and very few which will not concern more than two or three?
  Mr. Beith: I agree. For example, the North-East might well share a common interest with other regions. Shipbuilding, for example, concerns the North-East, the North-West, the Bristol Channel and Clydeside. But there are, of course, marked differences between industrial regions suffering decline and unemployment and the South-East. To assume that one can neglect that difference, or that it can be readily accommodated in a Committee of the type proposed, is misleading and short-sighted. Of course, time will be provided which is not now available on the Floor of the House—but it is the time of Members who themselves are involved in business on the Floor of the House and in other Committees. We must not set that supposed advantage too high.
  If the Committee is to operate on the basis of a "shifting sands" membership, with North-East Members attending it for one subject and South-West Members for another, for example, with the remaining Members generally absent and with debates concentrated on particular occa-
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  sions on the interests of one or two regions, we are dealing with a rather different body. I wonder whether it will manage to develop any continuing identity if it is merely a procedural device whereby Members representing one or two regions can gather to discuss a subject of common interest. Between these two extremes I find it difficult to know what satisfactory compromise can be arrived at.
  I raise these as reservations, not as reasons for rejecting the notion of creating this body. Its real disadvantages are matters that we might try to allow it to disprove rather than reasons for not setting the committee up. The paramount disadvantages of this body is that it looks like yet another talking shop which is bound to be viewed with little enthusiasm by those in regions such as the North-East who are anxious about the problems confronting them.
  It does not seem to me that the setting up of this Committee will in any way satisfy the most important cries coming from the regions. The first of these cries is for some clear voice to Government for their region. No Committee of this nature can provide such a voice, because it will combine representatives of a great many regions. The Committee cannot pass resolutions. It cannot make statements of any kind. It can only report that it has "considered the matter". Even if within the context of a debate within the Committee it became obvious that a view was emerging which represented the views of Yorkshire, say, that view could be "out-voiced", so to speak, by Members from other regions taking a different view. The Committee does not satisfy the need to present the views of a region collectively to the Government through that region's Members of Parliament. We must recognise that one of the crucial things that the regions have asked for will not be satisfied.
  Nor does the Committee give to the regions any of the power of action which Scotland and Wales will secure through substantial measures of devolution. If the Leader of the House believes that those of us who are concerned to get effective democratic control through regional bodies will be mollified by the setting up of this Committee, he is very mistaken. It does not meet the case for democratic regional control of ad hoc

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  appointed bodies in such areas as health and water.
  This proposal condemns the English regions to the political kindergarten, from which Scotland and Wales are, after a long period, graduating. How long will we remain with this Committee as our only means of expression other than the Floor of the House? Will we have to wait as long as Scotland and Wales have done before we go anywhere beyond this?
  Viewed in that sense, this Committee is a poor bargain. I would not wish to resist the experiment, nor would I wish my hon. Friends to resist it, as a place in which regional matters can be discussed to a greater extent than they are now. However, let no one suppose that it carries us very far or that it satisfies the legitimate demands of the regions of England which share with Scotland and Wales precisely the problems which have led the Government at long last to proceed to measures of devolution. We have those problems and we will still have them however many times this Committee sits.
  11.19 p.m.
  Mr. Nicholas Ridley: It is a good thing that some of those hon. Members should speak who do not have in their constituencies the types of problem about which the hon. Member for Berwick-upon-Tweed (Mr. Beith) and hon. Members opposite have spoken, problems concerned with unemployment and industrial decline.
  I should first like to ask what region my constituency is in. I do not believe that the Leader of the House can answer that question. It is not in the West Midlands. It is not in Wessex. It is not in Wales. It is not in the South-West. That, perhaps, is an illustration of the difficulty of setting up a Committee to deal with regional affairs when England is not divided into regions and there are no firm boundaries as to what are regions and what are not and which is in which region.
  I should like to ask, secondly: what are regional affairs? The term "regional affairs" is in the motion. It is surprising that nobody has yet defined what regional affairs are. The hon. Member for Berwick-upon-Tweed came nearer to attempting a definition when he talked
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  about industrial decline and unemployment. It has seemed to me from listening to the debate that most hon. Members who have talked about regional affairs are talking about the industrial situation in their constituency. He certainly was, although, with respect to him, I know his constituency very well indeed and I can say that there is very little industry and certainly little declining industry in it.
  Mr. Beith: What about the coal mines in my constituency?
  Mr. Ridley: The coal mines there are very few and far between and represent a tiny proportion of the population.
  Be that as it may, the hon. Gentleman had in mind the obtaining of further grants and assistance for industrial development, and the choking off of industrial development in other parts of the country such as that which I represent where it is judged that there is a sufficiency. If we are to interpret regional affairs in this sense, my constituents will find it very difficult to contribute. Perhaps their main point of view would be that they would like to pay less tax towards grants, loans and premiums to the regions and they would prefer that the industrial development certificate control be relaxed, because every time a new business of any size comes to my constituency it is denied an industrial development certificate in the hope that the business will go somewhere else. [AN HON. MEMBER: "Selfish."] No, it is not at all selfish. It merely tends to be rather a different point of view from that of the hon. Gentleman. I might suggest that he is talking, from his sedentary position, rather selfishly. Since he used the word, I use it too. This illustrates the divisive nature of the proposal.
  It seems to me that these are matters of great substance. They involve, first of all, the denial of certificates for industrial development, and, secondly, the raising of taxes and the distribution of subsidies from one group of citizens to another. This is a matter of great political import. To shove this sort of matter off to a Committee would be to devalue it. But, of course, there is no proposal that this Committee should be able to take substantive decisions. It is not a Committee which is going to enact law. Nor is it a Committee which is going

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  to pass financial votes. It is masquerading if it is called a Standing Committee, because at least a Standing Committee on a Bill has the power to recommend or to raise taxation if it is a financial Bill which is before the Committee. This is not to be a Standing Committee. It is to be a talking shop, and it seems to me that it would be totally valueless.
  If I have a criticism about our present procedures, it is that when there is a debate on Scotland or the North-East or the South-West, on the whole, Mr. Deputy Speaker, you and Mr. Speaker tend to concentrate on calling those who represent the area under discussion, who are all asking for more, but those who are trying to defend their constituents against increased taxation are not consulted so much.
  One of the further dangers about these debates on the regions is this. If we are to debate industrial development or water supply or housing or roads, the debate should be a whole one involving not only the benefits which are to be obtained for any region but the cost of that provision. We tend to have a day's debate on statutory corporations, such as today, or on British Leyland, just before we rose for the recess, and to spend large sums of money, and hon. Members with constituency interests in these matters put their points of view; and then every six months or so we have a Budget, and all those hon. Members disappear and another set of hon. Members come along and say that public expenditure is much too high and must be cut.
  If we are to have debates on regional affairs they should be attended by those whose job it is to defend the revenue-raising aspect of government. There should be Treasury Ministers present, who would rise and say "This policy for the region is going to cost X, Y or Z millions and we shall raise taxes in this way or in that way to cover the cost", and the representatives of the taxpayers should be able to comment on those proposals. This would be an improvement to our procedure, but it should not take place in a Committee. If it is to take place at all, it should take place on the Floor of the House.
  What sort of Committee will it be? I think that there are to be about 516 English Members plus five. The Leader
  190
  of the House is to appoint a further five. Who will they be? Why are these extra I per cent. selected? Is it that the Labour Party has 254 English Members and needs five more to obtain a majority on the Committee? Is a sort of party majority point involved? If not, what is the reason for adding these five people to the Committee?
  Where will the Committee sit? Will it sit in the Grand Committee Room? Even that is not big enough to hold 500-odd Members.
  Mr. John Biffen: Earls Court.
  Mr. Ridley: My hon. Friend gives me an idea. Perhaps we should sit by counties. Then there could be a different county represented in each Committee Room along the corridor. All the objections to Earls Court are applicable to this proposal.
  It would have been much better to drop the proposal, for all the reasons that have been given. There has not been one supporter of the proposal, with the possible exception of the hon. Member for Rossendale (Mr. Noble), who was lukewarm.
  My final reason for suggesting that we do not proceed with the proposal is the very reason at the heart of the speeches of my right hon. Friend the Member for Yeovil (Mr. Peyton) and others who have talked about the power of Parliament, the potency of the House. By questioning our power we are admitting not that we have not enough Committees, enough machinery, enough organisations and institutions to do our job, but that we cannot do our job because we are never prepared to use our votes in this Chamber. If we were to use our votes more in the direction that we believe right, we should at a stroke restore the authority of this House over the executive in a way that could not possibly be done by any amount of Select Committees, Standing Committees or any sort of Committee that the Leader of the House can set up.
  Those hon. Members, such as the hon. Member for Penistone (Mr. Mendelson) and Houghton-le-Spring (Mr. Urwin), who feel, for slightly different reasons,

  191
  that this is not the right way to proceed could in a strange way restore the authority of the House in a short while tonight by voting against the proposal. Put in those few clear, simple English words, the proposition seems so clear, simple and easy. Yet I can see that the conscience of the hon. Member for Penis-tone is writhing. I can see a torment of agony at the thought that what he said should be translated into simple action which he knew perfectly well when he spoke he did not intend to take. But when he thinks about the arguments he used and the arguments advanced from the Opposition benches he will see that he could put right that omission by going through the Lobby that he did not intend to go through before he started to speak.
  Mr. Tom Ellis: Is the hon. Gentleman suggesting that the proper way to restore the authority of this House is to vote against the Government, right or wrong?
  Mr. Ridley: No—to vote against the Government when they are wrong. I think that most hon. Members on both sides of the House think that the Government are wrong tonight.
  Hon. Members are much more likely to restore the authority of Parliament, and respect for it, if they reverse a wrong proposal by the Government. They are a million times more likely to succeed than all the Select Committees, Standing Committees, Sub-Committees and Grand Committees that the Leader of the House can dream up. These are but diversions, ways of wasting the time of hon. Members, who would be far wiser to spend their time in this Chamber, listening to the arguments and deciding when it is their duty and responsibility to vote against the executive.
  11.30 p.m.
  Mr. Edward Short: I have rarely heard so much sound and fury about a simple proposal for an experiment designed solely to help provide more opportunities for hon. Members. The Shadow Leader of the House made a niggling and utterly negative speech. There was not one positive proposal in the whole of it.
  Mr. Eric Ogden: I apologise for intervening. Will my right hon. Friend indicate whether he
  192
  is attempting to draw the debate to a conclusion? I shall support his proposal, but I should like to have my say before the debate is concluded.
  Mr. Short: That is a matter for you, Mr. Deputy Speaker.
  The right hon. Member said that this proposal—
  Mr. Ogden: On a point of order, Mr. Deputy Speaker. I apologise to my right hon. Friend for intervening again. I asked whether it was his intention to try to draw the debate to a conclusion.
  Mr. Deputy Speaker (Mr. George Thomas): That is not a point of order; it is a way of making the hon. Member's point.
  Mr. Short: I replied to my hon. Friend. I said that this was a matter entirely for you, Mr. Deputy Speaker.
  Mr. Ogden: I am sorry; I did not hear that.
  Mr. Short: This proposal is purely for the benefit of hon. Members who want to ventilate regional problems and who have expressed this view over and over again on Thursdays in business questions. To say, as the right hon. Gentleman did, that this is a case of the executive using tricks to erode the powers of Parliament is utter nonsense. It is a proposal for an experiment designed purely to help hon. Members who really want to debate specific regional problems.
  My hon. Friend the Member for Penistone (Mr. Mendelson) was talking of a debate on Yorkshire in 1972 but he will recollect that the then Opposition were prepared to devote some of their Supply time to regional matters, and frequently we gave a day which was divided into two regional debates. The present Opposition, so far, have not given any time for regional debates in that way.
  My hon. Friend also talked about the undoubted rights of Members to bring local matters—he referred to the case of a local industry—to the Floor of the House. I agree—and that right is completely unimpaired by this simple proposal. That right will remain. This right would be an additional one. It would mean that many specific matters which cannot be debated now would be debated. My hon. Friend also asked whether we

  193
  would accept this for an experimental period, and whether, if doubts were still expressed by hon. Members, I would take the initiative in abolishing the procedure. Of course I would; this is simply an experiment for a period, to see how it gets on.
  The hon. Member for Lancaster (Mrs. Kellett-Bowman), who has pressed for regional debates, called this a bromide solution. If she wants a debate on the strategic plan for the North-West, here is an opportunity, not out of sight and sound but in Committee, with the Press and the public present if they wish to be present. I should have thought that a debate in Committee in that way was better than no debate at all. I hope that the hon. Lady will support the proposal.
  My hon. Friend the Member for Rossendale (Mr. Noble) quoted a reply that I gave which illustrates that Scotland and Wales have a good deal of time to discuss regional matters in their Committees, and the proposal tonight is simply to give English Members the same kind of opportunity as that which Scottish and Welsh Members now have.
  The hon. Member for Woking (Mr. Onslow) said that the object was to make more room for Government business on the Floor of the House. That is not the object. The simple fact is that we are not debating regional matters sufficiently. My hon. Friend the Member for Houghton-le-Spring (Mr. Urwin) made the same point. I fully agree; we are not. I come from the same area as he does, where there are the most acute regional problems. How fortunate the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) is to have no regional problems. But he came from the North-East and he knows well that we have the most difficult regional problems there which need debating. This would be additional to any time that we can give on the Floor of the House.
  The hon. Member for Woking also complained—I note that the hon. Gentleman is not present now—about something which he says I shall say in reply to a hypothetical question which I may be asked on the Business Statement some time in the future. The hon. Gentleman kept on talking about this Committee being out of sight and out of hearing. That is utter nonsense. The Press and
  194
  the public would be present, and there may even be radio broadcasting.
  My hon. Friend the Member for Houghton-le-Spring gave the proposal a cautious welcome. He said that I was not sufficiently concerned with regional matters. It is because I am concerned with regional matters that I have brought forward this proposal.
  The hon. Member for Berwick-upon-Tweed (Mr. Beith) put the very interesting point that the need to provide more time for regional matters was the consequence of the policy of devolution. The hon. Gentleman went on to develop that argument to an unwarranted extent. I would not suggest that this is a proposal for some kind of devolution in England for some time in the future. The hon. Gentleman also raised the point—this was a matter raised by other hon. Members—whether the Committee would be able to discuss regional policy generally. It would be able to do so if there was general agreement that it should, but no subject could go to the Committee without general agreement.
  I would see the main purpose of the Committee as being to discuss not regional policy generally but specific matters relating to specific regions. The "shifting sands" concept of membership of the Committee would apply exactly as it does in the Scottish Grand Committee, where Members who tend to be interested in the subject under debate turn up for the debate.
  Mr. Arthur Jones: Is there any association in the right hon. Gentleman's mind between the proposal the right hon. Gentleman has put before the House and regional government and the election of regional councils?
  Mr. Short: No, none whatever. The two matters are completely unconnected. The hon. Member for Cirencester and Tewkesbury was right in saying that this would be a forum. I believe that as such it would be extremely valuable. Members would be able to go to the Committee—that is, Members who were interested and concerned—to put their point of view and the point of view of their region. Ministers would have to answer, and almost certainly the debates would receive wide publicity in the local Press as the Scottish and Welsh debates do.

  195
  I emphasise that this is a modest proposal for an experiment. It would give opportunities for debate which are not now available. It is not designed as a substitute for a debate in the House, nor is it designed to make more time available for the Government in the House. It would be additional to any time we can devote to regional matters on the Floor of the House. It is an experiment. It is a sessional Committee and nothing more. If it does not commend itself to the House after an experimental period, I shall propose discontinuing it. With those assurances I commend the proposal to the House. I hope the House will now be able to accept this proposition.
  11.38 p.m.
  Mr. Peyton: The Leader of the House having made his second speech—
  Mr. Deputy Speaker: Order. Does the right hon. Gentleman seek the leave of the House?
  Mr. Peyton: Perhaps you will allow me to complete my sentence, Mr. Deputy Speaker. The Leader of the House having made a second speech, I hope that I may have the leave of the House to do the same.
  I do not want to repeat my arguments, nor do I want to counter what the right hon. Gentleman has said. I do not think he hoisted in the point that there is some genuine interest on both sides of the House as to whether this proposal is as useful as he appears to think it is. I hope that the right hon. Gentleman and his colleagues will not be so precipitous and unwise, in view of the misgivings which have been expressed from both sides of the House and in view of the number of Members who want to speak, as to move the Closure on a matter which should be one of no party controversy.
  11.40 p.m.
  Mr. Eric Ogden: When a few moments ago I asked my right hon. Friend the Leader of the House whether he intended to wind up the debate, I did not intend to be discourteous. As the motion has been in existence for a period of between six and eight weeks, and as one Lancashire Conservative Member has already spoken in this debate, I thought I should have the
  196
  opportunity of making a contribution from Lancashire's point of view from the Labour benches. There are obviously still a number of hon. Members who wish to take part in the debate and, therefore, I shall put my points briefly.
  Obviously, every hon. Member would prefer to discuss regional affairs on the Floor of the House. In practice, however, this has happened on fewer and fewer occasions in recent years. Therefore, it would seem that our choice tonight lies between having the opportunity of discussing regional matters upstairs in committee and of having almost no opportunity to discuss regional affairs.
  One view from the Opposition benches was that we were now experiencing too much legislation—with the implication that if a discussion of regional affairs on the Floor of the House meant that more Government Bills fell by the wayside that would be all to the good. But that is not the way in which Labour Members would look at the situation. We were brought to power in order to put forward a programme, and we believe that that programme should have priority. Therefore, if the choice is between a debate on regional affairs upstairs in Committee and a debate in the House, reluctantly I would opt for a limited one upstairs. There are hon. Members who would prefer everything to take place in the House. There are those, such as the right hon. Member for Down, South (Mr. Powell), who argue that motions of this nature take away the pre-eminence of the House of Commons and are a threat to sovereignty. However, I believe that we should agree to this experiment and wait to see what the Committee itself brings forth.
  This does not mean that I approve every dot and comma of the proposals, some of which appear to be unnecessary. Paragraph 3 of the motion says:
  "A Motion may be made…by a Minister of the Crown…to the effect that a specified matter…be referred to the Standing Committee.…".
  Then why should not the Committee have the right to decide what it should discuss? There is no suggestion that this should be a regional Parliament. Therefore, surely such a Committee should have the right to discuss and decide what it wants to recommend, and all the rest of it.

  197
  On the matter of the veto, there is reference in the same paragraph to 20 Members rising in their places. That is a strange way to look at the question of sovereignty, because that would mean a figure of less than 4 per cent. of the total membership. Surely that point should be examined.
  Paragraph 4 says that the Committee must state that it has considered the matter. Should not the Committee also have the right to make recommendations? On the matter of the time scale, should not such a Committee be able to extend its work for one Session, or even two or three Sessions, if it considers that course to be necessary. Furthermore, I do not think the proceedings should be subject to a maximum of two-and-a-half hours—which is less than 15 seconds for each hon. Member. We appreciate that the motion is not part of any move to devolution, and if my right hon. Friend will agree to look at these points I believe that we should accept the proposals. On that basis I give the matter my support. I think it is important that the House has had the opportunity of making its view known on these proposals.
  11.45 p.m.
  Mr. Alexander Fletcher: It is a credit to the good nature of English Members on both sides of the House that, as a Scottish Member, I do not feel that I am intruding on what is perhaps a family dispute.
  My main motivation for intervening in the debate is my anxiety to see English regional business given the same amount of time, discussion and emphasis as is given to Scottish and Welsh business in this House.
  I have listened with interest to the anxieties expressed by hon. Members representing the industrial areas of the North of England and by hon. Members representing the South of England. I am sorry that my hon. Friend the Member for Woking (Mr. Onslow) is not here, because I should have liked to point out to him that when we are discussing regional affairs the London area is as much a region of the United Kingdom as the North of England or, in the absence of SNP Members, dare I say, Scotland.
  198
  In listening to debates of various kinds we have noticed a natural reaction—perhaps a natural backlash—by some English Members to the amount of time that is devoted, both on the Floor of the House and in Committee, to Scottish business to the disadvantage of many, if not most, of the regions of England. We Scots, believe it or not, are fair-minded people and would be happy to do what we can to even out the balance.
  This debate could and should have far-reaching consequences for devolution, despite the point made by the Lord President. It is a contribution to the shape of attitudes in the House on how we will regard the proposals that the Government will put forward for separate Parliaments in Scotland and Wales and the extent to which the imbalance that already exists in favour of Scotland and Wales in the form of devolution may be further exaggerated.
  Some Opposition Members, keen as they may be on proposals for devolution, have no desire to encourage Scotland or Wales to rush into a situation whereby they will further demote themselves in the context of the United Kingdom and Parliament as a whole.
  My right hon. Friend the Member for Yeovil (Mr. Peyton) was absolutely right when he emphasised that the basic problem is too much legislation and too many Committees. We cannot ignore the facts. There is very little evidence that in anything like the near future any remedy will be put forward which will greatly decrease the amount of legislation or Committee work. For that reason alone, I repeat my desire to see some balance in the way that regional business is handled in Scotland and in Wales.
  My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) hit the centre of the problem which is the way that business is conducted in the House and how we deal in a piecemeal fashion with most of the problems which come before us.
  I support the motion because I believe that it is the beginning of a reshaping of attitudes. It is important that English Members should realise that, although we take in good part the chat in the Lobby when the House is held up late at night because of Scottish business, at the same time we feel that the bargain should

  199
  be that it is just as important for the House to discuss Scottish business late at night as English business. Equally, it is just as relevant that English business should be taken upstairs in Committee if that is the place where Scottish and Welsh business is to be discussed.
  For those reasons, and because I believe that some balance of discussion should take place in this House, I say to the Lord President that, although I see many things in this proposal which will not improve the position as we see
  it in the House, an important principle is being touched upon this evening and it is one which for reasons of a Scottish nature, I shall support.
  Mr. Walter Harrison (Treasurer of Her Majesty's Household)Mr. Walter Harrison (Treasurer of Her Majesty's Household) rose in his place and claimed to move, That the Question be now put.
  Question put, That the Question be now put:—
  The House divided: Ayes 143, Noes 112.

  Division No. 220.]

  AYES

  [11.51 p.m.

  Allaun, Frank

  Garrett, W. E. (Wallsend)

  O'Halloran, Michael

  Armstrong, Ernest

  George, Bruce

  O'Malley, Rt Hon Brian

  Ashton, Joe

  Golding, John

  Ovenden, John

  Atkins, Ronald (Preston N)

  Gould, Bryan

  Palmer, Arthur

  Atkinson, Norman

  Grant, George (Morpeth)

  Park, George

  Bates, Alf

  Grant, John (Islington C)

  Parry, Robert

  Bean, R. E.

  Grocott, Bruce

  Prescott, John

  Bidwell, Sydney

  Harper, Joseph

  Price, C. (Lewisham W)

  Bishop, E. S.

  Harrison, Walter (Wakefield)

  Radice, Giles

  Boothroyd, Miss Betty

  Hatton, Frank

  Roberts, Gwilym (Cannock)

  Bradley, Tom

  Horam, John

  Rodgers, George (Chorley)

  Buchan, Norman

  Howell, Denis (B'ham, Sm H)

  Rooker, J. W.

  Callaghan, Rt Hon J (Cardiff SE)

  Hoyle, Doug (Nelson)

  Roper, John

  Callaghan, Jim (Middleton & P)

  Hughes, Robert (Aberdeen, N)

  Rose, Paul B.

  Carmichael, Neil

  Hughes, Roy (Newport)

  Ryman, John

  Castle, Rt Hon Barbara

  Hunter, Adam

  Selby, Harry

  Clemitson, Ivor

  Jackson, Miss Margaret (Lincoln)

  Short, Rt Hon E. (Newcastle C)

  Cocks, Michael (Bristol S)

  Janner, Greville

  Silkin, Rt Hon John (Deptford)

  Cohen, Stanley

  John, Brynmor

  Sillars, James

  Concannon, J. D.

  Jones, Alec (Rhondda)

  Skinner, Dennis

  Conlan, Bernard

  Lamborn, Harry

  Small, William

  Cook, Robin F. (Edin C)

  Lamond, James

  Smith, John (N Lanarkshire)

  Cox, Thomas (Tooting)

  Lestor, Miss Joan (Eton & Slough)

  Spriggs, Lesiie

  Craigen, J. M. (Maryhill)

  Lewis, Arthur (Newham N)

  Stallard, A. W.

  Crawshaw, Richard

  Loyden, Eddie

  Stewart, Rt Hon M. (Fulham)

  Cryer, Bob

  Luard, Evan

  Stoddart, David

  Cunningham, Dr J. (Whiteh)

  Lyons, Edward (Bradford W)

  Stott, Roger

  Dalyell, Tarn

  Mabon, Dr J. Dickson

  Strang, Gavin

  Davidson, Arthur

  McCartney, Hugh

  Taylor, Mrs Ann (Bolton W)

  Deakins, Eric

  McElhone, Frank

  Thomas, Ron (Bristol NW)

  Delargy, Hugh

  McGuire, Michael (Ince)

  Thorne, Stan (Preston South)

  Dell, Rt Hon Edmund

  McMillan, Tom (Glasgow C)

  Tomlinson, John

  Dempsey, James

  McNamara, Kevin

  Torney, Tom

  Doig, Peter

  Madden, Max

  Urwin, T. W.

  Douglas-Mann, Bruce

  Magee, Bryan

  Varley, Rt Hon Eric G.

  Duffy, A. E. P.

  Mahon, Simon

  Wainwright, Edwin (Dearne V)

  Dunn, James A.

  Mallalieu, J. P. W.

  Walker, Terry (Kingswood)

  Eadie, Alex

  Marks, Kenneth

  Ward, Michael

  Edge, Geoff

  Marshall, Dr Edmund (Goole)

  Wellbeloved, James

  Ellis, John (Brigg & Scun)

  Marshall, Jim (Leicester S)

  White, Frank R. (Bury)

  English, Michael

  Maynard, Miss Joan

  Williams, Alan (Swansea W)

  Evans, John (Newton)

  Mellish, Rt Hon Robert

  Wilson, William (Coventry SE)

  Ewing, Harry (Stirling)

  Mendelson, John

  Wise, Mrs Audrey

  Flannery, Martin

  Millan, Bruce

  Woodall, Alec

  Fletcher, Raymond (Ilkeston)

  Miller, Mrs Millie (Iltord N)

  Young, David (Bolton E)

  Fletcher, Ted (Darlington)

  Mitchell, R. C. (Soton, Itchen)

  Forrester, John

  Murray, Rt Hon Ronald King

  TELLERS FOR THE AYES:

  Fraser, John (Lambeth, N'w'd)

  Newens, Stanley

  Mr. J. D. Dormand and

  Freeson, Reginald

  Noble, Mike

  Mr. Laurie Pavitt.

  NOES

  Aitken, Jonathan

  Burden, F. A.

  Edwards, Nicholas (Pembroke)

  Arnold, Tom

  Butler, Adam (Bosworth)

  Elliott, Sir William

  Atkins, Rt Hon H. (Spelthorne)

  Chalker, Mrs Lynda

  Fairgrieve, Russell

  Benyon, W. L.

  Clarke, Kenneth (Rushcliffe)

  Fletcher, Alex (Edinburgh N)

  Biffen, John

  Cope, John

  Fletcher-Cooke, Charles

  Boscawen, Hon Robert

  Crouch, David

  Fowler, Norman (Sutton C'f'd)

  Brown, Sir Edward (Bath)

  Crowder, F. P.

  Freud, Clement

  Bulmer, Esmond

  Dean, Paul (N Somerset)

  Gardiner, George (Reigate)

  Godber, Rt Hon Joseph

  Madel, David

  Rhys Williams, Sir Brandon

  Gower, Sir Raymond (Barry)

  Marshall, Michael (Arundel)

  Ridley, Hon Nicholas

  Grieve, Percy

  Mather, Carol

  Rippon, Rt Hon Geoffrey

  Grist, Ian

  Maxwell-Hyslop, Robin

  Roberts, Michael (Cardiff NW)

  Harvie Anderson, Rt Hon Miss

  Mayhew, Patrick

  Ross, Stephen (Isle of Wight)

  Hawkins, Paul

  Miller, Hal (Bromsgrove)

  Rossi, Hugh (Hornsey)

  Higgins, Terence L.

  Moate, Roger

  Shaw, Giles (Pudsey)

  Hooson, Emlyn

  Molyneaux, James

  Shelton, William (Streatham)

  Hordern, Peter

  Monro, Hector

  Shepherd, Colin

  Hunt, John

  Montgomery, Fergus

  Silvester, Fred

  Hutchison, Michael Clark

  Morgan, Geraint

  Sims, Roger

  James, David

  Morrison, Charles (Devizes)

  Sinclair, Sir George

  Jones, Arthur (Daventry)

  Morrison, Hon Peter (Chester)

  Smith, Cyril (Rochdale)

  Jopling, Michael

  Neave, Airey

  Speed, Keith

  Kaberry, Sir Donald

  Nelson, Anthony

  Sproat, Iain

  Kellett-Bowman, Mrs Elaine

  Neubert, Michael

  Stokes, John

  Kershaw, Anthony

  Newton, Tony

  Stradling, Thomas, J.

  King, Evelyn (South Dorset)

  Normanton, Tom

  Taylor, Teddy (Cathcart)

  Knight, Mrs Jill

  Onslow, Cranley

  Tebbit, Norman

  Knox, David

  Oppenheim, Mrs Sally

  Thorpe, Rt Hon Jeremy (N Devon)

  Lamont, Norman

  Osborn, John

  Townsend, Cyril D.

  Latham, Michael (Melton)

  Page, Rt Hon R. Graham (Crosby)

  Trotter, Neville

  Lawrence, Ivan

  Pattle, Geoffrey

  Vaughan, Dr Gerard

  Leadbitter, Ted

  Penhaligon, David

  Viggers, Peter

  Lloyd, Ian

  Percival, Ian

  Weatherill, Bernard

  Luce, Richard

  Peyton, Rt Hon John

  Winterton, Nicholas

  McCrindle, Robert

  Powell, Rt Hon J. Enoch

  MacGregor, John

  Prior, Rt Hon James

  TELLERS FOR THE NOES:

  Macmillan, Rt Hon M. (Farnham)

  Rathbone, Tim

  Mr. Cecil Parkinson and

  McNair-Wilson, M. (Newbury)

  Rawlinson, Rt Hon Sir Peter

  Mr. Spencer Le Marchant.

  McNair-Wilson, P. (New Forest)

  Renton, Tim (Mid-Sussex)

  Question accordingly agreed to.
  Question put accordingly:—
  The House divided: Ayes 154, Noes 104.

  Division No. 221.]

  AYES

  [12.02 a.m.

  Allaun, Frank

  Fletcher, Alex (Edinburgh N)

  Marks, Kenneth

  Armstrong, Ernest

  Fletcher, Raymond (Ilkeston)

  Marshall, Dr Edmund (Goole)

  Ashton, Joe

  Fletcher, Ted (Darlington)

  Marshall, Jim (Leicester S)

  Atkins, Ronald (Preston N)

  Forrester, John

  Maynard, Miss Joan

  Atkinson, Norman

  Fraser, John (Lambeth, N'w'd)

  Mellish, Rt Hon Robert

  Bates, Alf

  Freeson, Reginald

  Mendelson, John

  Bean, R. E.

  Freud, Clement

  Millan, Bruce

  Beith, A. J.

  Garrett, W. E. (Wallsend)

  Miller, Mrs Millie (Ilford N)

  Bidwell, Sydney

  George, Bruce

  Mitchell, R. C. (Soton, Itchen)

  Bishop, E. S.

  Golding, John

  Murray, Rt Hon Ronald King

  Boothroyd, Miss Betty

  Gould, Bryan

  Newens, Stanley

  Bradley, Tom

  Grant, George (Morpeth)

  Noble, Mike

  Buchan, Norman

  Grant, John (Islington C)

  Ogden, Eric

  Callaghan, Rt Hon J (Cardiff SE)

  Grocott, Bruce

  O'Halloran, Michael

  Callaghan, Jim (Middleton & P)

  Harrison, Walter (Wakefield)

  O'Malley, Rt Hon Brian

  Carmichael, Nell

  Hatton, Frank

  Ovenden, John

  Castle, Rt Hon Barbara

  Hooson, Emlyn

  Palmer, Arthur

  Clemitson, Ivor

  Horam, John

  Park, George

  Cocks, Michael (Bristol S)

  Howell, Denis (B'ham, Sm H)

  Parry, Robert

  Cohen, Stanley

  Hoyle, Doug (Nelson)

  Pavitt, Laurie

  Concannon, J. D.

  Hughes, Robert (Aberdeen, N)

  Penhallgon, David

  Conlan, Bernard

  Hughes, Roy (Newport)

  Prescott, John

  Cook, Robin F. (Edin C)

  Hunter, Adam

  Price, C. (Lewisham W)

  Cox, Thomas (Tooting)

  Jackson, Miss Margaret (Lincoln)

  Radice, Giles

  Craigen, J. M. (Maryhill)

  Janner, Greville

  Roberts, Gwilym (Cannock)

  Crawshaw, Richard

  John, Brynmor

  Rodgers, George (Choriey)

  Cryer, Bob

  Jones, Alec (Rhondda)

  Hooker, J. W.

  Cunningham, Dr J. (Whiteh)

  Kerr, Russell

  Roper, John

  Dalyell, Tam

  Lamborn, Harry

  Rose, Paul B.

  Davidson, Arthur

  Lamond, James

  Ross, Stephen (Isle of Wight)

  Deakins, Erie

  Lestor, Miss Joan (Eton & Slough)

  Ryman, John

  Delargy, Hugh

  Lewis, Arthur (Newham N)

  Selby, Harry

  Dell, Rt Hon Edmund

  Loyden, Eddie

  Short, Rt Hon E. (Newcastle C)

  Dempsey, James

  Luard, Evan

  Silkin, Rt Hon John (Deptford)

  Doig, Peter

  Lyons, Edward (Bradford W)

  Sillars, James

  Douglas-Mann, Bruce

  Mabon, Dr J. Dickson

  Skinner, Dennis

  Duffy, A. E. P.

  McCartney, Hugh

  Small, William

  Dunn, James A.

  McElhone, Frank

  Smith, Cyril (Rochdale)

  Eadie, Alex

  McGuire, Michael (Ince)

  Smith, John (N Lanarkshire)

  Edge, Geoff

  McMillan, Tom (Glasgow C)

  Spriggs, Leslie

  Ellis, John (Brigg & Scun)

  McNamara, Kevin

  Sproat, Iain

  English, Michael

  Madden, Max

  Stallard, A. W.

  Evans, John (Newton)

  Magee, Bryan

  Stewart, Rt Hon M. (Fulham)

  Ewing, Harry (Stirling)

  Mahon, Simon

  Stoddart, David

  Flannery, Martin

  Mallalieu, J. P. W.

  Stott, Roger

  Strang, Gavin

  Varley, Rt Hon Eric G.

  Wise, Mrs Audrey

  Taylor, Mrs Ann (Bolton W)

  Wainwright, Edwin (Dearne V)

  Woodall, Alec

  Thomas, Ron (Bristol NW)

  Walker, Terry (Kingswood)

  Young, David (Bolton E)

  Thorne, Stan (Preston South)

  Ward, Michael

  Thorpe, Rt Hon Jeremy (N Devon)

  Wellbeloved, James

  TELLERS FOR THE AYES:

  Tomlinson, John

  White, Frank R. (Bury)

  Mr. Joseph Harper and

  Torney, Tom

  Williams, Alan (Swansea W)

  Mr. J. D. Dormand.

  Urwin, T. W.

  Wilson, William (Coventry SE)

  NOES

  Altken, Jonathan

  King, Evelyn (South Dorset)

  Page, Rt Hon R. Graham (Crosby)

  Arnold, Tom

  Knight, Mrs Jill

  Parkinson, Cecil

  Atkins, Rt Hon H. (Spelthorne)

  Knox, David

  Pattle, Geoffrey

  Biffen, John

  Lamont, Norman

  Percival, Ian

  Boscawen, Hon Robert

  Latham, Michael (Melton)

  Peyton, Rt Hon John

  Brown, Sir Edward (Bath)

  Lawrence, Ivan

  Powell, Rt Hon J. Enoch

  Bulmer, Esmond

  Leadbitter, Ted

  Prior, Rt Hon James

  Burden, F. A.

  Le Marchant, Spencer

  Rathbone, Tim

  Butler, Adam (Bosworth)

  Lloyd, Ian

  Rawlinson, Rt Hon Sir Peter

  Chalker, Mrs Lynda

  Luce, Richard

  Renton, Tim (Mid-Sussex)

  Clarke, Kenneth (Rushcliffe)

  McCrindle, Robert

  Rhys Williams, Sir Brandon

  Cope, John

  MacGregor, John

  Ridley, Hon Nicholas

  Crouch, David

  Macmillan, Rt Hon M- (Farnham)

  Rippon, Rt Hon Geoffrey

  Crowder, F. P.

  McNair-Wilson, M. (Newbury)

  Roberts, Michael (Cardiff NW)

  Dean, Paul (N Somerset)

  McNair-Wilson, P. (New Forest)

  Rossi, Hugh (Hornsey)

  Edwards, Nicholas (Pembroke)

  Madel, David

  Shaw, Giles (Pudsey)

  Elliott, Sir William

  Marshall, Michael (Arundel)

  Shelton, William (Streatham)

  Fairgrieve, Russell

  Mather, Carol

  Shepherd, Colin

  Fletcher-Cooke, Charles

  Maxwell-Hyslop, Robin

  Sims, Roger

  Fowler, Norman (Sutton C'f'd)

  Mayhew, Patrick

  Sinclair, Sir George

  Gardiner, George (Reigate)

  Miller, Hal (Bromsgrove)

  Speed, Keith

  Godber, Rt Hon Joseph

  Moate, Roger

  Stokes, John

  Gower, Sir Raymond (Barry)

  Molyneaux, James

  Stradling, Thomas, J.

  Grieve, Percy

  Monro, Hector

  Taylor, Teddy (Cathcart)

  Grist, Ian

  Montgomery, Fergus

  Tebbit, Norman

  Harvie Anderson, Rt Hon Miss

  Morgan, Geraint

  Townsend, Cyril D.

  Hawkins, Paul

  Morrison, Charles (Devizes)

  Trotter, Neville

  Higgins, Terence L.

  Morrison, Hon Peter (Chester)

  Vaughan, Dr Gerard

  Hordern, Peter

  Hunt, John

  Neave, Alrey

  Viggers, Peter

  Hutchison, Michael Clark

  Nelson, Anthony

  Weatherill, Bernard

  James, David

  Neubert, Michael

  Winterton, Nicholas

  Jones, Arthur (Daventry)

  Newton, Tony

  Jopling, Michael

  Normanton, Tom

  TELLERS FOR THE NOES:

  Kaberry, Sir Donald

  Onslow, Cranley

  Mr. W. Benyon and

  Kellett-Bowman, Mrs Elaine

  Oppenhelm, Mrs Sally

  Mr. Fred Silvester.

  Kershaw, Anthony

  Osborn, John

  Question accordingly agreed to.
  Ordered,
  That—
  1. There shall be a Standing Committee, to be called the Standing Committee on Regional Affairs, which shall consider any matter or matters relating to regional affairs in England which may be referred to them.
  2. All Members sitting for constituencies in England shall be members of the Standing Committee, together with not more than five other Members to be nominated by the Committee of Selection, who shall have power from time to time to discharge the Members so nominated by them and to appoint others in substitution for those discharged, and the provisions of Standing Orders Nos. 62 (Nomination of standing committees) and 63 (Attendance of law officers and ministers in standing committees) shall not apply.
  3. A Motion may be made by a Minister of the Crown at the commencement of Public Business to the effect that a specified matter or matters relating to regional affairs in England
  204
  be referred to the Standing Committee for their consideration, and the Question thereon shall be put forthwith; and if, on the Question being put, not less than twenty Members rise in their places and signify their objection thereto, Mr. Speaker shall declare that the Noes have it.
  4. The Committee shall consider the matter or matters referred to them on a motion 'That the Committee have considered the matter or matters'; and the Chairman shall put any Question necessary to dispose of the proceedings on such a motion, if not previously concluded, when the Committee shall have sat for two and a half hours after the commencement of those proceedings; and the Committee shall thereupon report to the House that they have considered the matter or matters without any further Question being put.

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

  SOCIAL SECURITY OFFICE, KNOTTINGLEY
  12.12 a.m.
  Dr. Edmund Marshall: I understand that it is the intention of the Department of Health and Social Security to close its office at the Old Town Hall, Knottingley, in my constituency, with effect from 1st August next.
  This news was conveyed to me in a letter dated 6th May from my hon. Friend the Under-Secretary, and I am grateful for his presence here to discuss this problem tonight. I hope that he will not consider it ungracious of me to have re-acted to his courteous letter by seeking this Adjournment debate. I feel it is right that the whole background to this important question for my constituents in Knottingley and district should be discussed in this House.
  Until 1972 the Department's office at Knottingley Town Hall provided for Knottingley and district all the national insurance functions inherited from the old Ministry of Pensions and National Insurance. With the creation of the new Department of Health and Social Security, one can understand the policy now of providing all national insurance and supplementary benefit functions at the same offices of the new Department, although this should not necessarily mean a reduction in the total number of offices operated by the Department.
  In the Knottingley area the Department has coupled its policy of rationalisation of functions with centralisation of offices. The building of a new all-purpose social security office at Pontefract has led to the gradual withdrawal of services from Knottingley. One could see the possibility of this happening over four years ago, when I corresponded on the subject with the Department's regional controller in Leeds. Yet, in a letter which I received from his office, dated 13th May 1971—a fortnight before I was elected—it is stated that the Department intended to retain its office at Knottingley
  "… to ensure that the needs of those local residents who prefer to conduct their social security business in person will continue to be fully met."
  On 29th September 1972 the Department's new office in Pontefract was opened and all the main functions which has been served by the Knottingley office were then transferred to Pontefract, but the
  206
  Knottingley office was kept open on a full-time basis, five hours a day, five days a week, to provide any callers there with a personal inquiry service on all matters related to social security.
  But only five months after that change the Department decided to reduce the hours of the Knottingley office to three hours each weekday morning. I was able to discover, by means of a Written Question, answered on 2nd March 1973, that during January and February of that year there had been an average of 75 callers per week at the office. The figures for mornings and afternoons respectively were not available then, but it was thought that the majority of callers came in the mornings.
  I exchanged letters with the then Under-Secretary of State, and on 6th April 1973 he wrote:
  "I am confident that the revised arrangements will continue to fully meet the needs of the people living at Knottingley and I am sure that any fears you may have on this score will prove unfounded."
  In view of those bold words, I was disappointed a year later, in June 1974, to receive word from the Department's manager at Pontefract that the hours of the Knottingley office were to be further reduced to only two mornings a week, Tuesday and Friday, with effect from 19th July 1974. In reply to another Written Question, I was told that the number of callers at the office for a week in the middle of June 1974 was 45, taking the five mornings together.
  I was not surprised by the reduction in the number of callers since February 1973, as a large part of the population of Knottingley consists of shift workers, including many working wives, who could not necessarily visit the office during the morning, and, although one might say that people in this category might not need to draw social security benefit themselves, there would sometimes be occasions for them to call at the office on behalf of aged or disabled relatives.
  During August 1974, not long after this further reduction in the opening hours of the office, I received representations from the Knottingley and District Trades Council opposing the reduction of the service maintained by the Department at Knottingley. Nevertheless, the Department is now preparing to administer the

  207
  final blow. In the letter dated 6th May 1975, my hon. Friend the Under-Secretary of State stated that the number of callers at the office had fallen to about 18 each session—that is, 36 a week, which is not many less than the figure in June 1974 and averages one caller every 10 minutes while the office is open. That does not seem to me to be too low a figure to justify keeping one official busy. I speak with some experience. I hold my monthly constituency surgeries in another room in the same building on the first Saturday morning of every month. I find that an average of one interview every 10 minutes keeps me busy.
  In his letter of 6th May my hon. Friend claimed that only about four of the 18 callers at the Department's office each session needed any advice; the rest simply handed in forms or medical certificates which could just as easily be posted direct to Pontefract. I would not discount the value of having an inquiry office where forms can simply be handed in. Such a service helps to put a personal human face on the Department and is for the general convenience of local residents.
  In these days of expensive postage, many elderly people will find it a blessing to be able to avoid paying postage on any item. If the Knottingley office is closed after 1st August as the Department intends, those local residents who require a personal interview about social security problems may even opt to come to my constituency surgeries which are held in the same building each month. They may take the view that if it is good enough for the local Member of Parliament to come to Knottingley regularly, so should a representative of one of the major public Departments.
  Those members of the public who decide that they want to make a personal visit to the next nearest office of the Department in Pontefract will need to make a round trip of six miles there and back, for which the total bus fare is 22p and there is one bus every half an hour. The total time for such a trip could be about one and a half hours, depending on how long one needs to be in the office in Pontefract. The journey may be physically impossible for mothers with young children in perambulators or for old or disabled people. It must be re-
  208
  membered that many recipients of national insurance and supplementary benefit are included in those categories.
  From this whole story I am bound to say that the gradual closure of the departmental office at Knottingley looks like an example of administrative centralisation which may suit the convenience of the official machine but does not help the general public. In too many walks of life nowadays the tendency to centralise is destroying the personal approach, making it more difficult for people to feel part of a caring community.
  In addition, the process by which the closure at Knottingley has been and is being undertaken smacks a little of bureaucratic guile. First, the hours are reduced, thereby making it more difficult for people to visit the office and so reducing the number of callers. That provides more evidence for cutting the hours still further. So the thing goes on in a downward spiral. By gradual cuts the Department may hope to avoid the outcry which a sudden, outright closure might have produced. The end effects of the two different strategies are the same and I submit that they call for the same critical comments now.
  Further, the withdrawal of the office of a Government Department will be another blow to the local community pride of Knottingley. Up to last year Knottingley and Ferrybridge formed a thriving urban district, but with reorganisation in April 1974 the seat of local government was moved to Wakefield. Knottingley now has no council of its own. It is a rapidly growing town with some 18,000 inhabitants, that popuation having almost doubled in the past 15 years. In addition, the surrounding rural area which was served by the old national insurance office at Knottingley contains about 10,000 people.
  The people of Knottingley have an independent spirit. They in no way regard themselves as a suburb of Pontefract. I know they will feel somewhat hurt by the loss of the social security local inquiry office at their own town hall. I do not think it is unreasonable to ask that the present service, which has been operating on two mornings a week, and on average assisting one person every 10 minutes, should be retained after 1st August this year.
  12.25 a.m.
  The Under-Secretary of State for Health and Social Security (Mr. Alec Jones): Certainly I do not think any the worse of my hon. Friend the Member for Goole (Dr. Marshall) for raising this matter tonight, despite the somewhat late hour. It is right and proper that he should seek every opportunity to raise matters which are of obvious concern to his constituents.
  I should like to put the matter in more general perspective. As my hon. Friend rightly said, since the merger of the former Ministry of Pensions and National Insurance and the National Assistance Board in 1966 it has been the policy of my Department to bring together contributory benefit offices and supplementary benefit offices to form a network of integrated offices, each capable of dealing with all types of social security benefits, many of which are, of course, interrelated. Although the great bulk of the business of local offices is conducted by post, one of the purposes of integration was to obviate the need for some claimants to have to go from one of the Department's offices to another in furtherance of their business. Jumping from the old supplementary benefit office to a national insurance office was not a good service for the claimants.
  Full caller facilities are provided at the all-purpose offices for those who prefer to call and make their claims and inquiries in person, and wherever the demand and local conditions make this desirable, particularly in more remote areas of the country, public inquiry offices are also maintained, sometimes on a full-time basis, and sometimes, as in the case to which my hon. Friend referred, on a part-time basis.
  Before September 1972 Knottingley was served for national insurance purposes by its own office. There was a similar national insurance office at Pontefract, but supplementary benefit matters for both towns were dealt with by a separate, third office, also in Pontefract. So in my hon. Friend's case his constituents and others before the amalgamation did, in fact, have to move these distances of which he fairly complains.
  These offices were amalgamated in September 1972 to form one all-purpose office. This office which is situated in
  210
  Horsefair, Pontefract, was designed to provide a comprehensive service for persons living in what were then the Pontefract municipal borough, the Featherstone and Knottingley urban districts, the Osgoldcross rural district and the eastern part of Hemsworth rural district. Residents of these areas were asked to send all correspondence, claims, medical certificates and national insurance contribution cards for exchange to the new address, but a full-time inquiry office was retained in Knottingley to provide an inquiry service for personal callers. It was impossible to forecast at the time what level of business this full-time office would attract and whether this would need to be more than a temporary arrangement.
  As my hon. Friend the Member for Goole will know from answers to previous Questions which he has put down on this subject, the number of people making inquiries at the inquiry office in the Old Town Hall in Knottingley has fallen steadily since the new Pontefract office was opened. When the number of callers fell on average to fewer than 20 a day in 1973 the hours of opening were reduced to mornings only. I must tell my hon. Friend that it was the fact that the numbers fell which led to the reduction in hours, and not the other way about. We certainly did not reduce the hours so as to bring about a fall in the number of callers.
  Since then, however, the numbers have continued to decline. By June 1974 they had reached a point where the need for facilities at all began to be in doubt. Despite the small number of callers, it was decided, however, to continue to provide a local service on two half-days each week, and at present this is the position.
  The office continues to open on Tuesdays and Fridays from 9.30 a.m. to 12.30 p.m., but, as my hon. Friend admits, the number of callers has fallen to about 18 each session. This was stated in the letter I sent to my hon. Friend last month. On average, only about four of the 18 need any kind of advice which they can obtain only by a personal call. The remainder call solely to hand in forms or medical certificates, which could have been posted direct to the main office at Pontefract.

  211
  My hon. Friend spoke of the cost. The cost of postage applies only to the first medical certificate. For subsequent certificates the Department provides a franked envelope, so it is not a question of expecting sick people constantly to pay additional costs for medical certificates.
  When my hon. Friend talked of one person being interviewed every 10 minutes he took into account those who called only to hand in a certificate. Those who call for advice total eight in six hours, which is one every 45 minutes. If I moved at that speed in my surgery I would spend a long time there. It costs the Department £5 for every person who calls for advice. We must take into account not only the cost but the time of skilled and scarce staff. It is because the number of callers has fallen that we have had to reconsider the matter.
  In situations of this sort the Department must balance its obligation to provide a reasonable service to a particular section of the public against the cost of so doing and to ensure overall that its resources are deployed to the best effect. I am sure that in this case the balance is in favour of concentrating those resources on the integrated office in Pontefract, and for these reasons it has been decided that the inquiry office at Knottingley should be closed on 1st August 1975. I do not believe that any substantial hardship or inconvience need be suffered by Knottingley claimants.
  The Pontefract office can deal with most enquiries quite adequately by correspondence or by telephone. Indeed, there is some advantage in this in that the inquiry can be deal with by an officer who specialises in the subject under inquiry. For the few who continue to feel the need for a personal call, I understand that a regular bus service is available and that the Pontefract office is conveniently situated opposite the bus station. The distance is only three miles. There are many parts of the country where claimants have to travel much further than the six-mile return journey. I speak sincerely with knowledge of the matter from my own constituency.
  Dr. Marshall: The three miles distance is simply that between the Knottingley
  212
  office and the Pontefract office. Many of my constituents who would normally have gone to the Knottingley office have to travel many miles before even getting to Knottingley.
  Mr. Jones: I took the three miles from what my hon. Friend said. Certainly there is an additional journey of six miles return.
  My hon. Friend is aware that the office operates a home visiting service so that those who need it may be visited in their own homes. My hon. Friend rightly drew our attention to the difficulties that elderly and disabled people might have if they had to travel a longer distance. Provided the home visiting service is used properly, there is no reason why elderly and disabled people should have to visit the office. A neighbour or anyone else can post a request for them to be visited at their home, where their claims should be dealt with effectively.
  If my hon. Friend comes across difficulties in this connection, I hope he will draw them to my attention. The service is intended to deal with the sort of individual case to which my hon. Friend rightly drew our attention, and which causes considerable feeling—that of the infirm, disabled or elderly person, or the expectant mother. I must tell my hon. Friend that the number of people requesting this service has fallen to such an extent that it is not possible to use the resources of the Department to keep this office open.
  Having said that, I hope that our home visiting service will meet the needs of all the elderly and disabled people in my hon. Friend's constituency. If he or anyone in his constituency comes across specific problems which are not being adequately dealt with by our home visiting service, I trust that my hon. Friend will bring them to our attention. But I cannot say that we would hope to keep open such a caller office, which is so little used in present circumstances. I regret having to say that, and I trust that the other services will be adequate to the needs of my hon. Friend's community.
  Question put and agreed to.
  Adjourned accordingly at twenty-four minutes to One o'clock.

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  European Community
WALES
  Local Government Structure
  Local Government Structure
  Planning
  Planning
  European Community
  European Community
  Departmental Staff
  Departmental Staff
EDUCATION AND SCIENCE
  Cellulite
  Cellulite
  European Community
  European Community
  Artistic Works
  Artistic Works
  Museums and Galleries (Staffs)
  Museums and Galleries (Staffs)
  Turner Paintings
  Turner Paintings
  Departmental Staff
  Departmental Staff
  Social Science Research Council
  Social Science Research Council
  Medical Students
  Medical Students
  Books (Education Authority Expenditure)
  Books (Education Authority Expenditure)
  Secondary Schools (Allocation Procedure)
  Secondary Schools (Allocation Procedure)
TRADE
  Iran
  Iran
  Imports (European Community)
  Imports (European Community)
  European Community
  European Community
  Departmental Staff
  Departmental Staff
  Textiles
  Textiles
  Steel Imports
  Steel Imports
  British Textile Confederation
  British Textile Confederation
  European Patent
  European Patent
  Concorde
  Concorde
  Shipping Collision (Canvey Island)
  Shipping Collision (Canvey Island)
  Uranium Ore (Namibia)
  Uranium Ore (Namibia)
  Multinational Corporations (Australia)
  Multinational Corporations (Australia)
  Whale Products
  Whale Products
SOCIAL SERVICES
  Widows' Pension
  Widows' Pension
  Retirement Pensions (Payment Methods and Charges)
  Retirement Pensions (Payment Methods and Charges)
  Benefits (Children)
  Benefits (Children)
  Hospital Costs
  Hospital Costs
  Weymouth and Portland
  Weymouth and Portland
  European Community
  European Community
  Benefits (Eligibility)
  Benefits (Eligibility)
  Health Service Employees
  Health Service Employees
  Departmental Staff
  Departmental Staff
  Personal Incomes
  Personal Incomes
  Rickets and Osteomalacia
  Rickets and Osteomalacia
  Disabled War Pensioners
  Disabled War Pensioners
  Wessex Neurological Centre
  Wessex Neurological Centre
  Supplementary Benefits
  Supplementary Benefits

Preamble
The House met at half past two of the clock: The LORD CHANCELLOR On the Woolsack.
Prayers—Read by the Lord Bishop of Worcester.
The Lord Wrottesley—Took the Oath.
The Viscount of Falkland—Took the Oath.

EXORCISM AND THE CHURCH
Baroness SUMMERSKILL: 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 they propose to take having regard to the letter from 65 leading academics about exorcism in the Church of England and its growing practice in many English dioceses.
Lord WELLS-PESTELL: My Lords, it would be neither appropriate nor helpful for Her Majesty's Government to intervene in the debate on this matter which is now going on within the Church.
Baroness SUMMERSKILL: My Lords, I thank my noble friend for the
2
deplorable reply that he cannot take any action just now. In view of the fact that in the 16th and 17th centuries the Church was conscious of the dangers of exorcism, is it compatible with modern medicine that the Church should now be encouraged to indulge in this medieval practice?
Lord WELLS-PESTELL: My Lords, in reply to my noble friend I would say that what happened quite recently, and the publicity given to it, has caused considerable concern. The open letter from 65 leading academics, to which my noble friend referred, was directed, if I understand the position correctly, to the Archbishops of Canterbury and York, and to the Bishops and members of the General Synod. The letter went so far as to suggest that exorcism receives no official encouragement and gains no official status in the Church. As it was directed to the Church in General Synod, I assume—and it is an assumption on my part—that this is a matter which they will consider at the General Synod next month.
Lord POPPLEWELL: My Lords, does my noble friend feel that it would also be appropriate for the Government to give an indication to the Church of the very wide feeling existing in the country against this type of behaviour, and also the feeling of sadness that the Church has not been so forthright in condemning what appears to many to be very near witchcraft, which is not in accord with present-day methods in society?
Lord WELLS-PESTELL: My Lords, I understand the concern of my noble friend, but would come back to the point which I tried to make a moment or two ago. At least for the time being, this matter must be left to the Church.
Lord PAGET of NORTHAMPTON: My Lords, has it not always been a function of civil government to stand between the Church and the Devil, with a modified leaning to the Left?
Lord WELLS-PESTELL: My Lords, for all I know it may be necessary to do so again.
Baroness SUMMERSKILL: My Lords, can my noble friend argue that this is a matter for the Church? Surely the victims of these practices are ordinary lay, ignorant people who become victims of a superstition about which they know nothing, but which they feel can be submitted to because the Church wields such tremendous power in the community.
Lord WELLS-PESTELL: My Lords, I do not think I can take the matter any further without repeating what I have already said. Certain Prelates have taken a very strong view about this matter. I think I am right in saying that the Archbishop of Canterbury himself has drawn attention to the need for collaboration with the medical world, but I cannot take the matter any further this afternoon.
The Lord Bishop of DERBY: My Lords, while appreciating the concern of the noble Baroness, Lady Summerskill, and expressing greater appreciation of it than was perhaps gathered the last time she raised this matter, may I ask that in any consideration given to this matter Her Majesty's Government will also take note of the great increase in occult practices of Satanist groups and the like, whose activities have stirred up a great deal of interest in the practice of exorcism? Will Her Majesty's Government also take account of the fact that there is no general encouragement in the Church for people to take part in the activity of exorcism?
Lord WELLS-PESTELL: My Lords, I am sure my right honourable friend will take note of what the right reverend Prelate has said.
Lord AYLESTONE: My Lords, is not the real danger to people already men-
4
tally disturbed, in that they may believe in the existence of devils?

RABIES IN EUROPE
2.43 p.m.
Lord DE CLIFFORD: 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 whether, in view of the continuing spread of rabies in Europe, they will institute a Press and television campaign to warn holidaymakers of the danger of attempting to smuggle animals into this country and the penalties such attempts will entail.
Lord STRABOLGI: My Lords, since the introduction in February of the higher penalties for smuggling animals, there has been a sustained campaign through the Press, radio and television stressing the dangers of rabies and the more severe penalties for offences against the regulations. Press and broadcasting coverage has been wide, both nationally and locally. In addition to coverage by the media, complementary publicity measures have been taken through Government posters and leaflets. Other measures will be taken as necessary to maintain the momentum of the campaign.
Lord DE CLIFFORD: My Lords, while thanking the noble Lord for his reply, may I ask whether he is aware that there have been reports in the Press of a French couple with a dog coming for a holiday to Ermington in Devon? There have also been reports in the Press of dogs coming off Dutch yachts in the harbour at Fowey. Would it be possible for the Government to extend their publicity campaign to the coastal ports on the Continent?
Lord STRABOLGI: Yes, my Lords; certainly. It is the Government's policy that the publicity campaign should be directed mainly at key sectors of the public who travel and at officials who are connected with the travel trade. Multi-language posters in 13 different languages, advising travellers of the quarantine rules and the very serious penalties for breaches of them, are on widespread display at ports, airports and other

5
points of entry, as well as on cross-Channel and North Sea ferries and at nearby foreign exits.
Lord NUGENT of GUILDFORD: My Lords, is the noble Lord aware that his information about the measures which the Government are taking is very welcome? Is he aware that there is a continuous and gradual spread of this appalling disease in wild animals Westwards across Europe; that therefore the danger of this disease crossing the Channel into England is ever-growing and that our only protection is the effectiveness of the quarantine regulations? Will he therefore allow me to say "more power to the Government's elbow", because everything that can be done should be done to make the public aware of the danger of this virus coming into the country.
Lord STRABOLGI: My Lords, I am grateful to the noble Lord, and the answer to him is, Yes, the Government take this matter very seriously and are well aware of the great importance of it.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, can the noble Lord tell me this?—I ought to know the answer. Is there power to destroy animals brought in across the customs regulations, and would it not be an effective deterrent if this were widely known?
Lord STRABOLGI: Yes, my Lords, we certainly have that power. Under the new Order the maximum penalty is an unlimited fine and up to one year's imprisonment, and, of course, the animal can be destroyed as well.
Lord BRUCE of DONINGTON: My Lords, would my noble friend consider making representations to Governments on the Continent with a view to securing the co-operation of the customs people on the other side of the Channel, thereby seeking our own protection?
Lord STRABOLGI: Yes, my Lords, this is already done. The EEC implications for our rabies policy are none. The United Kingdom is free to take whatever action is necessary to safeguard her rabies-free position. Indeed, no current EEC regulations affect this policy.
Baroness WOOTTON of ABINGER: My Lords, can my noble friend say
6
whether the power to destroy illegally imported animals has been exercised, and, if so, how often? Would that not be far and away the greatest deterrent?
Lord STRABOLGI: My Lords, I cannot answer that question in detail without notice. I think one really has to consider every case on its merits. Sometimes the animal is brought in through ignorance, or ignorance is pleaded. At other times it is in direct contravention of the regulations. I think one has to leave this to the courts.
Earl FERRERS: My Lords, while we all applaud the new regulations which have come into effect, may I ask whether the noble Lord has any evidence that these regulations have yet curtailed the entry of these animals? Has he any statistical evidence to show that there are fewer instances of the importation of rabid animals than before?
Lord STRABOLGI: My Lords, over 200 instances occurred in 1974 and this number was approximately the same as in 1973; this is with regard to last year. The majority of these were unlicensed animals openly declared by their owners rather than deliberate smuggling attempts. It is a little too early to say what is the position regarding this year, though I may say that a recent court case resulted in a fine of £200.

CHILDREN AND NON-ACCIDENTAL INJURY
Lord ELTON: 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 sums they expended in the financial year 1974–75 on the promotion of research into the causes of non-accidental injury to children and their cure and what sums they propose to allocate to this purpose in the current and next financial years.
Lord WELLS-PESTELL: My Lords, although no sum was specifically allocated to this research in 1974–75, the noble Lord and your Lordships will recall that I mentioned in my reply to the noble Lord on the 8th May last that, in a grant to the National Society for the

7
Prevention of Cruelty to Children, there was a sum to cover the salary of a research worker in order to enable a closer study to be made of families where a child is injured and of the effectiveness of techniques of treatment. My right honourable friend the Secretary of State for Social Services also assisted through the Oxford Linkage Study, the detailed study which was published last year of severely ill-treated children in North-East Wiltshire. So far as this year is concerned, my right honourable friend has not been able to commission any additional research, but the Department is actively seeking to promote research in this field and several projects are being discussed with researchers at this time. The research budget is under considerable pressure, but my right honourable friend regards this problem as a priority.
Lord ELTON: My Lords, while thanking the noble Lord for that reply, may I ask him whether he agrees that it is quite relevant to remember in these days of financial stringency that prevention is not only better but cheaper than cure? Can he assure this House that a priority will be given to this field of inquiry not only for reasons of finance but also of humanitarianism?
Lord WELLS-PESTELL: My Lords, I am sure that Her Majesty's Government would not disagree with anything that the noble Lord has said. One of the problems about research is that one has to be very clear as to the scope and the field of the research, and to find suitable people—because this is really essential, as the noble Lord knows—to undertake it in depth. One does not want to go off on a series of frolics. One wants to put down one's roots deeply in a defined area and this is what we are hoping to do. We certainly regard this as a matter of very great priority.
Lord ELTON: My Lords, may I ask the noble Lord not to be too surprised if I ask him in six months' time how he is getting on with this?
Baroness SUMMERSKILL: My Lords, arising out of my noble friend's reply, may I ask whether I am to take it that the institution of marriage will be examined, and the causes of disputes between husband and wife? At inquests
8
and inquiries of this kind it is generally found that the child suffers because the husband and wife are quarrelling and they take it out on the child.
Lord WELLS-PESTELL: My Lords, I would not be able to give your Lordships an undertaking that the institution of marriage will itself be examined, but I can say that, in dealing with any difficulty that arises as a result of battered children, the relationship of the husband and wife and the interplay of that relationship in the family upon the children must obviously be taken into account.

BRITISH FIRMS IN NAMIBIA
2.53 p.m.
Lord BROCKWAY: 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 consultation has taken place with British firms operating in Namibia under agreements with the South African Government in view of the illegality of their exports after 31st May under the United Nations' notice to that Government to declare its intention to withdraw from Namibia by that date.
The PARLIAMENTARY UNDER-SECRETARY of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, there have been no consultations of this kind with British firms in Namibia. We have, however, been active in urging British firms operating in Namibia and South Africa to implement good employment practices following the guide lines produced by the Trade and Industry Sub-Committee last year. Our policy on trade with Namibia remains as stated by my right honourable friend in another place on 4th December, 1974.
Lord BROCKWAY: My Lords, while thanking the Minister for that reply, may I ask him whether he is aware that Sean MacBride, the United Nations Commissioner for Namibia, stated on 14th May:
"Goods exported from the territory under agreements with South Africa after May 31st would be regarded as stolen property and could be seized anywhere in the world."
In view of that authoritative statement, is it not desirable that there should be

9
some consultations with British companies in Namibia?
Lord GORONWY-ROBERTS: My Lords, I am sure that the appropriate Departments of Government will always be ready to discuss with British firms the situation that arises in any part of the world, and perhaps in this part in particular, in the light of continuing circumstances. However, in regard to Mr. MacBride's activity, I must point out to my noble friend that while we are entirely with him—together with my noble friend—in his desire to see Namibia acquire full, free, independent status as soon as possible, we cannot, from the point of view of international legality, accept that the United Nations' Council, so called, is the lawful body to administer Namibia.
Lord CARRINGTON: My Lords, may I ask the noble Lord if he would remind the House whether the United Nations' Resolution to which the noble Lord, Lord Brockway, refers was mandatory and, if so, how the Government voted, or, if not, how the Government voted?
Lord GORONWY-ROBERTS: My Lords, it is not mandatory and we expressed very strong reservations based on legality about whether the General Assembly was competent to set up this Council with this status. This does not detract for a moment from our desire, our determination, to co-operate with other like-minded countries—and, indeed, with the United Nations—in the right way to secure for the people of Namibia their full, free, and independent status.
Lord BROCKWAY: My Lords, resisting the temptation to comment on the United Nations Security Council, and reverting to my Question, may I ask the Minister whether it is not desirable that early consultations should take place with British companies in Namibia in view of the statement by Sir Val Duncan, the Chairman of Rio-Tinto-Zinc, that the company does not regard the present regime in Namibia as illegal, and is not prepared to take notice of what the United Nations said? Is not this particularly important because our Atomic Energy Authority has a contract with RTZ for the purchase of uranium until 1982?
Lord GORONWY-ROBERTS: My Lords, I repeat that Government Departments will always be ready to discuss with British firms any questions, any problems, which arise in any part of the world, and perhaps particularly in this part of the world in the light of continuing circumstances. As to the contract between BNFL and Rossing, deliveries will not take place for another two years, but during those two years I think that one can confidently hope, having regard to what the Prime Minister and the Foreign Minister of South Africa have said quite recently, that an independent and free successor State will have emerged in Namibia before that time. I think that it is in the interests of the industry of this country, and of the Namibian people, that we shall be there as a British firm in that country at that time.
Lord BARNBY: My Lords, can the Minister, in clarification of the reply which he gave to my noble Leader, indicate what is the authority in law for the insinuation in the Question regarding the notice?
Lord GORONWY-ROBERTS: My Lords, I have indicated that we, in common with other countries, other Parliamentary democracies which are members of the Security Council, do not regard the action taken by the UN as being firmly based on law. I think that that covers the point that the noble Lord raised.
Lord PAGET of NORTHAMPTON: My Lords, does the Minister recognise that the conduct of international affairs depends upon a mutual recognition of those carrying and affecting real power and authority within bounds, and that a claim by the United Nations to upset arbitrarily such authorities, declare them non-existent, without providing any substitute, is simply a recipe for anarchy?
Lord GORONWY-ROBERTS: My Lords, that may well be. We recognise the de facto position in South-West Africa, in Namibia, and it is right that we should do so. On the question of the United Nations' decision and activity, we, as a founder member and a member of the Security Council, are surely entitled to point out that in our view—and the British view is not one to be easily set

11
aside in these matters—the legal basis for the present United Nations' attitude to Namibia is very flimsy, and, indeed, we would say unfounded.
Lord BARNBY: My Lords, in view of the statement that he just made renouncing legality, would the noble Lord agree that, in South-West Africa since the Ovambo elections, when SWAPO was entirely discredited, the situation which may have existed previously with regard to 31st May has been entirely obliterated?
Lord GORONWY-ROBERTS: Not entirely, my Lords. We think it is essential that SWAPO should be brought into any discussions affecting the future of Namibia.

EEC: BRITISH MEMBERSHIP
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, with the leave of the House, at a convenient moment after 3.30 p.m. my noble friend the Leader of the House will be making a Statement on British membership of the EEC.

IRON AND STEEL BILL [H.L.]
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, I beg leave to introduce a Bill to consolidate certain enactments relating to the British Steel Corporation and the iron and steel industry. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a, —(The Lord Chancellor.)
On Question, Bill read 1a, and to be printed.

PUBLIC LENDING RIGHT BILL [H.L.]
Lord WILLIS: My Lords, I beg leave to introduce a Bill to provide for payments to authors and their dependants by establishing a public lending right; and for related matters. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a, —(Lord Willis.)
On Question, Bill read 1a, and to be printed.

NEW TOWNS BILL
Brought from the Commons on Friday the 23rd May last and printed pursuant to Standing Order No. 48; read 1a.

PROCEDURE OF THE HOUSE
The CHAIRMAN of COMMITTEES (The Earl of Listowel): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Fourth Report from the Select Committee be agreed to.—(The Earl of Listowel.)
The Report was as follows:
PUBLIC BILL COMMITTEES
The Committee have considered the practice of the House whereby a Bill committed to a Public Bill Committee is recommitted to a Committee of the Whole House.
The purpose of committing a Bill to a Public Bill Committee is to save time on the Floor of the House and this purpose is to some extent nullified if a Bill is recommitted to a Committee of the Whole House.
Accordingly, the Committee recommend that a Bill which is committed to a Public Bill Committee should not, unless the House otherwise orders, be recommitted to a Committee of the Whole House but should proceed from the Public Bill Committee to Report on the Floor of the House.
On Question, Motion agreed to.

HOUSING FINANCE (SPECIAL PROVISIONS) BILL
3.2 p.m.
The LORD PRIVY SEAL (Lord Shepherd): My Lords, I beg to move that this Bill be now read a second time. I am well aware that this Bill has been the subject of much criticism, both in Parliament and in the Press, but I believe that a good deal of this criticism is misconceived, and I will, I hope, outline a strong case for legislation, and I suggest that the lines of this Bill are about right. This Bill is very much a clearing-up measure required to deal with the problem of failure to implement legislation now repealed. We on this side have unfortunately inherited the problem—a problem arising out of legislation introduced by noble Lords opposite—and to which I suggest there are no simple answers. Nevertheless, there can be no doubt that whatever Government were in office, some measure would have to be introduced to resolve this problem. I am

13
reinforced in this view, because in another place Members of the Opposition fully admitted that the present law was inadequate for this situation and that if they were now in Government they would need to introduce measures for a similar purpose.
The legislation to which I refer is the Housing Finance Act 1972. I do not want to weary or provoke noble Lords with a history of the opposition of my Party and of local authorities to this Act. Suffice it to say that this opposition was basically two-fold. First, that Act took away the right to fix rents for their dwellings from elected local authorities. This was a right they had exercised for 50 years or more under many different Governments. Instead, this function was to be performed by non-elected, non-accountable rent scrutiny boards. Secondly, there was the haste and some confusion with which the Act was brought into force. The Act came into force only two weeks after Royal Assent, on 10th August 1972, the height of the holiday season, and required rent increases to be made some six weeks later.
As noble Lords will be aware, rent increases require a resolution of the full council, as well as four weeks' notice to the tenants. So, with the best will in the world, authorities were faced with a desperately tight timeable. This inordinate haste in introducing new and disliked legislation was compounded by the confusion caused by the Newcastle Amendment. This Amendment, introduced at a late stage, enabled the Secretary of State to authorise a lower rent increase if he was satisfied that the mandatory one would cause rents to exceed the fair rent likely to be determined by the rent scrutiny boards. In the interests of their tenants, many authorities applied for such authorisations. These applications led to prolonged discussions in many cases, with the inevitable result that the date for making the rent increases went by before any decision was given.
Under the rigid provisions of the 1972 Act, rent increases not made on their due dates could not subsequently be made up. Where an authority can convince the district auditor that there were reasonable grounds for delay in implementing a rent increase, there is no surchargeable loss.
14
Our concern, however, is with the cases where the failure to put up rents within the timetable set by the Housing Finance Act resulted from a delay for which the district auditor would not find reasonable grounds; and would hold that the losses were due to misconduct and therefore those responsible should be surcharged. The outcome of all this is a probable surchargeable loss of rent income of some £1½ million in 18 or so authorities—of which Clay Cross was only one and about which I will have more to say later—and there are about 400 councillors who are possibly responsible. These figures are estimates only from information available to the Department of the Environment.
I know that in another place we were subjected to criticism for introducing legislation before all the facts were known. But, as your Lordships know, it is the independent district auditors who will eventually decide whether there is any misconduct, after hearing all the parties concerned, and not the Government. Whatever the final figures turn out to be, we have inherited the problem of how to deal with these cases and that is what this Bill is all about. And in case it should be alleged that this problem has been brought on our heads by encouraging authorities to defy the law, I would remind noble Lords of what I said in Committee on the Housing Finance Bill:
"I said in my opening speech that believe the law, good or bad, should be obeyed. But I am not certain yet whether the noble Lord, Lord Drumaibyn"—
who led for the then Government—
"fully appreciates the really strong sense of outrage that exists in local authorities throughout the country, irrespective of their political persuasion. I do not think the noble Lord appreciates that; nor does he appreciate the deep bitterness among councillors, in areas where housing conditions are difficult, that they are being called upon to carry out a political policy which is utterly obscene and obnoxious".—[Official Report, 27/6/72; col. 866.]
That was, and still is, the view of my Party—that laws must be obeyed whatever we may think of them. We are most certainly not condoning this misconduct.
As we see it, there are three main ways of dealing with the problem. First, we could let the existing provisions of the law dealing with local authority losses

15
take their course. That would mean surcharging these losses on the persons responsible and so seeking to make them good in this way. The disadvantages of this course are two-fold. First, in the circumstances of this particular affair it would be unwise and unfair to rest on this method of recovery. It would be unfair on two grounds. First, because such surcharges are made jointly and severally, anyone with some resources—for example, a businessman or perhaps a professional person—could be bankrupted by having to pay not only his own share of the surcharge, but that of his fellow councillors who had limited resources. Secondly, it would be unfair because the incidence of such surcharges might also be most uneven, since an authority with 10,000 dwellings which was late in implementing a rent increase would clearly have a loss ten times greater for each week of delay than one with only a thousand dwellings, and yet the number of councillors would not be ten times greater.
The second disadvantage of letting the law take its course is that surcharging these losses is likely to be unproductive. May I remind noble Lords that surcharge is not in law a punishment, like a fine. It is merely a means of recovering a loss, or unlawful expenditure. The persons concerned are surcharged with the amount of the loss, no more and no less. In the cases with which we are concerned the results of surcharging would probably be that only a small amount of the losses would actually be recovered, since most of the councillors concerned are unlikely to have the necessary financial resources. If that happened, then the part of the surcharged amount not recovered would fall on the rates, where it would be met by the ratepayer and the taxpayer through the rate support grants.
What would be the effect on the councillors concerned of attemping to recover the losses from them? Many would stand to be declared bankrupt and to lose their possessions, even their homes. And at the end of this painful process only a small fraction of the £1½ million would have been recovered. These are men and women who have willingly given unpaid service to the community, some for many years. For the most part, they are not militant extremists. They acted
16
according to their own ideas of what was right and wrong. That does not excuse what they did, but, I suggest, should be taken into account. They were misguided; but they were not corrupt. They were not feathering their own nests. Not only would it be they who would suffer, but their wives and children.
There is another consideration. Surcharges of over £500 attract an automatic disqualification from civic office for five years. Our information is that in most, if not all, defaulting authorities the surcharge would be over that amount. So we have to take into account the probable disqualification of some 400 persons, who, as I have said, have willingly given unpaid and for the most part good service to the community. The acrimony resulting from this procedure, and its prolongation through the period of appeals and by-elections would, in the Government's view, and, I hope, that of the House too, create political strife and bitterness at a time when, above all, we need national unity in this country and a greater sense of co-operation within the regions and the local authorities themselves. It would put a very real strain on the relationship between central and local government. I find it hard to believe that any noble Lord would really support that method of tackling the problem. We on this side certainly cannot.
A second way of dealing with the problem would be to make good the losses by central Government funds. But we consider that for central Government to pay for losses caused by defiance of the law would be quite wrong and tantamount to condoning that defiance. Locally incurred losses must be made good locally. Again, I cannot conceive of any noble Lord supporting that method.
So I come to the solution proposed in this Bill. It is based on two principles. First the lost rent income must be recovered. But this must not be at the expense of the taxpayer. The losses were incurred locally, so they must be made good locally. Secondly, the responsibility for making good the rent loss must be that of the local authority for the area concerned, since the loss arose out of a local authority decision. And the local authority must also decide the method of recovery under the options open to it under the Bill.

17
In other words, we are proposing that the local authorities should have a second chance to make good these losses. We consider that in the difficult and messy situation with which we are faced this is the best solution. The normal surcharge procedure will be replaced by recovery from rents, or from rates. The £11 million, or whatever is the precise figure, will be made good and the books put right.
I must point out to your Lordships that this is no painless, soft option. Although the councillors will be relieved of the burden of surcharge, they will have to explain to their electorate why they are having to impose the extra burden of recovery. The financial consequences of what happened two or three years ago will have to be explained locally, and there may well be political consequences to face as a result.
Before I turn to the actual provisions in the Bill, it might be helpful if I were to explain why it will not apply in Scotland, where there were similar late implementations of the 1972 Act. The reason is simply that the law relating to audit is quite different there in two major respects. First, it is the Secretary of State who decides whether any surcharge should be made. Unlike the district auditor, he has a much wider discretion either to make no surcharge at all or, as a result of recent legislation, to make a surcharge of any sum up to the amount of the loss or unlawful expenditure. Secondly, there is no automatic disqualification in Scotland following a surcharge. So the Scottish law already has the necessary provisions to deal with the problem.
I return to the main provisions of the Bill. They are based on the existing law relating to audit in Part X of the Local Government Act 1933, which governs the audit of local authorities' accounts up to the end of the financial year 1973–74. Accordingly, the district auditors will continue their audits in the normal way right up to the point where they have to decide whether they must make a disallowance or surcharge for any failure to implement the Housing Finance Act.
Clause 1 provides that at this point, instead of surcharging, the district auditor will issue a certificate in respect of any rent lost, stating the amount and the persons he would otherwise have sur-
18
charged. This certificate will be subject to the same appeals procedure as for a surcharge, and will not become effective until that procedure is complete. Subsections (3) and (5) of the clause provide similar arrangements for any cases of surcharge, for a failure to implement the 1972 Act, made after the first introduction of this Bill in another place. There have in fact been no such surcharges so far.
There may also be minor losses, other than rent, arising out of a failure to implement the Housing Finance Act. Examples of these are interest charges incurred through borrowing as a result of loss of rent income, or the expenses of advertising opposition to the legislation. All this subsidiary expenditure will have been incurred and, if the district auditor finds it surchargeable, he will not make a surcharge, but the cost of these items will be borne wholly by the rates without any subsidy. This is provided for in Clause 7.
Clause 2 requires the local authority to make good the amount in a rent loss certificate, once any appeals have been disposed of and the certificate becomes effective. This clause also provides one method for recovering the amount, which is by a general rent increase. Where reorganisation has taken place, this can be over the whole of a successor authority's area, or over only the defaulting area. The choice of area is entirely a matter for the decision of the local authority responsible for recovering the loss. Secondly, the recovery must normally be completed within five financial years. It can of course be completed more quickly if an authority so wish. But where the recovery is made over the defaulting area only and spread over the full five years, the burden per tenant should not amount to much more than a few pence a week—in nearly all cases less than 10p.
Clause 3 provides the alternative method for recovering the amount in a rent loss certificate. This is by charging it to the rates. Again, this charge may be spread over the whole of an authority's area or over only the defaulting part. It may also be charged over five years. It could, if the authority so decides, be charged over a shorter period. However, if an authority decides to charge the amount to the rates, it may

19
do so only at a specially convened meeting. This is to provide a proper opportunity for public discussion on the merits of charging the ratepayers rather than the tenants. It is also possible to charge part of the amount to the rates and part to rents.
We now come to Clause 4 which terminates the disqualification from civic office of any councillors who have already been surcharged and so disqualified as a result of a failure to implement the Housing Finance Act. A great deal of attention has been focused on this controversial clause. It is common knowledge that it applies to the 11 former Clay Cross councillors, who were disqualified on 7th October, 1973, as a result of lost rent income.
May I make the Government's position absolutely clear on these former councillors? Not for one moment do the Government approve of their continued defiance of the law; and their conduct is reprehensible. So why have we included this provision in the Bill to terminate their 5-year disqualification? We have done so in the interests of consistency and fairness to all—and I stress "all"—those councillors who failed to implement the Housing Finance Act on time.
We understand that there are about 400 councillors in all at risk. Of course the majority have not been disqualified because the audits of their authorities' accounts have not yet been completed. Neither for that matter has the ordinary audit at Clay Cross. What happened there was that the previous Government's Secretary of State ordered an extraordinary audit in November 1972, or a mere six weeks after the first rent increase was due. I am not questioning his undoubted right to do so. I am simply pointing out that of the 18 or so authorities who were culpably late in implementing rent increases, only at Clay Cross was there an extraordinary audit resulting in a surcharge and consequential disqualification. In these circumstances, it did not seem to the Government to be fair or consistent to remove the possibility of disqualification under Clause 1 from the councillors of the remaining authorities for a similar failure, and at the same time allow the disqualification
20
of the former Clay Cross councillors to continue.
Our objective in framing this Bill is to wipe the slate entirely clean and to clear up this mess in all its aspects. We would not have been meeting this objective had we done nothing about the Clay Cross disqualification. I must emphasise, however, that the Government have never proposed that the £7,000 surcharge which gave rise to these disqualifications should be remitted, or that public funds should be used to discharge this liability. The surcharge was upheld by the courts and we have no intention of overturning that decision retrospectively.
I am of course aware that these same persons, and some others, have recently been surcharged again, for matters quite unconnected with the Housing Finance Act, and for amounts of over £500, thus leading to disqualification. My information is that the former councillors who would be covered by Clause 4 have not appealed against these recent surcharges and the time allowed to them for appeal has expired. Where does this leave Clause 4? There is absolutely no intention on the part of the Government to relieve these recent surcharges or the disqualification flowing from them, and the clause to which I have referred does not do this.
I have argued, and would still continue to argue, that on grounds of consistency Clause 4 should remain—the wiping clean of the slate. But the recent developments I have described clearly create a new situation which the Government are looking at. As the time to appeal has only recently expired and most of us have been involved in events about which I shall shortly be making a Statement, I regret that I can say nothing further. However, I undertake that, by the time this Bill reaches Committee stage, I shall be able to report to your Lordships the Government's view on the future of this clause.
The remaining clauses are largely supplementary. They deal mainly with accounting and subsidy arrangements. They provide for the necessary adjustments to accounts consequent on the recovery procedures in the Bill. They also ensure that no surchargeable expenses or losses arising from failure to implement the Housing Finance Act fall on the taxpayer.

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My Lords, the partial amnesty contained in this Bill is not unknown in our history. We have a long-standing tradition of tempering justice with mercy in the administration of the law. Even since Shakespeare's days we have recoiled against always demanding the full pound of flesh. While I do not propose to go into a long history of precedents, we do have before us such examples as the Audit (Local Authorities) Act of 1927, when Mr. Neville Chamberlain was faced with a very similar act of defiance of the law by some London boroughs. It was he who, in his Second Reading speech in relation to that Act, coined the phrase of wanting to
"wine the slate clean, with no ragged ends",
which is exactly our philosophy, too, in this Bill. And there are continuing examples in the administration of justice in this country of the exercise of mercy and compassion; for example, through suspended prison sentences, the Parole Board and the use of the Royal prerogative of mercy. Such acts of mitigation of penalties are a time-honoured and integral part of our constitutional system.
What we are proposing in this Bill is not so very different in character. While it has to be done by Statute, in my view it falls into place as characteristic of the British approach to these matters. All the same, I would not seek to justify this Bill on the basis of precedents but on the clear requirement to deal with a mess in a way which takes account of the practical realities and is reasonably fair and consistent.
In commending this Bill to your Lordships for a Second Reading, may I conclude by saying again that there was agreement in another place that some legislative provision is necessary to clear up this problem. The Bill was very thoroughly considered there–17 hours in Committee on a Bill of 9 clauses. There were also substantial areas of agreement—for example, that the rent loss should be made good locally, and that the rule of law should be tempered with mercy.
Nevertheless, we fully recognise that there are still considerable areas of disagreement. Arguments were put forward forcefully and with conviction by those seeking to amend the Bill in another place. Basically, they turn on matters of
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opinion as to which of several options would best achieve the basic aim of the Bill. We believe that the Bill proposes the best solution to the problem. My Lords, I beg to move that the Bill be now read a second time.
Moved, That the Bill be now read 2a,—(Lord Shepherd.)
3.30 p.m.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I am sure the House is grateful to the noble Lord for his exposition of the provisions of this measure, although I am bound to say that I am left in complete doubt as to the future of Clause 4 which is its most controversial item. I regret that he has not dealt fully, or at all in my mind, with the constitutional principles involved. Therefore, I hope that I may be forgiven if I take a little more time in discussing this constitutional background than I would ordinarily do on a Monday afternoon on a Second Reading. In my opinion, this is probably the most important constitutional Bill which has come before this Parliament, at any rate during the present Session. It is therefore necessary for me to fill in certain background details which the noble Lord either did not mention or dealt with extremely summarily. In my view, before the House is asked to give a Second Reading to a measure of this kind it is entitled to be told something more of the context in which it is being asked to legislate, and the persons for whose especial benefit this legislation is designed.
The Party opposite is always—or perhaps I should say usually—loud in its denunciation of privilege, but this Bill, in the strict and etymological sense, is a privilegium; that is to say, a special piece of legislation designed for the benefit of a particular class of person and not for the benefit of the general public similarly placed. The general law regarding surcharges on councillors who have exceeded their powers is contained at present in the Local Government Act 1972, which for this purpose superseded the Local Government Act 1933, but with allowances for changes in the value of money which are very similar to the earlier Act.
For reasons of date which I will not go into, but which the noble Lord the

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Leader of the House partly explained, most if not all—and I think all—of those who can be advantaged by this Bill have fallen foul of the earlier legislation and not of the Act of 1972, so that we are either wholly or in the main dealing with the earlier legislation. But the distinction is unimportant, because I think it is safe to say that at all material times the general law provided that in the event of councillors exceeding their powers by incurring unauthorised expenditure, certain consequences would follow, subject to an appeal to the court to relieve them of those consequences of their unauthorised expenditure if they had acted reasonably or in the genuine belief that they were acting within the law. If this law operates in any way harshly or unreasonably, I concede that it is reasonable and right to ask Parliament to amend the general law to the extent that it acts unreasonably or harshly. If the injustice had become apparent only retrospectively. I should have been prepared to consider retrospective relief with some degree of sympathy, subject to the fact that the legislation, both of 1933 and of 1972, already allowed the courts—which I should have thought were the proper tribunal—to relieve councillors if they had acted reasonably.
This is not what the Government have, in fact, deliberately chosen to do. No alteration in the general law is proposed. In no other case is it going to be said that councillors ought to be relieved, either for the present or the future or for past misdemeanors. One must assume, therefore, that the Government have considered the general law and concluded that it operates justly. I am not sure that I agree with that, as I shall be saying when I look at some of the provisions of this Bill. What we are being asked to do in this House is not to amend the general law, but to pass a privilegium, a special piece of privilege to relieve retrospectively a particular group of persons who have broken one particular law, and because ex hy othesi we now know that they have not appealed to the court procedure one must conclude that they have all acted unreasonably and have all acted in the knowledge that what they did was not authorised by law.
Lord SHEPHERD: My Lords, I am sure that when the noble and learned
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Lord speaks of "all" he will recall that I referred to 400 councillors. The only ones who could have appealed are those at Clay Cross. The others could not yet appeal, because their cases have not been dealt with by the district courts.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I am wholly unimpressed by that intervention. Because they have not yet been surcharged it will be open to them to appeal when the surcharge comes, and they will be relieved by the courts under the general law if they have acted reasonably or in the honest belief that what they did was authorised by law. I therefore say again to the House that what it is being asked to do is to relieve a group of persons who have broken the law, about whom it is fair to assume that all of those to be relieved, since no appeal has been lodged, have acted unreasonably and in the knowledge that what they were doing was unauthorised by law. If they have acted reasonably, or in the honest belief that they were doing that which was authorised by law, albeit mistakenly, they can go to the court like any other councillors—if they have become surcharged after the passing of this Bill—without recourse to this Bill at all. They need to have recourse to this Bill only if they have acted unreasonably and in the knowledge that they have acted in a way unauthorised by law.
My Lords, I therefore make as my first point that this Bill suffers from an incurable defect. If it had been a Bill for the amendment of the general law because the general law was too harsh, one could have considered the first Amendment on its merits: but no such claim is made. The Bill is doubly suspect, because it so happens that the particular group of law breakers to be privileged in the way that I have described belong to a Party caucus devoted, at least nominally, to the support of the Labour Party. In other words, they are the present Government's own supporters and the Act which they deliberately broke unreasonably, and with the knowledge that they acted in defiance of the law, is a law passed by a Parliament with a majority of the Party opposite to the Government.
In the light of this fact, which was not touched on by the noble Lord, we must examine its provisions and see how far we can remove its objectionable features.

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But at the end of the day, the Bill is drawn in such a way that it is a privilegium and I should have preferred the Government, if they had thought it necessary to do so, to make any necessary proposed changes in the general law and not to seek to assist a group of their own supporters in a matter which was controversial as between the Parties.
The Bill is entitled the Housing Finance (Special Provisions) Bill. This is a misleading Title and I suspect that it is intentionally misleading. There are no special provisions in the Bill relating to housing finance; it is a straightforward bill of indemnity; that is to say, its main purpose is to relieve certain persons retrospectively from the consequences which would otherwise fall on them for breaking the law. As the noble Lord, Lord Hale, reminded us when the policy was first announced by means of a Statement in the House, there is nothing intrinsically wrong about an Act of Indemnity as such. Of course, it is of the nature of an Act of Indemnity that it should operate retrospectively; so that, so far, there is nothing to complain of. What makes the Bill unique, so far as I know, among Acts of Indemnity, is not its retrospection, but the fact that it is the only Act of Indemnity passed within living memory with the intention and the effect of removing from the consequences of law-breaking persons who have deliberately abused their official position by defying the law unreasonably and knowing what they were doing.
Owing the intervention of the noble Lord, Lord Hale, at the time the Statement was made, I asked a Question of the Government for Written Answer, which was replied to by the noble and learned Lord who sits on the Woolsack. He gave me a list of Acts of Indemnity passed since the war and the rough circumstances in which they were passed. The list was a long one and I have been through it; but I have not been able to find a single case which had the feature to which I have drawn the attention of the House. If I am wrong I shall be corrected. I believe this Bill to be unprecedented in recent times in the respect that I have stated; but if there is a precedent, then I am quite confident that it is one which should not be followed.
I was very sorry to hear the noble Lord the Leader of the House cite as a
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precedent the pre-war Bill, the Audit (Local authorities) Bill 1927. That is not a precedent at all, and I will now tell the House why it cannot even plausibly be put forward as one. That was a case in which, I think, the Poplar Borough Council had paid wages well above the market rate. They claimed to believe—and since one of them was the late Earl Attlee I have no doubt they claimed honestly to believe—that what they did was authorised by the law. Certainly, they had grounds for that belief based on the fact that the law did not give a maximum beyond which they must not go. They were surcharged by the district auditor. They appealed from the district auditor to the High Court. The High Court dismissed the appeal. They appealed from the High Court to the Court of Appeal. The Court of Appeal allowed their appeal. The Government of the day or the authorities—or I think it may have been a private citizen—appealed from the Court of Appeal to the House of Lords. The House of Lords reversed the decision of the Court of Appeal. They then went, as they honestly believed they were entitled to go, to the Minister who, under the Act, had concurrent jurisdiction. The Minister allowed their appeal on the basis that they had acted in good faith and he removed the consequences. Some village Hampden then went to the Divisional Court which reversed the Minister on the grounds that he had no jurisdiction once the councillors had taken the way of appeal via the courts rather than direct to the Minister.
In the circumstances it was clear enough that out of a number of very eminent authorities, a number of very sensible people had taken the view that these persons had acted in good faith. Clearly, Mr. Neville Chamberlain was entitled, on the very narrowest view which I have been putting forward, to amend the law in such a way as to give retrospective relief to the unfortunate councillors. As he did so, in a peroration that I shall not quote since I am afraid I shall take too long, he said that the last persons he wanted to benefit were those who had defied the law deliberately. It was unfortunate that the brief of the noble Lord the Leader of the House compelled him to cite an authority which is dead against him.

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My Lords, we then come to a most extraordinary circumstance. This Bill is limited to breaches of the Conservative Housing Finance Act, and when the Bill was introduced Parliament was led to suppose that this was all that had to be discussed; but as the Bill progressed through Parliament it has become apparent that this, too, was misleading and, I fear, intentionally misleading. By far the worst of the offenders for whose benefit the present Bill is designed are, so far as I know, the so-called Clay Cross councillors. So far, they are the only offenders whose identity has been disclosed to Parliament or whose liability is certain. We have been told—and the noble Lord the Leader of the House told us again this afternoon—that there may be others. We do not know who they are. We do not know the sums for which they are likely to be surcharged individually, although a very high estimate of the total was given by the noble Lord. What we do know is that they have not been surcharged yet; they may not be surcharged at all; and if they have acted reasonably or in good faith they have a complete defence that they can bring both to the district auditor and to the court.
I will therefore, for the time being, confine myself to the one known case. So far as the Clay Cross councillors are concerned, it has now become apparent that their disregard of the Housing Finance Act was only the tip, as it were, the culminating point, of an extremely ugly iceberg. The councillors, the same councillors whom it is now intended to advantage, had deliberately defied not merely the Housing Finance Act but the financial policies of successive Parliaments, Labour as well as Conservative. They had defrauded their ratepayers—and I do not think that these are too strong words; although their motive appears to have been political rather than financial—of a total sum of not less than £192,000-odd. We now know that there is an additional £52,000 surcharge hanging over their heads; that they have not appealed and do not intend to appeal and cannot now appeal against that surcharge; so they will be disqualified, whatever we do this afternoon, and I suppose they will have to become jointly and severally liable for the moneys.
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How much better it would have been, if the noble Lord's arguments had any basis, to have proposed in these circumstances an amendment to the general law. But what began as a constitutional outrage has now degenerated into a ridiculous farce and we are asked to outrage our consciences in a particular matter when, in the only known case, it will have not the slightest effect at all.
The first question which arises out of this is: did the Government know? Did the Government know when they fist sanctioned the policy that the breaches of the Housing Finance Act in the case of the Clay Cross Councillors were only an instalment of what might happen? Did they know that the defiance of the Act was only part of their deliberate defiance of the law? If so, why did they not tell Parliament at the time? Was it in order that they might lead Parliament to suppose that it was only the breach of a Tory Act which was in question? If so, why, when the cat is well out of the bag, do they not now postpone the passage of this miserable Bill, at least until the courts have bad an Opportunity of dealing with the matter? But perhaps it is now too late. Now we know there are to be no appeals the matter must assume an altogether more sinister aspect than when the Bill was originally produced. Why does Parliament have to give an indemnity in respect of the Housing Finance Act alone without being able to know the full extent and seriousness of the other defiances by the Clay Cross councillors? Surely this is treating the whole of Parliament with contempt. We are asked to remove the disqualification from councillors. But how can we do so without knowing the full facts? Is it not better that this matter be referred to the courts? We know that the Master of the Rolls said that the Clay Cross councillors ought to be disqualified in respect of their behaviour in regard to the Housing Finance Act. We have been asked to remove the disqualification, which was openly endorsed by the Master of the Rolls; but there is to be another disqualification about which we are allowed to know nothing, except what has been published in the Press.
As to the nature of this defiance of the law, there can be no doubt, if ever there could have been any after Mr. Bernard Levin's devastating exposure in

29
The Times—for these were founded in an article in the Political Quarterly, not a Conservative organ, by Mr. Austin Mitchell, and on two interim reports from the district auditor to the North East Derbyshire District Council, the second of which was dated only the 8th May. From these documents it becomes plain that, to use Mr. Austin Mitchell's or Mr. Levin's language, lest it should be thought that I am guilty of some hyperbole, the Clay Cross Councillors had for years, even when, as the authors put it, the Housing Finance Act was "merely a gleam in Selsdon man's eye", been organising their areas as a "miniature Soviet" supported by "ruthless purges" of those of their colleagues whose consciences became squeamish, by a policy of dismissal of their officials when their consciences revolted, including a lady clerk who was dismissed in her absence when attending a conference, the "duress" applied to their "chief finance officer", the tampering with official minutes of the Council—removing his protest that what he did was done by duress—by the public intimidation of their critics against a background of allegations of political favouritism in council house allocations.
My Lords, eight of the 11 original councillors suffered the fate of dismissala—"high mortality rate", as one of the writers described it, because their consciences were too delicate for the caucus. These are the men whom we are asked not to disqualify. These are the Labour councillors for whom the Government have devised an unprecedented Bill of indemnity to excuse them for a deliberate defiance of the law for which Parliament in 1933, and as recently as 1972, has devised a remedy. I share the view expressed by Mr. Bernard Levin, that "there is such a thing as political corruption" as well as financial corruption, and these are the men—again I quote from him, using language which is his and not mine—that they were guilty in that they
"looted the public coffers with the keys to which they were entrusted under the law, not to fill their own, but to form the community which they were supposed to serve in to a kind of miniature Soviet, a forcing house for their political ideas."
I have described them throughout as "Labour councillors"; but of course
30
they were crypto Communists or worse. The Government have been prone to intervene from time to time regarding the Shrewsbury two, but the Home Secretary has withstood this. The pressure may be the hand of Esau, but behind that hairy paw is the silky voice of Jacob in the shape of Mr. Bert Ramelson. This is the background, sedulously suppressed by the Government, against which this Bill is proposed.
I now come to its actual provisions. When a councillor is surcharged, the law provides two distinct consequences. In the first place he becomes liable to recoup the ratepayers—or rather, the local authority—for the money he has cost them. Secondly, if the amount of the surcharge passes a certain threshold —E500 under the 1933 Act, £2,000 under the 1972 Act—the guilty councillor is automatically disqualified for election to a local authority for a period of, I believe, five years, subject to the appeal to the court which I have described. The purpose of this Bill is, first, to terminate any such disqualification; secondly, it is to exonerate councillors from the whole of their potential financial liability if the surcharge was made on or after 7th March last, but not if it was made before, because that would be retrospection condoning illegality, although in each case, as I have sought to show, the act which gave rise to the potential surcharge was done before, and the act was unreasonable and in deliberate defiance of the law. Thirdly, the object is to make the council tenants or, alternatively, the ratepayers, pay the deficit; but the council tenants or the ratepayers at the option of the local authority.
Each of these provisions in its present form is, in my view, completely destructive of the rule of law. Each is deliberately discriminating in favour of the Labour Party's own supporters, if that is what they can be called. While the third part is fair as regards the council tenants who, in the nature of things, were the beneficiaries of the refusal to implement the Act, it is wholly unfair as regards the ratepayers at whose expense the act of defiance was done. As it stands, in my submission to the House, the Bill is a constitutional outrage—again, the language is not mine, it is the language of the present Attorney General, whose

31
name appeared on the back of the Bill when it was introduced into the Commons but who gave this description when he was in opposition and advising the Labour Party about this very matter.
It remains to be asked: What would be the consequences to the rule of law of passing the Bill into law in its present form? Secondly, what can we, as a Second Chamber of the legislators with defined constitutional powers but undefined responsibilities hope to do about it? To the first question it seems to me that the answer is appallingly simple. In its present form the Bill is a direct challenge to the rule of law. The rule of law requires something much more subtle than the mere maintenance of law and order by the police and the criminal courts. It means more again than majority rule or Parliamentary sovereignty and an independent and impartial Judiciary. The rule of law requires, among other things, a Government, a Parliament and local authorities which are themselves upright and free of corruption. I agree with Mr. Bernard Levin that there is such a thing as political corruption as well as financial corruption. In this sense the Clay Cross Council was politically corrupt, and I say that the Government are politically corrupt in condoning the political corruption of the Clay Cross Councillors who are their supporters.
Above all, the rule of law is indivisible. If, with impunity, it is set at nought by one group, it can be set at nought by all groups. In the eyes of the law what is sauce for the Government goose is sauce for the citizen gander. If it be in order for the Clay Cross councillor to flout the law in order to benefit the Council tenant, by what authority does the local Government claim—or the local authority be allowed—to impose on the innocent ratepayer the burden of recouping the guilty councillor for the legal liability he would have incurred but for this Bill? If it be in order for a Socialist Council to flout a Conservative Act of Parliament dealing with housing finance, why should not a Conservative Council defy a Socialist law to abolish direct grant schools or impose comprehension, or for a hospital board to refuse to phase out private beds? These are also matters upon which people feel deeply. They are also matters which are highly controversial between the
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Parties, and the noble Lord has set a bad example and a bad precedent by suggesting that a Government of the same persuasion as those who have deliberately defined laws should introduce measures giving them a privilegium to be excused from the consequences.
If a Government are going to remove disqualification for corruption in local affairs when incurred by their own supporters after they have victimised or employed duress on the servants of the council, where is it going to end except in the complete demoralisation of local officials liable to be dismissed or threatened with dismissal, as were the Clay Cross Council officials, and of local councillors who, in the one-Party State which is Clay Cross, were denied Party endorsement by the local caucus when they protested at the immorality of what was being done and were thereupon cast permanently into outer political darkness? There is no doubt that this Bill is completely subversive of the rule of law, and the pity of it is that it should be endorsed by the Attorney General and, dare I say it, by the noble and learned Lord on the Woolsack, whom all of us in this House have learned to admire and respect.
The Bill has clearly been drafted so as to make amendment difficult or even impossible. Clearly, it ought to have been rejected out of hand by any self-respecting House of Commons and the Government told to think again. Instead it has been sent up to us with its most objectionable features unaltered, although I rather gathered from the noble Lord's opening that one of its most controversial features is secretly under sentence of death. It is our business to see whether the objectionable features can be removed and by what means. My own view is that most of them can. To my mind, it is wholly objectionable that the disqualifications should be removed in their entirety. But the 1972 Act made the threshold £2,000 and not £500, which no more than reflects the change in the value of money since 1933. Despite the retrospective character of such a measure, I consider that it would be just here to apply the 1972 threshold as more realistic, and Amendments will be put down to achieve this when we get to the Committee stage.
The option to impose on ratepayers the obligation to meet the deficit is, to my

33
mind, wholly objectionable, still more so since I think it has been left to the new council—which is largely of similar political complexion to the old and corrupt council—to decide whether or not to do it. The original defiance of the rule of law was indulged to assist the tenants. It was for the benefit of the tenant that the original breach took place. It is therefore the rent and not the rates which must bear the burden now. The five-year period is not ungenerous—indeed, in my opinion it is probably too generous—and over five years I do not think that the burden upon the tenants will be excessive, viewed as a weekly charge. The noble Lord the Leader of the House put the figure at a few pence per week. I had put it slightly larger, at about 30 pence, but the noble Lord is more likely to be right than I am.
What is to be the position of the councillors' financial liability? Of course, in strict legal theory they ought to pay to the uttermost farthing the whole of the £192,000, or £106,000 if you confine yourselves to the Clay Cross councillors alone and to the Housing Finance Act alone. If they are suffering, their friends and supporters in the country might be asked to contribute to bail them out. I accept, as a matter of fact, that this is unrealistic and the spectacle of a dozen or more hopeless bankruptcies would be extremely unedifying and, incidentally, unjust to the other creditors of those concerned. This is why I suggest that the honest course would have been to amend the general law in such a case and not to provide a privilegium, because this will happen again at some time or other in respect of another Act but the Government have not done that.
I shall seek to put down an Amendment limiting liability to the extent of individual guilt and capability to pay, with a maximum of £1,000, and placing responsibility on a court to adjudicate on these; and, if need be, even to remove the disqualification which ensues, if the court thinks that is right. In this way we shall have a Bill which is both just and compassionate, although it will still be a privilegium, because it will not be possible within the compass of the Long Title to introduce wider Amendments or to alter the Long Title sufficiently widely to do it. I should vastly prefer it if the Government withdrew this Bill and came
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forward in place of it with one which amends the general law. I could then understand much better what we are being asked to do and why it is justified. But that must rest with the Government and we are bound by the Long Title of this Bill. It is to be hoped, even now, that the Government will think again. If they had proposed a Bill in the terms I have suggested, they would greatly have enhanced their reputation. It is to be hoped that even now they will be prepared to restore their reputation for respectability by accepting the Amendments which I have suggested, or proposing similar and better Amendments of their own with the expert help of the Parliamentary draftsmen.

EEC: BRITISH MEMBERSHIP
4.7 p.m.
Lord SHEPHERD: My Lords, with the permission of the House, I will repeat the Statement which has just been made in another place by my right honourable friend the Prime Minister. I will use his own words:
"As the House knows, last Thursday the British people voted to stay in the European Community.
"What has impressed all of us, and no less our friends in Europe, the Commonwealth and more widely, has been not only the high turn-out and the clear and unmistakeable nature of the decision, but also the consistent pattern of positive voting over almost every county and region of the United Kingdom.
"It is now almost fourteen years since the British Government first applied in July 1961 for negotiations to join the Community.
"The issue of membership has cut across Party lines, and the Government recognise the deep sincerity with which views have been held on both sides. The debate is now over. The two tests set out in our Manifesto of successful renegotiation and the expressed approval of the majority of the British people have been met. The historic decision has been made. I hope that this House and the country as a whole will follow the lead which the Government intend to give in placing past divisions behind us, and in

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working together to play a full and constructive part in all Community policies and activities.
"I am well aware that the period of renegotiation and the referendum has been difficult for other members of the Community. I pay tribute again to the constructive spirit in which they have dealt with our renegotiation proposals. In his statement to the Council of Ministers in Luxembourg on 1st April last year, at the outset of renegotiation, my right honourable friend the Foreign and Commonwealth Secretary said that, if we were successful, there would be 'a firm basis for continuing British membership of a strengthened Community'. I now say to our partners in the Community that we look forward to continuing to work with them in promoting the Community's wider interests and in fostering a greater sense of purpose among the Member States.
"I would also wish to say to our friends and allies in the Commonwealth who made clear their hope that we would remain within the Community—and to all the developing countries—that we shall hope to bring even more to our relationship with them following the clear decision of the British electorate last Thursday.
"I have already made clear the Government's general approach to Community policies. But it also follows from the decision to remain in the Community that this country should be fully represented in all the Community's institutions. I have said that if renegotiation succeeded and if our recommendation was endorsed by the country we should feel it right that this House"—
that means both Houses—
"should be fully represented in the European Assembly. A recommendation to this end will now be made to the Parliamentary Labour Party.
"The House will have noted the statements by the General Secretary of the TUC and the Chairman of the TUC International Committee making clear that the TUC is now likely to enter fully into the work of the Economic and Social Committee of EEC and to work with the European Industrial
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Labour Movement in a way which can only mean strengthening the trade union movement throughout the Community and here in Britain.
"What we can achieve both in our attack on the economic problems we face at home, and wider world economic problems, depends basically on the efforts which we make ourselves. But with the uncertainty over our membership of the European Community at an end, we can continue our efforts with greater confidence to find solutions to the great problems, both domestic and international, which confront us.
"The decision will also, I am sure, give confidence to those overseas who have been considering plans for investment in Britain. There are signs that this is already happening.
"The improvement of our own economic situation and our contribution to a more equitable world economic order can best be made from a settled position within the Community. We now have that settled position and are determined to make a success of it. But our future will continue to depend on what we are prepared to do by our own efforts, skill, our technology—and our restraint, a restraint which demonstrates our concern for the interests of those members of our national community least able to help themselves."
My Lords, that concludes the Statement.
4.12 p.m.
Lord CARRINGTON: My Lords, this is, certainly for me, not an occasion for criticism or grudging praise or for making Party points. So far as I am concerned it is a day of rejoicing, and I rejoice. The British people voted on a national issue—an issue of foreign affairs, not just a bread and butter issue. They voted in great number, and it is a matter so far as I am concerned for congratulation that the people voted in almost exactly the same proportion as Members of Parliament voted in another place, though it must be admitted that your Lordships may have been a trifle more enthusiastic. I suppose it could be argued another time—certainly not today—that that means that there was no need for a referendum. But two things were certain,

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and two things have resulted. First, that referendum has shown that Scotland, Wales and England are all in favour of continued membership, and that is important for our national future. Secondly, I think and I hope that the referendum has put this issue to bed forever. I hope that the opponents, and the sincere opponents, of the Common Market will accept the verdict of the British people and of their Parliament and that we shall now concentrate, as indeed the Prime Minister's Statement has said, on making a positive contribution to the Market. I am very glad that the Prime Minister has said that the Labour Party will now join in the work of the European Assembly. Perhaps we can now get on with the business, which is just as important, of ensuring the economic survival of this country.
Just one final word which I hope will not be considered out of place. Perhaps I might be allowed to congratulate those members of the "Britain in Europe" movement who took it upon their shoulders to organise the campaign and who worked so hard, and, perhaps particularly because he is in your Lordships' House, the noble Lord, Lord Harris of Greenwich, who did so much.
4.14 p.m.
Lord BYERS: My Lords, on these Benches we are certainly delighted at the overwhelming support which has been given in the referendum for Britain to stay in Europe. We welcome most sincerely the decision on the part of the Labour Party and the Trades Union Congress to play a full part in the institutions of the EEC. We want to put the past behind us as much as anyone, but may I ask what plans the Government have for ensuring from now on that the conduct of the day-to-day business with the Commission is carried on by Ministers who have not expressed themselves forcefully and with hostility against Britain's membership of the EEC and the general aim of the Community itself? We ask this with great sincerity because we want to make a fresh start and want to see Britain playing a full part in the outward-looking development of a Community which is vitally important to us and the rest of the world. We will want assurance on this point within a very short time indeed—certainly not today, hut we must have it within a short time.
Lord SHEPHERD: My Lords, the noble Lord, Lord Carrington, was right in that last Friday and today are days of rejoicing, not only on the decision that was made but on the manner in which the decision was made by the British people. It was decisive. It represented the view of all the country except for two far-distant counties; but I gather there may be some local reasons for a different view being taken in the Shetlands compared to the rest of Scotland. I think, too, in the light of some speeches that have recently been made in your Lordships' House (and I intend to say this in the debate on Wednesday) that the referendum, whether or not it was wise to have it, proved one thing: that the people of this country are sound, sane, sensible, responsible people and they are governable. For them to go out, without any Party machine, without depending upon the Party motor-car to get them to the poll, and to vote very closely to the vote we achieved with great effort at a General Election, is a great credit to the British people. I share the view of the noble Lord, Lord Carrington, that this matter has been dividing the country and the political Parties for far too long. There are very major issues for this country to solve, and to have this issue out of the way can only make that task a good deal easier, although, Heaven knows! it will be difficult enough.
Trust the noble Lord, Lord Byers, to put his foot in on a happy occasion. I would say only this to him.
Lord BYERS: The foot belongs to you, not to us.
Lord SHEPHERD: Throughout the renegotiations there were a number of Ministers who took, and retained to the very end, a dissenting view. But they negotiated with the European Community with great sincerity, dedication and persistence. I have no idea what their future will be. I myself hope that they will remain to use their own expertise and knowledge. But it would be quite wrong to question the integrity of Ministers in a matter of this kind where in the past, a recent past, they have exercised, and have clearly shown they exercised, responsibility in their negotiations with the European Community.
Lord BYERS: My Lords, may I make a personal explanation? I am sure that

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the noble Lord, Lord Shepherd, did not intend to misrepresent me by speaking about the integrity of Ministers. The point I am making is that up to now we have had to renegotiate our own terms of entry. From now onwards is a new start to develop the whole Community, all of us working together, not just for the British interest but in the interest of the Community as a whole. I want to make that clear.
Lord SHEPHERD: My Lords, I accept that from the noble Lord, but I am sure he will take it from me that if we are to consider sending Members of your Lordships' House to the European Assembly we should not confine the representation to the pro-Market horse.
4.19 p.m.
Lord SHINWELL: My Lords, is my noble friend aware that I have no wish to resume the debate which apparently the noble Lord, Lord Byers, is anxious to continue with variations on a theme? Is he also aware that I have no desire in any form to weaken the euphoria that naturally emerges from the decision recently taken by the British electorate? But during the campaign he may recall that some prominent politicians, some of them members of the Government, stated as plainly as could be, because they objected to the referendum in particular, that if the decision taken by the British public happened to be in the negative they would reserve their right to continue the pro-Common Market campaign in order to stay in Europe.
In those circumstances, along with others who regard the decision as disagreeable, may I be permitted to have the right to do precisely what those on the other side wish to do: namely, to continue my criticism of our entry into, and our remaining in, the Common. Market and to raise the question from time to time, since it might lead to a reversal of the decision? Will the Minister understand that I demand that right, in view of the fact that promiment politicians and members of his Government wish to reserve that right for themselves?
Lord SHEPHERD: My Lords, the noble Lord demands a right that he knows as well as I do he already has as a Member of your Lordships' House and
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as a member of the British democratic society. Nothing would prevail upon him to remain silent on this issue. Therefore, if the noble Lord intervenes we shall listen, as we have listened in the past, with the greatest possible interest to what he has to say.
Lord MAYBRAY-KING: My Lords, is the noble Lord aware that on this important day this House wishes to congratulate the former Prime Minister, Edward Heath, on the skill and patience that he showed throughout the years in negotiating our entry into the Common Market, and the present Prime Minister, Harold Wilson, on his skill and patience in maintaining our presence in this great European institution.
Lord SHEPHERD: My Lords, in the light of the noble Lord's congratulations to the latter, I naturally agree about the former! Perhaps with some exceptions, I think that the referendum campaign was conducted by both sides at a very high standard. I do not believe anybody could complain that the issue was not fairly debated. However, it has now been decided by the people, and I hope that we shall make the European Economic Community a great success not only for the countries within it, but for all those who may have relations with it.
Viscount BROOKEBOROUGH: My Lords, I noticed that my noble friend Lord Carrington specifically omitted Northern Ireland, for which I shall duly exercise retribution! I feel that the decision of Northern Ireland to support the decision to remain within the Constitution of the European Economic Community is very remarkable. I do not believe that there are many areas of the United Kingdom which, having suffered such casualties and also having had seven elections within a very short period, could have exercised, without Party organisation and cars, such a sane vote to remain within the Community. I feel sure that at a later date support for the EEC will be absolute.
Lord SHEPHERD: My Lords, I shall leave the noble Viscount's correction on the Record without adding further to it.
Lord CACCIA: My Lords, may I say that, with the noble Lord, Lord Inchyra, I was one of the people responsible for

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officially supporting our first application for membership of the EEC, and many of us on these Benches welcome the Statement which has been made by the Prime Minister. Over the years, importance on many grounds has been given to the terms of our entry. These grounds are not only the immediate self-interest of the United Kingdom, but also the very honourable recognition of our obligations to our trading and political partners in the Commonwealth. All that is now a thing of the past. Everything has been sealed and finally delivered. May I say, therefore, how greatly I welcome that part of the Prime Minister's Statement, and the subsequent remarks made by the noble Lord the Leader of the House, to the effect that the task now is to develop the Community with Britain's full-hearted support, and in order to give that full-hearted support we must get down to the very serious task of making Britain's voice powerful by being strong at home.
Lord BRUCE of DONINGTON: My Lords, is my noble friend aware that many of us on this side of the House, and, indeed, elsewhere, who have considered it to be our public duty to conduct the argument against Britain entering the Common Market are now prepared to accept the verdict of the electorate which has been so decisively delivered? May I also be permitted to say that, particularly in the long transitional period that lies ahead, many of us will feel that it is necessary to give as much emphasis to British interests as our colleagues on the Continent give to their own countries?
Lord SHEPHERD: My Lords, quite clearly, within the European Community all of the member countries have a direct responsibility to their own people, and in this country Parliament and the Government have that responsibility. If I may say so, I particularly welcome what my noble friend said at the outset, that irrespective of the feelings which some of my friends and others may have had, the decision has been taken democratically and we must now put into force what the people clearly wish to see.
Lord WYNNE-JONES: My Lords, as an ex-anti-Marketeer, may I ask my noble friend to bear in mind that many of us would feel it was outrageous if distinguished Ministers of the Crown were not
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regarded as suitable to represent us in European affairs?

HOUSING FINANCE (SPECIAL PROVISIONS) BILL
Second Reading debate resumed.
4.27 p.m.
Lord WIGODER: My Lords, after discussing for a few minutes the results of the referendum, which was very largely achieved by the co-operation of men and women of good will of all political Parties and of none, it is with ill-concealed distaste that I find I have to revert to the piece of legislation which is now before your Lordships' House, which is a divisive, shabby and evil little Bill. I describe it as evil, because there are two great conflicts closley intertwined which are threatening our democratic way of life. One is the conflict between the rule of law and the forces of anarchy. This Bill gives comfort to those who espouse the cause of anarchy. The other conflict is between the rule of Parliament and the domination of extra-Parliamentary pressure groups. This Bill gives encouragement to those who seek to bypass Parliament as the sovereign power in this country.
I look at this Bill from three aspects: first of all, to see who is to be helped; secondly, to find out how it is that they are to be helped; and, thirdly—and this is not the least significant feature—to find out who is doing the helping. The first feature—who is to be helped—we now know. It is about 400 councillors for whom it is necessary to legislate. As the noble and learned Lord, Lord Hailsham of Saint Marylebone, has made clear, that means 400 councillors who in the ordinary way would be surcharged as a result of negligence or misconduct, who would find it idle to appeal under Section 229 of the 1933 Act, and who would find it idle to apply for relief under Section 230 of that Act on the ground that they had acted reasonably or in the belief that their actions were authorised by law. In other words, it is abundantly clear that this piece of legislation concerns, and concerns only, 400 or so councillors who quite deliberately defied the law.
It is therefore wholly unnecessary to consider this afternoon any question of those councillors who may inadvertently

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have got into difficulties, those councillors who found the Newcastle Amendment somewhat complex, those councillors who were waiting in good faith for a housing commissioner to be put in. We are concerned only with those who deliberately broke the law, and, indeed, it emerged in the debates in the other place that already in some half a dozen cases district auditors had not imposed surcharges in cases where councillors had indicated that they were genuinely confused about some of the provisions of this Bill. It is those whom we are helping.
How are we helping them? The answer must be that we are helping them by a combination of firmness and fairness which appears to be characteristic at the moment of Her Majesty's Government. The firmness emerges in Clause 1, where it is clearly stated that all those who are about to be surcharged—and there appears to be a nasty attack of some unmentionable illness which has afflicted all the district auditors and has caused them to be unable to complete their audits at the present time—will be relieved of every single penny of the surcharge and relieved of every single day of the disqualification which they deserve.
The firmness appears in Clause 2, where it is decreed that the deficit which may result from the actions of those councillors may be imposed not merely as the noble and learned Lord, Lord Hailsham, indicated, upon the council tenants in that area but upon the council tenants in the whole new successor area who may have had nothing whatever to do with the election of the defaulting councillors and not gained one single half-penny from their activities. The fairness is continued in Clause 3, where it is said that the same or a similar burden may be placed not on council tenants but on ratepayers, again outside the area—if the council think it fit—which had any responsibility for the activities of the councillors. Indeed, one council in Derbyshire has already indicated that, if this Bill is passed, they propose to ensure that the deficit is met by the ratepayers in the new area which has no connection with the old area in which the defaults took place.
Then we come back to the firmness of Clause 4 where it has been decided that,
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in regard to the Clay Cross councillors, the surcharge having taken place for £7,000, nothing can probably be done about that except that the money will be raised by some fund, no doubt from some generous anonymous donor in the expectation of some reward. So far as the disqualification of the Clay Cross councillors is concerned, it is not of course possible to remove that retrospectively but it is to cease to run upon the passing of this Bill. The only provision missing from Clause 4 is that the Government have apparently failed to make any provision for compensation to the Clay Cross councillors for loss of Office.
That is how these councillors are to be helped. Let me turn, if I may, to the question of who is doing the helping. It is not in dispute that these councillors are members of the Labour Party. A Member of Parliament who was the chairman of the Tribune group went on record as saying:
"Labour councillors are right to ignore the Rent Bill".
There was a Labour Party Conference held at the time when the law was still being defied by many of these councillors which passed a Resolution which said:
"Conference further agrees that upon the election of a Labour Government all penalties, financial or otherwise, should be removed retrospectively from councillors who have courageously refused to implement the Housing Finance Act 1972."
It was Mr. Edward Short who said at that Conference, after saying that of course he would not encourage anybody to break the law:
"Clay Cross is something rather special. It really is. I think everybody in Britain, in the Labour movement and outside, were full of admiration and sympathy for the stand that the councillors have taken."
My Lords, if one looks at who is being relieved, how the relief is to be offered and who is doing the relieving, it is simply that we have here a situation in which a Labour Government are bailing out their own political friends and associates, in circumstances in which they promised that they would do so, while the law was deliberately being broken by those people. One appreciates of course what the noble Lord the Lord Privy Seal has said about tempering justice with mercy, though I find it difficult to see how suspended sentences or the parole board really come into this discussion. Of

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course it would be proper to extend leniency in an appropriate case, but I would venture to suggest two considerations: one is that some grounds must be given for extended leniency, and so far none has been given; and, secondly, the leniency must be seen to be extended by an independent tribunal. If I may say so, I think I know what the noble and learned Lord on the Woolsack would say if we had an unhappy situation in which some High Court judge having a brother who was charged with fraud, insisted on having the case put in his own list and then, as he would be entitled to do, recording a verdict of Not Guilty before the jury had even been sworn in.
If leniency is to be shown, as it may well properly be shown to these councillors, in order that there can be any confidence in our Parliament and any confidence in the Administration abroad, it must be shown not by their own political associates but by an independent tribunal, and in this case this means by referring the matter to the courts. The noble Lord the Lord Privy Seal added that there was some precedence for the course that is now taken. I venture to doubt whether precedents are of any great value. We are not sitting in our judicial capacity, interpreting a difficult point of law; even if we were we would not be hound by what any other judge decided about the same point of law.
We are asked today to take a political decision about a political problem in the circumstances of 1975. It was suggested by the noble Lord the Leader of the House that the Poplar case in 1927 had provided a precedent. I venture to doubt that, for the reasons so well expressed by the noble and learned Lord, Lord Hailsham; although if he will forgive me I would add that I think that at a very late stage in the deliberations on that Bill there was an Amendment introduced by Mr. Neville Chamberlain which in fact did remit the surcharge for the Poplar councillors, not only for the long period up to the date of the House of Lords' decision which made the law clear, but for the comparatively short period afterwards, when they must have known that what they were doing was wrong. But Mr. Neville Chamberlain wound up the Second Reading of the Bill which he introduced in 1927 by saying:
"The only people at whom this Bill is aimed are those people, if there be any such,
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who wish to go further than the law allows them and who wish to set up a counter authority to the action of Parliament."
He wound up his speech on the Third Reading by saying:
"Those who cannot show that their action was reasonable or that they thought they were acting in a justifiable manner, that is those who must admit that they were deliberately and intentionally acting in defiance of the law, cannot be fairly excused from the surcharge and ought to be taken out of the local administration of this country."
I doubt whether the noble Lord the Leader of the House could work any of those expressions into his final observations when he comes to reply to the debate on the Second Reading of this Bill. I must add that I find it an enchanting thought that there may be in the near future a subscription list got up by the Tribune group so that there may be erected in the market place at Clay Cross a statue of Mr. Neville Chamberlain. If we are to talk about precedent, the real precedent for which we seek today—and I doubt if there will be any answer forthcoming—is a precedent for a political Party that becomes the Government quite deliberately removing all the penalties from its own supporters who have flagrantly broken the law while that Party was in Opposition, and to whom that Party had pledged its support at the time they were breaking the law. If we talk about precedents, I suspect that it is this Bill which is in danger of becoming a precedent in the future.
My Lords, the noble and learned Lord, Lord Hailsham of Saint Marylebone, indicated the possibility that the ratepayers of Derbyshire might be deeply aggrieved by the fact that there was to be inflicted upon them responsibility for this deficit, although they did not even come from the area involved. Supposing that the ratepayers, with the active encouragement of their local Conservative Associations were to refuse to pay those increased rates. Do the Government not realise that they would have to remain silent as the Conservative Party Conference this autumn passed a resolution espousing the cause of those ratepayers, thus defying the law? Do the Government not realise that they would be unable to say a word as the Conservative equivalent of Mr. Edward Short—a formidable concept!—went on record, while the law was being broken, as saying, "This was a very special case"?

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Do the Government not realise that their lips would be sealed as a Conservative Attorney General advised that although, of course, it would not be proper to remit the rate increases where they had already been levied, the situation was totally different where the rate increases were about to he levied, and it could be entirely proper for Parliament to act in that way? Do the Government not realise, indeed, that they would be unable to take any action or make any protest if the Conservative Party were returned to power, and then passed a Bill which decreed that not only were the ratepayers of a particular area not to pay the increased rates, but that the whole of the deficit would be visited on the council house tenants of Wapping? Do the Government not realise, in a word, that by this Bill they are taking several substantial strides along the road to lawlessness?
My Lords, in those circumstances, my noble friends on these Benches have had to consider what would be the appropriate course to suggest to your Lordships' House on this Bill. I would suggest that there are ample grounds for rejecting this Bill in its entirety this afternoon. It is well within the constitutional position that this House should take up matters where issues of such fundamental importance are involved. What causes us to hesitate is simply that rejecting this Bill still leaves a problem which requires solution. It would still leave some 400 councillors about to be surcharged with sums which, to them, are no doubt quite astronomical. It would still leave therefore a deficit that would have to be raised from some source or another.
In those circumstances it seems to my noble friends and myself that the best course is to wait until the Committee stage of this Bill and then proceed drastically to seek to amend it, in the first place, in such a way that those who have deliberately broken the law, those who, in the words of the noble and learned Lord, Lord Denning, flagrantly defied the law and deserve to be disqualified, should be disqualified; to amend the Bill, secondly, so that the question of the extent of the surcharge, if any, which each councillor should pay should be
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assessed by the courts and not by the Government, and should be assessed in a manner which will be fair and equitable, not oppressive. Thirdly, it is best to amend the Bill so that the deficit that inevitably must arise is visited upon those specific areas and those specific people who profited from the failure of the councillors to implement the law, and not upon people who were totally removed from its operation. I say at once that it will be a very different Bill, I hope, that we will send back to the other place in due course. It will be a totally different Bill because instead of destroying the foundations of our democratic society, it will seek to strengthen and to support them.
4.45 p.m.
The Lord Bishop of DERBY: My Lords, I speak as the Bishop of Clay Cross, and as having a responsibility not only for the people of that parish, with its so-called rebel councillors, their supporters and their opponents, but also for those people who live in the area of the new North-East Derbyshire District Council. I am concerned with the ordinary people of this area, and a number of them have asked me to speak against this Bill.
I believe, like them, that this Bill imposes financial penalties on people who have done nothing to deserve them, and that it lifts penalties from others who equally clearly deserve them. Most people who live in the area believe that the injustices that the Bill perpetrates are wrong in themselves and could have serious consequences for our national way of life in the future. It is difficult to convey the sense of moral outrage on the part of members of all political Parties, and of none. I can assure your Lordships that the people of the area of North-East Derbyshire are deeply aggrieved at what is proposed.
I appreciate the way in which the noble Lord, Lord Shepherd, introduced the Second Reading of the Bill, but it seems to me that he ignored a number of essential considerations. I do not approach this matter as a member, or even as a supporter, of a political Party. I should be opposed to this Bill, or to any other Bill containing similar provisions, if it had been introduced by a Government of any other political colour. I should be opposed to it no matter the nature

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of the legislation that the Clay Cross councillors and others had defied. My basic convictions are those of a local justice of the peace who found himself conscientiously bound to resign when he knew that this legislation was being introduced. That man is a general practitioner in Clay Cross, a good physician, and a member of local government, until a few years ago his position was made intolerable.
When I drive to the Chesterfield area, as I do frequently, I join the main road from Derby a few miles South of Clay Cross. I remember vividly the first time, five and a half years ago, that I first set eyes on the town, and the impression of dereliction that it made on me. It could do with a few pieces of sculpture, as well as a great deal more improvement. By coincidence, it was the first parish in the diocese in which I spent an entire day meeting people and trying to learn something about the life of the community. Also by coincidence, my day began with a visit to the council offices, where I met the officers who were later so tyrannously—and I use the word advisedly—prevented from doing their duty. From my knowledge of the town I well understand the councillors wanting to improve its housing, to increase wages, to bring a number of unemployed people back to work. Like all of us they acted from mixed motives, but some of their motives were very good. I do not forget that one of those councillors, now disqualified, still suffers the effects of a mining accident and has been unemployed for three years.
It should be recognised wholeheartedly that the councillors concerned have never at any time sought any financial or other reward for themselves. They have striven for no personal advantage except the possession and exercise of power. What the ordinary person who is not a follower of theirs cannot understand, however, is why, if he contracts individual or corporate debts, he is both punished and has to repay them. These councillors are let off with something near complete remission. An argument can be produced in favour of remission along the lines that the councillors were misguided; that they did wrong in defying the authority of Parliament; that they dealt unwisely with the ratepayers' money; that they and Her Majesty's Government
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regret all this, and therefore it is right to show compassion, forgiveness or mercy, or wipe the slate clean. That is a legitimate argument. It is, however, muddled beyond any coherence and persuasiveness when remission is urged, as it now is, for offences which are reckoned to be not only permissible but meritorious.
If I may quote again the resolution of the Labour Party Conference, it said:
"Conference agrees that upon the election of a Labour Government all penalties, financial or otherwise, should be removed retrospectively from councillors who have courageously refused to implement the Housing Finance Act 1972."
That resolution was passed in 1973. We have had to wait a long time for the expression of the Government's dissent from that, if indeed such dissent is implied by some of the words of the noble Lord, Lord Shepherd. When unprivileged people, as most people are, defy the law for conscience sake they cannot escape the penalties of their actions, nor do they expect to do so. This Bill introduces the idea that if you break a law because you hold a particular set of political opinions you must be exempted from the usual consequences of moral courage. This seems to me and to the ordinary people I meet to be destructive of our whole concept of a system of laws which saves people from exploitation by this or that powerful group. We have seen in Clay Cross sustained aggressive action by a group of people claiming to be above the law. To imply, as this Bill does, that such action was legitimate is to take a dangerous step towards the acceptance of dictatorship by whatever group of people may happen to gain political power.
Not only are the councillors to be honoured and freed from financial penalty for defying an Act of Parliament, but a host of innocent people, as has already been suggested, are to pay the penalty for them. The financial loss, it is argued, cannot be borne by the taxpayer, but it must be borne by the ratepayers or council tenants. I should make clear that the new area on which these exactions could be imposed is very much larger than the old Clay Cross area. I am sorry to have to say this, knowing that it may be unfair to some individuals, but many people in North-East Derbyshire regard this Bill as sheer political expediency. It is a sad thing that a

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Party which plainly stands for social justice should decide to act with such palpable injustice towards groups of people who are almost completely defenceless against its present governmental power.
It is a persistent fact of evil, of course, that individuals of complete personal integrity will, as members of a group, do things that they would never countenance in their personal dealings with others. But in this instance, rather than penalise innocent people, Her Majesty's Government should have taken action to secure that those who encouraged councillors in the breaking of the law accepted the consequences of doing so. To follow the different policy of this Bill is the kind of thing which makes ordinary people disillusioned and cynical about politics and politicians. They seem to have a morality which suits themselves; this has been said to me in recent times.
Ordinary people have to suffer for their own foolishness as well as for their wrong doing. Besides refusing to implement the Housing Finance Act the Clay Cross councillors made some very foolish mistakes in their handling of other people's money. This Bill proposes that they should have restored to them the right to be elected to further office in local government before they have gained any greater wisdom. They, however, are not to be blamed entirely, or even chiefly, for all the sorry wickedness and foolishness. They were aided and abetted in it by senior political figures who should have known better and ought rather to have dissuaded them. It is encouraging to be told by the noble Lord the Leader of the House that the Government are opposed to any breaking of the law. This is a reassurance, but it will need to be said much more generally by all the members of Her Majesty's Government before people generally believe it.
There are certainly a great many people, in Derbyshire at least, who believe that this Bill is chiefly intended to get some politicians out of the difficult situation into which they have put themselves by their support of the rebel councillors. It is only politicians with a majority who can make things safe for themselves. If Her Majesty's Government want to preserve Parliamentary democracy they ought not to do any such thing. I believe, and so do those for whom I speak,
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that morality and law are in this Bill being made subservient to Party political scheming and advantage. Laws can be unjust and may need repeal or reform, but it is both wrong and perilous to try to change them by aggressive wrongdoing and then remove the consequences of the wrongdoing by injustice. I believe that this Bill is wrong in principle and is likely to be morally and politically damaging in its effects on the whole life of the nation.
4.58 p.m.
Lord KENNET: My Lords, when I used to sit on the Front Bench in this House and noble Lords said that they had come to a debate not having made up their minds, and were waiting until they heard it, I never believed them. Now that I am sitting on the Bench Benches, I find that one does this from time to time, and today is a time when I have done it. I thought, if I may say so, that my noble friend the Leader of the House made an extremely good case for this Bill. I thought it was much better than I believed possible. I have not had time to read all the Commons' Hansards, but I have read many of them. My noble friend's case was then attacked on constitutional grounds from the Conservative Opposition Front Bench, in a speech which I found almost equally persuasive, except for the endorsement of some intemperate extra-Parliamentary words. It was attacked again with ingenious venom from the Liberal Benches, and lastly with a kind of insidious thunder from the episcopal Benches. I say insidious not because of the content of the sound, but because of the quietness with which the indictment was delivered.
I seem to be the only Government Back-Bencher speaking on this Seconid Reading. I want to come on to the reasons for that, and that makes me go very carefully. First, I do not think it right to say that these people have been breaking the law; that they have been defiantly breaking the law and that therefore there is 116 problem. There clearly is a problem. It was explained very well by the Leader of the House. What happened was that a Conservative Government passed the Housing Finance Act, and it was of a nature that would inevitably become a political football. It was said earlier that at one stage it was a glint in the eye of Selsdon Man. I can

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remember the days when it was one of seven alternative glints in the eyes of the Ministry of Housing and Local Government. We looked at it in those days and said, "Well, at any rate we cannot do that one". So one was astonished when it was done, it being so obviously an object of acute political contention. In fact it became an object of acute political dissension, and it was immediately repealed by the incoming Labour Government.
The Act was repealed at a moment, as the Leader of the House explained, when some people would already be incurring disadvantages and penalties for having broken it, and others would not. The decision had to be taken: what about the others? It would have been very difficult indeed to provide that these audits, and possibly prosecutions and bankruptcies, should go rolling on for ever and ever in punishment of people who have broken a law since repealed. Then we are left with the problem of what to do about the Clay Cross councillors, and left with the present answer.
I should like to take up one or two minor points in the debate. First, many speakers have dwelled on the intrinsic injustice of the new larger local authority charging all the council tenants, or all the ratepayers, in order to recoup this loss. I would certainly find it an intrinsic injustice if it fell on me, but of course the Bill does not force them to do that. The Bill gives them three alternatives: council tenants in one area, or council tenants throughout their area, or ratepayers throughout their area. If they go for the one most likely to be politically inflammatory, then we might leave it to the operations of local democracy to sort their fate out for them. They have another choice.
I cannot stop in my mind relating the two things that we have been discussing this afternoon: the referendum and the Clay Cross Bill, to give it its real short title. I hope that the House will grant me its usual tolerance if I stray from the subject of the Bill for no more than one minute and 30 seconds. In the referendum 22 per cent. of the British electorate took the trouble to walk down to the polling stations and say, No. I believe on grounds of intrinsic likelihood that two-thirds of that 22 per cent. or, shall we
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say, 15 per cent. of the electorate, were Labour Party people broadly defined. I believe, again on grounds of general experience and intrinsic likelihood, that of that 15 per cent. probably at least one-third voted against the Market on what I would call grounds of Conservative nationalism. They voted against it on the same sort of grounds as some Tory voters voted against it. It is probably true then that we are left with only 10 per cent. of the electorate who voted the way they did on what one would call Left Wing doctrinaire, extremist, militant grounds. If I am right about this 10 per cent. in that matter, it is likely to be In per cent. in other matters, too.
I think that in this Bill the Government—Governments have to do it all the time—have made a deviation from the highest standards of legality, of constitutionality. It is a pity that such a deviation had to be made by the Party of the poor, because any precedent that has been set—and I hope it will not be—may be used by the other Party to greater effect than it could ever be used by the Party of the poor. If it was a deviation, I would say to the Government that I would have voted, if there had been a Division, for the Second Reading of this Bill. I hope to take part in the debates on the Amendments, but may I express the hope that this will he the last time that the Government will find it necessary to make any deviation for the benefit of what we now know to be only about 10 per cent. of the electors.
5.5 p.m.
Viscount RIDLEY: My Lords, I did not come here this afternoon to enter into the legal and constitutional arguments on this Bill, because I knew that that would be done by my noble and learned friend Lord Hailsham. He did it in a brilliant and devastating speech, which could have left very little for anybody else to say. Nor did I expect to come here and hear about Neville Chamberlain, but this House is full of interesting surprises. I want to speak about this Bill from my experience of working in local government. If I may quote the noble Lord the Lord Privy Seal, may I say to him that this Bill has already created a very strong sense of outrage in local government. First, I fear that this Bill will set a terrible precedent; indeed, it has already done so. So

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many things happen that local government does not like, and references are already being made to "taking up Clay Cross attitudes" on this, that or the other piece of legislation, or to circulars which Governments send out. I should add that the Government of which the noble and learned Lord, Lord Hailsham, was such a distinguished member, sent out some equally unpopular circulars in their time as well. There is no doubt that local government has already discovered that it can break the law, and in some circumstances can get away with it.
Secondly, I fear a threat to the freedom of local government, to which most of us pay lip service. I feel, as one who works in local government, that we should have more freedom where possible. But I also realise that there has to be the ultimate sanction of law behind everything we do. This country cannot afford total freedom on all the issues facing it, and this matter of housing finance is the most obvious example. I fear that the experience of this Clay Cross incident will inevitably result in central Government's increased mistrust of local government, and will gravely damage the relationships between the two arms of government. Thirdly, I believe that many senior members of the Labour Party are totally unhappy at much that is in this Bill. I hope that your Lordships will effectively change this disqualification clause in Committee, on the lines which my noble and learned friend has already indicated. I further think it is utterly preposterous that we should suggest that the ratepayers of a different area should be charged in order to pay the bill for the Clay Cross councillor's defects.
If we amend this Bill everybody in local government will support us and will be grateful to this House for carrying out its traditional role, not in any vindictive sense but constructively so that councillors will never again feel that they can do a "Clay Cross" and get away with it. I might give as an example the Tory authorities which are tempted to defy the present Government's attitude to certain aspects of education; for instance, over direct grant schools or comprehensive schools. This Bill has given them, rightly or wrongly, considerable encouragement, and I think the Government must realise that the Tory councils dis-
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like these aspects of legislation just as much as Labour councils disliked the Tory Housing Finance Act.
I do not think there can be any such thing as a monopoly of righteous indignation on either side of the political spectrum. These councillors defied the 1965 Labour Government long before the Tory Housing Act. If they were allowed to do so, if they were in a position to do so today, I am sure that they would defy the present Secretary of State for the Environment on his recent statement that council house rents must be allowed to rise. This is the Tory Finance Act rewritten in different words, but this is a subject that we shall not go into tonight.
These people have broken the law, and I hope that this will never be forgotten. The most disquieting aspect is the assumption by the Labour Party that they may defy Tory laws, the feeling that Socialists are so different in all things, that they are almost a separate species within the human race, and a superior one at that. Perhaps I should quote one of the Councillor Skinners—I think these people are all called "Skinner"—who said in a letter to Tribune about a year ago:
"To those who accuse us of breaking the law, we reply that 'We are keeping the only law accepted by this movement, the principles standing for the interests of the working class'."
I wonder whether these are the sort of people we wish to condone.
I do not share the Lord Privy Seal's feeling that this Bill is characteristic of the British approach. It is far from it. It is a shabby Bill. I do not believe that this slate can ever be wiped completely clean. While we are not wishing in any sense to increase the martyrdom of these councillors on the cross of the unlikely material they have chosen, I beg this House not to condone those who put law and order at risk in the name of liberty.
5.10 p.m.
Lord PAGET of NORTHAMPTON: My Lords, I had not intended to intervene in this debate, but it seems to me that we have had too much moral indignation and too little understanding of the circumstances and of the indignation from which these transactions occurred. Society is of its very nature a balance. It is a balance between the power of the Crown, the power of the Government

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and the rights of the subject. Standing between them is the law, which is in part the product of both, but I would say that that law is not sacred. It is something that moves from time to time and is acceptable and tolerable only in so far as it moves with the moral climate of the times and keeps in step with the strong sensations of the people. The heroes of our Constitution, of the American Constitution and of many other great issues have been people who defied the law because they found it unjust.
Still less is the Judiciary sacred. I feel that a great deal of nonsense has been talked about how one is defying, the rule of law if one alters the sentence passed by a judge. The prerogative of mercy has always belonged to the Crown. If we go back a century or two we see the circumstances in which something like four-fifths of the sentences passed by the Judiciary were altered by the Crown, and if the Crown had not intervened when those laws were cruel the law would have become unacceptable and intolerable to any moral opinion. It was kept in line precisely because the prerogative of mercy was kept and exercised by the Crown and I believe that there has been a loss of nerve by Government and the Crown in not interfering with sentences passed by judges who are seldom in the least expert in the subject.
Legislation is not merely a matter of the court. It is also a matter of Parliament, and if Parliament does not keep the law in line with strongly held opinions then it invites defiance. I do not believe that democracy is the rule of the majority; the majority can be a dictatorship often as bad as any other and sometimes worse. Democracy is the recognition of the rights of minorities. Democracy is a very strong will not to interfere with those rights even though they may be small religious groups, whatever they may be—with a group that feels intensely that to pass such a law would put that group outside the law. We were reaching a state like this when the Housing Finance Act—I will not debate its details—took the authority from the local government which was elected and which had held the authority to fix rents and put it elsewhere, with non-elected bodies. When noble Lords opposite do something so repulsive to a minority, they cannot complain after-
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wards if that law is put into disrespect, and that is precisely what they did.
The right reverend Prelate talked about "this wickedness". These were men doing what they profoundly believed to be right, with no self-interest of their own. That is not wickedness. We are not concerned with wickedness here. We are concerned with judgment. Then we are told that this is a case of political expediency. Of course it is. It is the duty of Government to be expedient, expedient in getting out of a mess created by their predecessors. The previous Conservative Government created an intolerable situation and the present Government, I believe moderately and sensibly, have found the easiest way out of it, even though it is not a perfect or ideal way out. If there is an Amendment, I should like to see the sum paid by the taxpayers as a whole, by the whole nation. This very bad law should have its consequences paid for by the nation as a whole rather than by the ratepayers of a particular county. Short of that, I believe that here we have had an honest endeavour by honest men who felt they were doing their duty and I congratulate the Government on what they have done.
5.16 p.m.
Lord SHEPHERD: My Lords, I did not expect an easy ride on the Second Reading of this Bill and clearly, from what the noble and learned Lord, Lord Hailsham of Saint Marylebone, and the noble Lord, Lord Wigoder, have said, I cannot expect an easy ride in Committee. However, I tell them both that I will look carefully at what they said to see the extent to which their suggestions are worthy of consideration and meeting.
It is fair to say that the debate has fallen mainly on the question of Clay Cross. The right reverend Prelate spoke of his own experience from within his area of responsibility, and he perhaps more than any other can speak of the general social and housing situation in that part of the country—of the very great pressures that lie there and some of the political steps that are taken because of those circumstances. My noble friend Lord Paget spoke of those who have broken the law in the past, and as he spoke I could not help but reflect on one who was esteemed in your Lordships'

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House for many years, the noble Lord, Lord Pethwick-Lawrence. Nobody would ever say of him that he was a man of discredit, but, along with his wife, he went to prison for breaking the law. I know of others who have either been in prison or have been very close to prison for breaking the law. The one thing that could be said of them is that they went to prison for something in which they believed and for which they did not themselves, or any of those connected with them, receive personal gain.
Thus, when one talks of corruption, which I believe was mentioned at the beginning of the debate, one must try to understand the misdemeanour of those at Clay Cross. I would not condone in any way at all what these councillors did under the Housing Finance Act or under other legislation which has got them into difficulty with the district auditor. To the noble and learned Lord, Lord Hailsham, I say that we had no knowledge at all of what the district auditor had in mind, this £50,000 surcharge, when the Bill was being introduced in another place. Nor do we know what in the end will be the full amount of a district auditor's surcharge on these particular councillors even in regard to the Housing Finance Act because the audit has not yet been completed.
To the noble Lord, Lord Wigoder—who I think meant it as an amusing aside when he referred to a strange disease and said that district auditors did not seem to be producing their reports—I say that my understanding is that in most cases the district auditors have completed their book-keeping operation, which I think is the phrase to use, and are now ready to hear evidence; but they have taken the view, on their own initiative, that it would be wrong to impose unnecessary costs on those who may be involved, local authorities and others, until a decision has been taken on this Bill. But the noble Lord, Lord Wigoder, will know that district auditors are independent officers, and that the Government have no say whatsoever as to the way in which they conduct their duties. If the Government were to interfere, I have not the slightest doubt about the independence of the auditors or about how they would react.
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The Clay Cross councillors will not, as the right reverend Prelate suggested, be free of their commitment as a consequence of their refusal to comply with the law. The surcharge of £7,000 will remain, irrespective of what happens to Clause 4 and even if there were no other surcharge. That £7,000 remains to be collected from them. In my speech on Second Reading, I put forward three proposals to the House as to how this matter could be dealt with, and I did so in the light of what the right reverend Prelate said; namely, that there is understandable ill feeling and strong feelings in the locality that the Bill will mean that persons who were not involved will now have to pay the price of the activities of these councillors and will have to bear the cost of the fact that some of the tenants were not required to pay the due rate. I ask the right reverend Prelate to look at my speech for I have to say to him that the sums which are surcharged—that is the shortfall between what should have been collected and what was collected, and which was the subject not of malpractice but of inefficiency—would, without the present Bill, fall immediately and directly on the rates and eventually upon the taxpayer. So there is a political problem, as the noble Lord, Lord Wigoder has said. If we left the situation as it is, the full £50,000 surcharge, instead of being paid for—as it can be—by those in the locality which created the problem, would have to come from the much larger area because the legislation now so provides.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I hesitate to interrupt the noble Lord by intervening, but surely the situation is that, as far as Clay Cross is concerned, the Housing Finance surcharge is of the order of £106,000. The £50,000 surcharge which is over and above that has to do with matters wholly unconnected with the Housing Finance Act. If that is not so, I have misunderstood the situation.
Lord SHEPHERD: That is quite true. I did say about the £106,000 that there is no certainty, as far as I know, whether the auditor himself will—
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I wonder whether the noble Lord will allow me to

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correct this, because I have read the district auditor's account and, although there may be some detail which is wrong, I feel sure that I read in the second interim report that, as regards the Housing Finance Act, the net figure—that is, after certain allowances had been made—was of the order of £106,000. When we are talking of the £50,000, I believe that I read in the second report that that was unconnected with the Housing Finance Act.
Lord SHEPHERD: My Lords, that is correct. They arise from two different acts by the authority. I am only doubtful, in regard to the £106,000, whether that is the final figure. However, I shall look at that and deal with it in Committee. But the fact is that, if the Bill were not passed, all this would have to be borne not through rents—if the council decided to do it by rents—over the whole new authority or just the part of the new authority that was represented by Clay Cross; the whole amount would have to be collected from the rates. So I believe that the noble Lord, Lord Wigoder, was very correct when he said that this is a political Bill, in that there is a basic problem which has to be dealt with in our legislation.
The noble Lords, Lord Hailsham and Lord Wigoder, gave an indication of what they had in mind for the Committee stage. I think that that was very much what was fully discussed in another place, so we know roughly the ground which we need to cover. I would not say that the Government are absolutely intransigent on this matter. I think it would be hard to move them on any of the recommendations which were made in another place, but I will certainly see what we can do in Committee.
I want to make only one last point here. It relates to political integrity, whether in Government, in Parliament or in the local authorities. From time to time, there are those who fall from the very high standards which we demand today. Anyone who reads history will see that the demands of public service today are infinitely and dramatically higher than the demands made at the turn of the century. We are judging men and women in public life by standards which are very different even from those of relatively few years ago. There
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are odd cases in which individuals fall from the highest of those standards. I do not believe that any member of the Government is happy about the present measure, but we have been discussing this solely in relation to Clay Cross. Very few speakers have drawn attention in the course of their speeches to the other 400 councillors who may be involved. None of us knows whether or not they will be, because this is in the hands of the district auditor and depends on the way he finds it right to act.
The noble Lord, Lord Hailsham, thought that we should wait to know who is concerned, what the amount may be and what may he the circumstances, and that we should let some outside organisation like a court decide what should be done. There are attractions in that course, if I may say so. No Government—no Party—likes to bring in measures of this sort which are solely concerned with people who happen to he members of the Party in question, but I ask the House to contemplate the alternative. Over three, four or even more years, there would be cases in the courts involving men and women who have voluntarily given long service to their community but who because they took an unwise decision are now confronted with surcharge and disqualification, and with proceedings through the courts—first the lower court, and then, perhaps, a Court of Appeal. There is also the cost of representing oneself to consider. One councillor may be able to do this under the Government's free legal aid system, while another councillor, because he may happen to be a professional, may have to bear the cost of the case himself. After that, supposing the case goes against him and he is disqualified. Consider all the bitterness that will have been engendered and developed within that local authority.
Could anyone really believe, in the difficult days which undoubtedly confront local authorities—let alone the nation as a whole—that such an atmosphere would be conducive to good order and government? Therefore, my Lords, we have taken the view that we should seek to deal with these 400 and that we should also, on grounds of consistency, take the position in terms of Clay Cross. As I said in my opening speech, on the question of Clause 4 there is a new situation.

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This is a matter upon which I am in immediate contact with colleagues. I had hoped to be in a position to say something concrete, but because of the activities with the European referendum have not been able to complete my inquiries and discussions. But we shall be able to deal with this matter at Committee stage, when I hope to be in a position to express the view of Her Majesty's Government. Perhaps we could then proceed with the other matters which other noble Lords on all sides of the House have referred to and which give them disquiet.
My Lords, this is a difficult Bill. Harsh words have been said, and I suspect that they will appear harsher in print than they did to one's own ear in your Lordships' House. But whatever may be said, I believe that this Bill would have been necessary. I believe it really is a question of opinion as to the right balance, one way or another. But these are matters which we could consider very fully in Committee. My Lords, I hope that the House will now give this Bill a Second Reading.
On Question, Bill read 2a and committed to a Committee of the Whole House.

COAL INDUSTRY BILL
5.33 p.m.
Report received.
Clause 2 [New right of Board to withdraw support to enable coal to be worked]:
Viscount LONG Viscount LONG moved Amendment No. 1:
Page 3, line 16, leave out subsection (4) and insert—
"(4) Subject to the provisions of Schedule 1 to this Act, where damage to any land or to anything lawfully on that land whenever constructed or brought thereon arises from the exercise of the right to withdraw support conferred on the Board by this section, the Board shall either—

(a) pay proper compensation for the damage including such consequential loss as would be recoverable in an action of nuisance in respect of that withdrawal, or

(b) with the consent (which shall not be unreasonably withheld) of the person who would otherwise be entitled to the payment of compensation for the damage, make good
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the damage to the reasonable satisfaction of that person and without expense to him;

and, where appropriate, the Board shall pay such proper compenstion in accordance with paragraph (a) above for damage not made good in accordance with paragraph (b) above."
The noble Viscount said: My Lords, I apologise for jumping to my feet when the noble and learned Lord the Lord Chancellor was putting the Question that the Report be now received, but I noticed that the noble Lord, Lord Balogh, was not present, so I wondered what was happening. I shall proceed as slowly as I can until the noble Lord is present, in the hope that when he arrives he can get the gist of the points I wish to make relating to this Amendment.
The Bill has so far been very well received in your Lordships' House and, as I said in my speech on Second Reading—as have other of my noble friends—we do not want to delay the Bill in any way at all. But your Lordships may recall that at the Committee stage there were certain Amendments which we had to raise, and we withdrew an Amendment relating to Clause 2, on the question of compensation, which we considered very important. At that time we felt that to go too far with it, without having the fullest information from the Government, might mean that we would not achieve the right answer in the long run.
The importance of this Amendment is to bring the National Coal Board into line in modern times with the Common Law on consequential loss. The problem at the moment is that I am having to speak rather slowly due to the fact that the noble Lord, Lord Balogh, has not yet arrived, and I am rather nervous to spoil the situation. On Second Reading, we said that we would hurry up the Bill because of the urgency regarding coal. It was noticed and recorded that oil is very important, but coal is now more important than ever before, and one of the important objectives at present is to get the Selby mine moving so that coal can be produced for four coal power stations in the North.
Part of the Bill deals with the emergency power for getting this coal out, and provides for those people who live near or adjacent to a coalmine to have compensation, because if the Coal Board went in too quickly the land could be damaged

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or could move, and then the Board could be out again, and could disappear, and probably no one would get true compensation. If the noble Lord, Lord Lovell-Davis, is in agreement perhaps I may proceed.
The purpose of our Amendment is to bring into the Bill, as it was at the beginning, just compensation; to make proper provision so that people would be able to define in court what their rights were. Common Law damages can be recovered for the withdrawal of support from land where the plaintiff suffers injury or loss. The plaintiff can get compensation for physical damage to land or property. He may also receive compensation for any financial loss he has suffered that follows from that physical damage. However, he can recover only that financial loss which is reasonably foreseeable, and in its present form the Bill makes no provision for compensation for the financial loss. The Coal Act 1938 made no such provision either, but because it did not give any right to the Board to withdraw lateral as opposed to vertical support, the Board had to pay financial loss as well as compensation for physical damage upon the withdrawal of a lateral support.
Therefore the effect of the present Amendment is virtually threefold. First, it puts the Coal Industry Bill in line with Common Law. It gives people affected by National Coal Board mining the same rights as they would have if their land was interfered with by anyone else. Everyone has a Common Law right of support for their land. We have always known that and we hope it will continue. To withdraw support from land is a "nuisance" in law. We are therefore merely saying that if the National Coal Board withdraw support they have in effect committed what, without statutory approval, would be a "nuisance". They should therefore be obliged to pay such compensation as would be awarded in a Common Law action in respect of such withdrawal of support.
The second point I want to make is that the Amendment extends the subjects of damage to anything lawfully on that land whenever constructed or brought on to it. This part of the Amendment, though considerably widening the Bill in its present form in this respect, is necessary to cover moveable property—on the Committee
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stage I mentioned tractors, machinery, et cetera. Thirdly, the Amendment ensures that if the Board opt for repairing an injured party's house or property rather than paying compensation for such repairs to be carried out, if there is any financial loss as well as the physical damage (which the Board is dealing with) the Board will have to compensate for that consequential loss as well as paying for the repairs which have been made, necessary.
I am glad to welcome the noble Lord, Lord Balogh, back into his seat. I must say that I have been through the Second Reading all over again. I turn now to the Committee stage of the Bill and would first say that the noble Lord, Lord Balogh, said that in this Bill the complex question of reforming the law of compensation should not be carried out. Therefore the Bill should not be allowed to set any precedent about compensation when it is admitted that the law of compensation is not adequate. For this reason any question of compensation dealt with by this Bill should be most stringently examined. The noble Lord went on to say that there is virtually no case law on this subject under the 1938 Act. This is not because people did not ask for compensation when the National Coal Board withdrew lateral support, but because the Board willingly paid compensation for damage caused by this withdrawal. This fact does not, as the noble Lord, Lord Balogh, says, "still" certain difficulties, but shows that the Board have up till now recognised the need, and indeed were forced to pay suitable compensation.
The third point is that the present proposals contained in Clause 2 do not, as the noble Lord, Lord Balogh, said in Committee clarify the rights the Board have always assumed they had as much as limiting the National Coal Board's duty to pay compensation which up to now they have necessarily had to pay. Neither the 1950 nor the 1957 Acts help in any way in defining what compensation shall be payable. If the National Coal Board are to be given the right to withdraw lateral support, they must accordingly pay for the damage thereby incurred. That in my view would be only just. If the Board thought it correct in the past to pay adequate compensation, whether or not they were

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obliged to do so by the operation of law, it is appropriate that they should continue to do so rather than subject the unfortunate people under whose land there is coal, to bearing the cost of mining themselves when in fact it is the whole community which ultimately benefits.
Regarding point 4, the noble Lord, Lord Balogh, has constantly urged upon us on this side the word "patience", and we took him up on it; but it would seem that the Government are intent on putting through this Bill despite the fact that (a) compensation is not adequately defined, and (b) their Working Party on Compensation, due to report on this question and to make a suitable recommendation, has not yet reported. It is therefore possible that the provisions of this Bill for compensation may in the end be contrary to what the Working Party propose. During the Committee stage we were rather worried about this because this Committee has been sitting since 1971 and when the National Coal Board Bill came up it was suddenly found that the Committee was there and that nothing had been done.
Recently in another place Mr. Patrick McNair-Wilson put to the right honourable Mr. Eric Varley this Question:
"To ask the Secretary of State for Energy, what are the terms of reference of the interdepartmental committee appointed in 1971 to consider questions of compensation for damage and injury resulting from mining or other industrial operations; how many times the committee has met; when it is due to report; whether its conclusions will be made public; and whether it is his intention to incorporate the recommendations in the current Coal Industry Bill."
The interesting reply came back from the Secretary of State for Energy:
"The terms of reference of the Working Group on Mining Subsidence Compensation are: 'To study the problem of damage resulting from coal mining subsidence and to make recommendations with regard to two separate issues, viz

(a) the National Coal Board's statutory liability to pay compensation;

(b) the Board's attitude towards the cost of structural precautions to lessen the risk of damage to new buildings'."

He went on to say:
"The Working Group has had six full meetings and in addition various consultations have taken place by correspondence and between individual members. It has been asked to
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report as quickly as possible after it has had time to give proper consideration to the new evidence which has been coming to light and the views which are being expressed during the passage of the Coal Industry Bill through Parliament. As is usual in the case of Committees of officials the report will not be made public but the Government will make a full statement on the subject when it has had time to consider the report. If new legislation is then called for an early opportunity will be sought for it."
I can see no better time for these amendments to be placed in the Bill, because at this stage we have no idea when this inquiry on compensation will be finalised. The Committee has been sitting since 1971, it has only just discovered its importance, and it has only just been discovered that this report is urgently required. I can only express surprise that the Committee has been sitting for so long and has achieved so little.
I feel at this stage that these Amendments are quite appropriate if the Bill is to go through at this time. Even if, in the light of the Committee's report, new legislation is then called for, it may be too late for certain landowners to benefit. Unless something happens quickly some landowners, factories and industries are going to suffer enormously, and there is no way we can tell whether this Committee is to report in six months or in a year or tomorrow. Someone will get hurt in the meantime.
My Lords, I go on to a further point that the noble Lord, Lord Balogh, mentioned. He contends that our first Amendment, and possibly the second Amendment, introduces a substantial measure of uncertainty about the liabilities of the Board. Since our Amendments merely hope to enshrine Common Law rights into the Bill, by the objection he is merely contending that Common Law has a measure of uncertainty about it. This we do not dispute; but we would dispute that this is a valid ground of objection. Finally, the Working Party on Mining Subsidence Compensation has been set up to study the National Coal Board's statutory liability to pay compensation and to examine the Board's attitude towards the cost of structural precautions. These two questions are so crucial to the central issue of this Bill that it is not appropriate that this Bill should be passed until the Working Party's resolutions and decisions are known. To pass this Bill in its present

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form would mean uncertainty and possibly hardship to many people and the Government should not rely on the future results of the Working Party as an argument for passing the Bill in its present form when it is patently unreasonable and irresponsible so to do.
I feel that we have worked throughout this Bill to try to bring much stronger wording on compensation into Clause 2. The word "compensation" alone was far too weak. The noble Lord, Lord Balogh, was not here when I said that I felt that the panic or rush of driving equipment into the mines would probably result in those around getting hurt. Ordinary compensation will not do in this case. We need compensation with, as I said in Committee, consequential losses for those people who work in factories or on farms. We want to broaden it so that machinery comes into it; because today it is expensive for machinery to lie idle and no factory and no farmer can afford to let this happen. I beg to move.
Lord MIDDLETON: My Lords, it is clear that in Committee on the matter of compensation for damage resulting from subsidence my noble friends and the noble Lord. Lord Balogh, were largely on common ground. We agreed with the noble Lord when he said that the social cost of coal includes the cost of subsidence and damages. We agree that on the whole compensation has been dealt with fairly by the Coal Board and we have up to now accepted that their assurances for the future are given in the utmost good faith. But notwithstanding those good intentions, there is no dispute that the Coal Board at present has, and will continue to have, under this Bill in its present form no statutory obligation to make good consequential damage. That this state of affairs is unsatisfactory, there is no dispute. The noble Lord, Lord Balogh. said as much in Committee and he reminded us that we have an inter-Departmental Working Party to review the whole question of compensation for mining subsidence.
The one area of difference is that the Government are telling us to wait until the Working Party reports and then all will be put right: while we are saying—and here I agree with my noble friend Lord Long—that a Working Party set up in 1971 and which has met only six
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times can be proceeding in a way that can only perhaps be described as politely as possible as deliberate. The noble Lord, Lord Balogh, says, "Be patient!" but we have no idea when the Working Party will report and no guarantee that the Government of the day will accept their recommendations; nor, if they do, is there any guarantee that legislation will follow. We do not think it is good enough to do as the noble Lord opposite is recommending and to rely for the time being on the assurances of the Coal Board. However bland these assurances, they are not a satisfactory basis for settling the claims that will arise, especially at Selby.
We were sharply reminded of the statutory limitation on the National Coal Board's liability by counsel for the Coal Board at a recent public inquiry at Selby. He said:
"There is, as you know, no provision at the present time for compensation for consequential damage resulting from subsidence."
He went on to say to one of the firms who were worried about future damage:
"No one else gets any compensation. Why do you think your company should be treated as any exception?"
The noble Lord, Lord Balogh, told us in Committee that the Government do not consider this as a Bill in which the very complicated and complex questions of reforming the law on compensation should be carried out and that we must avoid what he called some kind of "Heath Robinson arrangement" without benefit of legal advice. This Amendment is not, I hope, "Heath Robinson" in character. It has certainly been the subject of a great deal of legal advice. I, too, believe with my noble friend Lord Long that it is necessary to have an Amendment in this Bill to tide us over until a new compensation Bill comes forward. I sincerely hope that the noble Lord, Lord Balogh, will meet us today on this point.
Baroness HORNSBY-SMITH: My Lords, I welcome the opportunity to support the Amendment in the names of my noble friends because the purpose of this Bill is to give the Coal Board very wide powers indeed to extract coal: and the words of the noble Lord, Lord Balogh,

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when he outlined the Bill on the Second Reading were that it concerns:
"…the Coal Board's right to withdraw support from the surface by taking away the coal underneath."
That was clearly and succinctly put. The issue which concerns so many people and the issue which is clouded by obscurity in this Bill is that of compensation. To many surface owners this is a Bill of limitation for the surface owner since it bestows almost unlimited powers on the Coal Board to mine but offers less protection than hitherto against the costs and losses from subsidence which the surface owner victims can neither forecast nor can they foresee.
With all the engineering skills and scientific aids available to the Coal Board the underground strata of the earth remains a very varied and a very changing thing in its strength and structure. Inevitably, mining probes weaknesses and subsidence results. For the surface owner, subsidence can be anything from a temporary nuisance to an economic disaster; yet the terms of compensation are quite deliberately omitted from this Bill and limited. For five years, as my noble friend has said—nearly six years now— we have had this Departmental Committee which does not seem to have pursued their objectives with much speed. Why have we not had their findings? Why are their recommendations not incorporated in this Bill? Why rush through this Bill in advance of properly defined terms of compensation as the result of this six-year-old inquiry? Is it any wonder that the local authorities with vast housing estates and industry with millions in capital in plant and machinery and Chambers of Trade involved in great shopping centres and farmers and householders are concerned at the free-way rights given to the Coal Board and, in particular, of the withdrawal of the provisions regarding lateral support which operated and which were compensated hitherto under either the 1938 Coal Bill or the separately-made, what are known as, Robens-style Committee Agreements?
It is just not good enough for the House to be asked to pass this Bill and wait for an undefined period until the Committee comes up with a formula. It puts the surface owner in an intolerable position, and by this Amendment we seek
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to remedy this. It would do no more than put this Bill in line with common law and give surface owners affected by NCB mining the same rights as they would have if their land was interfered with by anybody else or any other form of mining. Under the law, to withdraw support from the land is a nuisance, and the National Coal Board, if that nuisance were pursued, should be obliged to pay such compensation as would be awarded in a common law action in respect of the results from the withdrawal of that support.
In the Amendment we also seek to extend the subject of damage not merely to fixed structures or buildings, but to anything lawfully on the land, whether constructed or brought on to it. We are pressing for new development areas. There may be a 60 ft. crane, which is not a permanent structure, or a combined harvester on the farmlands in Yorkshire, or a prize herd of cattle, or only somebody's company car; but we believe that these items, properly and lawfully on the land, should also be covered in the forms of compensation.
Thirdly, the Amendment asks that there should be some provision for financial loss where the Board opts to repair an injured party's house, for example, or a factory, rather than paying compensation for such repairs to be carried out. The sewer may be fractured; areas can be flooded. People may have to be re-housed at considerable expense by the local council or, if they were house owners, have to pay for board and lodging elsewhere. A factory may have to halt production and the work force might have to be laid off until such time as the repairs were carried out. No one denies that coal is a national asset, and we accepted the plea of the noble Lord, Lord Balogh. when he introduced the Bill in this House, that the extraction of coal is for the benefit of the whole nation. But when mining results in surface damage, why should some innocent surface owner have to pay for the entire consequential loss which may affect his factory, farm or home?
One matter has concerned me greatly since the Second Reading, when the noble Lord was kind enough to reply to the points I raised. I made inquiries regarding the issue of consequential loss, because there appears to be a sharp

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divergence of opinion between the noble Lord and his colleagues on the Front Bench, and the National Coal Board. The Government gave us assurances about recognising the consequential loss; they gave us an assurance about the continuance of Robens-type committee agreements. An inquiry made independently of the noble Lord from another source in relation to the possibility of subsidence in the new Selby field, when that comes into operation, elicited a firm statement from the Yorkshire Area Coal Board offices, that in relation to Selby there would be no question of paying any consequential loss. So what are we going to have now? I am sure the noble Lord spoke in good faith. If, for example, Robens agreements are honourable in respect of Coventry, or other areas where they have been paid a consequential loss, are we to have a different form and different pattern of compensation for the unsuspecting people in Yorkshire who never expected to have a coal mine under their feet, and are now going to find they are under a different formula and can only get compensation for structural and physical damage? Small wonder that many people feel that the Government are racing the Bill through Parliament hoping that the unanimous accord for the benefits bestowed on pneumoconiotics will conceal the withdrawal of full and proper compensation for the victims of subsidence. Hitherto the National Coal Board paid up when they withdrew lateral support and when damage resulted. But far from clarifying the rights, which it was claimed from the Government Front Bench the clause did, Clause 2 positively limits the National Coal Board's duty to pay compensation which hitherto it felt in honour bound to pay.
Three times the noble Lord, Lord Balogh, has begged us to be patient, but this Bill does adequately define compensation. The Departmental Committee was one of those things set up to answer a scare some years ago, and it was lost in limbo and only reactivated, or as was reported to me when I rang the Department, "definalised" and brought back into existence solely as a result of pressure in this House and another place because of the unsatisfactory terms for compensation in the Bill. All we are asking for in this Amendment is that the National Coal Board give compensation to those who suffer physical and finan-
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cial loss as a result of their operations, and that such losses should not in all equity fall on the surface owner who has no control whatever over his land being undermined. As an example of the seriousness with which industry considers this matter, and tries to safeguard against subsidence, long before there was the recent Health and Welfare Bill in Parliament, many major companies operating vast plants with sophisticated processes employed seismologists to register any tremors or shifting of strata resulting from mining under their factories. They do this as a safeguard because they are so frightened of subsidence.
If a steam or chemical process pipe is fractured, the whole works may have to be evacuated. Production can be brought to a standstill. The consequential loss, so far as the physical replacement of the pipe conerned, is "peanuts", but under the Bill the stopping of the factory, the evacuation and the standing off of the staff, will be the entire loss of the company. The noble Lord, Lord Balogh, assured us that the Board would never undermine the Oxford Colleges. I understand that an assurance has been given that they will never mine under Coventry Cathedral. That is good news for our ancient heritage, but it is farming and industry which finds the jobs and earns the nation's living, and as there must be mining so too there must be adequate protection for those affected and fulfilling these demands of the nation above the surface as well as below.
6.8 p.m.
The MINISTER of STATE, DEPARTMENT of ENERGY (Lord Balogh): My Lords, first may I humbly apologise for my absence at the beginning of this Report stage, which was caused by a certain amount of disturbance in communication between the Whips' Office and my own office. I hope your Lordships' House will accept my apologies. Gallantry compels me to answer first the noble Baroness. Her impassioned speech was extraordinarily lacking in what as a Continental, always thought was the myosis of the British public life. Certainly her speech could not, in any sense of the word, be considered myotic. Terrible things were conjured up before our eyes—factories

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ruined, houses falling into disorder, combine harvesters no longer able to "clack" away. It was a picture of desolation. The noble Baroness spoke with sincere conviction; the conviction was heard throbbing throughout her speech.
But what is the situation? First, let me state certain facts. As regards the Yorkshire gentlemen who spoke so rashly according to the noble Baroness—and I shall inform the noble Baroness in writing about what has really happened—if he did speak as alleged, then he was plainly wrong, and I repudiate it altogether. That is one point. Secondly, of course, it is not a fact that this Bill limits or cuts across the right of compensation. It reaffirms almost verbatim the 1938 Act's compensation formula.
Turning now to the speeches made by the noble Viscount, Lord Long, and the noble Lord. Lord Middleton, it seems that noble Lords opposite want to have a thorough report, yet they do not want to wait. We cannot wait for compensation and, because of the very peculiar situation in South Yorkshire, we cannot wait for an amendment or a clearing up of the copyhold situation. Thus there is a lag between the possible report of the Working Party and other needs. Is it really so damaging to anybody? There is no doubt that the Robens' assurances hold absolutely. I have now said that three times and may have to repeat it again during the Third Reading debate.
We were accused of having this Committee as a sort of camouflage. Actually, the Committee was appointed by noble Lords opposite and their friends in the Lower House; and of the four-year period of delay in the report's gestation, three years belonged to noble Lords opposite and only one year to us. As a matter of fact, I have ordered the Committee to meet and it will do so this month. I shall see to it that this report is handed over as soon as possible. But the delay can be explained. The situation in the coal industry has not been altogether of the friendliest or most peaceful in recent years, and officials have been burdened with other problems, including financial ones, so that I do not take such a gloomy view about the delay as that which is taken by noble Lords opposite.
The Earl of KINNOULL: My Lords, I wonder whether I might interrupt the noble Lord. In view of the very widespread interest in the work of this committee, can the noble Lord give an assurance that the report is likely to be published?
Lord BALOGH: My Lords, I am afraid I cannot give that assurance. It is not customary to publish and I think that when noble Lords opposite have been in Office they have not published reports of official committees which cannot answer for themselves. It seems to me that what will have to happen is that an ample statement, possibly in the form of a White Paper, will be published. It can be debated and it will be answered, because we are responsible for it. Obviously, we cannot debate a paper for which officials have to take responsibility.
Turning now to the problem of lateral support, I do not really understand how noble Lords and the noble Baroness opposite have come to the conclusion that somehow withdrawal of this support is a new threat. I have said twice already and will now repeat for the third time—I am patient, unlike some noble Lords opposite, and I am willing to state it again, if necessary—that the Board always had the notion that they were allowed to remove lateral support, and they have acted accordingly. Nevertheless, no problem under either the 1938 Act or the 1957 Act has arisen and there has been no case law. The absence of case law means that Common Law rights have been taken care of by the Coal Board. Given the fact that nothing new has emerged, that this is a very complicated Bill dealing with a complicated subject and given the fact that we want to get on with it, I really think I have answered all the questions that have been raised, and that I am entitled to ask noble Lords opposite to withdraw their Amendment.
Viscount LONG: My Lords, like the noble Lord I, too, can be patient. I thought I was rather patient awaiting the noble Lord's entry this evening.
Lord BALOGH: My Lords, I thought I apologised.
Viscount LONG: But I do not see any guarantee or assurance here from the noble Lord. My noble friend Lady Hornsby-Smith might have sounded as

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though she was getting excited or panicky over hundreds of houses being knocked down and so on, but she was really giving us a very good case for the odd house, the odd farmhouse and the odd factory—and they can be very big, as the noble Lord will know—which could well come down and the people inside, whoever they may be, could suffer consequential loss. My noble friend Lord Middleton also put up a good case in regard to the inquiry going on. This has now finished and it was more than frightening to some of us to hear that there is no chance of obtaining consequential loss payments, although there is compensation. I should have thought the noble Lord might have come our way on this, because this is a new Bill and a good Bill; it only needed tidying up in Clause 2. The fact is that we here are steering this Bill through your Lordships' House and it is our task to make sure that those who are living in and around such a mine are protected. It sounds so easy to say that it might not happen, but when it does happen there is certainly no compensation for consequential loss.
Lord SHINWELL: My Lords, would the noble Viscount answer a question? How does he define "consequential loss"? It is very important to get an accurate definition. I should have thought that if there was anything serious in the way of financial losses incurred by a factory or a householder, or something like that, it would be a matter for negotiation or arbitration and might eventually go to the courts to define what is meant by "consequential loss". Unless the noble Viscount or one of his friends can define "consequential loss" fairly accurately, I do not see that it is relevant to the subject.
Viscount LONG: My Lords, I thank the noble Lord for raising that question. The nearest I can get to it is that it is the equivalent of disturbance in compensation law.
Lord SHINWELL: My Lords, I do not know whether the noble Viscount has had very much experience of the coal industry in this matter of compensation
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due to subsidence. In fact, though damage has occurred—and I have seen it myself over many years—nevertheless there has been very little in the way of disputation as between the private owners and those who have suffered damage, or between the National Coal Board and those who have suffered damage. Very few cases have been taken to court because of failure to negotiate or arbitrate satisfactorily. From what I see in the Bill—I had not looked at the Bill until recently when I saw it on the Bench—I believe that all the assurances that are required are in it.
Viscount LONG: My Lords, so far as I can see, it is no use taking the matter to court because there are no powers, anyway. This is what we are arguing now. We want powers for compensation in the Bill. That is what I and my noble friends are trying to establish. It is necessary to tidy up Clause 2 of this Bill by these Amendments. The noble Lord ought to have come further towards our way of thinking over our Amendment. I am not happy and would far rather let my noble friends speak for themselves in the Division Lobby.
Lord BALOGH: My Lords, may I have the leave of the House to make a further remark? I think the effectual reply to the noble Viscount's case was made by my noble friend Lord Shinwell. If the Amendment is accepted, insecurity and uncertainty will be introduced because, obviously, it will be exceedingly difficult to define what is "consequential loss". It seems to me that this is exactly the kind of point which is being considered by the Working Party. While I can undertake to do my very best to have the Working Party's report published very soon—and I can give the assurance that I have ordered that the Working Party should meet—I can say no more than that I deplore the Amendment, which might cause a great deal of unnecessary litigation instead of doing the opposite.
6.24 p.m.
On Question, Whether the said Amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 53; Not-Contents, 37.

CONTENTS

Amory, V.

Elton, L.

Merrivale, L.

Auckland, L.

Emmet of Amberley, B.

Middleton, L.

Balerno, L.

Falkland, V.

Newall, L.

Belstead, L.

Ferrers, E.

Northchurch, B.

Berkeley, B.

Fraser of Kilmorack, L.

Rankeillour, L.

Brookeborough V.

Glenkinglas, L.

Ridley, L.

Brougham and Vaux, L.

Gough, V.

Rockley, L.

Buckton, L.

Gowrie, E.

St. Aldwyn, E. [Teller.]

Campbell of Croy, L.

Halsbury, E.

Sandys, L.

Carrington, L.

Hornsby-Smith, B.

Selkirk, E.

Cullen of Ashbourne, L.

Killearn, L.

Somers, L.

Daventry, V.

Kings Norton, L.

Sudeley, L.

Denham, L.

Kinnoull, E.

Terrington, L.

Drumalbyn, L.

Lauderdale, E.

Tweedsmuir, L.

Dundonald, E.

Long, V. [Teller.]

Vickers, B.

Eccles, V.

Lyell, L.

Vivian, L.

Elgin and Kincardine, E.

Macleod of Borve, B.

Ward of North Tyneside, B

Elliot of Harwood, B.

Mancroft, L.

NOT-CONTENTS

Ardwick, L.

Houghton of Sowerby, L.

Phillips, B.

Bacon, B.

Jacques, L.

Popplewell, L.

Balogh, L.

Kennet, L.

Segal, L.

Beswick, L.

Leatherland, L.

Shepherd, L. (L. Privy Seal)

Pirk. B.

Llewelyn-Davies of Hastoe, B.

Shinwell, L.

Blyton, L.

Lloyd of Hampstead, L.

Slater, L.

Boothby, L.

Longford, E.

Stedman, B.

Castle, L.

Lovell-Davis, L. [Teller.]

Taylor of Mansfield, L.

Champion, L.

McLeavy, L

Wallace of Coslany, L

Collison, L.

Maelor, L.

Wells-Pestell, L.

Crowther-Hunt, L.

Melchett, L. [Teller.]

Wootton of Abinger, B.

Davies of Leek, L.

Paget of Northampton, L.

Wynne-Jones, L.

Elwyn-Jones, L. (L. Chancellor)

Resolved in the affirmative, and Amendment agreed to accordingly.
Clause 3 [Right of Board to work coal in former copyhold land]:
6.30 p.m.
Lord BALOGH Lord BALOGH moved Amendment No. 2:
Page 7, line 5, at beginning insert ("(a)").
The noble Lord said: My Lords, I beg to move Amendment No. 2. This Amendment, together with Amendment No. 3, is consequential upon the substantive Amendment No. 4 in the Marshalled List. With permission, I should like to speak now on all three Amendments. The purpose of these Amendments is to remove an anomaly in the process by which the clause enables the National Coal Board to work coal in which retained interests subside. The intention of subsection (8) of Clause 3 is to exclude from notice issued under the clause any retained interests in the land covered by the notice in respect of which the Board has already secured the right to work the coal. There will be a good
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many examples of this in established mining areas where the Board have made an agreement with the owners of the retained interests who have secured the necessary rights through an order made under the Mines (Working Facilities and Support) Act 1966. This is clearly right. It would have been inequitable for the Board to have to go through the additional procedure and pay costs and compensation for something they have already secured and paid for by other processes. In the normal course, the rights which the Board have secured will have covered only a particular seam, or seams, of coal, but the present wording of the subsection would cause any other seams above and below them also to be excluded from the notice and, indeed, make it impossible for the National Coal Board to cover such seams in a notice under this clause. The Amendment cures this anomaly by providing that only the seams in respect of which the Board already have rights should be excluded from notices which they issue under this clause. In this way, any other seams above or below will be covered by the notice and the owners of

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the retained interests in them will be entitled to register their retained interests and to receive their appropriate compensation for them.
On Question, Amendment agreed to.
Lord BALOGH: My Lords, I beg to move Amendment No. 4, which is also consequential.
Amendment moved—
Page 7, line 8, leave out ("that land") and insert ("so much of that land as consists of that coal or mine of coal").—(Lord Balogh.)
On Question, Amendment agreed to.
Lord BALOGH: My Lords, I beg to move this Amendment No. 4, which is also consequential.
Amendment moved—
Page 7, line 9, at end insert—
(" and
(b) in so far as notice of a retained interest which is given as mentioned in subsection (3)(b) above at a time when the Board are so entitled relates to a retained interest in any land in or under which that coal or mine of coal is comprised or lies, for the purposes of determining the amount of any compensation payable under subsection (4) above, that interest shall be treated as not subsisting in that coal or mine of coal.").—(Lord Balogh.)
On Question, Amendment agreed to.

WHITE FISH AND HERRING SUBSIDIES (UNITED KINGDOM) SCHEME 1975
6.37 p.m.
Lord LOVELL-DAVIS Lord LOVELL-DAVIS rose to move, That the White Fish and Herring Subsidies (United Kingdom) Scheme 1975, laid before the House on 6th May, be approved. The noble Lord said: My Lords, the purpose of this Order is to provide for payment of aid to the fishing fleet in respect of the first six months of this year. Details of the Government's proposals were announced on 27th February. While apologising for the fact that the necessary Order was not made sooner, I will explain in a moment the reasons for this delay.
It is generally known that the fishing industry, both abroad and at home, is going through a very difficult time. The early 1970s were profitable, but a sharp reverse occurred in 1974. Operating costs rose steeply, led by the savage increase in fuel prices; but the returns received from
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the sale of fish did not follow suit. Fresh fish is marketed traditionally by auction at the port of landing, and the auction price is dictated by prevailing supply and demand, which is influenced by imports, the stocks of frozen fish and also the price of competing foodstuffs such as meat and poultry. Market factors of this sort kept down the fishermen's return while their inescapable costs soared.
Some sectors of the fleet were showing signs of trouble during the latter half of 1974. But generally the industry had reserves from the previous period of profitability on which to draw. By the turn of this year, however, the position had become much worse. More and more voyages were undertaken at a loss. An increasing number of vessels were being scrapped, laid up, sold or put to other work. Without some hope of either improved profits or aid in the near future, the rate of run-down of the fleet was in danger of reaching unacceptable proportions, with all the social, economic and structural problems entailed. Of course, a severe rundown of the fleet, once its less economic units had been eliminated, could only mean loss of catching capacity for the future. This might have meant later shortages and high prices to consumers, or an increase in the import bill which the nation can ill afford.
The 400-odd ships of the United Kingdom deep water fleet still land nearly half of the total catch of white fish and appreciably more than half of the supply of certain important species. The remainder is landed by about 6,000 vessels of the inshore fleet. It follows that any sudden changes in the composition of the deep-sea fleet have a more immediate and significant impact on supplies. This sector of the fleet is ageing. Reinvestment decisions have been deferred, pending clarification of where and under what conditions deep-sea fishing may be possible in future years. Many units designed to operate under different circumstances, particularly cheap fuel, cannot cover voyage costs under present conditions. The most uneconomic examples were quickly withdrawn from service, but many others remained at risk.
The Government were therefore faced with the real prospect that vessels accounting for a significant proportion of supplies might be lost irretrievably in a

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very short time, with far reaching consequences not only on food supplies (replaceable only by purchases across the exchanges) but on the whole structure of the industry. The Government therefore felt it right to provide aid, to give the industry time to respond to the changed circumstances in a more orderly fashion.
As the problem had, to a large extent, been created by the increased cost of fuel, it was suggested that the most straightforward way of solving it would be to provide a fuel subsidy, as some other countries have done. This would have been a short-sighted approach. As your Lordships know, the Government's policy is to allow higher fuel costs, representing as they do a continuing burden on the economy, to work their way into the price structure. A fuel subsidy for fishing vessels would be inconsistent with this policy.
On the other hand, a general subsidy of the type which existed until 1973 would have been equally unsuitable in a situation where the need was for temporary aid for those sections of the fleet at greatest risk until costs and returns came into line. The section most at risk is, as I have explained, the deep-sea fleet. But, as a result of developing technology, many vessels previously regarded as inshore vessels fish in some grounds alongside the larger vessel of the traditional deep-sea fleet and market their fish in the same competitive situation.
The Government therefore decided, as will be seen from the Order now before the House, to bring within the scope of the Scheme all white fish and herring vessels of 40 feet and over in length. The vessels now within the scope of the Scheme account for 90 per cent. of our supplies of white fish and herring.
When the Government's intention to limit assistance in this way was announced, it understandably led to some criticism from the owners of smaller vessels and from shellfishermen. The Government fully understood their sense of disappointment, and the Parliamentary Under-Secretary of State for Scotland undertook that the scope of the Scheme should be reconsidered in the light of their views. This has been done most carefully and sympathetically, but we
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have concluded that the best interests of the fishing industry as a whole require that aid should be restricted to vessels of 40 feet and over. To extend the subsidy to vessels below 40 feet in length could be open to the objection implied in my remarks in relation to a general subsidy; that is, it would dissipate the available funds over a larger number of vessels rather than concentrating it where the structural risk was greatest. And in any case, we have no powers to subsidise shellfishing.
The full consideration of these representations delayed the making and laying of the Order, but I am sure the House will agree that it would have been wrong not to have given the fullest consideration to the representations that have been made. Subject to this, the Order was made and laid as quickly as possible.
The administration of the Scheme is simple and straightforward. One payment of the subsidy will be made as soon as possible after the end of the period, calculated by the simple process of multiplying the number of days fishing, provided that these exceed the qualifying minimum, by the appropriate daily rate. The Scheme runs only until the end of June. Naturally, there is interest, even anxiety, to learn the Government's intentions beyond that date. I regret that I am not in a position to discuss that today. My immediate concern is to secure the approval of your Lordships' House for the payment of this very necessary present measure of aid. My Lords, I beg to move.
Moved, That the White Fish and Herring Subsidies (United Kingdom) Scheme 1975, laid before the House on 6th May, be approved.—(Lord Lovell-Davis.)
6.43 p.m.
Lord CAMPBELL of CROY: My Lords, I am glad that on the first day after the Recess we are having this debate on the very serious problems of the fishing industry. We had a debate in the week before the Recess which I initiated, to which the noble Lord, Lord Strabolgi, replied and gave some helpful assurances, and we are grateful for the explanation which the noble Lord, Lord Lovell-Davis, has given us today about this Order. During the Recess there have been some further developments. The North-East Atlantic Fisheries Commission has completed its conference and

85
issued quotas and, we understand from the reports, made other decisions.
The annual report of the Herring Industry Board has also been published. I would add that there has been a referendum in which the islands of Shetlands and the Western Isles differed from the rest of the country. I mention that because although fishing problems definitely intruded into the consideration there, they ought not to have done. It was deep concern about the future of the fishing industry there which played a prominent part and this was because the Scottish Nationalist Party—the SNP—had misled a large number of fishermen into thinking that these current difficulties were due to our membership of the EEC, which of course is quite wrong. There is one matter which is applicable to the EEC, but that is something that comes up in eight years' time and which is due to be adapted before then. Fortunately, many of the fishermen on the mainland were enlightened by their own leaders about these false stories—not all of them, but many of them, I am glad to say—so that the kind of result which appeared in the Western Isles and Shetland was not repeated there.
As regards the subsidy for the six months up to the end of this month, of course this is welcome to this side of the House. The criticism has been made that boats under 40 ft. are excluded, and the noble Lord will probably know that some fishermen in some areas have already themselves voluntarily subscribed to schemes to help the fishermen whose boats are under 40 ft. because they feel that in some cases their needs are even greater. I would ask the noble Lord, in considering the future, to bear in mind that the fishermen who are due to get the subsidy are themselves making arrangements so that some of it can be volunteered by them to their less fortunate friends.
Our question is, of course: what is to happen after 30th June? Presumably in this very serious crisis there will be a continuation of assistance of this kind. There are now many boats tied up or working for the oil industry, transferring away from fishing. The EEC countries have been giving a subsidy which is equivalent to an oil fuel subsidy, that is connected with the oil which the boats use, and I understand that it is to last
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a year, until June 1976. So presumably the Government are considering that as one possibility although they may not decide that it is appropriate. We would ask the Government to let us know soon. The noble Lord said that he could not make an announcement today, but having considered the various possibilities we ask the Government to let the fishing industry and those who are concerned about its vital interests know soon in what form the assistance will be continued in the future.
I will not go through all the current problems. As I mentioned, we had a debate three weeks ago and the points have also come up at Question Time in your Lordships' House. It is announced only today in the Press that the deep-sea industry has stated that more than 40 vessels have gone out of service in the last five months. That announcement was issued by the British Trawlers Federation, and another 36 vessels apparently went out of service during the course of last year. They attribute this mainly to cheap imports of fish. We know that, because of the American market being reduced, Iceland and Norway in particular have been selling greatly increased quantities of fish to us and at prices which the distant water fleet say they cannot compete with.
As the noble Lord said, for various reasons the fishing industry as a whole is facing a difficult time. For the herring fishermen it is nothing less than a crisis threatening their livelihood. Unless some further action is taken soon, the herring could become almost extinct in the seas round Britain within a few years. However, if the situation is caught in time, there is hope that the present stocks can multiply back into reasonable shoals again. British fishermen are greatly affected by the decimation of the herring, and Britain is now the country which could most suitably take a new initiative. Since the debate which I initiated, the North-East Atlantic Fisheries Commission ended its meeting and I welcome the reported agreement to stop industrial fishing which sweeps up immature herring for conversion into oil and fish meal. Agreement was also reached on strict quotas for herring, as I urged in that debate, but British fishermen are greatly restricted by the British quota in the quantity that they can now catch. Strict

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conservation is necessary, but the scope for British fishermen earning their living is greatly reduced by the arrangements which have been announced.
I would remind your Lordships that from 1970 to 1973 the inshore fishing industry enjoyed a period of increasing success and prosperity. Then they were struck by adversity for reasons unconnected with the EEC: for example, the steep increase in the price of fuel oil and the landing of cheap fish, which I have already mentioned. The larger deep-sea vessels have been fishing in more distant waters on their traditional grounds off Iceland, the Faroes and Northern Norway, thanks to agreements made by the British Government. It is clear, however, that the time limit for these is approaching. All concerned have been waiting for the Law of the Sea Conference to produce agreement on a 200-mile zone. In the meantime, it is questionable whether agreements on as favourable terms as those which have been concluded under which our fishermen are now fishing up to 12 miles off Iceland and the Faroes can be renewed, if in fact agreements at all can be made.
While the Law of the Sea Conference has shown that nearly all the nations of the world favour this new concept of a 200-mile zone, they are still a long way from signing an agreement upon it. The delay arises largely from matters other than fishing; such as the rights of free passage, and mining for minerals in the ocean floor beyond the Continental Shelf. Can we wait for such matters to be settled before making new arrangements for fishing? I doubt it, if we are to save the herring stocks, and the next meeting of the Law of the Sea Conference is not due to be held until next year.
Since it is now clear that what will eventually be agreed on a world basis is a 200-mile economic zone, should Britain not now seek a regional agreement on fishing only, which will conform with that expected 200-mile economic zone? It could be restricted to herring, if necessary, and not include other fish. Such an agreement would constitute a conservation, measure additional to those already agreed in the Atlantic Commission. Instead of only quotas, prohibited areas, and closed seasons, we could try to move
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towards the system of zones which we know is to be the system of the future. In international law, it would have the same basis as the quotas and the other conservation arrangements agreed regionally by the North-East Atlantic Commission. A similar agreement was made for trawl-free zones off Norway earlier this year between the affected countries, including Britain, and those also outside Norway's fishing limits; they are part of the international high seas.
Surely, future conservation agreements would be better based on a system consistent with what we know is to come; namely, a 200-mile economic zone. The countries affected would be those who were members of the North-East Atlantic Commission. Have the Government tried this possibility with the other members? I do not expect the noble Lord to be able to answer these questions tonight, but I put them because they are so important. Can the Government see this as a practical aim during the next few months?
My Lords, there is now a great danger of unilateral action in any case by certain countries, which could be forestalled by entry into negotiations designed to reach a regional agreement on new conservation agreements for fishing. Within the coastal State zone extending to 200 miles in the open seas, or to a median line, there would be an exclusive fishing zone reserved for the fishermen of that particular State. This might still be the present 12-mile limit, or an agreed increase to 20 miles or more. Negotiation on this inner zone is due to take place within the EEC well before 1983. It has been awaiting only the 200-mile zone to be sanctified in a world agreement. It cannot wait much longer. Further conservation measures are urgently required if the herring is to be allowed to multiply again. This is most urgent. The quotas on their own are not entirely satisfactory, because British fishermen and the British Government cannot be sure that they are being observed by other countries. The surviving herring are being caught by foreign vessels in waters near our coasts, though most of them I mentioned are not from the EEC countries.
I hope that your Lordships will have realised from my remarks that I am not proposing any kind of unilateral action by Britain. I am against that. Quite

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apart from the loss of confidence it would cause in Britain's reputation in the world, it would mean that we should probably lose more than we gained, because our distant-water fishermen, fishing for white fish off the shores of other countries, would probably be pushed out immediately in retaliation by those countries if we were to announce some zone, such as a 50-mile zone which some are pressing upon us. It might help the herring industry, but on balance it would probably cause more damage to other parts of our fishing fleet.
That is why a regional agreement of the kind I have suggested could be obtained and recognised by the rest of the world, which would be similar to the agreements on a regional basis which have already been reached on fish quotas and similar restrictions. Such an agreement would then be in the shape of what is clearly to be eventually agreed for the world at the Law of the Sea Conference—a system of zones and medians. In this way, Europe would be setting an example, leading the way without prejudicing the other issues being discussed at the Law of the Sea Conference, such as minerals in the Continental Shelf, navigation and pollution. So I would again urge that the crisis of the herring industry, apart from all the other problems faced by the fishing industry in this country, should be treated by the Government as urgent and given immediate attention. I hope that the proposals I have made will be considered.
Lord LLOYD of KILGERRAN: My Lords, may I add two brief points? First, may I thank the noble Lord the Minister for the clear and lucid way in which he approached the matter, and for the sympathetic approach he has made to the crisis conditions in the industry. Secondly, may I emphasise that the rate of rundown of the fishing fleet has been very great indeed in recent months. This is bound to lead to greater shortages and to higher prices in the very near future. Of course, the subsidy is welcome, but we are now in a crisis position in relation to this fishing fleet.
Therefore, I should like to ask the Government, now that we are to remain in the EEC, whether they will sympathetically consider that after the end of this month, when the subsidy comes to
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an end, in accordance with other countries in the EEC, a subsidy in relation to the consumption of oil can be given, and thus widen the scope of this subsidy? As the noble Lord, Lord Campbell of Croy, has said, there are many in this industry who feel the limitation for subsidy to ships of 40 ft. is unfair to some with ships of a lesser size. It may be that the Government will consider that the attitude of some of the EEC countries in giving grants in relation to the consumption of fuel is fair and just.
6.57 p.m.
Viscount BROOKEBOROUGH: My Lords, I should like to welcome the flexibility and ingenuity of the Government in managing to provide some form of subsidy to those ships which are also dealing with prawns and shellfish. It is very welcome to a very large industry in Northern Ireland, and is a very good example of a flexible Government approach. I should like to support my noble friend Lord Campbell of Croy in expressing absolute alarm about the future of the herring industry. Certainly, people in my part of the world are afraid that there is no time to save the stock. The facts of the matter are that at the moment we operate conservation methods within our 12-mile limit. The herring spawn especially off the Isle of Man and then go into other waters where they are duly captured by the fleets of other countries. They are taken and our stock is reduced. I am told that although the quota for next year goes down from 150,000 tons to 66,000 tons, there is little hope of our fishing boats managing to catch that amount of the quota.
My Lords, I wonder whether we have time to carry out negotiations with countries throughout the world. Although my noble friend said that unilateral action would do an immense amount of damage overall, I think the future of the industry will not allow us to go ahead with the long and prolonged negotiations which exist, and must exist, in order to get Russia, Poland and Norway—all sorts of countries which are not within our orbit so far as policing or conservation methods are concerned—to agree. I feel our own fishermen believe that so many of our conservation methods prevent them from catching fish, and allow people from other countries who are not interested in our

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conservation to continue to make a living. The future lies not in the continuation of subsidies, but in conservation.
I feel we must convince our own fishermen that our own Government are determined to see the conservation of the herring stock, which has traditionally been such a major element in our food supplies, continue. I should like to feel that in the very near future the Government will announce the continuation in the short term of the subsidy, and at the same time say that they will pursue with maximum vigour the conservation of the stocks off the West Coast of Scotland and in the Irish Sea, an area in which I have a special interest. Time is not on our side. International agreements always appear to take time. Maybe we may have to think of unilateral action in conjunction with the Irish Government in the Irish Sea, and off the West Coast of Scotland.
7.0 p.m.
Lord LOVELL-DAVIS: My Lords, I will endeavour to answer as many as I possibly can of the points noble Lords have raised. I feel as though I have been subjected to a hail of grapeshot. The noble Lord, Lord Campbell of Croy, referred early in his speech to the matter of the Scots' offer, and it is true, of course, that the Scottish fishermen did offer some of their aid to provide something for those excluded but a similar offer was not made by the England and Wales section, and the offer would be quite outside the statutory Scheme. As the noble Lord knows, no doubt, the Parliamentary Under-Secretary of State for Scotland is pursuing this matter on a voluntary basis with the Scottish fishery representative bodies.
The noble Lord also asked what would happen after 30th June. The aid was introduced essentially as a temporary measure to help the industry to adjust in an orderly fashion to the changing situation. The Government will consider successor arrangements, if any, in the light of circumstances prevailing, and an announcement will be made as soon as possible. Reference was made to the fuel subsidy by both the noble Lord, Lord Campbell, and the noble Lord, Lord Lloyd of Kilgerran. I have explained already why this gells or does not gell with the Government's policy vis-à-vis
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increased fuel prices. The Commission have extended the period during which fuel subsidies may be paid. They decided to extend the period from the end of June 1975 to the end of December 1975, and the Council took note of this at their meeting on 28th and 29th April. As I said, the Government's policy is that higher fuel costs should be allowed to work their way through the system. Nevertheless, if other Member-States chose to take advantage of the latest decision by the Commission there could be some distortion of competition. The situation will be kept under review, but it is too early yet to say whether the United Kingdom will pay a subsidy in the second half of 1975.
The matter of cheap imports obtained from Norway and Iceland is obviously significant, but I think the noble Lord will agree that this is a world problem; it is not limited to our own fishing industry. Although this aspect plays its part it is not all that significant a part. The herring crisis is a tremendously important matter, and the Government are well aware of the importance of preserving herring fishing. It is a desperate situation which, as the noble Lord, Lord Campbell, pointed out, has arisen primarily because of over-fishing by the industrial fisheries, and it has left the herring stocks around our shores in a very bad state. The North-East Atlantic Fisheries Commission have reached agreement on a greatly reduced total of international catch and quotas of both North Sea herring stocks and West of Scotland herring, and the United Kingdom has secured a fair quota allocation. These agreements, together with a ban on industrial fishing for herring, could go a long way towards protecting the herring stocks; but more protection is necessary and the Government are pressing strongly for further conservation action.
A ban on herring fishing would, of course, be very difficult to negotiate, but we have to resolve the problem. I quite agree with the noble Lord when he says, with regard to unilateral action, that we cannot take this course; there would almost certainly be retaliation to it. The Government's approach to this whole matter is one of working towards solution of the problems through regional and international negotiation and agreement. The noble Lord, Lord Lloyd of Kilgerran, referred to the rundown of

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the fleet. I am not sure whether it was he or the noble Lord, Lord Campbell, who referred to the number of ships.
Lord CAMPBELL of CROY: My Lords, I referred to a report in the Press today.
Lord LOVELL-DAVIS: My Lords, one should not lose sight of the fact that vessels do go out of service for a variety of reasons, servicing and so on; I think this ought to be taken into account. The noble Lord, Lord Lloyd, raised a further point about the limitation to vessels of 40 feet. Aid was given to avoid the development of a serious structural situation which could endanger food supplies. This situation is not apparent in the case of shellfish and with coastal vessels of less than 40 feet in length. Vessels accounting for over 90 per cent. of white fish and herring landings are covered by this Scheme. I think we must all agree that shellfish are, after all, a luxury item of diet in all social classes. Were we to extend the subsidy to smaller vessels we should be faced with very substantial payments. Approximately 4,200 vessels of under 40 feet known to fish regularly are excluded from the present subsidy. The figure includes shellfishing vessels, but many of the smaller vessels fish for both white fish and shellfish, and a fairly realistic guess would be that for every £1 per day paid in subsidy to these vessels the Exchequer would be paying something like £168,000 a half year.
I have one final point—I am sorry if I have missed other points raised during this short debate—concerning the reason for our herring quota shares being so small. Well, they are not so small. The quotas are worked out on the basis of historic performance in the fishery, with allowances for coastal States and States with special needs, and our quotas are broadly in line with our percentage share of the fisheries. In the interests of conservation, sacrifices must be made by all countries, and these sacrifices are reflected in the quotas. My Lords, I hope I have covered the main points that have been raised.
On Question, Motion agreed to.

ROLLS-ROYCE RB211 ENGINE PROGRAMME
7.8 p.m.
Lord KINGS NORTON Lord KINGS NORTON rose to ask Her Majesty's Government how they view the importance of the continuing development of the Rolls-Royce RB211 engine programme and whether they plan to continue their support for the RB211–524 engine. The noble Lord said: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. It was in February 1971 that we debated in this House the Rolls-Royce purchase Bill, and as the noble Lord, Lord Carrington, said on that occasion, the RB211 engine was the centre of the debate. I have no intention of recalling that momentous occasion, except to say that at that time the fate of the RB211 was in the balance. In my speech then I said that the RB211 was a good engine and it represented a remarkable achievement, and certainly subsequent developments have confirmed that opinion. At the time it was touch and go. Fortunately, the decision was go, and it has been amply justified.
The RB211 is the biggest single export earner of the United Kingdom aviation industry, and four years ago the White Paper on the engine estimated that 25,000 people were engaged on it. Since deliveries of it began in 1972, engines and spares worth over £280 million, mostly for overseas, have been produced. The current output is over £2 million a week, and of the total orders to date for 700 engines more than 450 have been delivered. This is substantial business, but the country and the company will get the maximum value of that considerable investment in the RB211 programme only if the engine is continuously developed to meet the market requirements.
The original RB211 engine used in the Lockheed TriStar has a maximum thrust of 42,000 lb. The engine under active development now is externally indistinguishable from it, but it will be certificated this year at 48,000 lb. thrust, and is expected quickly to develop to 50,000 lb. thrust. This is the RB211–524–B engine. Its development and initial production is costing £55 million, shared between the Government and the company. The

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engine is intended for the long-range versions of the Lockheed TriStar.
I have so far, my Lords, been describing what appears to me to be a very satisfactory situation, and I come now to more recent history, which I hope will develop equally satisfactorily, and on which I hope the noble Lord, Lord Beswick, will be able to be reassuring. In parallel with the development programme of the RB211–254 engine for the TriStar, Rolls-Royce and Boeing are working on a programme to certificate it for use in the Boeing 747–200 aircraft required by British Airways for delivery from the spring of 1977 onwards. The plan is for the engine in this application to enter service with a maximum thrust of 48,000 lb. and to move to 50,000 lb. about a year later. I believe that it is vital to the maximum exploitation of the RB211 engine that this plan goes forward. Whatever the future development of the Tri-Star, the future of the Boeing 747—unique in its great size, and likely to stay unique for many years to come—will be on a much greater scale. It will probably continue until the end of the century, and I feel that we must ensure that the vast engine market it represents is not just cut up between Pratt and Whitney and General Electric. This means that a policy of continuous concentrated development on RB211 is essential.
Already Rolls-Royce and Boeing are planning to engine the projected heavyweight 747 with Rolls-Royce RB211–524D engines of 53,000 lb. thrust, but—and now I come to the heart of the matter—my information is (and it comes from a very reliable source) that unless the British Airways initial order of four Jumbos with RB211–524 engines is confirmed by the end of this month, the joint work between Boeing and Rolls-Royce on the later Jumbo model—the heavyweight—is in danger and may cease. The development and production of the British Airways initial 747–524 aircraft, besides being eminently desirable in itself, is therefore an essential part of the long-term plan. Furthermore, an immediate favourable decision is needed from Her Majesty's Government, because British Airways need for 1977 deliveries of their 747s would mean that, in the absence of such a decision, there would have to
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be a switch to Pratt and Whitney high thrust JT9D engines.
I have now been told that the current view of Her Majesty's Government—and I hope that the noble Lord, Lord Beswick, will be able to clarify what at first seems a rather odd situation—is that they cannot translate the British Airways' desire to have Boeing 747 Rolls-Royce R13211–524 aircraft in 1977 into a firm order unless there is another order for the same aircraft from another airline. I believe that the future of this splendid engine of ours, which is improving all the time, should not be allowed to depend on such a condition, and it is my earnest hope that Her Majesty's Government will give the go-ahead immediately, without waiting for another order. My information is that then All Nippon Airlines, South African Airways, and Saudi-Arabian Airlines are likely in due course to follow suit.
The need for a decision on the matter of the engines for the four British Airways Jumbos for 1977 has lasted through the whole life of the present Government, and as I have indicated, has now become urgent—very urgent. When I was looking into this matter just before the recess, I found that without a favourable decision Boeing's work on the aircraft destined for certificating the RB211–524 engine in the British Airways 1977 machines would cease on 31st May. The aircraft would be lost to Rolls-Royce and to British Airways, and there is no other aircraft under construction to take its place.
Pleading the disruption caused in other business by the referendum campaign, Rolls-Royce managed to persuade Boeing to extend the contract to 10th June. I believe that the Secretary of State for Industry himself then intervened because there was a later extension of the contract to the end of this month. I cannot think that any further extension will be possible. My information on what has become an extremely complicated matter is that Boeing are prepared to continue to commit their resources to the end of this month, incurring considerable expenditure on the way, so that if on 30th June Her Majesty's Government regrettably decided not to proceed, some 2 million dollars will have to be paid. Thereafter the programme can continue only if Rolls-Royce or British Airways engage to buy

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the aircraft earmarked for the certification work. This would involve the firms, or the Government, or both, in a substantial irrecoverable down-payment and a contract with cancellation penalties. In other words, my Lords, there is plenty of incentive to Her Majesty's Government to make up their mind.
I am told that the net cost of proceeding with the 524 installation in the 747 after the end of the current contract—that is to say, after the end of this month—is an additional £12 million at current prices, and the uprating to 53,000 lb, thrust another £24 million. These sums would he spread over some years. I feel that we tend in these days to talk in millions rather lightly, but indeed these sums which I have mentioned do not seem to be great in comparison with certain other items of intended Government expenditure, and I certainly make the strongest possible plea for their authorisation. The benefits in future to our balance of trade from this capital expenditure would, in my view, be tremendous—possibly, over the lifetime of the engine, of the order of £1,000 million—and I hope that the "go" spirit which saved the RB211 in 1971 still animates the decision-makers.
I was encouraged to believe that it does when I read what the Prime Minister said on Saturday at Mansfield:
"Britain's future"—
he is reported by The Times to have said—
"depends on our own efforts here, our own inventiveness, our technology."
I believe that he made the same point in his EEC Statement today. How right he is. Investment in this technology must be right, my Lords. We must back our great technological achievements. To let our own decision depend on the decisions of foreign airlines would be an unworthy policy: indeed, I have never quite believed that this ever was the policy, but it has been widely believed to have been, and I hope that the noble Lord, Lord Beswick, will be able to deny flatly that it is, or ever was. We must, my Lords, have faith in ourselves and in our works, and of those, my Lords, the RB211 engine is a shining example.
7.20 p.m.
Earl FERRERS: My Lords, I thank the noble Lord, Lord Kings Norton, for
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introducing this subject and we look forward to hearing what the noble Lord, Lord Beswick, has to say in reply. It is fair to say that it depends on the noble Lord's reply—whether, of course, he can give it in its entirety tonight is another matter—whether the RB211 engine is going to be permitted to be of use in its advanced form in future generations of aircraft. The original 211 was, as the noble Lord said, designed for the TriStar, and very successful it has been. The engine is now being developed with greater thrust to be put into the long-range TriStar. The whole nub of the noble Lord's Question is whether this self-same engine is to be allowed to be put not just into the TriStar but into future 747s. The engine is identical, the only difference being the way in which it is hung on to the aeroplane, and, as I understand it, that is the only research and development that has to be done. In this, Rolls-Royce have agreed to meet the cost of the limited redesign of the 747 wings provided, of course, that the Government are prepared to underwrite that cost. As the noble Lord, Lord Kings Norton, said, that part of the contract terminates at the end of this month.
I very much hope—and I have no hesitation in saying this—that the Government will be prepared to back this project. The cost is relatively small, though I agree with the noble Lord that we should not get complacent about figures when we talk about millions of pounds. But if the contract is cancelled not only will all the expenditure and work that has been done up to date on fitting this engine into the 747s been wasted, but we will be giving over entirely to the United States the provision of engines for future 747s. We should not willingly do this, and I believe that there is a demand for future 747s to be fitted with this engine. For a start, British Airways would like two of these long-range Boeings in 1977 and two more in 1978, and this could be increased to twenty-five by 1985: and if this requirement were met in full, British Airways could be responsible for taking some 125 engines, and this alone could justify the research and development expenditure. If the 747 with this developed 211 engine goes ahead then, as the noble Lord said, other airlines will be interested, too. But of course nobody is going to declare

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an interest or an open requirement for something that is still a myth; if we make it a reality almost certainly other airlines will go for it.
On the British Airways requirement alone there is a fairly strong case for the developed engine, for if British Airways can purchase the 747s with the 524 engine fitted, then all their long-range aircraft will be fitted with 211 engines and the long-range Boeings will have the identical engine as the long-range TriStar. This desire for conformity and standardisation is understandable and, I suggest, quite necessary. But if British Airways are to get their requirements for two of these aircraft in 1977, the aeroplane must fly by August of next year; so relatively little time is left, and the Government's decision should not only be imminent, it is vital. One wonders, of course, why we cannot go ahead. We come back to the classic chicken and egg situation—British Airways have said that they want to place an order for aircraft but this needs to be approved by the Department of Trade. My understanding is that the Department of Trade cannot approve the order until the Department of Industry has approved the installation of the engine, and of course there is a firm requirement for only four aircraft. But nobody else is likely to put in an order for these aircraft until they actually exist, and they cannot actually exist until the Department of Industry gives its approval.
Behind this lurks, quite rightly, the steely hand of the Treasury, and I cannot help thinking that we are in a way seeing the same situation as we had over the Maritime Harrier, where nobody would place an order until Britain did so. Of course there is risk, and of course there is cash involved in this decision, as there was over the Maritime Harrier. I congratulate the Government on their decision over that and I realise it was a difficult and complex one. I do not believe that they will for one minute regret the decision they took over the Maritime Harrier, and I believe that if the noble Lord, Lord Beswick, were able to say, "Yes, the Government are going to back this project, too", they would not regret that decision either.
It is right to say that our future depends on our own efforts, skill and
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technology. If I recorded those words correctly, they were the very words the Prime Minister used this afternoon in his Statement on the after-effects of the EEC referendum—that in the end the future of this country depends on our own efforts, skill and technology. Here in this engine we have a classic example of how we can succeed. I hope the Government will ensure that this comes about.
7.26 p.m.
Earl AMHERST: My Lords, I too wish to thank the noble Lord, Lord Kings Norton, for bringing this urgent Question to our attention and I strongly support what he said on the subject. I will not go into the technical details because I do not feel capable of doing so. I should like simply to consider what I believe to be the three main stages of the matter. The first stage, as I understand it, involves bringing the Rolls-Royce RB211 up to 50,000 lb. of thrust and I gather that this has been funded. The second stage is to fund the fitting of the engine into the extended Tristar and the Boeings. The third and final stage is to bring it up to 50,000 lb. of thrust to power the bigger version of the Jumbo, which I understand British Airways want to take delivery of after 1977. These requirements are to be spread over several years—they are not immediately required—but I understand that they are based on present prices. The first stage has been funded jointly by Her Majesty's Government and Rolls-Royce. The second stage is to cost £12 million and the third stage a further £24 million.
We are accustomed to speaking in millions of pounds when considering these matters and while these sums are not inconsiderable, compared with the amount of money which may be spent or have already been spent on, for example, Leylands, steel and Ferranti, they are surely not very much out of line. The exception is that in the Rolls-Royce case the provision of money is really the financing of an investment in an engineering project and not an injection of cash to meet an immediate week-to-week emergency. Unless the bottom is to fall out of the civil aviation market, from what the noble Lord, Lord Kings Norton, has already told us, the provision of these sums should provide a profitable investment both for Her Majesty's Government and Rolls-Royce, and I am told should

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provide over £1,000 million towards our balance of payments by way of exports.
I believe that at the moment there are some 25,000 people employed in Rolls-Royce on this project and probably a higher figure if one includes sub-contractors. I am told on good authority that the best results can be obtained only from the development of all three stages if the work at Rolls-Royce can go forward in succession and continuously and that there is not any "stop-go". However, as the noble Lord, Lord Kings Norton, explained, serious difficulty now arises in that Her Majesty's Government are reported to be reluctant if not actually adamant that Government finance cannot be provided for stages two and three unless there is at least one further order from a major airline, over and above the British Airways requirement for the four big Boeings for delivery after 1977. Surely this is hardly a realistic point of view to adopt at the moment, when the industry has rather straightened out into a near standstill and nobody seems anxious to buy seats.
I believe that we have arrived at a point when we ought to take a serious look at the position which is likely to develop if, as a result of the Government's decision, stages two and three are not proceeded with. Presumably, any further work on the development of the RB211 beyond the 50,000 lb. thrust mark would cease and, as the years went on, this superb engine would become less and less competitive in the international world market. The final stage would be that this section of Rolls-Royce would have to close down and that the skill and know-how so carefully fostered and worked on by 25,000 people would be lost. The export of this famous engine would come to a stop.
What about those 25,000 jobs? Messrs. Boeing would be forced to go either to Pratt & Whitney or to General Electric for their engines. I do not know how the Pratt & Whitney and the General Electric engines match up to the final development of the RB211 or, indeed, whether they can give the same performance and reliability which British Airways are counting on, but the result will be that Pratt & Whitney or General Electric will scoop a world market which I am told will, in the next 10 years, be worth something in the region of 50 billion dollars.
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Surely at this time of national stringency the Government cannot afford to turn up their nose at such a vast potential market. But, if Pratt & Whitney and General Electric are to be left to capture the market, surely our airlines will still need these engines and the Treasury will have to find the dollars to buy them, which will hardly improve our balance of payments problem.
It is a gloomy and dismal picture. I rather wonder if an alternative might not present itself if the Rolls-Royce company were allowed to go to the market to raise the money on normal commercial terms. If the Government refuse to finance stages two and three and also refuse to let British Airways, which they own, go to the market, can we be told precisely why? Are the Government aware that the delays and hesitations which have taken place in this matter are sapping the confidence of the international world of aviation, not only in Rolls-Royce, but also in the Government's ability to treat this matter in an urgent and businesslike way? However, I have the greatest hope that when the noble Lord, Lord Beswick, comes to reply he will be able to allay all these fears and to provide an answer which will not only fully reassure Rolls-Royce, but also British Airways and Messrs. Boeing, and, indeed, this House.
7.36 p.m.
The Earl of KINNOULL: My Lords. I should like to support the noble Lord. Lord Kings Norton, and to congratulate him on raising what is undoubtedly a very important subject in what I felt was a very persuasive and powerful speech. Although the House can, technically, draw on a deep reservoir of knowledge among its Members, it seems all too often that the experts are not available. However, the noble Lord, Lord Kings Norton, is an exception. He is an expert, he makes himself available and he speaks with wide knowledge and telling effect.
The noble Lord's Question about the RB211 and its continuing development concerns what I believe forms one of the cornerstones of the British aircraft industry. It is one which about three years ago resembled more of a gravestone, but I believe that today that cornerstone has turned into a pillar of strength for the British aerospace industry in its continuous and relentless drive for exports.

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The RB211 engine no longer relies on paper forecasts, thank goodness! It has now been in service with TriStar for over two years and it has proved a very remarkable engine. It has proved—as was originally claimed for it—to be relatively quiet; it has proved to be reliable; above all, it has proved to be economical in the use of fuel. I am told that it produces results some 5 per cent. better than the Pratt and Whitney and GE engines. I am sure that that will in the future mean a lot to the customer airlines. Again, from the sales point of view, the engine has also proved wholly satisfactory to Lockheed on deliveries and wholly satisfactory to the customer airlines on performance. All that, I suggest to the noble Lord, Lord Beswick, bodes well for the present and encouragingly for the future.
Since the traumatic experience of 1971, both the Government and the new Rolls-Royce Company clearly saw the importance of what the noble Lord, Lord Kings Norton, suggests in his Question; that is, that there is a need for the continuing development of the engine. This need was markedly demonstrated by the Government, or rather by the previous Administration, some two years ago when, in conjunction with Rolls-Royce, they entered into a fairly massive development programme, amounting to some £55 million, as the noble Lord, Lord Kings Norton, and other speakers have mentioned. We know that this development was intended to catch up with the other competitors and to uprate the engine from 42,000 to 50,000 thrust. As we know, this development programme was initially designed to meet the needs of the "stretched" TriStar. Here, I feel that it would be very interesting to hear from the noble Lord, Lord Beswick, what success the stretched TriStar has so far had, what its sales have so far been and what prospects he sees for it.
At the stage when the £55 million development programme was entered into, I believe I am correct in saying that no precondition was laid down by the Government that firm orders were required. I think it is important to recall that, when one looks at the fact that one of the reasons why the Government have been so slow in supporting Rolls-Royce in the Boeing situation is that they have laid
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down the precondition that Rolls-Royce had to obtain a second order in addition to that of British Airways before they could be given the go-ahead.
Clearly, both the Government and Rolls-Royce had their eyes not only on the stretched TriStar when the £55 million development programme was entered into, but also on every other wide-bodied aircraft in the market, including of course the Boeing 747. This would make obvious sense to maximise the exportation of this great engine. As other noble Lords have said, my prime purpose in supporting the noble Lord, Lord Kings Norton, this evening has to do with the Boeing situation. I believe it true to say that Boeing and Rolls-Royce got together some 12 months ago on this development contract and that at that stage the Government had full knowledge and were consulted as to the wisdom of entering into the contract, which was simply to explore the possibility of strapping the engine on the 747. Either then, or soon afterwards—I am not quite sure which—along came British Airways and announced its decision to place an order for the four 747s, but specified with the Rolls-Royce engines. Those of us who recall the history of British Airways—or perhaps BOAC and British European Airways—will remember that they did not place orders on sentiment alone; they placed orders on hard facts.
The development contract between Boeing and Rolls-Royce had a time limit, as the noble Lord, Lord Kings Norton, said. Initially it was to the end of May and then it was extended until, I think tomorrow. Then, I understand—and I am sure that the noble Lord will confirm this—Rolls-Royce negotiated it up to the end of this month. But there was a condition on the extension; that is, that if ultimately Rolls-Royce, British Airways or the Government did not proceed with an order in the book, Rolls-Royce would be subject to very substantial damages against Boeing, and this, I understand they will realistically have to accept.
I do not intend to ask a series of questions, but there are one or two matters I wish to raise. First, I wish to ask the noble Lord, Lord Beswick, whether, if the Government decide not to proceed by the end of June and to scrap the hope of Rolls-Royce going into

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Boeing, will they agree to underwrite Rolls-Royce against subsequent damages that may fall upon it? I think that this is a fair point and I hope that the noble Lord will be able to say something about it. We have three more weeks for the Government and Rolls-Royce—the Government, really—to decide on this issue. After that date the chance of the RB211 strapped to the 747 will be lost—I think everyone here agrees on that—and the immediate future possible orders, which Rolls-Royce has been discussing very energetically over the past months, will also be lost. The noble Lord, Lord Kings Norton, mentioned the potential that is there.
What is delaying the Government? Is it really the financial commitment? The evidence one is given is that of £30 million in the first stage and then, perhaps, another £20 million, which does not seem huge when compared with the overall development cost of this engine. But what are the rewards? The noble Lord, Lord Kings Norton, has spoken about the 747; its uniqueness, its size; the fact that it was the first wide-bodied aircraft to come into service; its reputation; and its future. I am sure there will be very few people who could not argue a very sound case that to put Rolls-Royce with Boeing would make very sound commercial sense. I feel, like the noble Lord, and indeed like everyone who has spoken in the debate, that this is a decision of very great importance. I heard today on the BBC that the right honourable friend of the noble Lord, Lord Beswick, was asked basically this very question about the Rolls-Royce and Boeing situation. If I may paraphrase, he said that the Government were looking carefully into the matter, but that they had not long received the Rolls-Royce brochure. If that was the answer that was given—and my information was to that effect—I hope that the noble Lord, Lord Beswick, will be able to say that the Government do not rely wholly on colourful brochures.
7.43 p.m.
The MINISTER of STATE, DEPARTMENT of INDUSTRY (Lord Beswick): My Lords, noble Lords will have realised that I am glad to sec their interest in the future of the RB211 engine. As the noble Lord, Lord Kings
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Norton, and the noble Earl, Lord Kinnoull, reminded us, the whole project was threatened by the collapse of Rolls-Royce Limited in 1971, and it was out of those difficulties that the present company emerged, as well as the renegotiation of the contract to supply the RB211 engine for the Lockheed L1011 TriStar aircraft.
We remember—as the noble Lord, Lord Kings Norton, reminded us—that in 1971–72 the Government agreed fully to fund the remaining launch costs of the RB211, and that task will be completed later this year. It was also agreed that the Government would fund the production of the first 555 engines and the last of these is expected to be delivered before the middle of next year. My noble friend—if I may so call the noble Lord, Lord Kings Norton—rightly told us of the export success of this engine, and the noble Earl, Lord Ferrers, said that the present position was satisfactory. But I remind them that the net cost of Government support for this project was estimated in the 1972 White Paper at £170 million. Although there have been some changes in the basis of the estimate, there have also been savings, and the present estimate of net cost is still close to £140 million. Therefore, as the noble Lord says, we have got £280 million worth of exports, we have done so at a loss of £140 million, and I do not think that we should be criticised for lacking in financial support for the engine. Other noble Lords have commented that over 450 RB211 engines are now in service, which they are—and they are doing well.
The Earl of KINNOULL: My Lords, I have just one point to raise. Is it correct to say that this came under the fixed contract basis—for the first 555 engines at a loss of £140 million—and that already 507 have been delivered?
Lord BESWICK: My Lords, what happened was that we agreed to pay for the cost of the 555 engines being produced. We, the Government, meet all the costs of the engines and we take what money is received in return for the first 555, and there will be a net loss on that of £140 million.
As I was saying, the engine has been successful and we would expect, as with

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other engines, to consider higher thrust developments and application to other airframes. In 1972, Rolls-Royce began development of a higher thrust RB211 with Government support. In April 1974, the company put forward proposals to commit fully the launch and production of this engine, called the -524. In August 1974, the Government gave their approval and full support to the launch of the -524 for the TriStar L1011–200, and in September the first order was placed.
We carried out a careful study of the markets and the cost and agreed to support the development of this new higher thrust version for the TriStar. Again, it should be borne in mind, if there is any tendency towards criticism for lack of courage, that the success of this investment depends almost entirely on the future of an aircraft for which we as a Government have absolutely no responsibility.
I was asked by the noble Earl, Lord Kinnoull, about the sales of the stretched TriStar. At the moment they stand at one aircraft for Saudi Arabia, and three more for the same air line will be retrofitted, totalling 17 engines altogether. This is not at the moment good, but we think that sales prospects are.
To return to what I was saying, British Airways had by this time expressed a wish to have all their heavier weight Boeing 747s powered by the -524 engine. At the same time as giving the go ahead for the use of the TriStar, the Government also said that they would support the application to the Boeing 747 as soon as a second major order was obtained in addition to British Airways' requirements. The noble Lord, Lord Kings Norton, said that his information on this point came from a reliable source and I confirm that he was correctly informed. The costs, including those for thrust growth, were substantial and we considered it prudent to have at least one other major order, besides that of the British company, before committing the whole launch programme. That was not an unreasonable decision to take. The noble Earl said what great prospects there were. He was absolutely certain that all the engines were going to be sold, but all we said was that if there could be one other major order in addition to the
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British company we would support the whole launch programme.
This decision enabled Rolls and Boeing to make a firm unconditional offer to other major airlines. Rolls-Royce and Boeing signed an agreement—as the noble Earl, Lord Kinnoull, reminded us—to carry out initial work on the application until the end of May 1975. It has been said that there are airlines willing to order and that the Government are holding back. This is absolutely untrue. I can only emphasise that if an airline such as ANA, in Japan, is ready to sign, then Rolls-Royce can accept the order and Government support would automatically follow.
The Government are now considering fresh proposals from Rolls-Royce which were not put to the Department in final form—and I emphasise final form—until 16th May. Noble Lords will understand that such proposals have to be studied and that the sums involved are considerable. We have to consider not just the application to the 747 of the engine already under development, but also the costs of developing even the extra thrust which will inevitably be required over the years. I say quite firmly that some of those who have been so certain that we should have gone ahead with this expenditure without demur would have looked much more closely at these costs had it been their own money which was involved.
The noble Earl, Lord Ferrers, said that the British Airways order alone would have justified the extra cost. I suppose it depends on what criterion of justification we apply, but if we apply the criterion of a reasonable return on money invested I can only say that that order from British Airways alone would not so justify the investment. However, the assessment is now complete and we are urgently considering the matter. It is true to say that the longer than usual Recess to accommodate the referendum caused certain difficulties, and my right honourable friend the Secretary of State wrote to the President of the Boeing Aeroplane Company stating that a decision would be made shortly and asking that options should be kept open in the interim period. The Boeing Company have now sent a constructive reply and a decision will be taken within an acceptable time scale.

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I was asked by the noble Earl, Lord Kinnoull, what financial compensation we will give to Rolls-Royce if they are not given the go-ahead on this application. The noble Earl will not be surprised to learn that I do not answer hypothetical questions. All I will say is that the Government's aim wherever possible is to assist Rolls-Royce in developing and exploiting all its products, always provided that any new or developed project has reasonably satisfactory possibilities of an adequate market.
The Earl of KINNOULL: My Lords, before the noble Lord sits down, may I say that I do not think the question is totally hypothetical. As I understand, Rolls-Royce could have withdrawn at the end of May with no costs at all. They hoped that the Government would reach a decision before then. They then managed to persuade Boeing to wait until 10th June and then negotiated, with Government approval I presume, to the end of June. So is it really a hypothetical question?
Lord BESWICK: My Lords, it is certainly hypothetical. The noble Earl asks what we shall do if the agreement to go ahead is not given and I am saying that a decision has not yet been taken. If when it is taken it is an adverse decision, I shall welcome the opportunity of answering the question which the noble Earl then poses.

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