Sitting of 16 June 1975

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

  BROOKWOOD CEMETERY BILL [Lords]
  Order for Second Reading read.
  To be read a Second time tomorrow.

ORAL ANSWERS TO QUESTIONS
  PRICES AND CONSUMER PROTECTION

    Car Parking Contracts (Exclusion Clauses)
    Mr. Greville Jannerasked the Secretary of State for Prices and Consumer Protection whether she will now introduce legislation to ban exclusion clauses in contracts of car parking businesses.
    The Minister of State, Department of Prices and Consumer Protection (Mr. Alan Williams): This is one of the problems on which the Law Commissions' recommendations are awaited. As soon as the Commissions' report is received we shall consider urgently what needs to be done.
    Mr. Janner: Is my hon. Friend aware that we have been awaiting the report for several years and that the delay is quite disgraceful? Is he also aware that in the meantime motorists are paying very high rates to park their cars where they have no alternative but to leave their keys in the ignition and when an employee of the car park smashes up a car the motorist has to pay the bill because of an iniquitous exclusion clause in the contract? What is my hon. Friend proposing to do about this? Does he not agree that it is a disgrace?
    Mr. Alan Williams: I agree that it is a disgrace. I am sure that I do not need to spell out to my hon. and learned Friend that the Law Commissions are independent and not subject to the control of the Department. My hon. and learned Friend must make up his mind how much he wants to preserve the independence of the Law Commissions. He cannot have it all ways. We have made our position clear. I shall be happy to convey to the Law Commissions the point of view that my hon. and learned Friend has expressed.
    Mr. Janner: They know it already.
    Mr. Alan Williams: At the end of the day the Law Commissions are not subject to my control or to my Department's control.
    Mr. Britian: Does the Minister not agree that if the Law Commissions are not subject to the Government's control, the Government are not dependent on the Law Commissions and not obliged to wait until the Law Commissions produce their report? If they are so dilatory in producing their report, why will the Government not act independently of them?
    Mr. Alan Williams: If the hon. Gentleman had followed earlier exchanges on the subject he would realise that the question of exclusion clauses is more complex in relation to services than in relation to goods. The Law Commissions are within one or two months of completing their report. There are complications because of the legal differences in Scotland, England and Wales. This is causing some delay. However, nothing the Government could do in this sector could be as comprehensive as that which we hope to do in a relatively short while, based on the report which the Commissions have almost completed.

    Inflation
    Mr. Adleyasked the Secretary of State for Prices and Consumer Protection by how much the retail price index has risen since 28th February 1974.
    Mr. Giles Shawasked the Secretary of State for Prices and Consumer Protection what is the current rate of inflation based upon a grossing-up to an annual rate of the last three months' increase in the retail price index, and calculate

    929
    on the same basis as the three month figure of 8·4 per cent. quoted by the Chancellor of the Exchequer as being the grossed-up annual rate of inflation for August 1974.
    Sir George Youngasked the Secretary of State for Prices and Consumer Protection what is the latest rate of price inflation expressed at an annual rate.
    The Secretary of State for Prices and Consumer Protection (Mrs. Shirley Williams): The retail price index has risen 25 per cent. over the last 12 months to May 1975 and 32·3 per cent. since February 1974. The change over the last three months, grossed-up to an annual rate, is 53·1 per cent. but the figures are distorted by the measures which the Government have had to take for the reasons my right hon. Friend gave in his Budget Statement.
    Mr. Adley: No matter how much the right hon. Lady may talk about the figures being distorted, is she not aware that the disgraceful figure she has just announced is her personal contribution to 16 wasted months of Socialism? Is she not ashamed of being a member of a Government who are bringing this country to such a state that people going abroad on package holidays now purchase their currency a week in advance to avoid the effect of inflation? As the right hon. Lady is a well-advertised moderate in the present Government, will she now begin to disown the wild Socialist policies that are bringing the country to its knees?
    Mrs. Shirley Williams: The hon. Gentleman will know that over the last year-and-a-bit the Government have cut retail profits by 10 per cent., have announced a three-months' gap between price rises, introduced subsidies on basic foods, introduced investment relief into the Price Code, introduced maximum prices for subsidised food, and extended unit pricing. On every one of those measures the Opposition have attacked us, opposed us or, at best, grudgingly agreed with us. When the Opposition realise that indignation is no substitute for a positive policy I shall listen to them, but not before.
    Mr. Heffer: I entirely accept the point which my right hon. Friend has just
    930
    made, but will she also take into consideration the fact that the time has come for very drastic measures to be taken? Will she consider the whole question of introducing a price freeze on certain basic commodities? I accept that this is very difficult. Nevertheless, will she now consider the proposals by, for example, ASTMS and other organisations, to have a price freeze on basic food commodities?
    Mrs. Shirley Williams: I am interested in any such proposals, including those by trade union leaders. However, it must also be accepted that there must be a general restraint on incomes if a price freeze is to serve any purpose.
    Mr. Giles Shaw: Does the right hon. Lady not accept that we have moved a considerable way from the Chancellor's claim of 8·4 per cent. inflation last August, doubtless based upon a formula for the full-hearted content of the British people? Does she not further agree that over half of last month's staggering price rise was due to the action which the Chancellor took and action which probably the Secretary of State for Employment failed to take in relation to the social contract? When will the Government take some action through the Department of Prices and Consumer Protection to prevent this appalling rate of inflation continuing?
    Mrs. Shirley Williams: I have already indicated to the hon. Gentleman—and he knows it very well—that one of the main reasons for our inflation is not that we are a high-wage country but that we are a low-productivity country. The reasons for that go far back into our recent history. What is essential is to take, over the next couple of years, the investment measures that will enable us to become a high-productivity country. For the present, we require from all sections of the community, including the Opposition, acceptance of restraint for a couple of years, which will enable this process to begin.
    Mr. Dempsey: Is my right hon. Friend aware that the measures she has taken are welcomed as an effort to control the rising cost of living? But does she realise that many of the price regulations are not being enforced? I recognise that it is impossible to enforce them from trader

    931
    to trader, but is it not possible to have random checks to ensure that they are observed?
    Mrs. Shirley Williams: I thank my hon. Friend for what he said. Only recently I instituted a series of special inquiries into individual prices which go beyond the general control of the Price Code. The first reports from those special inquiries are expected very shortly.
    Sir George Young: is the right hon. Lady aware that she recently attracted widespread public support for her announcement in the referendum campaign that she would rather resign from public life than remain committed to an administration pursuing policies in which she did not believe? Will she apply the same high standards and resign from public life if her colleagues in the Cabinet do not introduce measures at once to bring down the disastrous rate of inflation?
    Mrs. Shirley Williams: Like so many of his colleagues, the hon. Gentleman always talks in general terms and never in specific ones. The whole difficulty about the Opposition's approach is that they try to replace policy with expressions of indignation and never face up to the problems of making a voluntary incomes policy work.
    Mr. James Lamond: To take a specific example, has my right hon. Friend had any information from the suppliers of petrol that they will now be able to reduce their prices because of the reopening of the Suez Canal, the closing of which caused them to increase prices some years ago?
    Mrs. Shirley Williams: We shall certainly be closely watching the effects on oil prices of the reopening of the Suez Canal. I also assure my hon. Friend that the Price Commission, with our encouragement, is chasing up all falls in raw material prices to make sure that they are carried through in the final prices.
    Mrs. Sally Oppenheim: As the right hon. Lady has presided over the fastest rise in prices this century—rises which were largely avoidable and which will bring serious economic and social consequences in their wake—does she agree that in the circumstances it would be honourable to resign? Instead of giving lectures and quoting statistics, will she turn
    932
    her attention to the consequences, in human terms, of the devastating rate of inflation—for which her Government are responsible—on the people who have not gained the spoils of the big battalions to protect them against the effects of inflation—people who will suffer a sharp cut in living standards, whose jobs are in danger—[HON. MEMBERS: "Speech."] I can understand that Labour Members do not want to hear this. Does not the right hon. Lady agree that her Government have created the most unfair society in this country since the war?
    Mrs. Shirley Williams: That was, perhaps, a speech rather than a supplementary question. I do not think that calling for resignations across the Floor of the House is a substitute for thinking about ways to solve the nation's problems. The hon. Lady knows perfectly well that her Government's efforts to deal with inflation led straight to the three-day working week. We are trying to find a better answer, based on a voluntary policy. The Opposition would do better to support us and the social contract rather than perpetually undermine it.
    Mr. Adley: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the Secretary of State's answer, and to give her an opportunity for her to hear our proposals, I wish to give notice that I shall seek to raise the matter on the Adjournment.
    Mr. Neubertasked the Secretary of State for Prices and Consumer Protection what is the latest annual rate of inflation according to the Price Commission index.
    Mrs. Shirley Williams: In the 12 months to February 1975 the Price Commission's index rose by 19·6 per cent. This index was published in the most recent quarterly report.
    Mr. Neubert: As the rate of inflation has more than doubled in the last three months, and as the Price Commission stated that any increases in prices have been due almost exclusively to increases in wages, is it not clear that a policy that seeks the control of prices, except the most important price—the price of labour—may well be in the interests of the British Labour Party but not in the

    933
    interests of the British people as a whole, and must be a highly damaging sham?
    Mrs. Shirley Williams: The hon. Gentleman owes it to the country not to make remarks that are quite as wild as that. It is not the case that the rate of inflation has doubled in the last three months. The figure that I gave was 19·6 per cent. on a 12-monthly basis; the figure today is 25 per cent. That is not a doubling by any mathematics. I have made it clear on many occasions, as have my colleagues in the Government, that we are concerned about the level of labour costs. Incidentally, they are not just wage costs, for labour costs generally go far beyond that. The hon. Member simply cannot wave aside the problems of establishing either a voluntary or a statutory incomes policy. We have had long experience of the latter.
    Mr. Tomlinson: Does my right hon. Friend not agree that it is somewhat over-simplistic to argue that there should be a total freeze on prices at the same time as it is argued that there should be greater investment in industry? Do not many people find motivation for investment in a mixed economy in the profitability on their return? While profits need to be controlled, to argue that there should be no return on investment is likely to have major implications in terms of jobs.
    Mrs. Shirley Williams: My hon. Friend is leaping to exactly the opposite conclusion to that to which the Opposition leapt. We have neither said nor denied that there would be a price freeze; we have simply said that all options have to be open at present. It would be as mistaken for my hon. Friend to leap to one conclusion as it is for the hon. Member for Oswestry (Mr. Biffen) to leap to the opposite conclusion. The straight truth of the matter is that these issues are under discussion at present, as the House well knows. The investment relief was introduced by the Government, for the first time, specifically because we recognised the importance of there being the highest possible level of investment in the public and private sectors.
    Sir John Hall: In view of the Chancellor's stated intention to halve the rate of inflation over the next 12 months, will the right hon. Lady say what base figure the Chancellor is using?
    Mrs. Shirley Williams: I would like the hon. Gentleman to ask my right hon. Friend that question because I am not quite sure of the exact phrase to which the hon. Gentleman is referring.
    Mr. Heffer: Is it not absolutely wrong to suggest that the basic cause of inflation is wage increases? While wage increases undoubtedly have a marginal effect on inflation, is it not the case that there are other factors of much greater importance? Is it not clear that in Chile, where a totally free enterprise system has been introduced, inflation has increased by 150 per cent.? Does my right hon. Friend not agree that it is not true to suggest that by lifting all price restrictions inflation is automatically held back? On the contrary, is not private enterprise the biggest ingredient in the creation of inflation?
    Mrs. Shirley Williams: My hon. Friend must accept, as I must, that in recent months labour costs have been the main force behind inflation.
    Mr. Heffer: I do not accept that.
    Mrs. Shirley Williams: I repeat that these are labour costs including the costs of the professions and the self-employed. It does not mean costs which fall only to trade unions. My hon. Friend and I would agree that we live in a relatively low-wage economy and that it is understandable that people try to force up their wages in this situation. The centre of our problems lies in the fact that we have to increase productivity to the extent that we can pay decent wages. These are not problems created over the last year-and-a-bit by the Government.
    Mr. Tim Rentonasked the Secretary of State for Prices and Consumer Protection what plans she has to mitigate the effects of inflation on food prices for those on below average incomes.
    Mr. Alan Williams: The food subsidy programme, together with the operation of the Price Code and other counter-inflation measures, will continue to provide substantial benefit to those on below-average incomes.
    Mr. Renton: Is the hon. Gentleman aware that, due to the failure of his Government to take action sooner, we now have the same inflation rate as Brazil, and that for it to be cured everyone in this

    935
    country will have to take a cut in their standard of living. During this process, what new measures has the hon. Gentleman in mind to protect the old and the weak, who will necessarily be most at risk?
    Mr. Alan Williams: As the hon. Gentleman will appreciate, the Chancellor of the Exchequer is undertaking consultations with both sides of industry on the future programme. In the meantime, the protection which we give to the lower income groups remains.
    Mr. Ronald Atkins: In view of the scaling down of food subsidies, will my hon. Friend resist the introduction of VAT on food as practised in the Common Market?
    Mr. Man Williams: I have no knowledge of any such intention, but my hon. Friend will fully appreciate that that is a question for the Chancellor of the Exchequer, and that it would be utterly wrong for me to try to answer it.

    Household Articles
    Mr. Cartwrightasked the Secretary of State for Prices and Consumer Protection if she will make a statement about the results of her voluntary agreement with retailers and manufacturers to restrain the prices of certain essential household items.
    Mr. Alan Williams: The voluntary agreement covers two lists of goods: one of items which retailers keep on continuous offer, and the other of items on which manufacturers concentrate their promotional price-cuts. The combined price of the retailers' items increased by 19·6 per cent. between May 1974 and April 1975, and that of the manufacturers' items by 22·4 per cent.; together they rose by 20·1 per cent. In the same period the retail food index rose by 25·1 per cent., and the index for manufactured foods by 34·6 per cent.
    Mr. Cartwright: I am glad to hear of that progress, but does my hon. Friend agree that this is an area of price restraint in which the housewife does not understand the system, and that on occasion it can be counter-productive, because she soon forgets the cut in prices at the beginning of the special offer period but remembers the often steep rise in prices at the end?
    936
    Therefore, could any indication be given of total savings to the consumer as a result of the agreement? In any renegotiation of the agreement, will my hon. Friend try to improve the public's understanding of the system?
    Mr. Alan Williams: The saving is between 5p and 6p in the pound. I fully appreciate the point that my hon. Friend makes. It is difficult for consumers to appreciate that they are continually receiving this marginal benefit from the existence of the voluntary agreement. We are discussing what price control, and so on, is to follow at the end of the voluntary agreement, or whether the voluntary agreement is to continue.
    Mr. Richard Wainwright: Will the Minister give an assurance that in his efforts to continue voluntary agreements with retailers he will explore all possible means of ensuring that small self-employed shopkeepers are fully represented in the negotiations?
    Mr. Alan Williams: We shall do what we can to ensure that that is done. We fully appreciate the importance of the small shopkeeper, particularly to those confined to shopping in a limited locality, such as the elderly.
    Mr. Mike Thomas: When the Department has this relative success with private industry, why is it so clearly unable to have any success with the publicly-owned industries, particularly electricity and gas, in keeping down the cost of their products to small consumers—for example, the cost of consuming electricity through a prepayment meter and the cost of consuming small amounts of electricity and gas? When the Department is having this success with the private sector, why cannot it achieve the same success with the industries owned by us and controlled by my right hon. Friends and the House?
    Mr. Alan Williams: I congratulate my hon. Friend in getting his speech in early. There is a subsequent Question on this subject on the Order Paper.
    Mr. Norman Lamont: Reverting to the question asked earlier by the hon. Member for Liverpool, Walton (Mr. Heffer), does the Minister agree that even if the voluntary agreement is not renewed there is no point in using Section 2 of the Prices Act for a total freeze? To

    937
    do that when underlying costs are rising would simply be further to lower investment and increase unemployment. Will the hon. Gentleman give an assurance that the Government will not impose a total freeze?
    Mr. Alan Williams: The Opposition call on us to take action to curb prices and then spell out their opposition to every option. We are willing to consider all options constructively.

    Price Code
    Mr. Biffenasked the Secretary of State for Prices and Consumer Protection what assessment she has made of the impact of the Price Code on the level of the retail price index in the light of the recent trends in raw material and other costs.
    Mrs. Shirley Williams: The Price Code continues to exert a useful influence on the RPI. Precise quantification is not possible.
    Mr. Biffen: Even so, is there not now ample evidence to the Price Commission and the right hon. Lady's Department to suggest that margins in both industry and commerce are narrow and competitive? In those circumstances, does she not agree that to call for a freeze on prices, or, for that matter, on wages, is misconceived and nonsensical?
    Mrs. Shirley Williams: There has been a substantial fall in profit margins in the past 12 months, and profits are not now contributing to the rise in prices, but I do not think that the abolition of the Price Code, which the present Government inherited from their predecessors, would be a very helpful prelude to a major national attack on inflation.
    Sir G. de Freitas: In view of the British Steel Corporation's reduction in the price of certain steels, how soon can my right hon. Friend give an estimate of the effect that that will have on the price of refrigerators and other household items?
    Mrs. Shirley Williams: I would need a little time to consider that question from my right hon. Friend because it takes about four to five months for the prices of raw materials and of processing materials to work their way through to the retail level. As I have said, the
    938
    Price Commission is already under instructions to follow through all falls in raw material and industrial material prices to the point of the retail trade.
    Mr. Geoffrey Dodsworthasked the Secretary of State for Prices and Consumer Protection whether she will review the Price Code in the light of the latest CBI industrial trends survey.
    Mrs. Shirley Williams: I have just amended the code to help exporting firms and reinforce the investment relief. I have no plans for further changes at present.
    Mr. Dodsworth: Does the right hon. Lady accept that the recent survey showing a reduction of investment intentions highlights the fact that investment relief, as it is called, is a restriction, and that 45 per cent. of investment is supported by retained profits and that for income tax purposes 100 per cent. is written off? Surely investment relief should not be substantially increased if it is an impediment rather than an assistance to investment.
    Mrs. Shirley Williams: If it is an impediment, it is surprising that industry welcomed its introduction and also pressed for its increase from 17½ per cent. to 20 per cent. It is a basic part of the Government's philosophy that where policies can be undertaken to increase investment which itself will create new jobs, it is very much in the national interest for that to be done. It is still a surprise to me that the previous administration had no investment relief of any kind in its price code.
    Mr. Evelyn King: Is it not a statistical fact that price increases have been at their steepest since we appointed a Secretary of State for Prices and Consumer Protection? Is it not possible that that is not wholly coincidental and that the more profit margins are restricted the more capital investment is restricted, and the more capital investment is restricted, the more expensive things become?
    Mrs. Shirley Williams: The hon. Gentleman's argument would be stronger if he would recognise that in the last two years there have been massive increases in both oil prices and world commodity prices, which, it is generally accepted, have been the main forces

    939
    behind inflation until the last few months. In the last few months, in consequence of thresholds and other claims, there has been a take-over by the cost of income from the cost of commodities. But there is no doubt that the cost of commodities was the original engine behind the rate of inflation that we now have.
    Mr. Skinner: In view of that answer, will my right hon. Friend guarantee that she will resist any further relaxation in the Price Code in foreseeable economic changes that may be coming in the near future?
    Mrs. Shirley Williams: No, I could not give that guarantee, because in certain circumstances a relaxation of the Price Code, like the recent investment relief relaxation, is directly related to the employment position. Representations have been made to me by trade unions, for instance, with a view to making such a relaxation. There must always be a balance between trying to keep prices down and keeping employment up.
    Mr. Biffen: Is the right hon. Lady aware that one of the most depressing and significant aspects of Question Time today has been her unwillingness to rebut suggestions that we might have a statutory prices freeze? Will she take this opportunity here and now to hold out relief and hope to the industrial and commercial community by saying that she would not countenance a prices freeze because of the bankruptcy that it would inevitably involve for British industry and commerce?
    Mrs. Shirley Williams: The hon. Member will appreciate that, as my hon. Friend the Minister said earlier, it is the first responsibility of the Government to leave all possibilities open in dealing with the rate of inflation.

    Garages (Code of Practice)
    Mr. Loan Evansasked the Secretary of State for Prices and Consumer Protection what report she has received from the Office of Fair Trading regarding the discussion it is having with garages on a code of practice; and what action is proposed.
    Mr. Alan Williams: The Office of Fair Trading announced on 27th May that its
    940
    discussions with the motor trade had led to the adoption by the Scottish Motor Trade Association of a code of practice in respect of used cars. It is hoped the rest of the United Kingdom trade associations will follow the Scottish example.
    Mr. Evans: I thank my hon. Friend for that reply. Does he not agree, however, in view of the increase in petrol and other motoring costs, that there is greater need for consumer protection for the motorist than ever before? Will he look again at the Consumer Association report, which showed that one-third of the cars leaving garages were inadequately maintained and two-thirds were dangerously inadequately maintained? Does not something need to be done, and done urgently?
    Mr. Alan Williams: Yes, Sir, but it is a matter of doing something as urgently as possible which will be effective, when dealing with a series of outlets scattered throughout the country, many of them very small. I am sure that my hon. Friend will go along with me in congratulating the Director General and the Scottish Motor Trade Association on the first breakthrough in this sector. The schedule of inspections that we have agreed to is very valuable, and no obstacle has been put in the way of progress in England and Wales; it is just that the Scots started earlier. We hope to see this extension into England and Wales, including new cars and servicing generally.
    Mr. Greville Janner: I congratulate the Scots on their forward movement, but what is my hon. Friend proposing to do to stimulate the English and Welsh into doing likewise? Can he show to the learned and independent members of the Law Commission how much progress has been made in other sectors, so that they may try to sink their international difference?
    Mr. Alan Williams: My hon. and learned Friend seems determined to return to a point that he made earlier. I would probably be rebuked by you, Mr. Speaker, if I followed his example. For England and Wales, the Director General assures me that he is not meeting any obstacle from the trade, and that the trade is co-operating fully and willingly in attempting to establish a good code

    941
    of practice in England and Wales. We hope that he will reach a suitable conclusion soon. We expect that he will come to some agreement by about the turn of the year, or early next year.

    Food Manufacturers' Charter
    Mr. Banksasked the Secretary of State for Prices and Consumer Protection whether she will make a statement about the Government's policy towards the proposals in the food manufacturers' charter.
    Mrs. Shirley Williams: The trade has agreed that there should be such a charter. I am discussing this question with it at the present time.
    Mr. Banks: In view of the rapidly rising costs of manufacturers, does the right hon. Lady agree that it is urgent to have a move towards a voluntary policy which will take account of all the costs with which manufacturers are faced directly as a result of the Government's voluntary wages policy?
    Mrs. Shirley Williams: It is the Government's policy to enter into voluntary planning agreements with industry, but the outline of the food charter is still in very general terms and we are discussing with them the details which the food manufacturers have in mind.
    Dr. Miller: My right hon. Friend seems rather timorous—if I may use a Scottishism—about any attempt being made to impose a wage freeze. Will she tell us that she will not agree to the blandishments of the trade to have a free-for-all in prices, and that everything she has been doing in this respect will be kept up in the months ahead?
    Mrs. Shirley Williams: My hon. Friend need have no fear that I would like or want to see any kind of free-for-all in prices at present. That would be madness.

    Food Subsidies
    Mr. Rostasked the Secretary of State for Prices and Consumer Protection if she is satisfied with the effect of food subsidies on the cost of living.
    Mr. McCrindleasked the Secretary of State for Prices and Consumer Protection by what percentage the payment of
    942
    food subsidies has reduced the average cost of those items to which they apply.
    Mr. Wellbelovedasked the Secretary of State for Prices and Consumer Protection what effect food subsidies have had on the cost of living; and if she will make a statement.
    Mr. Alan Williams: The present saving in the General Index of Retail Prices as a result of food subsidits is estimated to be 1·4 points, while the reduction in the average cost of subsidised foods is estimated to be about 20 per cent. These savings are particularly helpful to low-income families which have to spend a high proportion of their money on food and other necessities.
    Mr. Rost: The right hon. Lady was asking for specific suggestions. As food subsidies are making only a marginal impact on food prices, yet adding substantially to inflationary pressures because they are increasing Government spending, would it not be more sensible to reallocate these blanket, indiscriminate and wasteful subsidies to those families and pensioners who are being hit worst by the ravages of inflation?
    Mr. Alan Williams: The hon. Gentleman must have misheard what I said in my answer. I made it clear that food subsidies are making a 20 per cent. difference to the prices of subsidised foods. In terms of benefit, they are four times as valuable to a family with an income of £20 or under per week as to a family with an income of £80 or over per week.
    The Opposition are in little position to criticise when, in government, for years they pursued a policy of subsidising the nationalised industries, where the benefit was 2 to 1 in favour of the high-income groups.
    Mr. Wellbeloved: As my hon. Friend's answer clearly demonstrated that, in terms of subsidies on basic foods, the less well off are receiving substantial help, will he give an undertaking, in view of the efforts which will be made to re-vamp the social contract in the weeks ahead, that subsidisation of basic foods will continue in order to assist the less well off in our community?
    Mr. Alan Williams: It is our intention that the subsidies on food shall continue. We have announced the programme for the following year. There will be no cut in them until the next financial year. There is no question of the subsidies being terminated. It is a matter of their being phased out systematically.
    Mr. MeCrindle: I accept the point that the less well off are being benefited to some extent as a result of the food subsidy policy, but will not the right hon. Gentleman take on board the reasonable point, put by my hon. Friend the Member for Derbyshire, South-East (Mr. Rost), that if the Government wish to continue to direct most help towards these people it could be more effectively and perhaps more generously done direct through the social services benefit system?
    Mr. Alan Williams: I appreciate the hon. Gentleman's attempt to be constructive. In the Chancellor of the Exchequer's announcement of public expenditure cuts, the increases that were scheduled for the social services were not in any way cut. For example, there will be a further uprating of pensions and associated benefits in November, the non-contributory invalidity scheme, and the help for the one-parent family.
    Mr. Skinner: If the food subsidy system is so egalitarian in its nature, why are food subsidies being phased out progressively?
    Mr. Alan Williams: It was never envisaged that food subsidies would be continued permanently. As my hon. Friend will remember, at the time when he supported the original programme in the House it was made clear that food subsidies were an interim measure. My right hon. Friend made it clear that in the long term she was envisaging more on social security benefits—for example, if a new system such as that for one-parent families could be devised—and that we would move away from food subsidies. It was always envisaged that the food subsidies would be short-term, and the Act was brought in for two years.
    Mr. Ridsdale: What effect have food subsidies on the retail price index? Would it not be better, for example, to look at
    944
    the rating system, and methods of reforming it?
    Mr. Alan Williams: The amount being paid in food subsidies is £550 million, in real terms. I ask the hon. Gentleman to read my answer, in which I stated their impact on the retail price index.
    Mr. Hooson: If the hon. Gentleman is right—and I accept it—that the value of food subsidies to a man on £20 a week is four times that to a man in a higher income group, does this not show, in itself, that there is a great deal of waste in the system and that it distorts the value of food in relation to other commodities in our community? Would it not be much better to give the lower income groups the help they undoubtedly need much more directly?
    Mr. Alan Williams: The hon. and learned Gentleman is aware that we have looked at a whole series of alternatives. Food subsidies were introduced because they could apply immediately. In addition, experience of schemes introduced by the Opposition—I accept their motives, but their methods were wrong—such as the family income supplement, and so on, all had a low uptake and did not get to the people who most needed the help.
    Mr. Ioan Evans: Does not my hon. Friend agree that subsidies on essential foods, such as milk, bread, butter and cheese, have kept food prices in this country much lower than those in neighbouring European countries? Would it not be possible at the point of sale to show the amount of the subsidy to the consumer so that she could appreciate the benefit of the Government's action in subsidies?
    Mr. Alan Williams: The difficulty about that suggestion is that in a period of high inflation various changes would make it difficult and possibly confusing to give such information. My hon. Friend should also bear in mind the risk that if too much information is given at the point of sale, at the end of the day the consumer ends up getting no information.
    Mrs. Sally Oppenheim: Does the hon. Gentleman acknowledge that as the average family has to spend over £12 a week more than it did last year, and as poorer families need £10 a week more, and as

    945
    the pension for a married couple will have to go up by £5 in December to restore its purchasing power to the level of last July, in this context the 85p a week that food subsidies are saving families is insignificant and irrelevant? Could not the Government have helped people far more by restraining inflation instead of trying to conceal it?
    Mr. Alan Williams: The hon. Lady states the obvious when she says that it would be better to restrain inflation. Both parties have been trying to find effective methods of doing just that, and we have invited the co-operation of both sides of industry in achieving an agreed policy. The hon. Lady constantly repeats the record and I congratulate her on having had it played on the radio for the first time today, but no doubt the listeners will become as familiar with it as we are. So far, the Opposition have not come up with a single alternative.
    Mr. Wakehamasked the Secretary of State for Prices and Consumer Protection if she will make a statement on the implementation of the Government's proposals to scale down food subsidies.
    Mr. William Hamiltonasked the Secretary of State for Prices and Consumer Protection if she will make a further statement on her proposed phasing out of food subsidies.
    Mr. Alan Williams: We have not decided the adjustments to be made in particular subsidies in 1976–77. The position will be considered nearer the time in the light of developing economic conditions and the expected price movements for the various subsidised foods.
    Mr. Wakeham: I accept the need, expressed on all sides of the House, to help those on low incomes, but does the hon. Gentleman not agree that confidence in the pound sterling will not return until we, as a nation, stop subsidising consumption? Will that process not be painful for all sections of the community?
    Mr. Alan Williams: I do not agree with that conclusion. It is not necessarily valid. There are far more important factors which relate to confidence. I do not think it did confidence any good to have
    946
    such an irresponsible speech as that which we had from the Leader of the Opposition at the weekend.
    Mr. William Hamilton: Since it was the Government's argument in favour of food subsidies that they protected those on low incomes, is that not a reason to retain them? Will it not be much more difficult—
    Mr. Skinner: It is the Common Market.
    Mr. William Hamilton: It is nothing to do with the Common Market. Does my hon. Friend not agree that it will be much more difficult to get an acceptable voluntary incomes policy if food subsidies are phased out, because of the consequential rise in the price index? Does my hon. Friend not agree that the trade unions will not accept that there should be an increase in food prices at a time of income restraint?
    Mr. Alan Williams: I accept the problem put by my hon. Friend. The change that has been envisaged for next year—and I stress that it is next year; there are many months before the change comes into operation—will still add only half per cent. to the cost of living at a time when the Chancellor envisages a substantial change in the rate at which the cost of living is increasing.
    Mr. Hardyasked the Secretary of State for Prices and Consumer Protection what has been the value of food subsidies to the average family in Great Britain for each week; and the value for each person, during the last 12 months.
    Mrs. Shirley Williams: The latest estimate of the value of food subsidies to a typical family of two adults and two children is about 75p per week. During the last 12 months the estimated average value per person has varied between 15p and 23p per week.
    Mr. Hardy: Does my right hon. Friend agree that the subsidies have been of great help to millions of people and that this help has been insufficiently appreciated in the country? Does she also agree that the absence of that help would be noticed by those to whom a half of 1 per cent. increase in the price of food is a great deal?
    Mrs. Shirley Williams: I thank my hon. Friend for what he said. The Conservative administration did not see fit to increase family allowances at all, but food subsidies have been of direct help to people with several children to raise.
    Mr. Gow: Is it not the case that out of the total amount of subsidies for the current year, namely, £550 million, £280 million is going to families with more than £50 a week and only £270 million to families with less than £50 a week?
    Mrs. Shirley Williams: The hon. Gentleman is falling into the common statistical error of comparing households which are mostly one- and two-person households—that is, pensioner households—with households which are normally four- and five-person households in the upper income brackets. If he were to look at the benefit per capita, he would find, as we have said, that the proportionate benefit to low income households is between three and four times what it is to high income households.

    Advertising and Packaging
    Mr. Gwilym Robertsasked the Secretary of State for Prices and Consumer Protection what study she has made of the amount spent on advertising and packaging goods, and their respective contribution to prices; if she will take steps designed to reduce advertising and packaging expenditures; and if she will make a statement.
    Mrs. Shirley Williams: Estimated expenditure on media advertising was £870 million in 1973. A Government-sponsored study of the economics of advertising will be published later this year. Expenditure on packaging is estimated at £1,700 million for 1974. The Waste Management Advisory Council, set up by the Government, is studying the possibility of eliminating excess packaging.
    Mr. Roberts: Is my right hon. Friend aware that many of us hope that before very long the Government will introduce controls on the advertising of essential commodities? Even so, we believe that in the meantime it is essential to curb some of the obvious excesses of our society, such as unnecessary advertising and packaging. Is she aware that such a
    948
    curb would be generally welcomed by the community?
    Mrs. Shirley Williams: I sympathise with my hon. Friend's anxiety, especially in respect of excessive packaging, for much of which there is no justification. With advertising it is very much a matter of looking at the facts in each case. Sometimes advertising has the effect of lowering costs and at other times of raising them. My hon. Friend will be aware that my Department is in close consultation with the industry about ways in which the position may be improved.
    Mr. Rifkind: No one wishes to see excessive advertising, but will the right hon. Lady bear in mind that the survival of many newspapers, or at least their cost to the public, depends largely on the amount of advertising that they are able to carry?
    Mrs. Shirley Williams: Yes, that true. The real danger with advertising is that it can sometimes create a more inflationary climate than would otherwise exist. I have in mind the example of some of the advertising for financial credit schemes in 1973, at a time when the previous administration was trying to cope with a massive but out-of-hand boom.
    Mr. Mike Thomas: On a point of order, Mr. Speaker. May I ask my right hon. Friend either to answer my supplementary now, or Question No. 10 now, or both at the end of Question Firm?
    Mr. Speaker: That is not a matter of order.

    Diabetic Foods
    Mr. Rookerasked the Secretary of State for Prices and Consumer Protection if she will amend the Price Code so as to exclude the weighting of price increases in diabetic products with costs not related to their manufacture.
    Mr. Alan Williams: My right hon Friend told the House on 17th April that she had asked the Price Commission to look into the price of diabetic foods. It will be decided whether there is need for any action when we have seen the commission's report.
    Mr. Rooker: May I give my hon. Friend an example of the need for action?

    949
    One of my constituents went to complain about an increase in the price of diabetic chocolate biscuits at Boots and was told that the reason for a massive increase was the big increase in the price of sugar.
    Mr. Alan Williams: I can understand the consumer's no doubt bemused reaction. However, it is interesting to note that although the price of sugar has risen massively, the price of sorbitol, which is a substitute, is still twice as high as that of sugar. We must wait until we have received the report and then consider what action may be taken

    Central Heating
    Mrs. Sally Oppenheimasked the Secretary of State for Prices and Consumer Protection whether she will arrange for an investigation of door to door selling and financing of central heating.
    Mr. Alan Williams: The Director-General of Fair Trading is already engaged in a review of doorstep selling. The financing of central heating installations will be covered by regulations to be made under the Consumer Credit Act.
    Mrs. Oppenheim: Does the hon. Gentleman not agree that the Consumer Credit Act can be brought into this? Since some of the firms involved have been named in newspaper articles, would not this be an ideal situation for the Director General of Fair Trading to invoke Section 38 of the Fair Trading Act to warn those companies and to take whatever appropriate action may be necessary in the Restrictive Practices Court?
    Mr. Alan Williams: The hon. Lady will know that we discussed this matter at considerable length in the House last week. I am sure that we all very much regret that she was not able to be with us.
    Mrs. Oppenheim: It was an Adjournment debate.
    Mr. Alan Williams: It may have been an Adjournment debate, but it was an extended one. We would have welcomed the hon. Lady's point of view. Dealing with the point about the Consumer Credit Act, I can tell the hon. Lady that we shall be introducing licensing in the autumn. That will be an ideal opportunity for the Director General to impose further discipline upon those who
    950
    have behaved in what I know the hon. Lady would agree can be described as a shabby way towards the consumer. I am sure that the Director General will welcome any information that the hon. Lady can give about individual firms.
    Mr. Wellbeloved: Does my hon. Friend accept that there are Labour Members who would join with the hon. Lady in calling for stringent action to be taken against those free enterprise contractors who exploit the consumer when selling central heating? Is it not worth reminding the House and the country that the best people to give advice on central heating are at the electricity boards and gas boards? Further, is it not the case that such advice is free?
    Mr. Alan Williams: That is extremely sound advice. It is valuable for the House to warn the consumer as often as possible of the risks he faces in buying from some doorstep salesmen. Most of them are decent, genuine traders. It needs only a small proportion of people trading in high-cost goods like central heating to do tremendous harm to large numbers.

    Price Commission
    Mr. Ian Stewartasked the Secretary of State for Prices and Consumer Protection whether she will make a statement on the latest report of the Price Commission.
    Mrs. Shirley Williams: The report deals with many topics, including movements in labour costs, and material costs. The report says that prices were still being affected by the increase in oil prices but once this worked its way through, rising prices would largely be due to rising labour costs.
    Mr. Stewart: In the light of the Price Commission report, does the right hon. Lady consider that there is any further scope for restricting price increases by limitations on wholesale or retail margins? Will she say whether her plan for continuing restraint of prices will take into account the danger of promoting unemployment through the erosion of profit margins, caused in many cases by a delay in approving price adjustments at a time of high and accelerating inflation?
    Mrs. Shirley Williams: As I have already said, we are trying to strike a balance between the needs of investment and the maintenance of employment, on the one side, and the need to reduce the rate of inflation, as far as possible, on the other. It is with this in mind that I have given the Price Commission additional powers to make special inquiries about individual prices while retaining a general structure of control over the profits of enterprises.
    Mr. Lipton: What is the Price Commission doing about the excessive cost of ice-cream, hamburgers, and so on, charged by street traders in the West End? Let us forget all these airy-fairy theories. What is it doing about that?
    Mrs. Shirley Williams: Since one of my hon. Friend's colleagues has asked exactly this Question, it would be unfair of me to answer it in reply to a supplementary question.

    Consumer Advice Centres
    Mr. Cryerasked the Secretary of State for Prices and Consumer Protection if she is satisfied with the number of consumer advice centres currently available.
    Mrs. Shirley Williams: In June 1974 there were about 35 consumer advice centres now there are about 60, including mobile units. In addition, there are 670 citizens advice bureaux, an increase of 45, most of which now deal with consumer problems.
    I would like to see this development go further when the economic situation permits. But at present the Government consider that the enforcement of consumer protection legislation, much of it new, including the Consumer Credit Act, must, within the constraints on local authorities' spending, have priority over new developments in consumer advice.
    Mr. Cryer: But will my right hon. Friend accept that the implementation of consumer advice centres is an important part of the social contract? Does she agree that in Labour's Programme 1973 we stressed the importance of establishing a nation-wide system of high street consumer advice and control units to which the consumer could go immediately and ask for the price control mechanism to be operated, instead of the present rather
    952
    haphazard system? Will my right hon. Friend urge action to be taken on this?
    Mrs. Shirley Williams: I think that my hon. Friend will accept, coming as he does from one of the leading local authorities in this field, that there has been a very sharp jump forward in the last 12 months. Indeed, if I were to give him the figures from when the Government came to power in February 1974, he would see that there has been about a fivefold increase in the number of consumer advice centres as well as an increase in the number of citizens' advice bureaux. I assure him that I yield to no one in believing that these are of crucial importance, but it would be a mistake for Parliament to pass legislation and then not to finance the means of enforcing it as quickly as possible.
    Mr. Michael Morris: Is it not true that, on a cost-effective basis, citizens' advice bureaux are giving far better value for money than are consumer advice centres, particularly at a time when there is a great shortage of local authority funds?
    Mrs. Shirley Williams: I think that the hon. Gentleman would find it hard to sustain that argument. It depends very much on the citizens' advice bureaux at which one looks and in what area, because the citizens' advice centres are virtually all in metropolitan areas, with relatively high rent and rate costs to meet. But my strong impression from those advice centres which have been in being long enough to return effective reports is that in many cases they are more than saving their ratepayers the cost of running them. We are endeavouring to get full reports so that we can put a complete picture before the House, but as many centres have been running for only a matter of months, and in some cases weeks, the hon. Gentleman will appreciate that it will be a little time before such a report can be brought forward.
    Dr. M. S. Miller: May I draw my right hon. Friend's attention to a change in practice in the consumer advice centre in my constituency, which is one of the two consumer advice centres in Scotland? Is she aware that the control of it is now in the hands of the regional authority and that, instead of the director of the consumer advice centre being able to

    953
    drive a bargain with the retailer, problems now have to go through a cumbersome mechanism, with letters being written? This is disadvantageous to the customer.
    Mrs. Shirley Williams: I assure my hon. Friend that we have urged local authorities not that they devolve on the districts the major responsibility which was left with the county authorities under local government reorganisation but that, as far as possible, matters of consumer complaint should be dealt with locally, which gives a much more effective and helpful service.
    Mr. Teddy Taylor: Is the right hon. Lady aware that the high-powered and expensive expertise offered by gas and electricity consultative councils is not used a great deal by people who need the advice? Therefore, will she discuss with the gas and electricity boards the possibility of these consultative councils having officers available to help the public in consumer advice centres?
    Mrs. Shirley Williams: The hon. Gentleman will be aware that the question of the structure of nationalised industries' consumer councils has been sent to the National Consumer Council for review, and we hope that one of the things which will emerge from it is a simplification of the direct service to the consumer, who often finds it easier to go to one point of assistance rather than to many.

    Referendum
    Mr. Mike Thomasasked the Secretary of State for Prices and Consumer Protection whether she will make a statement on the referendum result as it affects the work of her Department.
    Mrs. Shirley Williams: Since I took office I have made numerous representations in the consumer interest on European Community matters, notably in relation to agricultural, competition and consumer protection policy. I shall continue to pursue these questions, and I am happy to say that the Commissioner in charge of consumer affairs will be coming here to see me shortly.
    Mr. Thomas: May I congratulate my right hon. Friend on the part she played in the referendum campaign, and may
    954
    I say how anxious a number of us on these benches are that this House and her Department play their full part in European matters now that we are in the Community to stay? Is she aware that a number of our Socialist colleagues in Europe will be almost as interested as I am to learn the answer to my earlier supplementary question? If she could give it while answering this supplementary question, I should be extremely pleased.
    Mrs. Shirley Williams: I am interested in all aspects of consumer affairs, and, as in Europe, I endeavoured to get the agricultural Commissioner to consider more closely the interests of consumers in drawing up agricultural policy, so domestically I am anxious to persuade the electricity and gas boards to take into account the concern of small consumers for pricing policies which are less regressive than they are at present.

    Ice-Cream and Coca-Cola
    Mr. Crouchasked the Secretary of State for Prices and Consumer Protection if, in the interests of visitors and overseas tourists, she will refer to the Price Commission the prices being charged for ice-cream and Coca-Cola outside the Palace of Westminster.
    Mr. Alan Williams: I am concerned about the reports of excessive charges by some street traders, but a reference to the Price Commission would not be the right remedy for a problem which may well involve unlicensed trading.
    Mr. Crouch: Will the Minister take from me a suggestion as to the right remedy for the traders outside this temple? If they cannot observe the prices recommended by the manufacturers of these soft drinks and ice-cream, and continue to charge prices which are three times as much as they should be, thereby rooking tourists and visitors to this country, they should be chucked out. I suggest that we put up in St. Stephen's Garden and other places, notices of recommended prices, and so safeguard our tourists.
    Mr. Williams: I am afraid that the hon. Gentleman is wrong if he thinks that this problem is confined to the immediate area of the Palace of Westminster. If it were, it would be easier

    955
    to solve. This sort of abuse and cheating of tourists takes place on a wide scale in London, and one of the difficulties is pinning down the people concerned. As they are unlicensed, they are often difficult to trace. For this reason, I have invited the London Tourist Board to a meeting with me this week, so that we can discuss what further measures can be taken. I am sure that this and the publicity that the hon. Gentleman has now given to the matter will help tourists. I think that magistrates could also help by not imposing such derisory fines when these people are caught.

NORTHERN IRELAND
Mr. Powell Mr. Powell (by Private Notice) asked the Secretary of State for Northern Ireland if he will make a statement on the severe recrudescence of violence in Northern Ireland in the last 48 hours.
The Secretary of State for Northern Ireland (Mr. Merlyn Rees): There were a number of incidents in Northern Ireland during Saturday and Sunday, 14th and 15th June. On Saturday 14th June two people were killed and 10 injured. The main incident was in New Lodge Road, Belfast, when a woman was killed and five persons were injured in the same attack when gunmen carried out a shooting attack; in addition, a man was killed by a gunman at the Garden Bar in the Tiger Bay area, and there were two other shooting incidents, involving injuries, in Belfast. There were also incidents involving injuries in Castlewellan, Co. Down, and Larne. On Sunday 15th June a man was injured by a gunman in the Village, Belfast. There were other attacks in Belfast but no one was hurt. The RUC is taking every possible means to deal with these incidents and 18 people have been charged with murder, attempted murder, and explosives and firearms offences in respect of those incidents.
In addition, the House will be aware of incidents which occurred last Friday, including one in which a child was killed and her father seriously injured in Belfast; and in the early hours of this morning, weapons and ammunition were stolen from the UDR centre at Magherafeld, Co. Londonderry.
956
Since the Provisional IRA cease-fire, violence has continued but its nature has changed. The cease-fire has brought into sharp focus a great deal of violence in, and between, both communities. This violence has got to be stamped out if the road forward in Northern Ireland is not to remain blocked for ever. The security forces are doing everything possible; the help of the people of Northern Ireland is essential to them in this vital task. As I stated in the answer which I gave to my hon. Friend the Member for St. Pancras, North (Mr. Stallard) on 11th June, during the period 1st January to 9th June 1975 52 attempted murder charges, 199 firearms charges, 35 explosive charges, 131 theft charges and 45 other security-type charges were made. These figures do not include murder charges, of which there have been 54 so far this year.
Mr. Powell: While recognising the volume of successful action taken by the RUC, to which, despite the right hon. Gentleman's efforts, not sufficient publicity is probably given, may I ask him two questions? First, what has been the rôle in these matters in recent days of the incident centres? Second, bearing in mind that uncertainty as to the future status of Northern Ireland is the breeding ground of violence, is it not the case that those who purport to issue and to give circulation to baseless and improbable rumours as to Her Majesty's Government's action in hypothetical circumstances bear a grave responsibility for the consequences?
Mr. Rees: The incident centres have been used both ways to try to find out who has been involved in the violence of the last few days, and, indeed, of the last three or four months. But I must make a basic point that is sometimes ignored. The cease-fire is not complete, it is not genuine and sustained, but in terms of the violence within a community, sectarian violence, the killings and the murderings are taking place from both sides of the community—indeed, on balance, in terms of murders, from the majority community. It is most important to get that into perspective.
On the second question, of course uncertainty plays a part, but the more I look at it the more I realise that there

957
are people in Northern Ireland who are motivated not by political ideals or ideas but by killing for the sake of killing. For instance, if the right hon. Gentleman could tell me what was involved in spraying a bus queue with machine-gun fire which killed and injured people, what that was supposed to do for the future of the community on either side, I should be obliged. I cannot sum it up. This is deeper and more senseless than perhaps any of us realises; and it is the cease-fire which has isolated it.
Mr. Flannery: I know that my right hon. Friend would not want anyone to say anything which would inflame a difficult situation, but would he not agree that the catalogue of melancholy actions is getting deeper and deeper and that, so far, the political actions which we have taken do not seem to have had the effect that we had hoped for? Therefore, is not a complete reassessment of our political approach to Northern Ireland absolutely necessary because at the moment we are getting nowhere?
Mr. Rees: My hon. Friend has fallen prey to the English disease of pretending that there is a simple answer to the problem of Northern Ireland——
Mr. Flannery: The present approach is not working.
Mr. Rees: My hon. Friend says that it is not working, which illustrates the same point. Years of hatred are involved in present events. There is one point: thank heaven the number of men in the Army who have been hurt or killed since the end of last year is much lower, which is a part of the story that I was trying to indicate of the different nature of the present violence.
What is happening in Northern Ireland now is that, with the IRA violence very much lower, this violence is taking place in working-class areas—I use the phrase advisedly—and it is sectarian, inter-sectarian, Chicagoesque, and, politically, I do not believe that even a political solution would solve this problem. It will go on even if we came up with a nice simple solution to the problem of 800 years.
Mr. Neave: While one congratulates the RUC on its efforts to deal with these terrible incidents—efforts which have been well recognised by the welcome honour
958
to Sir Jamie Flanagan which we heard about on Saturday—is it not the case that the Government are resolved, whatever may be said to the contrary, that our forces shall continue in support of the civil power until normal policing by the RUC throughout the Province is possible?
Mr. Rees: Yes, Sir. Support by the Army for the civil power is marked by the presence in Northern Ireland of 13,000 soldiers. But when the Army first went there five or six years ago it was for a particular purpose. There is no denigration involved in what I say, because I am fully aware of the incredible rôle that it has played. A great deal of what I have described today is not capable of solution by soldiers; it needs detective work and the sort of investigation that the RUC is used to. This is the nature of the change which has taken place, and I am grateful for this opportunity to illustrate the changed nature of the security situation in Northern Ireland. It would be wrong to pretend that the violence comes only from the minority community. That is not the case. It comes from both sides. We have to mark that well.
Mr. Thorpe: May I ask the right hon. Gentleman about a matter for which we do have responsibility? That is the raid on the UDR depot. Is it not the case that a large number of weapons were stolen and that it is suggested that between a minimum of three and a maximum of nine people only were involved? Does that not suggest that security was very lax? In order to prevent these weapons from spreading into very dangerous hands, has the area been cordoned off and have we sought and received the support of the authorities of the Republic on the border?
Mr. Rees: Without wanting to avoid answering those questions, I must make it clear for the record that the UDR and the Army, when it comes to answering Questions in the House, are the responsibility of the Secretary of State for Defence. However, I have, of course, looked into that matter this morning. A great deal is being done in regard to the raid on the UDR armoury last night. It would be foolish of me to give any indication of what is involved. It is not easy, when this sort of thing happens, for the spread of arms to one or other of the para-military organisations to be prevented. But

959
it is a bad thing and everything is being done to deal with it. Without checking on the telephone, I do not know at the moment the preliminary view of the security forces. Here again. I would advise against jumping to conclusion as to which of the para-military forces carried out this raid overnight.
Mr. Kelley: Does not my right hon. Friend agree that a monumental mistake was made when we entered, in a military sense, into the Northern Ireland situation? Would it now be wise to review the position from the point of view of a withdrawal and allow the people of Northern Ireland to try to sort out their own problems in their own way?
Mr. Rees: I have just reported that the people of Northern Ireland are trying to sort out their own problems in their own way. Their own way is not pleasant. I repeat a point of view which I sometimes hear. It is largely a working-class fight which is taking place in Northern Ireland. I refer to 1969. It is easy after the event to say that going in in that way was a monumental mistake. The Army was already there, because Northern Ireland is part of the United Kingdom. The job of this Government—as I am sure it was of the previous Government—is to obtain normal policing, with normal civilian forces to deal with this matter. It is not meant that the Army should deal with this kind of problem. However, it has a rôle to play there. I hope that when, from time to time, the number of soldiers in Northern Ireland is reduced it will not be seen as a case of pulling out but will be seen as a case of dealing with a situation in the best way.
Rev. Ian Paisley: Will the Secretary of State take it that the hon. Members on these benches from Northern Ireland agree with him that a section of the majority population has been involved in the most dastardly deeds? Will the right hon. Gentleman agree that the majority of the Protestant population in Northern Ireland completely dissociate themselves from these actions which are supposedly done in their name? Will he confirm that the Protestant population in the main are supporting, through their leaders, the members of the Royal Ulster Constabulary as it carries out its work? Will he
960
say whether he takes heart that tomorrow in the Northern Ireland Convention, for the first time in Northern Ireland politics, an all-party motion proposed by the leader of the UUC, and seconded by the leader of the SDLP, condemning violence will be discussed? Does he not feel that that is an omen in the right direction?
Mr. Rees: Taking the hon. Gentleman's last point, when I first proposed to the House that there should be a meeting and a Convention, representing the people of Northern Ireland, composed of people sitting together and putting their minds to the political problems of Northern Ireland, there were many who believed that that was impossible. I do not deny the difficulty. This past weekend illustrates that. There are many signs in the Convention that the representatives of Northern Ireland stand a better chance than those from outside in working out their future. This is about the only comment I have made in recent months. Tomorrow's activities in the Convention show what can be done. I note with interest what the hon. Gentleman said. We have faced difficulties together. As he said today, he has spoken out against violence. That cannot but be helpful. The majority of both communities want peace, but there is a small group of people with guns. That is the measure of the political problem in Northern Ireland.
Mr. Duffy: Is the Secretary of State aware that the reported detention of four men almost immediately after the indiscriminate shooting in the New Lodge area is very much to the credit of the soldiers involved? It is very reassuring. Will the Secretary of State say whether that action fairly reflects the growing success of the police and the armed forces in dealing with these terrible sectarian attacks?
Mr. Rees: The difficulty, when we move into the area of cases being considered by the courts, is that I must not get involved in matters which are sub judice. On Saturday afternoon the men of the Second Parachute Regiment—I saw the Officer Commanding on Saturday evening—apprehended some people shortly after the machine-gunning took place. I must leave the matter at that point. This illustrates the fact that the police are too stretched to patrol the interfaces, and that the

961
Army has a rôle to play, and that it did on that occasion apprehend a number of people. We must await the outcome from the courts.
I should like to pick up one of my hon. Friend's points. Those persons were not detained by me. They will go through the courts. That is the measure of the change which is taking place.

UGANDA (MR. D. HILLS AND MR. S. W. SMOLEN)
The Secretary of State for Foreign and Commonwealth Affairs (Mr. James Callaghan): With your permission, Mr. Speaker, and that of the House, I should like to make a statement about the two British subjects imprisoned in Uganda.
Hon. Members will know that Mr. Hills has been convicted and sentenced to death by a military tribunal on charges connected with his authorship of a book, as yet unpublished, which has been held to be critical of President Amin. Mr. Hills had previously appeared before a civil court, when similar charges against him were withdrawn by the prosecution and the magistrate stated that there was no case to answer.
Mr. Smolen has also appeared before a military tribunal on a charge of hoarding under the recently introduced Uganda economic crimes decree. Under this decree he is liable, if convicted, to a maximum penalty of 10 years' imprisonment. However, President Amin is reported by Uganda radio to have said that he too will face the death penalty if found guilty. Mr. Smolen's case has been adjourned until 18th June.
Her Majesty's Government have been embarked on an intense round of diplomatic activity since the danger to Mr. Hills' life first became apparent. I cannot at this moment indicate all the steps which are being taken, but a number of world leaders and Governments have made or will make representations to President Amin on humanitarian grounds on behalf of our two citizens. Some have requested that we should not reveal the messages they have sent, and I shall, of course, respect their confidences. It could in any case well be that their messages will thus be more effective. The
962
House will wish me to express its appreciation to them and particularly to President Kenyatta, who has been in contact with President Amin on several occasions and through whom we have been aware of developments in the Ugandan position.
I have instructed our acting High Com missioner in Kampala, Mr. Hennessy, to deliver the personal message to President Amin signed by the Prime Minister, and he has done so today.
The normal means of communication between Governments are through diplomatic representatives. I have, of course, given very careful consideration to the report emanating from radio Uganda that President Amin has demanded that the message be delivered by myself or by my right hon. Friend the Secretary of State for Defence, although the Ugandans have not so notified us in any formal way. I wish to inform the House that I do not think it would assist good relations between our two countries in the long run if I were to deliver such a message under duress. [HON. MEMBERS: "Hear, hear.") But if, as I hope, humanity prevails in the cases of Mr. Hills and Mr. Smolen I should be very willing to discuss with President Amin in the near future the state of relations between our two countries. Amongst the subjects I would wish to raise with him is the future of the 700 or so Britons remaining in Uganda.
I am grateful to hon. Members who refrained from pressing me to answer questions on this subject last week. The House will appreciate that it is necessary for me to continue to exercise reticence.
Mr. Maudling: The Secretary of State has been good enough to keep the Opposition informed, through me, of what has been happening. I am most grateful for that. Is he aware that the Opposition have strong feelings of indignation and concern about this situation? I assure him that it is our intention to do everything we possibly can to help him with this tragic situation. For the time being I am sure that he is right in saying that exercising reticence is the correct procedure. The time will come when that situation no longer applies and the matter can be discussed. For the time being I am sure that the House supports the efforts being made by the Foreign Secretary.
Mr. David Steel: Although it is right that the cases of these two citizens should receive widespread publicity, does the Foreign Secretary agree that unhappily there are other citizens, some of whom are known personally to Members of Parliament, whose fate is equally uncertain? Does he therefore accept, as we accept, that diplomatic activity is the right answer, especially amongst those Commonwealth countries which are members of the Organisation of African Unity?
Mr. Callaghan: I am much obliged to the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) and the right hon. Member for Chipping Barnet (Mr. Maudling). Yes, Sir; I think that in this matter diplomatic activity is the best chance we have of ensuring that humanity prevails. I propose to pursue this in an intense but, I hope, non-provocative way.
Mr. George Cunningham: Does my right hon. Friend appreciate that those of us who have in the past interceded on behalf of prisoners will understand the difficulties under which he has been labouring, and that it is only because of that understanding that there have not been more vocal expressions of the disquiet which so many of us feel so strongly?
Mr. Callaghan: Yes, I recognise that. It was for that reason that I volunteered this statement today, in order that I could say to the House as much as possible in the circumstances and in order that the House should recognise that I feel that I have a responsibility here.
Mr. Ridley: As Mr. Hills' brother-in-law is a constituent of mine, may I thank the Foreign and Commonwealth Secretary for his statement this afternoon? Those of us who have connections with these two unfortunate citizens wish to show forbearance in any way that we can in order to assist the excellent work which the Foreign Office and the right hon. Gentleman have done. But would he not agree that if barbarous sentences are meted out, this will be seriously deleterious to British-Ugandan relations in the future?
Mr. Callaghan: The sentence has already been announced in the case of Mr. Hill, and it is now for President
964
Amin to consider whether he will exercise clemency in this case. I believe the whole House will join in making that request to him. As regards Mr. Smolen, he has not yet been convicted, but the sentence which President Amin has said will be carried out if he is found guilty appears to go beyond what is laid down under the economic crimes decree.

BILL PRESENTED
  DEMOCRATIC ELECTIONS
  Sir Brandon Rhys Williams, supported by Mr. Clement Freud and Mr. William Hamilton, presented a Bill to amend the law relating to Parliamentary and local government elections; to enable electors to register an alternative vote; and for purposes connected therewith: And the same was read the First time; and ordered to be read a Second time upon Friday 11th July and to be printed. [Bill 178.]
ORDERS OF THE DAY
  SUPPLY
  [18th ALLOTTED DAY],—considered

  HOUSING
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Coleman.]
  3.53 p.m.
  Mr. Timothy Raison: There are few moments when a debate on housing is not relevant, but I think the House will agree that this is an occasion when it could not have been more relevant.
  As the Secretary of State knows full well, and has made clear in recent speeches, the country is at the moment in the throes of a grave economic crisis, and a drastic curtailing of public expenditure is clearly necessary. Yet in the matter of housing, public expenditure has rocketed and new public sector housing in particular has often become hideously expensive. Subsidies and the local authority debt burden have soared. Yet, in spite of this, housing remains, I believe, our greatest social weakness.
  I suspect that many hon. Members on both sides of the House, like myself, will join in saying from their own experience in their surgeries and through their correspondence that of all the things which are put to them, housing is again and again the most serious and most worrying.
  The purpose of this debate is to establish, first of all, exactly what is happening and to explore what can be done. But it is also to point out to the Government the folly of some of the Government's present policies and the damage that their doctrinaire blindness is doing to ordinary men and women who are desperate for somewhere to live. What we are seeing is, on the one hand, profligate and often ineffective public spending and, on the other hand, bigoted policies over private tenancies, land and so on, which are clearly cruel in their effects.
  I want to look first of all at the present situation. It is perfectly true that the
  966
  latest figures for starts from February to April are up on both the private and public sides. The private sector starts are up 40 per cent., public sector starts are up 3 per cent.—and that is something. But the comparison is with 1974 which was the worst year for house building since 1951. Has anybody any confidence at all that these present latest figures can be maintained in present circumstances?
  The percentage increase in private sector starts in particular is from a quite abysmally low level of 104,800 last year, which was the worst since 1953. I understand that the latest Department of the Environment Private Enterprise Housing Inquiry suggests that 1975 would see 135,000 private starts, which is 30,000 fewer than in any of the 15 years between 1959 and 1973. So, as I say, the improvement is only on the dreadful year of 1974.
  The fact is that at the moment we have substantial unemployment in the building industry, but we still have huge brick stockpiles. The reports from the industry on the sales side are particularly depressing. Although the improvement in mortgage availability is welcome, and the Secretary of State, I think, has been sensible in his emphasis on achieving stability, the number of mortgages supplied for purchases of new houses is slightly down between the last quarter of 1974 and the first quarter of 1975. At the same time, the £100 million cut in local authority mortgages will not help because this will hit the lower income groups who find it hardest to get mortgages.
  Taking the picture in public sector housing, the situation is clearly equally critical. Part of it was summarised in an article in The Times of 12th May when the planning reporter said:
  "The economic crisis, for perhaps the first time, has focused public attention on the enormous and ever-growing cost of public housing programmes. On March 31st 1973 the local authorities' housing debt totalled £8,889 million. By the end of the current financial year it is estimated that the figure will be some £16,500 million."
  The article goes on to say:
  "…there is a real possibility that if things go on as they are councils will find themselves unable to service their debts."
  Local authorities are faced in some parts with huge costs of building new houses.

  967
  Yet some persist in addition in enormously expensive municipalisation programmes, though it must be said that the Government at last seem to be, partially anyway, stamping down on this.
  I will not embarrass the Secretary of State by quoting the highly pertinent articles of Messrs. Booker and Gray. I will not rehearse the examples of Camden and other areas, which are proposing to pay astronomical sums of money for new house building. Hon. Members and the country are familiar with these stories. But the Secretary of State has to recognise that the cost of new housing in the London area ranges from £20,000 to £50,000 a unit, and clearly that cannot go on.
  Interestingly enough, members of the GLC, or some of them, are coming to recognise this. In the Daily Telegraph of 23rd April there was a report that the Chairman and Vice-Chairman of the Policy and Resources Committee, Mr. Harrington and Mr. Stutchbury,
  "have told the ruling Labour group that they must face drastic cuts in their programme."
  It was a gross over-simplification of the then Under-Secretary, whom we see here today, last week to
  "draw the attention of local authorities to the fact that they are able to build without a subsidy ceiling and that many local authorities could be building far more if only they had the will to do so."—[Official Report, 11th June 1975; Vol. 893, c. 402.]
  His actual words, the House will recall, were "to build without a ceiling." I think the word "subsidy" was incorporated in the course of revision of the Hansard text. His actual words were somewhat more to the point than the version which appears in Hansard.
  The public expenditure problem in housing is prodigious. It has been summarised recently in an illuminating paper by Dr. Edward Craven of the Centre for Studies in Social Policy, with which I am associated, which is to be published shortly. He says:
  "Throughout the 1960s, spending on housing represented about 5 to 6 per cent. of total public expenditure, even though this included a period during which a previous Labour Government was giving housing priority. In 1972–73, it still accounted for only 6 per cent. But then came the jump. There was a big increase in 1973–74; housing indeed was the only major programme to be specifically exempt from the December 1973 expenditure
  968
  cuts. And by 1974–75 housing expenditure represented 9.4 per cent. of total public spending. In volume terms in that two-year period, housing expenditure went up from £2,047 million to £3,616 million, a 77 per cent. increase: in cost terms, it rose by a staggering 119 per cent."
  Against this:
  "Total public expenditure increased by only 14 per cent. in volume terms, and 22 per cent. in cost terms."
  What were the consequences of this? Dr. Craven continues:
  "… the sharp increase in expenditure has not been reflected in a similar increase in housing output in bricks and mortar terms, or at least not on anything like the same scale. Almost all indicators of housing output—improvement grants, new building, level of slum clearance—fell or are to increase relatively slowly over the period 1972–73 to 197576. A very large part of the increase went into refinancing the housing programme, into transferring stock from the private to the public sector, and into cushioning families from the effects of price inflation."
  In other words, what has been happening is that in terms of additional housing—which, after all, is what really matters—the results can only be said to be bitterly disappointing.
  Why has public expenditure soared? There are a number of reasons for this. I just want to pick out two. First of all, the big drop in the sales of council houses has seriously affected the figures. In 1972 over 60,000 council houses were sold. In 1974 only 1,000 or 2,000 were sold. The consequence of this is that between 1972–73 and 1974–75 there has been a fall in receipts from this source of £276 million. Quite apart from this, there are very strong objections to the Government's policy.
  Secondly, there has been the enormous growth in subsidies, which account for a third of public expenditure on housing today. Subsidies increased by 113 per cent. between 1972–73 and 1974–75, and they now stand, according to an answer to a Question on 11th June, at £1,218 million. As Dr. Craven says:
  "This rise reflects a number of factors but the most important of these is inflation—and more specifically the Labour Government's decision to use the housing programme as an instrument of incomes policy and incomes maintenance on an unprecedented scale".
  That is at the heart of our present problems.
  Under the Government strong element of distortion has entered into housing

  969
  policy. It is perfectly true that the rent rebates and allowances which we introduced and support account for 28 per cent. of the increase in subsidies. However, the crucial factors include the rent freeze from March 1974 for one year. The loss of income from this to the housing revenue accounts was about £90 million. This rent freeze was at a time when earnings were increasing steadily.
  Over the years there has also been the general tendency for rent to provide for an ever-smaller proportion of housing revenue accounts. The net contribution after rebates is now well below 50 per cent. In 1973 unrebated rents contributed 69 per cent. towards the housing revenue accounts. Now that is down to only 55 per cent.
  I regret having to put these statistics before the House because this is never the most attractive way of arguing, but we have to examine this area in these hard times. This situation simply cannot continue. Neither the ratepayer nor the Exchequer can bear this burden, particularly where the incomes of a considerable proportion of council tenants have been rising well ahead of inflation. The fact is that average earnings have raced ahead of rents.
  The Secretary of State must now state his policy for rents in clearer terms. What does he have in mind? He simply cannot leave this matter to the local authorities. It is quite clear that this problem has become far too vast to be left simply to the decisions of individual councils. Equally, he cannot leave the whole problem until next year because the pressure on public expenditure is so great that he must take action now.
  Mr. Frank Allaun: I have listened carefully to the argument advanced by the hon. Gentleman. Is he advocating—and I hope I am not correctly summarising his argument—that the Government should compel local authorities to raise rents?
  Mr. Raison: If the hon. Gentleman is strongly opposed to that policy, he will find himself shortly fighting with his colleagues. The Secretary of State has to use powerful influence over the local authorities in this matter, which is what he will have to do anyway.
  970
  At the same time there is the long decline in the private rented sector. The House knows that in 1950 private rented dwellings accounted for 45 per cent. of households in the United Kingdom. In 1973 that figure was down to 17 per cent., including housing associations. The Labour Party revels in this. It believes that this is social progress. Labour Members say so over and over again. I believe that they are profoundly wrong. I suggest that they read an article by Dr. David Eversley of the Centre for Environmental Studies, which was published in New Society on 16th January this year. I should like to quote what he said about the consequence of not having private rented houses.
  "What are we going to do to enable people to move house when they need to change jobs? What are we going to offer, besides a council house after a very long wait, to young couples getting married and perhaps wanting to start a family? If the answer is 'nothing', then no one should be surprised if large cities cannot man their essential services, if homelessness is on the increase, and if fertility is falling faster than even the optimistic had demanded.
  There remains a further question—whether a state of affairs where there is no choice, other than ownership or local authority tenancy, represents the environmental millenium we wanted? It is a question, however, which we should ask those seeking homes, not the theorists. It is hard to see what joy the strangulation of the private housing market has brought to those most in need of a roof over their heads."
  I believe that those words would ring true with very many poorer people in our big cities if only they were to read them.
  Mr. Bruce Douglas-Mann: Perhaps the hon. Gentleman is aware that in a Fabian Society pamphlet on the subject of municipalisation similar words were written by me. Would the hon. Gentleman not take into account the fact that the greatest and sharpest decline in the stock of privately rented dwellings took place between 1957 and 1964 at a time when the 1957 Rent Act was taking premises out of control? Would he not agree that the measures taken have protected a large number of tenants from being evicted as a consequence of the lack of protection under the Rent Act?
  Mr. Raison: I fully accept that this has been an ongoing decline for a long time. However, I believe that the hon. Gentleman is wrong in a way that is

  971
  typical of his party, because it approaches this in terms of an obsession with security rather than with provisions. Above all we need provision. Whether we can ever get substantial new investment into the private rented sector is obviously a substantial question. I should like to see it, but clearly there are difficulties. What cannot be doubted is that there is real hardship at the moment arising from Labour's war on landlords. This hardship applies equally to small landlords and to the homeless alike.
  The truth is that the long years of control and, in particular, the folly of the Rent Act 1974 have taken their predictable toll. I believe that forcing landlords to subsidise tenants through control means quite simply that landlords give up. The drying up of furnished tenancies caused by the Rent Act 1974, which we predicted last year, is now taking place, with cruel results. Obviously none of us can give exact figures for what is happening. No doubt when he replies to the debate the Minister will talk about the evidence. But we all know what is happening. Every hon. Member who has people coming to him in a desperate search for housing knows that the 1974 Act has seriously diminished the stock of rented housing. There is no question about it. The evidence from estate agents, who are in a position to know, confirms this point completely. This has happened, and with cruel results.
  The Parliamentary Secretary to the Treasury (Mr. Robert Mellish): Nonsense.
  Mr. Raison: I should have thought that the Chief Whip would have cared about this.
  Mr. Mellish Mr. Mellish rose——
  Mr. Raison: I am not quite clear whether the Patronage Secretary is seeking to intervene.
  Mr. Mellish: I think that it is impertinent of the hon. Gentleman to talk about care about housing. The record of the Conservative Party when in Government is pretty grim. Most of us have spent a long time, in the House and outside it, trying to stop the Tory Party supporting landlords whose objective has been to destroy property and the initiative of those who want to buy it.
  Mr. Raison: I suggest that the right hon. Gentleman turns his powers and eloquence on to his colleagues on the Government Front Bench and tries to rub some sense into them on this matter.
  The Secretary of State must think of ways of alleviating the problem created by the Rent Act 1974. It is absolute madness to encourage under-occupation at a time when we should be thinking of the reverse. There is no question that the Rent Act 1974 is encouraging under-occupation.
  The truth is that at a time when we have enormous public expenditure and inflationary problems, the Government are making matters far worse through sheer Socialist folly. Firstly, as I have said, there is their excessive use of housing policy as a means of supplementing incomes, which in many cases do not need it. Secondly, there is total commitment on their side to housing as a social service, rather than seeing the social service element as something which should be brought in to help people in need. Thirdly, there is persistent bias against the private sector, especially the private rented sector. Fourthly, there is bias against selling council houses, which is doing nothing for our housing stock and is adding again to public expenditure.
  In addition to this, we still have the incredibly expensive demolition and redevelopment which are beloved of Socialist councils, and municipalisation for municipalisation's sake, even though we are now seeing a slowing down of the latter. We also have a very worrying picture on improvements. The figures for house renovation grants are down from 89,700 for the first quarter of 1974 to 29,900 in 1975.
  If this debate does nothing else, it should at least give the Government the chance to state what is happening. At present we have statements and circulars following each other with such bewildering and sometimes contradictory rapidity that no one knows where he stands. It is extremely difficult to follow these circulars as they come out and contradict each other. As if that were not bad enough, we have such astonishing policies as the Community Land Bill.
  I do not propose to go into detail today on the Community Land Bill, but quite apart from its other grave defects it can

  973
  only harm housing, certainly private housing, very severely indeed. The truth is that it is already, by the mere threat of its existence as an Act, drying up the supply of land. To come up at this time with a measure which does nothing to make for cheaper housing seems to me absolutely extraordinary. I beg the Secretary of State to drop it, even if it means some unpleasantness among his colleagues.
  May I also say to the Secretary of State that the way that this Bill is being handled in Committee is absolutely disgraceful. I hope that both the Secretary of State and the Chief Whip will study the leader published in this morning's edition of The Guardian on this subject.
  The situation is clearly out of hand. The question now is what should be done. Because it is so out of hand, on the public expenditure side especially, it is particularly difficult, clearly, to put it right. But we must try to pick something up out of the ashes. The need to cut Government expenditure makes it imperative that housing policy should be rethought in such a way that we get the best out of such money as there is. For a start, this means jettisoning Socialism. Socialism has nothing to offer in housing policy today. It is expensive. It pays far too little regard to the desires and needs of individuals. It is geared to mass housing, at a time when we need human scale housing. It is geared to authoritarian paternalism, at a time when we need choice and sensitivity.
  Over and over again, Conservative instincts about what people want have been proved right, not least because of our emphasis on choice and variety. We on our side accept the place for council housing, but there is a pressing need to give fresh life and stability to the private sector, both owner-occupied and rented. This is not only a matter of desires and needs. It is also a fact that support for the private sector is a much more cost-effective way of providing housing where one can do so. It is clear that the cost of subsidising each new local authority house—initally, anyway—is about three times the tax relief on a mortgage for each new purchaser. The figures come from the Government and assume loan charges based on an interest rate of only 9.6 per cent., which is well below the current borrowing rate.
  974
  How can we stimulate home ownership? First, I believe that we should return to encouraging the sale of council houses. With the rise in incomes and a static level of private house prices, this should be easier than it was a year or two ago.
  Mr. Joseph Dean: Having quoted figures for council houses sold some years ago, is the hon. Gentleman aware that most of those were "given away" for less than £2,000 and that quite a number have since had to be bought back by the authorities which sold them, because of their housing shortages, for sums ranging between £8,000 and £10,000? Does the hon. Gentleman consider that to be good economics, when the balance has to be found, in the main, by the local ratepayers, from rents and from the taxpayer in general? Is that the hon. Gentleman's philosophy?
  Mr. Raison: The figures must be approved by the district valuer. The fact that houses can be sold back seems to be an advantage in the scheme rather than a disadvantage. One of the arguments against selling council houses has always been that some people may not be able to afford to keep up their payments. If they can sell them back, that is all to the good.
  Secondly, I believe that, again for public expenditure reasons, we must give additional support for mortgages if at all possible and certainly do what we can to hold down the rate. As I have said, I think that the present supply is adequate, but I believe—the Secretary of State has, I think, acknowledged this—that the rate needs to be watched very carefully. Thirdly, we must make more available for larger loans, because a bottle-neck has built up at the higher end of the market.
  Fourthly, we must scrap the Community Land Bill and encourage people to bring forward land for sale and get on with the job of implementing Dobry. One of our charges against the Community Land Bill is that it has put the Dobry Report on the shelf at a time when it would be of great value to be able to push ahead with its recommendations.
  Fifthly, we must look closely at new forms of buying. There is the half-and-half scheme, which has received publicity lately, and possibilities of partial shares in equity, and high-start schemes, and

  975
  so on. This is not the time to adopt an excessively doctrinaire view, but the great need is to keep the market going.
  I turn to the private rented sector. For a start, clearly we must repeal the Rent Act 1974, or alternatively, at the very least, bring in some new form of short-term lease which does not confer longterm security. The North Wiltshire approach, which has been discussed recently, is a start, although I have doubts about how widespread its value might be. Better still, we should take seriously the approach of my hon. Friend the Member for Kensington (Sir B. Rhys Williams) for some form of shorthold. [Interruption.] It is no good Ministers and ex-Ministers mocking this, because at present the need is desperate. We should also seriously consider the possibility of restoring some real point in investing in private lettings. Perhaps that can be done through depreciation or through capital grants, for example. The need is clear and it is being acknowledged even within the Labour Party. The House may recall that in the Daily Telegraph of 23rd April Mr. Stutchbury said:
  "I think it is now clear that London's housing problem cannot be solved from the public sector. The main reason for this is the doubling of interest rates over the past two years."
  Later it was reported that Mr. Stutchbury argues
  "that the Government has done this, as a start to subsidising the private landlord so that he is not, as at present, subsidising his tenant. They should move towards a situation where the private landlord can get an economic return on his property and afford to keep it in repair."
  What about the council sector? The money which is available for this sector must be used for building provided it is at a reasonable cost. Secondly, there is a strong case for trying to keep the improvement programme going. Thirdly, I hope that we can maintain mortgages for those who do not meet the level of the building societies. Fourthly, there is the continuing need to keep housing associations under way.
  Clearly rents must rise and account for a substantially greater proportion of the housing revenue account than at present. We also need to attack under-occupation in the public sector as in the private sector. For example, I think we could do more to encourage transfers and ex-
  976
  changes. We could do more to increase the number of smaller units and to encourage lodgers in council houses, making it worth while to have them. At the same time, we should review management policies and move towards an effective tenants' charter of the kind which the Conservative Party has advocated.
  What about the crucial question of the council rent system? I have a suspicion that the Secretary of State may now be somewhat ruefully regretting his party's attitude to the fair rent system in the Housing Finance Act 1972. It may be true that next year's rent increases will be approximately double the 50p which would have been allowed under that Act. Whether or not fair rents should be brought back can be debated. It may be better to work through a mixture of subsidies and the proportion of the housing revenue account which is to be borne by rents. I do not begrudge the Secretary of State his present inquiry into housing finance.
  Mr. Douglas-Mann: Is the hon. Gentleman suggesting that if his party had been in office it would have limited rent increases to the 50p per annum envisaged in the Housing Finance Act 1972, when at the same time he is suggesting that we should be increasing rents still further? What is he advocating? Is he seriously suggesting that his party would have kept rent increases down to 50p.
  Mr. Raison: I am suggesting that we have to face a vast problem and that the cries which were put forward by Labour Members, including the hon. Member for Mitcham and Morden (Mr. Douglas-Mann), during the passage of the 1972 Act have now been shown to be complete hypocrisy.
  I do not begrudge the Secretary of State his present inquiry into the whole subject of housing finance although I think it is high time that he embarked on it. I also accept that there is an important need to establish the basic facts of the situation—for example, the extent to which we need new housing. However, it is certain that if the Government continue to approach their housing policy in the spirit of narrow partisanship, which characterises the Minister for Housing and Construction more than anyone else, there will be no hope of meeting the real needs.

  977
  Housing is an area in which we must achieve a great degree of agreement and stability. If the Government do not recognise that and if they persist in their bigoted and inflationary housing policies, they will do the gravest disservice to the long-suffering people of this country, and the homeless and ill-housed above all.
  4.29 p.m.
  The Secretary of State for the Environment (Mr. Anthony Crosland): As a veteran of more than five years of debates as my party's spokesman on housing, I again welcome the hon. Member for Aylesbury (Mr. Raison) to his new job. I have no doubt that, very properly, the hon. Gentleman is extremely pleased to have attained his position, but he should not allow his spirits to rise too high.
  Crosland's law states that to be appointed Tory spokesman for housing is the kiss of political death. Let us remember the roll of honour over the past five years. First, there is the position of the right hon. Member for Worcester (Mr. Walker). Where is he now? He is very much out of sight on the back benches. The right hon. and learned Member for Hexham (Mr. Rippon) wisely committed political suicide only hours before he was due to be guillotined. The right hon. Member for Brighton, Pavilion (Mr. Amery) sits sadly and disconsolately on the back benches, as does the hon. Member for Southend, West (Mr. Channon). The hon. Member for Chelsea (Mr. Scott) is in a similar position.
  It is a poor, sad, miserable prospect that lies ahead of the hon. Member for Aylesbury unless, of course, he manages to follow the one exception to this hideous tale of carnage—namely, the right hon. Member for Finchley (Mrs. Thatcher), the present Leader of the Opposition. However, to judge from the private mutterings of her supposed supporters, even the right hon. Lady does not seem to have total security of tenure.
  The hon. Gentleman showed an almost sublime impertinence in criticising the Government's housing record after his Government had been in power for four years and when we have been in power for only one and a quarter years. I must remind the House briefly of the situation which we inherited in March of last year
  978
  from the hon. Gentleman's Government. To reverse the words he applied to this Government, the Conservative Government were unsocialist, non-partisan, unbigoted and undoctrinaire. They showed care for the private rented sector and were motivated by good Conservative instincts. What did they do with that non-partisan outlook?
  First, I turn to new house building. In 1973, the Conservatives' last year in office, the total number of new houses completed was below 300,000, the lowest figure since they were previously in office in 1963. Council house building was at its lowest level for 25 years. Private house building had virtually collapsed. House prices had doubled during the years of Conservative rule. Land prices had trebled. The mortgage rate had increased from 8½ per cent, to 9½ per cent., 10 per cent. and 11 per cent. The mortgage feast of 1971–72 had given way to the famine of 1973. Generally the would-be home-buyer received a clobbering such as he had never had in living memory. There are many thousands of young couples who will never forgive the Conservative Party for what happened in those years.
  Mr. Michael Latham Mr. Michael Latham (Melton) rose——
  Mr. Crosland: No, I have only just begun. In the council house sector the determination of rents had been taken away from democratically-elected local authorities and handed over to non-accountable rent scrutiny boards. Despite the fact that, against their wishes, subsidies increased as inflation gathered pace, Conservative Ministers, through the sheer clumsiness of the Housing Finance Act and its frontal attack on local democracy, managed to alienate almost every council and council tenant in the country.
  In the private rented sector, about which the hon. Member for Aylesbury had so much to say, the Tory Government simply abdicated. There was only drift and muddle. They finally conceded, about 10 years later than all other informed commentators, that the sector could not be sustained, yet they refused to extend security to the furnished tenant, the chief victim of the decline. They refused to accept the advice on municipalisation that was given in Layfield and in other reports. They

  979
  refused for years to stop the misuse of improvement grants which was leading to gentrification.
  Finalyl, I turn to land. When I hear the hon. Gentleman attack our land Bill I become more charitably disposed towards the Bourbons. They may not have learnt anything but at least they forgot nothing. Conservative Members, however, seem to have forgotten everything. They have forgotten the Klondyke rush for land in 1971 and 1972. They have forgotten the enormous profits that were made by land speculators. They have forgotten that, contrary to their free market economics, higher prices led not to greater land availability but to land hoarding in the hope of still further profits. They have forgotten that when the land price balloon at last burst the financial position of many house builders was disastrously weakened and the task of restoring the house building programme made much harder. I find it quite impossible to give any credence to Conservative criticism of our housing policy.
  Faced with the situation that we inherited in March last year, we had to take swift emergency action right across the housing field. At the same time we wanted this emergency action to fit into the broad strategy for housing which was clearly needed. What did we do?
  First, new house building. In the public sector, we started with Circular 70/74 in April 1974, which made it clear that the Government were prepared to make available the necessary extra money for local authorities to increase their programmes. We then, in the Housing Rents and Subsidies Bill, devised a subsidy system which provides strong Exchequer support for new house building, and we greatly reduced the restraint imposed by the cost yardstick control.
  The result—although, with respect, the hon. Gentleman was extremely grudging about this—has been a heartening increase in new building in the public sector. In Great Britain, completions last year were 20 per cent. up on 1973, starts 30 per cent. up, and—most significant of all—dwellings in new contracts approved 34 per cent. up. The increased momentum is being sustained this year. The figures for the first four months of this year show further sizeable increases in completions, starts and approvals over
  980
  the same period last year. So, though I am still not satisfied, this is success No. 1.
  In the private house building sector—where one would never have gathered what was the position a year ago from listening to the hon. Gentleman—the first priorities were to bring to an end the disastrous mortgage famine and prevent the imminent rise in the mortgage rate to 13 per cent. We achieved both these objectives by the £500 million loan to the building societies—a loan which was strongly attacked at the time by the right hon. Lady the Leader of the Opposition. So the mortgage rate has been held at 11 per cent. and the building society net inflow is running at a record level. Contrary to what the hon. Gentleman appeared to suggest, the number of commitments per month has been rising substantially in recent months, and I am happy to say that all this is now being reflected in the figures for private house building. Again, this up-turn received rather a grudging response from the hon. Gentleman.
  Over the three months from February to April, allowing for seasonal fluctuations, private starts were 40 per cent. up on the previous three months and now run at about 12,000 a month. Annual completions at about the same level were 12 per cent. up on the same comparison. Confidence is returning to the market and there is no doubt that the trend is in the right direction, compared with the unprecedented slump in private house building caused by the disasters of 1973–74. So, though I am still very far from satisfied, this up-turn in private house building is success No. 2, and it derives from the Government's commitment, not just in words but in action, to the support of owner-occupation.
  The action which we took on mortgages last year was successful in tiding us over the immediate crisis, but it also had a deeper significance. It represented a first step towards mortgage stabilisation. I, personally, as some hon. Members know, have been committed to this concept for many years, and it is now a key element in our housing policy. It is not a simple matter. We are nowhere near the end of the road on this yet, but the agreement of 11th April with the building societies has given us for the first time a firm basis

  981
  for achieving mortgage stabilisation in the future. I willingly acknowledge the helpful way in which the building societies are working with us in the Joint Advisory Committee.
  Mortgage funds, although important, are not the whole answer. In January we announced a further package of measures to help the private house building industry—measures worked out by the Government in close discussion with the house builders and the building societies. The low-start scheme for the first time buyer, the emphasis on the need to cut down planning delays, and so on, have also contributed to the return of confidence to the industry.
  Despite this evidence, the hon. Gentleman again repeated today the claim that the community land scheme in some sinister way sounds the death knell of private house building. It of course does nothing of the sort. The health of the house building industry is a matter of close concern to us in the Government, and the scheme has been carefully designed with this in mind.
  Any radical measure of reform such as the land scheme involves difficult changes and adjustments. Some will inevitably have doubts as to how matters will work out and will rightly seek reassurance, in particular on the key issue of the continuity of land supply. We are still in discussion with the house building industry, and the special arrangements we propose about, for example, builders' land banks and the small sites have already shown our strong desire to help smooth the initial stages.
  Our commitment to a high level of new house building, public and private, is clear, but we must ensure that our building programmes reflect the actual needs of our population. For example, we need far more dwellings for smaller households, both for renting and for owner-occupation. I am looking here for a shift of emphasis in local authority programmes and for greater awareness on the part both of private builders and of planning authorities of the demand for smaller houses for owner-occupiers. These were the essential messages of Circular 24/75.
  From new house building, I turn briefly to the existing stock of houses. The worst problem here—to this extent I agree with the hon. Gentleman—lies in the pri-
  982
  vately rented sector. This sector, as we all know, has been declining steadily since 1918, or since even before the First World War, but the decline has been more rapid since the end of the First World War, and the decline has been as fast under Conservative as under Labour Governments. Many of us, as the hon. Gentleman fairly said, welcome this decline as a matter of social policy, but it carries with it the danger of a loss of low-income rented housing on a scale which we simply cannot afford.
  Although the hon. Gentleman had a lot to say about the private rented sector he told us nothing, except for the vaguest hints, of what the Conservative policy for that sector would be. If there were some equitable policy for the sector which could be found to prevent the loss of low-income rented housing, presumably the Conservatives would have found it between 1951 and 1963 or between 1970 and 1974, but they did not. As one of my hon. Friends pointed out, the decline has been at least as rapid—in one case more rapid—under Conservative as under Labour Governments.
  Mr. A. P. Costain: Does not the right hon. Gentleman appreciate that, whatever is Conservative policy on rented houses, the Labour Party must give an undertaking? In 1961 I said in the Chamber that if the Labour Party would give a guarantee not to interfere with or control the flow of houses we would build 50,000 houses a year. That would have given us 750,000 houses, and the problem would have been nearly solved by now.
  Mr. Crosland: The Conservatives had a fairly long period of office between 1951 and 1964, and if there were an equitable method of increasing new investment in this sector they would have found it. The hon. Member for Aylesbury mentioned the possibility of new investment but was utterly vague on how that might be achieved. That is one danger—the loss of low-income rented housing.
  The other feature in the private rented sector is that it contains a disproportionately high share—about 40 per cent.—of all older substandard housing. These two facts underline the crucial importance of municipalisation. On the one hand, this is often the only method by

  983
  which we can get substandard property improved. It is also the only method by which we can preserve in the rented sector enough property to let at rents which people can afford.
  We recognise, of course, that full social ownership cannot be achieved overnight. Public expenditure restraints have obliged us to go more slowly than we would have liked in an ideal world. In spite of these constraints, we have provided for a very substantial increase in public expenditure for acquisitions by local authorities. Last year this expenditure was running at £180 million, which compares with around £50 million in earlier years. I have recently announced that I propose to switch money to municipalisation to make sure that spending is maintained at the same figure this year as last year.
  Mr. Arthur Jones: Will the Secretary of State tell us what "full social ownership" means in housing terms?
  Mr. Crosland: In the terms in which we are immediately speaking, it includes acquisitions by local authorities and acquisitions by housing associations. Looking ahead, we hope that there will be other forms of social ownership. My hon. Friend the Minister for Housing and Construction will perhaps be speculating aloud about other possible forms in the future. Municipalisation is pointless unless we find money to improve municipalised property. Here there has been a great deal of misunderstanding. My hon. Friend the Minister for Housing and Construction, who knows all the Section 105 arguments backwards, will no doubt have some important words to say about this matter this evening.
  It has been said that we have cut expenditure on improvement of council-owned housing by about 50 per cent. That is not so. The actual reduction in England, in constant prices, is from £305 million last year to £255 million this year. That still leaves councils spending almost five times as much in real terms on improvement as they were spending as recently as 1969–70. That they are spending five times as much shows what an enormous boost has been given to the improvement of our public stock of housing.
  984
  I do not say that we have yet got the right balance in these matters. To help us try to find it, we have set up, with the local authority associations, a study group which will examine all these matters. Chaired by my hon. Friend the Minister for Housing and Construction, this study group is now hard at work and we look forward to seeing its conclusions.
  There is much else which I could say about the better use of our existing housing stock. The hon. Member for Aylesbury listed a number of points like con versions, empty houses, lodgers, the encouragement of transfers and the rest. I shall not repeat them all, but I was grateful to him for repeating almost verbatim our circular "Housing Needs and Action" which refers to the importance of every single one of the points he mentioned.
  Mr. Dafydd Wigley: The Secretary of State referred to the cut-back in England. Does he agree that the figures for Wales on the degree of rehabilitation and modernisation of publicly-owned houses shows a decrease from the £29 million of the last financial year to £9·4 million expected for the current financial year?
  Mr. Crosland: I do not have the figure at my finger tips, but I shall ask my hon. Friend to deal with that point when replying. The position in Wales is different, for reasons that the hon. Member knows very much better than I. Owner-occupied housing represents a much higher proportion of the total housing stock there than in England so that there is a different balance between private improvement and public improvement.
  Having discussed investment in housing, I now turn briefly to the cost of housing and the question of subsidies. First there is the would be owner-occupier. By the time we came into office last March, the man on average earnings wanting to buy a house had been to a large extent priced out of the market by a combination of the explosion in house prices and the rise in the mortgage rate.
  Now, however, due partly to the stability of house prices over the past two years and partly, and I fully concede this, to wage-inflation, the relationship has returned to something more normal.

  985
  Given our agreement with the building societies on mortgage stabilisation, I see no reason to expect—indeed I am determined to avoid—a price explosion of the kind we had in 1972–73.
  Mr. Michael Latham: Will the right hon. Gentleman say, supplementary to the statement he made on his agreement with the building societies recently, whether he has given them any guidance that they should impose positive restrictions on mortgages as some building societies have already voluntarily done?
  Mr. Crosland: No, I have given them no more guidance than emerges from the joint statement that we put out a very short time ago.
  1 turn now to council rents, which will present us with an extremely difficult situation in the years ahead. While house prices have gone up much faster than average earnings in recent years, rents have gone up much more slowly, and this is especially true of the two years 1974–75 and 1975–76—due partly to last year's rent freeze and partly to the special element of housing subsidy in the Housing Rents and Subsidies Act.
  Since May 1973 the retail price index has risen by 39 per cent., average earnings by 45 per cent. and average unrebated rents by 23 per cent. The consequence is that the contribution of rents to the costs of the housing revenue accounts has been steadily falling since the late 1960s. Curiously it fell even through the years of the Housing Finance Act. In 1968 it was 74 per cent., now it is 55 per cent., and these are average figures. In some parts of the country—London for example—the contribution of rents is much lower than the average figure of 55 per cent.
  This growing gap between rent income and housing costs has of course been covered by subsidies—it could not be covered from anything else—partly from the rates but mostly from the Government. This year Government subsidies will be three times in real terms what they were five years ago. They are in consequence pre-empting a higher share of the housing money we have available, and that reduces the share available for capital expenditure on improvement, municipalisation and the rest.
  986
  Now the Chancellor has announced that he is seeking a saving of £65 million in housing subsidies, of which about £50 million relates to local authorities in England. Unless I am to make deeper cuts in essential capital spending on housing, this saving can be found in only one way, and that is through rents. So rents next year will have to go up faster than they have recently.
  This year, on present indications, they will rise by only about 12 per cent.—far less than the likely rise in earnings. Next year, the increase will have to be larger. Exactly how much it will need to be is a matter for detailed discussion between Government and local authority associations in the course of the rate support grant negotiations over the next few months. We cannot yet give a figure in money terms, partly because we do not yet know what next year's inflation rate will be.
  However, it is clear that increases will have to do more—and quite a bit more—than merely to keep pace with inflation. Rents will have to start making the kind of contribution in real terms towards housing costs that they have done prior to the most recent developments.
  Despite this, housing expenditure will remain one of the Government's highest priorities. Some of my hon. Friends continually press me for still more spending on housing and my sympathies are entirely with them. But I wonder whether they realise the actual rise of expenditure on housing last year, and how it reflected the extremely high priority we give to housing.
  In 1973–74, in effect the Tories' last year in office, public expenditure on housing in Great Britain amounted to some £2,740 million at 1974 prices. In 1974–75 it rose—still at 1974 prices—to some £3,470 million. This is an increase of more than a quarter in a single year, which represents a large shift in Government priorities in expenditure.
  Now the country faces an economic crisis far more serious than any we have faced since the war. The priority claims on our national resources are the balance of payments and higher industrial investment. We therefore cannot expect any significant further increase in housing public expenditure over the next few

  987
  years. Housing did well last year—spectacularly well. From now on we shall have to do our best within what is still an enormous total, but without the freedom of manoeuvre which continuous growth would provide.
  In this situation we shall have some hard decisions to take. Priority programmes must be protected. But from now on more spent in one area means that less is available somewhere else.
  Mr. Arthur Jones: I am unable to marry up the figures the Secretary of State has given—the figure of £2,740 million for 1973–74 and £3,470 million for 1974–75 being spent on housing subsidies. Will he give us the origin of these figures?
  Mr. Crosland: I believe these are from the last public expenditure survey but if that is not the case I shall ask my hon. Friend the Minister to say so when he replies. I take it for granted that they were from that survey.
  I have no absolute confidence that we have got all our priorities completely right. I have a lot of sympathy with the comment in this month's Municipal Review:
  "What appears to be needed is a critical judgment of the allocation of housing resources across the board. It is true, as the Secretary of State has rightly pointed out, that the total national housing programme has reached a plateau with expenditure of the order of £3,500 million a year as compared with £2,500 million in real terms two years ago. But it does not seem certain that all the priorities are yet right."
  I admit that, and this is one of the basic reasons I have set up a long-term housing review.
  I am sorry that the Opposition have not put down a motion today because had they done so we might have learnt what their housing policy was. There is no more assiduous reader of the speeches by the Leader of the Opposition than myself, but if I were asked what Tory policy on housing was I would not have the faintest idea even after listening to the speech by the hon. Member for Aylesbury this afternoon.
  We had a lot of "Perhaps we should do this", "Perhaps we should do the other", "Perhaps we should look at this" or "Perhaps we should look at the other." We had a certain amount of praise for new developments last year,
  988
  almost all of which were the responsibility of the Labour Government or Labour councils.
  I turn to what the Conservatives would do and how far that differs from what they did under the 1972 Act. On this subject we are absolutely in the dark. I revert to a speech made by the right hon. Lady the Leader of the Opposition, last week. That speech was purported to be—so I understand from the Press reports—a major speech on the economy. Over and over again the right hon. Lady said and this was implied today by the hon. Member for Aylesbury—that subsidies are a thoroughly bad thing. I hope that the closing speaker for the Opposition—no doubt another new appointment—will illustrate what that phrase means. The hon. Member for Hampstead (Mr. Finsberg) is one of the hon. Members who knows most about housing, and I am delighted to learn that he is to reply. I hope that he will elucidate what "dislike of subsidies" means in the area of housing. Does it mean that the Opposition have now ditched their disgraceful election pledge to subsidise mortgage rates down to 9½ per cent.? If they have not, their Leader stands exposed as a hypocrite. If they have, it is time they said so openly to the country.
  Does it mean that it is now Conservative policy to remove or reduce the £680 million subsidy which owner-occupiers receive by way of tax relief on their mortgages? What does it mean for subsidies to council housing, for rents and for council householding?
  We know that they would repeal security of tenure for furnished tenants. We know that they dislike municipalisation. We know that they would encourage the sale of council houses. But beyond that everything is in utter darkness.
  In a brief year and a quarter we have not yet solved the housing problem. Of course we have not. But we have started firmly along the right road. Local authority house building is up. Private house building is up. The mortgage situation has been stablised. We are acting positively to improve both the condition and the use of our existing housing stock. Above all, housing is receiving a much higher priority in terms of public expenditure than it did under the Conservatives.

  989
  I am far from being satisfied with our progress, but at least we have begun to make progress. It hardly lies in the mouths of Opposition Members, who left us the shambles of a year ago, to carp and criticise today.
  4.52 p.m.
  Mr. Julian Amery: I have not spoken in a housing debate since I left the Department of the Environment in 1972, though naturally I have watched from the sidelines the evolution of housing policies. Both sides of the House approach the matter from rather different angles, yet what has impressed me most, from listening to the debate today and, indeed, to previous Government statements, is how much closer we are now than we appeared to be in the long days and nights when we crossed swords during the Committee stage of the Housing Finance Act 1972. Certain agreeable aspects of that Act, such as rent rebates, allowances, slum clearing subsidies, and so on, have been accepted and endorsed by the Government. That came as no surprise to me. Indeed, in Committee the right hon. Gentleman who is now Secretary of State paid tribute to some of these ideas.
  I was very glad to hear the right hon. Gentleman say today that although there had been some shortfall on housing improvement grants compared with the high point to which we had brought them, they were still a great deal better than they were in 1969–70. At least he was doing his best to keep up with the standards which we had tried to set. We must never forget the importance of housing improvement socially, even more than in terms of accommodation unit provision.
  On council house rents, we seem to be on much closer ground than we were before. In Committee the right hon. Gentleman as well as the Minister for Housing and Construction lambasted me on two grounds, first, that we were raising the rents, as they said, inordinately, and, secondly, that we were depriving the local councils of their autonomy and freedom in determining the rent level. It now seems clear that the rents will be raised in many cases substantially higher than the Housing Finance Act would have raised them.
  990
  It is all very well to say, as I think the hon. Member for Leeds, West (Mr. Dean) said, that of course if we had been in the present economic situation we too would have had to put them up higher. My reply is that we would never have allowed ourselves to get into that situation, but, of course, that is an academic answer.
  I turn to the freedom of local authorities to determine their rents. Under the limitations that seem likely to be imposed on them by the Treasury, their freedom will be what used to be termed in good old Socialist parlance as "freedom to sleep under the bridges", because that is the only place to sleep. I do not propose to go into all the details which have been raised.
  Mr. Joseph Dean: When the right hon. Gentleman says that rent increases may be in excess of what would have been charged under the Housing Finance Act, has he forgotten that the original increases were only of a limited duration, and that the Act catered for three-yearly reviews upwards? The 50p per year was for only three years, and would have been increased thereafter.
  Mr. Amery: I was saying that what we had proposed was of a fixed character. It now appears that rents will be raised still higher than we had proposed. It is all very well for hon. Gentlemen to say that "If you were in office and had the present economic situation to deal with you might have to put the rate higher than you had intended." If we had been in office, we would not have had this situation to deal with. But, as I said, this is an academic point, and I do not want to dwell on this argument.
  There is common ground between us that the rents have had to increase at least as high and almost certainly higher than we had proposed and that the freedom of local authorities to determine the rent will be severely limited.
  I do not want to go into the very important but largely administrative points that have been debated. I stand strongly for the maximum extension of private house ownership. Therefore, I hope that we shall not go back on the election pledges of my right hon. Friend the Leader of the Opposition. We must do everything to encourage home ownership

  991
  through the building societies and through the sale of council houses.
  Of course, there remain differences of emphasis between us. However, the gap between us is substantially narrower than it appeared to be in 1972. While there remain differences of emphasis which no doubt justify us in dividing the House this evening, on this major element of social policy the two parties—or, at any rate, the representative and serious elements in both parties—are closer than they have been for some time. That is an undoubted gain.
  4.59 p.m.
  Mr. Ernest G. Perry: After listening intently to what the right hon. Member for Brighton, Pavilion (Mr. Amery) said—
  Mr. George Cunningham: What did the right hon. Gentleman say?
  Mr. Perry: He said a considerable amount.
  I recall the halcyon days of 1971 and 1972. I think that about 15 of the hon. Members present served on the Committee considering the Housing Finance Bill—[Interruption.] Halcyon days and nights, I agree.
  If we examined the Official Report of the Committee proceedings, some of us on both sides of the House might find that we had to eat some of our words.
  I agree with the right hon. Gentleman that it would be devastating if the Leader of the Opposition ever went back on her pledge to reduce the mortgage interest rate for potential house buyers to 91 per cent. That was a promise, and there can be no back-tracking on it.
  In March 1974 we inherited a mortgage interest rate of 11 per cent., and it is still 11 per cent. But many people, particularly in the London area, are paying much more. The rate of 11 per cent. is the minimum. I know of many families in my constituency and elsewhere in the London borough of Wandsworth who, being unable to obtain a mortgage through the local authority or a building society, turn to finance houses. I am referring to some of my immigrant population, for whom it is not easy to find anywhere to live. They have to pay as
  992
  much as 13 per cent. and even 16 per cent. to buy a house. No one should be under the impression that 11 per cent. is the maximum rate.
  I agree with the right hon. Gentleman that we must try to encourage home ownership among ordinary people. The Labour Government achieved more than 50 per cent. owner-occupation. One of my aims in life is to see that figure reach 60 per cent. or even 75 per cent. I am sure that the right hon. Gentleman also wants to see the extension of owner-occupation.
  The invective of the hon. Member for Aylesbury (Mr. Raison) against the Government was disconcerting. If we are ever to solve the housing problem it must be done by co-operation between all those who engage in house building and all those in politics and Government. The hon. Gentleman had only two solutions to the housing problem. One was the sale of all council houses and the other was the increase of council tenants' rents. Anyone with any idea about housing knows that those are not the answers. More than 50 per cent. of council tenants live in large blocks of flats which are not conducive to owner-occupation, unless there is some form of co-operative ground landlordship by the tenants themselves. I am not averse to that. It is a good idea.
  The sale of council houses and putting up council rents do not produce one more brick or one more house for people to live in. The hon. Gentleman said that 65,000 council-owned houses had been sold to their occupiers. Later, he said that about 10,000 of these had been sold when we were in power. When the councils sold 65,000 houses to their tenants it did not produce one more house, but it gave the ownership of a council house to any people who could have afforded to buy a house on the open market, and so provide a house for people not so well off. That would have been a much better policy.
  What I am really interested in is the situation in London, and I want specifically to deal with that. The Conservative Government, through reductions in taxes of all kinds, released on to the market an enormous amount of money that they thought would be invested in industry. Instead, in 1971, 1972 and 1973 it went

  993
  into property development, into acquiring new sites. The result has been that, particularly in London, hundreds of acres are lying idle, owned by firms which are going bankrupt because they cannot meet the interest charges on the money they borrowed to buy the sites. This is happening not only in inner London but in my own borough, the London borough of Wandsworth.
  I must point out to my right hon. Friend the Secretary of State that local authorities were encouraged to buy houses where the owner-occupier could not sell to a private bidder. In my constituency the Wandsworth council has bought hundreds of houses from owner-occupiers who could not sell them and who wanted to move away. Each house was bought for conversion into two flats, but unfortunately they remain empty and their condition is getting worse every day. They are being damaged because the council does not have the necessary money to convert them. The sooner more money is made available to local authorities in London to convert them the sooner will some of the homeless and those living in overcrowded conditions find somewhere suitable to live.
  What I have just said applies to both the public sector and the private sector. One can walk through Wandsworth, Battersea, South and Battersea, North—wherever one likes—and see house after house that was privately occupied and is now empty and becoming structurally worse, week after week. One of the reasons is that although the owners can find buyers the buyers cannot obtain mortgages.
  I see in the Chamber several Members representing London constituencies. They know as well as I do that there is a barrier to people living in London obtaining a mortgage sufficient to buy a house in the area in which they live. In Wandsworth the price for the average type of house ranges between £15,000 and £28,000. As soon as the building societies know that it was erected towards the end of the last century or early in this century they tell people applying for a mortgage "We are very sorry. We do not have the funds for this type of property at present" or "We have exceeded our quota "or" The building is far too old".
  994
  This happens to many people in London wishing to buy their own houses.
  I appeal to the building societies. Surely a compromise can be found, perhaps with the Government guaranteeing the interest due on the money borrowed, and giving a guarantee if, for example, the house has to be used for development in 20, 30 or 40 years' time. I see no objection. I see no reason why thousands of houses should remain empty in London because building societies will not advance the money for their purchase As local authorities have such a dearth of money for their house purchase schemes, perhaps we can reach a compromise on the matter.
  Last week, I put down a Question to my right hon. Friend about the agreement that he had breached with the building societies in order to get some money from them to help people in the inner urban areas. His reply was not satisfactory. As the Government helped out the building societies to the extent of £500 million last year, surely they can reciprocate now that they are getting such enormous sums from investors. Surely the huge insurance companies could allocate some of their money for use in extending home ownership, or for modernisation of houses which are empty at present.
  Mr. Crosland: I am listening attentively to my hon. Friend, but it seems that there may be some misunderstanding. First, the £500 million last year was a loan, and almost all of it has been repaid. Secondly, we have announced an agreement with the building societies whereby they are willing in principle to help make good the £100 million cut in local authority lending. I hope therefore, that there will not be any cut in total mortgage lending.
  Mr. Perry: I am grateful for that intervention. But £100 million is but a drop in the ocean of the problem of home ownership and the modernisation of old property. We have to go much further than that. Thousands of houses are lying derelict. The process is always the same. First, the windows are broken, then boarded up; then a wall is knocked down; rubbish begins to be dumped in the garden; squatters may move in, and finally, methylated spirit addicts may move in. The Government must tackle

  995
  the problem of the inner urban areas and ensure that empty property that can be used is used.
  We must be prepared to do much more if we are to solve the housing problem and the social problems which that brings in its train. We must have cooperation between the Government, the local authorities and the building societies, and I would also bring in many of the institutions with enormous financial assets. They should be able to get the same return on the money they invested as the building societies should get, and it should be guaranteed by the Government.
  I am sure that hundreds of millions of pounds are lying idle in many banks and insurance companies, and a Government guarantee in such terms would surely help to release much of it in order to tackle the enormous housing problem of the inner urban areas. Unless that problem is solved in the next 10 years, it will get worse and worse and become the greatest sore on the country that we have ever known. It is getting steadily worse month by month and year by year.
  I am sorry to use such strong language, but this is an enormous problem in London. I was born in London and I still live there, and I feel sad when I see the deterioration of the capital. We see thousands of acres lying idle. We see thousands of derelict buildings. Huge stretches of land once used by industrial companies to produce goods now lie unused because those companies have gone—some of them forced out by freeholders.
  If such a situation occurred in Northern Ireland, or in Wales, or in Scotland, or in the North-East or the North-West of England, we would have debates about it in the House. It seems, however, that anything can happen in London and Londoners just have to tolerate it.
  Mr. Andrew Welsh: It has happened in Scotland. If the hon. Gentleman reads the Department of the Environment's circular on urban deprivation he will see that Scotland has 95 per cent. of the most deprived areas in the United Kingdom. The hon. Gentleman would see the sad situation in Glasgow.
  Mr. Perry: I do not deny what the hon. Gentleman has said, but I am saying
  996
  that, while other areas in the United Kingdom get a chance of public debate about their problems, London rarely does. I make the plea that London should get more time in this House, more Government money and more money from financial institutions, so that it does not sink into the slough of despond. Anyone with pride in London wants to see the present deterioration stopped.
  London's housing is not only a problem of empty property. At this time of the year, for example, a great deal of decent housing accommodation is taken over by developers and turned into hotels for the millions of tourists visiting London.
  Mr. George Cunningham: Under Government subsidy.
  Mr. Perry: Yes. But all the people of London have to suffer the consequences. The problem gets worse year by year. When my right hon. Friend is considering where to get the money from, he should think of the enormous sums which successive Governments have provided to private institutions and companies in order to keep them going. It is about time the process was reversed and that some of these huge insurance companies, building societies and other financial institutions coughed up money, under guarantee, at a fixed rate of interest, in order to help provide decent living accommodation for the people of London and, at the same time, more employment in the building industry, which needs it so much.
  I regret the terms of the motion, but at least it has given us an opportunity to bring into the limelight the conditions in London. The problem is spreading from inner London boroughs like Camden, Wandsworth and Hammersmith to outer London boroughs like Croydon and Sutton. The problem must be solved in the next decade. I urge my right hon. Friend to get some money from somewhere to stop London from sinking into slumdom.
  5.18 p.m.
  Mr. Peter Fry: Whatever our political differences, the hon. Member for Battersea, South (Mr. Perry) always tries to put some sound ideas into the debates in which he takes

  997
  part, and I want to take up two points that he raised.
  First, the hon. Gentleman queried the statement by my hon. Friend the Member for Aylesbury (Mr. Raison) about the selling of council houses, saying that it does not add a single house to the housing stock. I accept that. On the other hand, it does release cash which the council can then use to build more houses. It also enables people who would not otherwise buy their own home to do so—people who, for a variety of reasons, do not want to move from the house in which they have lived for many years but which they have probably paid for two or three times over in terms of rent. It would be wrong to deny such people an opportunity to buy their homes, and it is certainly not a retrograde policy. I believe that it is also a way of giving people a little more individual freedom. In any case, the majority of such people would never leave their homes, which would therefore not become available on the housing list because, invariably, the children take over the tenancy as their parents die.
  Secondly, the hon. Gentleman referred to London's problems. I am not a London Member, but I represent a constituency in which there is an expanding town which contains a large number of ex-Londoners. One of our difficulties is that some of the problems of London are being exported because of what I believe to be the mistaken policy of the London housing authorities.
  For example, we find that houses are being provided in our area for Londoners, but the rest of the services—the necessary infrastructure—have to be paid for by ratepayers already in the area. Many of them find that cost enormous. I agree with the hon. Member for Battersea, South that it would be much better to spend the money on providing houses in London, which most of these people would prefer if they had the choice.
  In spite of the cautious self-satisfaction of the Secretary of State, I do not think that any hon. Member has any reason for satisfaction with the current housing situation or the house building industry. Some 30 years after the war we have probably the worst housing situation in Western Europe. Even behind the Iron
  998
  Curtain there is more owner-occupation than we have.
  A few weeks ago, I had the privilege of visiting Yugoslavia, and I went to a province that even its inhabitants would describe as the most backward the autonomous province of Kosovo. The authorities there are in the process of bringing a largely rural population into the towns to try to develop industry. One saw the development of flats and houses usually seen in growing towns. I said in all innocence that I presumed that the homes were provided by the local authority, but I was told that more than 70 per cent. of the new homes in the province were being bought by the people who were to live in them.
  This decision has been taken in Communist Yugoslavia for the one simple reason that the authorities there have realised that they cannot possibly house all the population out of public funds—that they have to harness the desire of the ordinary individual to buy his own home. The fact that 70 per cent. of all new homes going up there are owner-occupied is a lesson for us in our mixed economy.
  I, too, wish to touch briefly on the three main areas of housing, and I should like first to consider the public sector, which is causing considerable concern. The other day figures were released of the enormous amount of loan capital required to finance the present house building programme. It is estimated that building 150,000 houses adds about £ 1.000 million to the borrowing requirement. That is in just one year.
  It is also apparent from the current figures of new council houses—I have been given the figure for Croydon as being about £17,500—that there is no hope, without massive subsidies, of doing more than touch the fringe of demand for houses in and outside London. Assuming that about £300 a year is paid in rent, the astonishing figure of £1,500 to £1,600 a year has to be provided in subsidy by ratepayers or taxpayers. It is obviously hopeless to think that we can solve the housing problem by relying almost entirely on the public sector.
  There has to be a change of emphasis on the part of the Government. They have to say clearly to the hundreds of thousands of young couples who want

  999
  a home "We cannot hope to provide you all with council houses in the foreseeable future. Yet in our surgeries these young people tell us that they see no other choice. They say that they cannot possibly obtain a privately rented house or flat and do not feel that they can afford to buy a house. Their only remaining choice is to go on the local housing list. It is deceiving these people not to be honest and say that, no matter how much money is poured into the system in the next few years, many of them cannot possibly be provided with a local authority home. I would much rather the Government were fully honest about this issue. They would have far greater respect inside and outside the House if they were.
  The second area needing urgent consideration is the private sector. I am getting tired of sending letters to the Minister on behalf of constituents who are almost at their wits' end because they happen to be the owners of private property that they have rented or leased. Last week, a gentleman came to see me about two houses that he owned. One, he admitted, was old and below the standard required for him to be able to apply for a fair rent. He obtained 76p a week in rent for it. At the moment it is habitable. His expenses this year alone will be about £75 or £80.
  He said "Frankly, I shall not do the essential repairs". All that will happen will be that the house will fall into disrepair and eventually have to be taken over. Its occupants, presumably, will be rehoused at the expense of the ratepayer and the taxpayer, the cost being about £25 a week.
  Mr. George Cunningham: Under the latest legislation he is able to make repairs and recover the cost as an addition to the controlled rent that would otherwise obtain.
  Mr. Fry: In this case he is unable to do so because of the low rateable value.
  He has made repairs on the other house, for which he gets 85p a week. For those repairs he has been awarded the princely sum of £2 a week, well below the economic return on any property in which a family could live.
  Mr. George Cunningham: As the hon. Gentleman has obviously not looked up
  1000
  the latest legislation, perhaps he will advise his constituent to do so, for he may find something to his advantage.
  Mr. Fry: I am grateful to the hon. Gentleman.
  The result of this and other examples is that many people feel that property that they are able to let or lease is a millstone round their necks. Many of them, especially in view of the 1974 legislation, have decided to dispose of these properties as soon as possible, or even to take them right off the market.
  Thus, already we have two factors: the problem in the public sector, which will not be solved simply by pushing in more public money, and the problem in the privately rented sector, where the supply of accommodation is being reduced. It cannot be much sense for Government supporters in these circumstances to talk about ending the tied cottage system. In many rural areas to do so will only exacerbate the housing problem.
  An interesting survey has been made of people living in tied cottages. The majority of those who had been in such accommodation for some years were happy about living in a tied cottage and at the same time were earning more than those who were dissatisfied—generally those who had been there for only a short time. The reason is in the nature of the system.
  By having a tied cottage a farmer is able to provide accommodation for a stockman to live near a herd. The system is accepted in many other walks of life. I agree that the present Prime Minister does not live in No. 10 Downing Street, but it is a tied house. School caretakers live in tied cottages, and I understand that there are no proposals to abolish that aspect of the system.
  We have to face the fact that if we go ahead with legislation that has a doctrinal basis, all we shall do is worsen the housing situation in many areas. Farmers will find it impossible to obtain skilled workers, and the country's food production will suffer as a result.
  Mr. Andrew Welsh: In Scotland the National Farmers' Union and the farm workers favour the tied cottage system, unlike the situation in England.
  Mr. Fry: I wish that the farm workers in Scotland would talk to the union in my country to see whether they could make our workers agree with the Scottish workers.
  The third area is the owner-occupied sector. Here, the problem is more psychological than monetary. Many people, especially young couples, are nervous about embarking on buying a home of their own, and they have a variety of reasons for their nervousness. What they desperately need is the confidence that they will be able to keep their jobs, and thus maintain the repayments.
  I accept that that is largely outside the province of this debate because it is tied up with the general economic situation, but there are things which the Government could do, particularly to help the large number of people who feel that they cannot afford to buy a house. The Secretary of State made an interesting speech some time ago suggesting that local authorities should investigate new ways of providing cheaper houses more quickly. He talked, for example, about erecting mobile homes. Yet there has been remarkably little advance in that direction.
  Local authorities still seem to be steeped in age-old ways. I am disturbed because local authorities seem to be slow to take up new ideas. I have heard it said that not all housing associations can obtain sites as quickly or as easily as they would like. They find it difficult to deal with many local authorities. That is why I am doubtful about the value of the Community Land Bill. It places far too much power in the hands of local authorities. They will decide far too many things, such as what land will be made available and who will have it. We would all agree that there is a regrettable tendency in local government for empires to be built and for local officials to want more power.
  My suggestions are twofold. First, we should look more closely at system building. It has now been proved that using system building techniques a house can be built in four weeks as compared with about six months using conventional techniques. If system builders were given contracts by local authorities there could
  1002
  be a dramatic increase in the number of housing starts and in the number of young couples who would be able to find accommodation. The Government ought to encourage this method of house building.
  Second, there is the whole question of the provision of land for private builders. It is all very well for the large firms, but the small and medium-sized builders are in a state of crisis, largely because of the high cost of land. Recently their difficulties have been made worse because the value of the land they hold has dropped. As a result, its collateral value against bank overdrafts has been reduced. Many small builders are now in desperate circumstances. They are certainly in no position to buy another plot of land These people, usually local builders, could build a small development. They need the active co-operation of Government and local authorities. Why should not many more local authorities allocate certain areas of land, leasehold, to local builders under certain conditions? In that way the builder would pay nothing towards the cost of the land. The rent on the land could be paid to the local authority.
  The small builder could erect a number of houses at the lowest possible cost to take account of those at the bottom end of the scale who would welcome the chance to buy their own homes. This could be done widely, yet it is not being done. Instead, many small builders are going out of business because they cannot obtain land. The Secretary of State should encourage local authorities to arrange this.
  Basically, the whole problem facing the industry and those who want to buy homes is to do with confidence in the future. The best thing the Government can do is to show that they will take a firm grip upon inflation. In that way people will not be so worried about what their money will be worth in a few years' time.
  The situation is becoming exceedingly critical. What we need is action, not just strong speeches. It is all very well for the Secretary of State to say that the party has got to stop. He must realise that for far too many people the housing party never started. I think that many Labour Members believe this, too. The right hon. Gentleman will find a considerable

  1003
  amount of all-party agreement if he enables more houses to be built, thus injecting confidence into the industry and into house purchasers.
  5.35 p.m.
  Mr. Frank Allaun: A fortnight ago three Labour Members—my hon. Friends the Member for Leeds, West (Mr. Dean), Wolverhampton, South-East (Mr. Edwards) and myself—wrote to the Prime Minister making three proposals of ways to resolve the desperate housing situation. This weekend we have received a reply, covering four foolscap pages, which I have here. The reply is prompt, and treats our arguments seriously.
  Nevertheless I and my two colleagues cannot accept the objections made by the Prime Minister—objections which are probably shared by the Secretary of State and his ministerial colleagues. We sought a great and immediate housing drive, a vast expansion of the house-building programme. The Prime Minister replied:
  "I do not accept that this is necessarily the right course. There can be no mistaking the Government's view of its priorities and the place held by housing among them. But we simply cannot ignore the immense economic difficulties we face and I do not think we can reasonably expect to make further additions to the much increased provisions we have been able to make for housing in spite of all the pressures we have already had to face."
  I take the opposite point of view. Far from it being economically inopportune for such an expansion I believe that it is the ideal time. In Italy and Germany, as soon as unemployment began to grow recently, those countries stepped up their already considerable housing programmes. There are today 152.000 workers in the building trade in this country, plus 30,000 in related industries such as brickmaking and furniture, who are out of work.
  It costs up to £2,000 a year to keep an unemployed building worker and his family in State benefits. Surely it would be better to have something to show for the money. We should remember that at the depth of the Depression in the 1930s in America President Roosevelt proclaimed his New Deal—the National Recovery Act. There were 16 million men and women walking the streets at that time. The New Deal not only
  1004
  developed great areas of the country but also provided the necessary lobs. We should do the same.
  Apart from a small amount of copper the only import needed would be timber. A great deal of timber is now produced in this country. Much of it could be substituted. Light steel frames could be used for roofs in place of timber, so that there would be little strain on our balance of payments.
  Mr. Stephen Ross: Will the hon. Gentleman accept that the yards of the timber merchants are full of timber which they cannot sell, all of it bought two or three years ago?
  Mr. Allaun: I am grateful for that intervention, which greatly strengthens the argument. The same applies to brickworks.
  In his letter the Prime Minister refers to the improvement on the 1973 figures for starts and completions. I welcome this, but those figures were the lowest for almost 26 years. We must contrast the 268,000 completions last year with 413,000 houses completed in 1968. There is a mighty big leeway to make up.
  Will the growth in housing continue or will it be halted? Certain remarks made by the Secretary of State today have increased my apprehension. In 1967, the Prime Minister told us that although other social services had been cut back the housing programme was sacrosanct. You, Mr. Speaker, may remember that remark. Tragically, it was not sacrosanct.
  Mr. Deputy Speaker (Mr. George Thomas): Order. I am grateful for the promotion, but the hon. Gentleman must not remind me of my past: it is disconcerting to me.
  Mr. Allaun: Very well, Mr. Deputy Speaker, I shall never commit that crime again.
  When the International Monetary Fund and the international bankers laid down conditions for loans, I believe that a cut in housing was one of their conditions. In 1968 a cut certainly took place. We have gone down from 1968 onwards. Shall we see them crack the whip again in a few weeks' time? And will the Secretary of State stand firm against Treasury demands? He should. A certain

  1005
  red-headed member of the Cabinet has fought hard, and, I think, successfully, to protect her corner. The Secretary of State must fight for his.
  Where is the money to come from? It will come as no surprise to hon. Members when I say that it should come partly by cutting arms spending instead of increasing it, as we are doing. To take one item in the arms budget, expenditure on military research and development this year will rise to £550 million a year. With that sum, at £10,000 a house, we could provide an additional 55,000 homes for families, which I know the people of this country would prefer. Until arms spending is cut, some of us will resist a penny being cut off any form of housing expenditure—and it is now coming off not construction but improvements, repairs and municipalisation.
  Contrast the housing situation in Germany and France, which have similar economic systems to ours and almost identical populations. Each of those countries builds more than 500,000 homes a year. It is no miracle. France builds twice the number that we build because she devotes 6·6 per cent. of her gross national product to housing compared with our 3·6 per cent.
  Secondly, in our letter we asked the Government to permit local authorities to requisition houses empty for six months or more without good reason. The Prime Minister replied:
  "… we have examined the possibilities very carefully. But it is clear that requisitioning powers, in practice, would not he a more effective or speedy way of bringing empty housing into use than administrative measures such as those that the Minister for Housing and Construction is examining, operated within the framework of existing powers."
  The unfortunate fact is that the Minister has not brought forward such measures. Meanwhile, 750,000 homes stand empty. Many of them have been empty for years and are becoming write-offs.
  I received a letter last week telling me of a house which had been vacant for 19 years—this at a time when people are in absolute misery because of the lack of homes. Last week a young newlywed couple came to see me about a house empty for a long time in Salford which they would like to buy and put in order. The owner does not live there. They
  1006
  cannot trace her address, although they know her name, so they have asked me to forward their offer to buy the house to her via the local authority, which has her address.
  The council should be authorised to requisition in such cases. A great advantage of requisitioning is that it completely avoids the floating of huge loans to purchase the properties, which is said to be highly inflationary. Instead, the council would install tenants on its waiting list and pay the rents to the owner after deducting repairs. What could be fairer than that?
  My Private Member's Bill, supported by the majority of hon. Members, is still awaiting a Second Reading. It was interesting that when it was introduced under the Ten Minutes Rule the Government Whips voted for it, but I regret to say that the Ministers of the Department of the Environment did not.
  The third proposal which we made to the Prime Minister was that buildin9, societies should lend their surplus funds to local authorities at 11 per cent. to provide mortgages to residents unable to secure them from the building societies, usually because the houses were old or they were people on low incomes. The Prime Minister replied:
  "What we are doing is to explore urgently with the building societies how far they may be able to help in filling the gap caused by our decision to switch resources from local authority lending to municipalisation and improvement—a request that they have promised to treat as sympathetically as possible."
  But the brutal truth is that local authorities have recently received a letter instructing them immediately to cut their supply of mortgages to 50 per cent. of what they were last year. This morning I received a letter from my city treasurer about a constituent who had approached me. The treasurer wrote:
  "I am afraid that he is going to be one more of hundreds of would-be house purchasers who because of the effect of Circular 64/75 of 9th June cannot in the foreseeable future be helped by the council."
  This is happening all over the country.
  I do not share the criticisms made today by the Opposition—a lot of ideological balderdash—but I think that there is something in the criticisms that I am making and which have been made by my hon. Friends. Out of 32 London

  1007
  boroughs, 23 have stopped lending altogether and another five have imposed restrictions, so there will be a further strain on the waiting lists for council houses.
  Councils are having to pay up to 15 per cent. interest on borrowing, compared with 11 per cent. for building societies. The Government should require the societies to transfer several hundred million pounds of surplus funds at 11 per cent. to the local authorities.
  All that I have time to say on rents is that I am bitterly disappointed that on the housing finance working party which the Secretary of State has established there is not a single representative of the people most directly concerned—the tenants. Nobody seems to think about them. The Association of London Housing Estates and other excellent tenants' associations have experts who should be appointed and serving on that committee—and it is not too late.
  Finally, I wish to say a few words about the private building firms which are exploiting the councils and the homeless, although there are honourable exceptions. Why should a new council house in the provinces cost £10,500, quite apart from the land cost, and, as we have been told today, £30,000 to £50,000 in London? Why should it cost £4,000 to improve a council flat? Ten years ago, in Salford, bathrooms with hot water and inside lavatories were being installed for £220 in terraced houses. I know that there has been inflation, but, my goodness, not to that extent. I blame some firms of architects. They are paid commission on a percentage basis: the higher the cost, the higher the commission. In a recent sheltered housing scheme in Salford costing £300,000, no less than £40,000 went on professional fees for architects and quantity surveyors.
  As for faulty work, I could provide hair-curling stories from all over the country. Let me quote one or two from Salford. In three tower blocks the columns have cracked and at this moment are having to be propped up with steel girders inside and out. In a number of other tower blocks in the city, a major job is looming because of the movement of parapet panels and suspect joints. A new bridge over the river Irwell collapsed. Yet the bridge builder was actually paid his fee!
  1008
  Damp abounds, affecting walls, clothes, bedrooms and furniture with green, grey and black mould. There is a serious effect on health. Damp results chiefly from faulty design by architects who should have been forced to live in these flats for six months—
  Mr. Perry: And partly from shoddy work.
  Mr. Geoffrey Finsberg: Is the hon. Member indicting just private architects and developers or also local authority workers and direct labour departments?
  Mr. Allaun: I am glad that that point has been raised. If the hon. Gentleman can contain himself for 20 seconds, I shall be there.
  Then there are the high alumina cement developments. Now are added the fears over woodwool slabs. Why is something not done about the firms responsible for these faults? I have friends who are architects and they tell me that they take out huge insurance policies to cover disasters. Yet these firms are not sued or prosecuted, when things go wrong. Instead, the heads of some of them are honoured. Frank Taylor, of Taylor Woodrow, built Ronan Point, the collapse of which eventually cost this country £100 million paid for half by the taxpayers and half by tenants and ratepayers. What happened to Mr. Taylor? He was knighted. As far as I know, Taylor Woodrow did not pay a penny of compensation, and its profits of £6 million in 1967 had trebled to £18½ million in 1973.
  The answer is to check soaring contract prices by employing those direct labour departments which have proved successes. Manchester, which employs 4,500 men, has built 16,000 council houses and has a wonderful record of success. Neighbouring councils in the Greater Manchester conurbation would like to employ Manchester's direct labour department to build houses for them. That would certainly bring down the tenders of some of the building firms. But this is forbidden by some outdated circular.
  The Secretary of State told me at Question Time last week that he was permitting Manchester and Sheffield to work for other councils, but I understand that while they may do certain repair work they will not be permitted to build houses. I

  1009
  cannot see why that should be. A Manchester councillor tells me that it will be 1977 before an Act is pushed through to change that situation. Surely it is not beyond the wit of the Secretary of State, or of man generally, to alter that regulation without having to wait two years. Where there's a will there's a way.
  Mr. Joseph Dean: On this point, is my hon. Friend aware that the end of the Manchester department's massive building programme is coming very close and that it would be expedient to examine the situation to allow it to build for other authorities in the conurbation so as to assist them with their housing programme?
  Mr. Allaun: I am very grateful for that intervention. It shows that these men who have experience could be kept fully employed in building houses, which is what they want to do. I shall be listening very carefully to what the Minister has to say later tonight.
  5.56 p.m.
  Mr. Stephen Ross: I am glad to speak after the hon. Member for Salford, East (Mr. Allaun), who has made the most perceptive and common sense speech of the debate so far. I also congratulate the hon. Member for Battersea, South (Mr. Perry) who highlighted many of the problems that we see in our constituencies. He was particularly concerned with the London area, but even in my constituency we have the unheard-of situation of between 2,000 and 3,000 people on our waiting lists while properties stand empty and rotting—some owned by local authorities. We cannot understand why that is allowed to continue. In the county town of Newport, to which I am about to move, I photographed no fewer than 50 empty properties, one of which had been empty for over 20 years.
  The situation has deteriorated since our last housing debate, despite what I accept are some encouraging new starts in the public and private sectors. Some of the Government's present housing policies are very hard to understand, which is putting it kindly. We have heard about the lack of mortgage finance which local authorities are facing. I was in Cornwall on Saturday and I was told that practically all authorities there are right out of
  1010
  money. Some are saying that they can lend no more local authority money this financial year.
  We know that about 50 authorities are unable to lend at under 14 per cent. I am sure that the Minister will have had his attention drawn to the deputation from Stevenage, which some of us met the other day. That is not in my constituency, but I was asked to attend as spokesman for my party. It was a frightening experience. Those people were in no mood to take "No" for an answer, having to face mortgage rates of up to 14 per cent. when their mortgages, on new town houses, were originally granted at 8 per cent. They could not understand that huge increase.
  In my constituency, one authority now lends at up to 14 per cent., if one can get it, and the other at 11 per cent., so anyone buying a small property tends to go to the area of the latter. But both face reductions in lending and I do not suppose that they will be able to continue lending for much longer.
  The housing waiting lists seem to grow longer. There was a period when my postbag did not get so full and not so many people came to see me on Saturday mornings. It is a forlorn experience when one has to interview decent people, often with a reasonable income, who are unable to get a home at all, sometimes suffering nervous breakdowns and seeing a doctor, and when one knows that there is nothing one can do to help except make a plea to the housing manager, who himself is at his wits' end.
  Local authority modernisation schemes are almost at a standstill. In my authority, some additional money has been released on one scheme, but it is a different story with others. Properties in London and elsewhere will have to stand empty because of the cut-back—
  The Minister for Housing and Construction (Mr. Reginald Freeson)The Minister for Housing and Construction (Mr. Reginald Freeson) indicated dissent.
  Mr. Ross: I am glad to note the Minister's disagreement, and I hope that what I have said is not so. However, improvement grants are severely restricted. I have written to the Minister twice in recent months asking for the bottom limit of £175 rateable value to be raised. Rating valuation lists prove that

  1011
  small properties valued above that figure cannot be improved.
  Turning to the speech of the hon. Member for Aylesbury (Mr. Raison), I am forced to put on record my sympathy for the Government, because of the fact that many of their problems result from the deplorable goings-on during the period of the last Conservative Government. The hon. Member for Salford, East described some of those things. A prime example is the use of high alumina cement. The cowboys who were allowed to operate in the private sector between 1971 and 1974 were a disgrace to this nation. It will take years of suffering to put that situation right.
  I have found that the whole of the drainage system of a property that I am buying is completely condemned by the local authority and that it will cost between £1,000 and £2,000 to put it right. The builder had no previous experience. In those days building houses was a "good act to get in on." Inexperienced builders built those houses. The country will live with that fact for years.
  The greatest disservice was the enormous rise in prices. It has made it almost impossible for the ordinary person to buy a small property. This is the problem with which the country is faced. Both sides of the House should arrive at a consensus so that the problem can be solved.
  I do not suppose that the hon. Member for Salford, East will agree with my following remarks. There are up to 1 million dwellings which are empty but ready for occupation now. We all know of cases in which people have left the country temporarily. There are people who own two homes. They are prepared to help the housing situation. Not all property owners have an evil intent. Many people would like to let their spare properties. I refer to those who own properties which have become unexpectedly vacant through a relative's death. Others have bought houses for eventual retirement.
  Those property owners are frightened. They are advised by their lawyers that they must not let their properties. If they do let them they may find themselves in an unfortunate situation. We all know
  1012
  what happens. Tenants make promises that possession will be given, but when the time comes they are unable to leave. Those tenants are protected. The protection applies to both furnished and unfurnished tenancies. We must give private landlords the opportunity to help in this situation. We have heard about the scheme in North Wiltshire, which is a start. That scheme provides for local authorities to guarantee short-term lettings. The local authority will take over the tenancies. That offers one way forward. However, the scheme is at present making only slow progress. The administrative costs and subsequent management charges are under £25 per annum. That scheme should be examined and extended.
  However, there is a need to go further than that. We should make special arrangements for the first letting of houses, subject to satisfactory safeguards. I do not wish to return to the 1959–64 situation. That went wrong. The rent officers must be allowed to assess fair rents. The tenants must know exactly where they stand when they enter into the agreement. The landlord must know that he will not lose all control. If a local authority can give a guarantee, so much the better. In that context, I support the Private Member's Bill in the name of the hon. Member for Kensington (Sir B. Rhys Williams). We must face up to the situation. We must make use of all our existing housing assets.
  I believe that the Rent Act 1974 was necessary at the time, but it is nonsense to talk about the effect its repeal will have. Furnished property usually commands a high rent of between £20 to £40 a week. I do not think that repealing the 1974 Act will help the situation. Even so, landlords of either furnished or unfurnished property should be allowed the unrestricted right to let for the first time.
  I do not think that the suggestion made by the hon. Member for Aylesbury (Mr Raison) about private developers building houses to let is feasible today. I do not see how anybody can build property to let at a realistic rent, as costs are now every high. Local authorities are very often at fault in that they allow their own properties to stand empty. It takes a long time for them to make a move.

  1013
  The Rotary Club in my county town tried for some years to obtain premises in the centre of town so that they could provide meals for old people. At long last something is being done. A building which has been derelict for over 10 years is being made available, because the redevelopment scheme there never got off the ground. Why should it have taken so long to do that? Why should not the local authorities provide buildings for charitable and housing associations to let on a short-term basis? They could renovate those properties and make them habitable. That would be a move in the right direction.
  I could instance schemes in other parts of the country. In Portsmouth properties scheduled for demolition are being taken over by a housing association. Accommodation is being provided for unmarried mothers. The properties are being converted into flats. Local authorities should be encouraged to set up such schemes.
  I agree with the mandatory rating of all empty premises. It should be mandatory on all local authorities to rate empty dwellings. I agree also with the requsitioning of empty properties. Where premises are flagrantly left empty the local authorities should be empowered to requisition them. However, owners of such properties should first be given the opportunity to make proper use of them.
  I believe that the financial institutions and banks should be obliged to help local authorities to grant mortgages. I do not think that the building societies should be forced to do so. I hope that the Government will direct the financial institutions to deposit funds with local authorities so that mortgage schemes can be funded. Building societies' funds are already fully taken up. I understand that the banks already run mortgage schemes for their employees at favourable rates of interest, which are sometimes as low as 4½ per cent.
  I am in favour of low-cost housing schemes. People are often satisfied with one-bedroom units or two-bedroom units. Such units can be built for approximately £6,000, or possibly less. Those schemes should be more actively promoted. I believe that local authority planning officers are reluctant to consider those schemes. I heard of a case recently where
  1014
  a private developer was prepared to build one-bedroom units, leaving purchasers the opportunity to extend their accommodation afterwards as their families increased. I was told that the building society which was approached did not look upon this as a suitable investment for mortgage money. That is nonsense. I must make it clear that I am not referring to all building societies. I do not wish to receive letters contradicting me, as I did the last time I made remarks about a building society.
  I hope that it is not the policy of all building societies not to lend money on low-cost houses. The same remark applies to flats and maisonettes. I constantly receive letters from estate agents and others saying that the building societies do not lend money on flats and maisonettes. The building societies could do a great deal more to help, as many people could afford low cost units.
  I favour the idea of making outright grants to first-time buyers. Such grants would be of enormous assistance to them. Why is there no way in which that can be done? I know that the idea has been considered from time to time. In some areas local authorities put aside part of the rent paid by first-time occupiers and allow their deposits to build up. Perhaps that scheme will work better now that the market is stable. The idea is to build up accounts for first-time occupiers so that they have a deposit to put down on a house. Such a scheme would work to the benefit of the Government. I do not say how much grants to first-time purchasers should amount to. I suppose that the grants should range between £1,000 and £1,500.
  The Community Land Bill is a tragedy, although I agree with the basic idea behind the Bill. However the Government are approaching the matter in the wrong way. The Bill is unlikely to produce any cheaper land. The local authorities will be the speculators of the future. They will buy the land at existing use value. They will then undertake the planning and sell the land at open market value. I do not think that will help one iota.
  I can imagine people on the finance committee of a local authority saying "We are advised by the planners that we can have only eight houses per acre,

  1015
  and this is a five-acre site. If we were to erect blocks of flats we could get far more money." They will look for the biggest financial return. That is one aspect of the Bill which will not help the housing situation.
  I also wish to refer to the frustrations of housing associations, particularly charitable organisations, of one of which I am a member. We started with the intention of building up to 50 or 60 houses a year in my constituency. We started off with 30 schemes, 27 of which have now fallen to the ground through lack of co-operation of one sort or another. Very often the owner of a site will not agree a price with the district valuer, and that is a problem which we cannot overcome unless there are compulsory powers in the background.
  More often the local authority is not very helpful. I know of one which has been very helpful, but others are not. They are not prepared to provide mortgage finance. In addition, it took my housing association two years to get registered. There are many frustrations, and many good people who have come forward to help are now almost giving up in despair. The willingness has been there, and the patience of these people has been tested enormously.
  May I now refer to the Parker Morris standards. It so happens that I was at Milton Keynes New Town this morning and I saw a case in which it was unnecessary to stick to Parker Morris standards—a big bedroom wardrobe. I am not opposed to the provision of good standards but we do seem to go to excessions in providing high standards which are not required by occupiers. Very often when people move in they throw out these items which have been built to such a high standard.
  I wish to see the future of housing planned on a regional or county structure. We should put houses where they are most needed. This is very important because we are now running up against the problems of drainage and sewerage. Because we have set up these new river and water authorities, the new local authorities no longer control the water and sewage disposal, and frequently a water authority is found not to have the necessary money to provide the drainage for a new develop-
  1016
  ment. In a regional context houses could be built where there are already adequate sewerage facilities. We must have the cooperation of the building industry. A great deal more could be done to get help from the industry to assist in development on a regional basis.
  I agree with the hon. Member for Salford, East on the subject of high alumina cement and wood wool filling. We have read in the Sunday newspapers about the filling of cavity wall structure houses, and I should be grateful if the Minister would comment on this. I believe there is an inquiry into the use of high alumina cement and that there is to be a report published by July. I do not know whether people who are affected by the use of these materials can look to this report for assistance, but it would be helpful if a comment could be made particularly on wood wool filling.
  The lack of a decent home is the cause of many of our ills in society. If we cut down on costs in our housing programme we are liable to add to our health and social security burdens. Radical new policies are urgently required some of which I have tried to outline in my speech today.
  6.14 p.m.
  Mr. Andrew Welsh: If housing has been described as the great British failure, it is surely the great Scottish disaster. The recent Department of the Environment Report on Census Indicators of Urban Deprivation shows clearly that Scotland's housing is the disgrace of Europe.
  Of all the indicators of deprivation, this report shows that the West Central belt of Scotland has the greatest concentration of all kinds of multi-deprivational factors—poverty, low wages and so on—in the whole of the United Kingdom, and of these, housing is by far the most important and fundamental. In Scotland we have slum housing which is a disgrace to any civilised, self-respecting modern democracy. That is the proven record of consecutive London Governments, both Labour and Conservative.
  This report on urban deprivation, which I recommend as statutory reading for every Minister, shows clearly the extent of what is, by any reckoning, a truly formidable task. There is at present no

  1017
  adequate governmental machinery existing to undertake this vital role. Housing in Scotland at present is the responsibility of an Under-Secretary of State who deals also with farming, fishing and forestry. Housing and fishing—what a combination! What sort of ingenuity must have been required to combine those two activities?
  The Under-Secretary is responsible in turn to a Secretary of State who himself has to deal with a host of portfolios—education, health, police, housing, farming and forestry—any one of which would require all the brain power which any one man has to offer, and then demand more if they are to be dealt with adequately. Each one of them has a Minister to itself in England. No wonder Scotland has lost out. No wonder Scotland has suffered from a poverty of new ideas and initiatives.
  I ask for the immediate creation of a fully fledged Scottish housing Minister with his own Department, backed up by adequate finance, and responsible to the people of Scotland through our own directly elected Scottish Assembly, or, better still, through our own democratically elected Parliament. If the problem is to be solved, the Government machinery capable of solving it must be created. I ask the Government to initiate an immediate all-Scotland housing survey, using Scandinavian standards in order to ascertain the fitness or unfitness of each house. Our universities, local authorities and other appropriate bodies could be called upon to help in this essential task.
  There must now be a switch in emphasis in the use of housing standards. For far too long we have been too happy to accept standards of mediocrity where "minimum tolerable standards" really have been minimal. They have been the lowest common denominator under which human beings should be asked to live.
  I ask the Government to start talking in terms not of standards of mediocrity but of standards of excellence. To do this the present house building programmes will have to be drastically revised. The inadequacy of past and present house building programmes in Scotland and the potential options open to a Scottish Government can be seen in
  1018
  the actual achievements of similar small nations. The Scandinavian democracies, for example, have consistently built more and better houses than we have, and cumulatively Scotland is falling further behind. Between 1963 and 1972 Sweden built 620,000 more houses than Scotland did. Denmark in the same period built 58,000 more houses than we did. When we talk about the most prosperous nations, Finland is rarely mentioned, but even Finland has built at an annual rate of twice the number of houses that we have achieved in Scotland.
  I ask the Government to review their attitude fundamentally towards the financing of house building. The sums involved are not necessarily astronomically high. In 1973, in order to achieve a better house building record, Sweden spent only £21 million more than was spent in Scotland, and in the same way Norway spent only £18 million more, yet achieved a far better record. Sums of £18 million or £21 million more are hardly astronomical, especially for a nation with a gross domestic product in the region of £5,300 million. These sums are easily within the reach of a careful dedicated and sensible Scottish Government.
  Those who say that Scotland gets more than her "fair share" of United Kingdom expenditure should take a good look at the housing statistics. They will see that Scotland has 10 per cent. of the United Kingdom population. Yet year after year Scotland, with the worst slum housing problem in the United Kingdom, has been allocated less than 10 per cent. of the total United Kingdom house building expenditure. In real terms over the past few years the Government's allocation for Scottish housing has actually fallen.
  Mr. Robin F. Cook: Would the hon. Gentleman explain to the House how, if expenditure on public housing is so low in Scotland, Scotland has one-tenth the population and one-fifth of the council houses?
  Mr. Welsh: I was making the point that those who say that Scotland gets more than its fair share should look at the expenditure on housing. With one tenth of the United Kingdom population and a far bigger problem, Scotland has

  1019
  consistently been allocated less than one-tenth of the total United Kingdom housing.
  Mr. Douglas Crawford: Perhaps my hon. Friend would comment on the fact that the area with the worst deprivation in the United Kingdom—the West of Scotland—has been consistently ruled by Labour local authorities and it is to them that blame should be attributed.
  Mr. Norman Buchan: Does the hon. Gentleman have the figures?
  Mr. Welsh: I am happy to supply the hon. Gentleman with the figures. In the three years 1969, 1970 and 1971 Scottish authorities have achieved only a tiny fraction above the 10 per cent. I mentioned.
  Mr. Buchan: Is the hon. Gentleman withdrawing his statement?
  Mr. Welsh: I said that Scotland had consistently failed to get less than 10 per cent. I have pointed out that only in three years have we received only a tiny fraction above 10 per cent.—and I do mean a tiny fraction.
  Attitudes to housing and thus to housing standards and priorities reflect social values as well as the availability of resources. If the Government spend a small proportion of their GNP on housing, clearly they do not view housing as a major priority. By their own record and to their shame the Government, therefore, do not look upon housing as a serious priority in Scotland.
  The Scandinavian example has shown the possibilities open to us, and when the vast potential revenues from our oil are taken into account as a bonus, a Scottish housing Minister will have all the financial resources that could possibly be required for these purposes.
  I ask the Government to undertake an immediate and comprehensive attack on Scotland's poor housing standards. I ask them to create the machinery required, to allocate the finance needed and to apply Scandinavian-style determination to tackling the problem. There must be new ideas and initiatives. The traditional expertise and ability of our long-established financial institutions must be
  1020
  encouraged to create and to pioneer new methods of housing finance. Employers, trade unions, co-operatives and other appropriate organisations could be encouraged to provide Government-backed housing finance schemes as part of their service to their workers and their customers.
  All sources of help, both public and private, must now be called into play if this problem is to be tackled properly. I ask the Government for action. We have had plenty of past reports. For example, the Bowhouse Report has been in existence for three years and little or nothing has been done to cure the problems that it underlined. It is the people of Alloa who suffer while the Government dither.
  Let there be no more Bowhouses or Blackhills, no more Govan redevelopment schemes—which are now lagging 10 years behind schedule—no more part-time or half-hearted management of Scottish housing problems, no more 95 per cent. of extreme urban deprivation huddling together on Clydeside, and no massive Drumchapel or Castlemilk type of urban sprawls which were built without adequate facilities to back them up.
  I ask the Government to learn from past mistakes and to translate present potential into future reality by always keeping in mind the needs of individuals.
  6.24 p.m.
  Mr. Joseph Dean: I am surprised at the affrontery of the Opposition—because the Government have only been in office for just over 15 months—to opt for a debate which is almost a censure motion on the Government's 15-month record. Those hon. Members involved in housing problems know that it takes two to three years for a national policy to emerge in any depth. Although I was a signatory of the letter sent to the Prime Minister which asked for additional resources, I give a qualified word of appreciation of what has been done already, because the barometer is at last moving decisively in the right direction with a 30 per cent. increase during the time the Government have been in office. I shall be delighted if the momentum continues and if that 30 per cent. is compounded in the next set of figures that is published later this year.
  The hon. Member for Aylesbury (Mr. Raison) mentioned the financing of

  1021
  council house building. One of his arguments was that the sale of council houses would immediately make more finance available for the local authority to begin to build more houses. It is obvious that the hon. Member knows nothing about the effect of the sale of council houses on an authority where there is a shortage of housing.
  Whenever the Opposition talk glibly about this subject and use the sale of council houses as a popular sprat to throw to the electorate, they never talk about the sale of council flats. I know of no area where council flats have been sold or bought to any extent. In the past the more desirable council houses have been bought at low prices and where there has been a shortage a house has gone out of local authority control. The waiting list for houses in a major connurbation such as Leeds is approaching 25,000. It is glib to say that we should start to sell council houses.
  The hon. Member for Aylesbury raised the matter of the valuation of council houses. The situation arose in the last valuation of council houses that there were no adequate staff to give proper valuation because of the bonuses and discounts of 20 per cent. which were increased to 30 per cent. by the last Conservative Government. It is absolutely paramount that adequate staff are available to carry out proper valuations. The result was that some council houses were undervalued—valued below what we accept as a fair market figure. Most of the houses I would describe as being good post-war houses.
  The hon. Member for the Isle of Wight (Mr. Ross) touched on the question of Parker Morris standards, but I want to deal with this in a different concept. The hard fact of life is that while those council houses were being built to Parker Morris standards, their counterparts that were being built for sale in the private sector were not to the same standards The council houses to Parker Morris standards had 20 per cent. more cubic space, and that standard demanded certain basic features, for example, central heating, which the private sector was not required to install.
  1022
  Some very nice council houses were being valued at prices far too low just in order to get them into the pipeline because of decisions being taken locally. What would be the situation if the 60,000 council houses, which the hon. Member for Aylesbury mentioned, were sold in the one year? What would happen to the housing programme and the cost effect on the nation if we were to build 300,000 or 400,000 houses a year, half of them being council houses, and we were to sell 100,000 houses on a knock-down basis? Other houses would have to be put back into the pool because of the severe waiting list. I am referring to stress areas, because I would not oppose this on political grounds if there were a surplus of council accommodation. This is what the debate is about. What would happen? Most of the post-war houses were built for, on average, £4,000 ten years ago. It may have been a little higher or lower. They would have to be replaced at today's prices.
  Mr. Reginald Eyre: I appreciate the point that the hon. Gentleman is trying to make, but is he not exaggerating it enormously? Does he not realise that the family that bought the council house would have stayed as tenants?
  Mr. Dean: The hon. Gentleman is assuming that no one moves from a council house, when the truth is quite the opposite. There is a tremendous national wastage every year in council houses. I had an association over a long period on the subject of housing with one of our major cities, which was demolishing 6,000 slums a year. Half of this project was being met by re-lets. Therefore it is not true to say that people born in council houses die in them. They move from such accommodation as rapidly as people move in the private sector. No one in this Chamber could be sure that in 12 months' time he will be living in the same house. That premise is completely false.
  I return to my point. If we were to sell 100,000 council houses per year and they were valued as they were on the last occasion, they would be valued on a lower basis than if a private estate agent were selling them. That has been proved more than adequately. We should have to replace those houses at a cost of

  1023
  £10,000 per unit. The Conservative Party is saying "Let us protect the taxpayer and the ratepayer", but Conservative Members have almost said "Never mind about council house tenants." What would that load on to an authority which had to keep building, if it had to discard council houses which had been built at what was at the time a high cost but which, because of inflation, has become a relatively low cost? It would be disastrous.
  I have always viewed the ploy of selling council houses as nothing but a legalised bribe by the Tory Party. I can go back to my history as the housing chairman of Manchester. I think that it was in 1971 that because of the forthcoming municipal elections—in that area it was a mini-General Election; it was a full organisation—the Conservatives upped the "anti" from 20 per cent. to 30 per cent. in an attempt to buy the votes of council house tenants. But they were massacred. They returned 18 councillors, I think, out of 99. That is how attractive the idea was.
  However, the people who would remain in council houses would be the overwhelming majority. If one valued these houses properly, there would be no rush to buy them at today's mortgage interest rates. This would once again mean a quite disproportionate and unfair burden being unloaded on the backs of the remaining council house tenants.
  On the question of council house rents, mention has been made of over-protection, and it has been said that the Housing Finance Act, introduced by the previous Conservative Government, was a very good thing. But there has been an inference from a previous Minister that rises in the rents may eventually exceed what was envisaged in that Act.
  I was very deeply involved in that Act once it had left Parliament. I was then the chairman of the AMC Housing Committee. There was to be a 50p increase if the Act was implemented in the spring and an increase of £1 if it was implemented in the October. But the Conservative Party was talking of cloud cuckoo land. I happened to be part of a general deputation from the TUC and the AMC which met the then Secretary of State, the right hon. and learned Mem-
  1024
  ber for Hexham (Mr. Rippon). I produced figures which showed that between the provisional coming into effect of the Act in March, and the period to October of the following year, which was the 18 months when the second obligatory increase in the October had to be brought in, a large number of council house tenants in the stress areas and major conurbations were being asked to pay 40 per cent. more in total, rents and rates, than hitherto.
  Let us not forget that this was in a period of freeze and semi-freeze, when the then Prime Minister, now the ex-Leader of the Opposition, was asking people for restraint. The case that we put forward was heard in muted silence. It was accepted. It was not denied. Nevertheless, it went by default, and people had to pay.
  Let us not retain any ideas that in the past councillors were able to depress rents and keep them artificially low. There may be grounds for saying that in relation to some areas, but only minimal grounds because by law councillors had to balance their housing revenue accounts annually. There was no other option. If such accounts had been overweighted by raiding the rate fund, I am sure that the councillors would have taken the consequences at the local elections which were held every year.
  I am glad that the hon. Member for Birmingham, Hall Green (Mr. Eyre) intervened, because his area was outstanding as one in which the Act made nonsense. I think that Birmingham then had a surplus of £3 million. The Act said that half of that was to go back to the Government. That money had been collected in rents. Some subsidy had been involved, of course, but can anyone imagine anything more autocratic than saying to a local authority "You have collected £3 million from your people, but we want half of it back"? These are the people who are talking about fair treatment for council house tenants.
  I received some criticism within my party for the stand that I took on that Act. It was a thoroughly bad Act. I implemented it finally on the basis that I was not prepared to break the law, but I did not do so with any enthusiasm. As my right hon. Friend the Secretary of State said, it is true that rent scrutiny

  1025
  boards were set up. But by the time the present Secretary of State brought in legislation to nullify and destroy that Act, there was no major housing authority that had had a rent level set by a scrutiny board. They were increasing rents by Government direction and did not know what they were paying for.
  This idea wants nailing. In the future the council house tenant may have to pay more rent. However, what we must do as public guardians is to make sure that such tenants are not asked to pay a disproportionate increase to redevelop a city in which they have lived all their lives, for someone else to draw the benefit. That is the unfairness of what was proposed. It is true that the Act initially covered only three years and that rents would have been reviewed under it—and drastically upwards in my opinion.
  I want now to deal with the question of the housing programme. The peak reached during the term of office of the previous Labour Government was about 400,000 houses. Just over 50 per cent. of those were built by the private sector, and the rest by the public sector. I am not against owner-occupation in the right sense by the private sector. I am myself an owner-occupier. However, it is quite apparent that because of inflation, unless we go to Common Market wages—and that will not go down well with some, nor will the prospect of Common Market prices—the ordinary working class person can forget about owner-occupation. Therefore, if we are aiming at a target of 400,000 houses, it is obvious that we must go for a much bigger slice of the global sum for local authority building.
  I should be the last to suggest that local authorities are the ideal that everyone would desire in housing. Each house built can be a problem. Each child born into the world becomes a potential housing problem. Even with the difficulties that have been experienced—not all local authorities are the best of landlords—I am sure that local authorities do a tremendous job. At present 6 million families are housed in local authority houses. If they were not so housed, no one would bother about them. I think that our care must be on an increasing basis and above the level of 50 per cent. being built by local authorities.
  We must also consider the prerequisites in terms of building houses. One import-
  1026
  ant factor is money. As my right hon. Friend the Secretary of State for the Environment has said, there has been a generous increase in the amounts that have been allocated and the amounts that are in the pipeline. Land is one of the most difficult problems and I think that the Community Land Bill will go a long way towards providing local authorities with a vehicle for taking land under their control where there is a shortage. We must also consider building resources. It is clear that we have adequate building materials. We have ample supplies of wood, bricks and glass, for example. Supplies are stockpiled everywhere.
  Here I issue a word of warning on system building and gimmickry. Alumina cement was a gimmick and it has soon caught up with us. I used to represent an authority that proceeded with about four huge gimmicks. Deck access flats became fashionable. All that we did was to lift slums off the ground and put lifts in them. It is easy to say that it will not happen again, but we must keep a careful watch on these matters. I speak forcibly against gimmickry and against messing around with industrialised systems.
  My hon. Friend the Member for Salford, East was correct when he said that upwards of 150,000 building workers are drawing unemployment benefit. Some statistics that I saw several years ago showed that on the basis of a balanced building force it took 0·9 of a man a year to build one council house by traditional means. That means that if we have a balanced building force of 152,000 unemployed—and I have no reason to say that it is not a balanced force—we could build in excess of 150,000 in addition to the number we are already building. That reinforces some information to which I referred when I last spoke in the House on housing. I had been in touch with the secretary of the National Federation of Building Employers. He said that manpower resources existed amongst his members that would make it possible to build another 150,000 council houses a year in addition to last year's programme.
  This debate amounts to almost a motion of censure on the Government's housing record. I would have expected the big guns to be brought to bear. The big guns that we have heard today from the Opposition remind me very much of the big gun that Charlie Chaplin tried to

  1027
  fire in "Modern Times". That gun did not go off. I think that the Opposition will have to do a little better themselves if they are to criticise the Government's performance.
  I have some reservations about our programme and I would like to see it increased. I am hoping that when the economic situation improves my right hon. Friend the Secretary of State for the Environment will ensure that housing has an increasing share of the national cake in the interests of people who remain on the ever-growing waiting lists. A greater share of that cake will give local authorities the chance to build the houses that are so desperately needed.
  6.44 p.m.
  Mr. Jim Spicer: The hon. Member for Isle of Wight (Mr. Ross) has already spoken of the problems of rural areas. Although most people accept that the major problems are to be found in the urban areas, it should be emphasised that the rural areas have their share of misery and hardship. I accept that the problem may be on a much smaller scale.
  In the countryside there is a sense of identity with the area in which a person lives. As matters stand, a movement of 15 miles, 20 or 30 miles can involve personal hardship and the loss of identity for a family that has lived all its life in one area.
  We must now face the realities of our situation. I shall raise three smallish points in a general sense and then go on to one particular matter which might be of some help to the Government. I do not believe that we can accept the situation that has arisen over the past 10 years. The housing deficit has risen from £150 million in 1965 to £1,250 million in 1974. Some people may feel that that is right, but I do not believe that we can continue along those lines. It has already been illustrated by the Secretary of State in another context that that trend is not acceptable.
  I do not believe that we can exist in a world in which subsidies on council house rents range from £25 to sometimes £60 a week. I am sure that none of my right hon. and hon. Friends has any objection to a subsidy being paid when it is needed by the person to whom it is
  1028
  being paid. What I find difficult to accept is that so many people are now paying for the subsidies through rates and taxes when very often they are less well off than those who are receiving them. That is a situation that almost everyone must deplore.
  Mr. Julius Silverman: Does the hon. Gentleman apply the same principle to mortgage relief, which is given irrespective of income?
  Mr. Spicer: No, I do not.
  The hon. Member for Leeds, West (Mr. Dean) referred to the turnover that takes place amongst council house tenants. One of the saddest things that we have experienced in west Dorset over the past three years is a turnover of council house tenancies of 3 per cent. and rising, dropping to 1 per cent., and falling with the change of Government. There is a static population and the people at the top of the income scale were moving out as their incomes became high enough to allow them to buy a house of their own. Those people are now sitting tight because they know that they are on to a good thing. I was grateful to the Secretary of State when he said that there is to be an increase in council house rents next year. I hope that it will be so modulated that those people at the top of the income bracket will once again be in the position where they will find it better to purchase a home of their own.
  I do not believe that we can continue along the present lines. We are all waiting with anticipation, and possibly some trepidation, for the economic cuts that the Government are to announce in the near future. When they are announced, undoubtedly the housing sector will suffer along with every other facet of our national life. It is for the Government to decide how they will operate the cuts in the housing sector, but today it is for us to give our advice and to try to help, even though it may be in a very small way. That is what I want to try to do in this debate. I am looking at the matter in a strictly parochial sense, but I am certain that the point that I am about to put forward could be extended to many other areas, and particularly rural areas.
  In west Dorset we have a camp in an area called Piddlehinton. It lies four miles from Dorchester. The camp was

  1029
  built during the war to house 1,500 troops. It was used to house Asian refugees from Uganda some two years ago. At that time some £50,000 was expended on it. The camp comprises some 85 brick-built units of accommodation with cavity walls and damp coursing. Not all the units have main services laid on but there are some 40 wooden huts on good, solid concrete bases with all the servicing that one would expect to go into such a camp. The camp has its own septic tank disposal unit. There is main drainage lying in straight lines all the way through the camp.
  When the camp was vacated by the Asians some two years ago the first proposal was that it should be bulldozed down and put back to agricultural use. At the time the cost of doing that was about £68,000. The camp comprises an area of 91 acres. We moved on a little, and the second proposal was that the local district council should take over 18 of the brick-built units to house 22 homeless families and that in the fullness of time the rest of the brick and wooden huts should be bulldozed down leaving the bases in situ because the cost of removing them was too high. That would mean that on the rest of the 91 acres the weeds and the grass would grow up all round the 22 homeless families who moved there.
  I have written to the Department about this in the hope that we shall be able to consider an alternative scheme for this camp and for others which exist in Bridgwater and in many other parts of the country. When the need is there we must make use of what we have.
  My proposal is as follows. There are 85 individual brick-built units in the camp. They could first be offered as they stand to council house tenants in the area for purchase at about £1,000 or £1,500 for each unit. A clerk of works could be installed to act as guide and mentor to the people who would buy the properties so as to enable them to build their own houses. There are many people who are capable of doing that. I welcome the suggestion, made again this afternoon, that there should be a grant to first-time buyers. That would make it possible for young married couples and people who had been looking for a home
  1030
  for many years to purchase these properties.
  The 40 wooden huts should be bulldozed off the concrete bases, and instead of just leaving the concrete bases we should put on them mobile homes. The Department has been conducting an investigation into the rôle of mobile homes and considering what better use can be made of them. As a result of that investigation I hope that the Department will propose ways in which better use can be made of mobile homes.
  There are many other buildings in the camp, a gymnasium, various messes, workshops and so on, all of which lie derelict but all of which could be used to serve the newly built village lived in by people who had themselves done a large part of the work. That sounds perhaps a little too much like a dream, but I think that it could be done and it would provide homes for people who had not had them before.
  In dealing with problems of this sort it is necessary to look at the list of the other people who are involved. That list includes the Department of the Environment, which has been acting for the Ministry of Defence in selling the site to the county council. The county council is giving a 10-year lease to the district council which wants to put up 22 units of accommodation, but is not too sure about it. It is not beyond the bounds of possibility for the Minister to bring all those people together and to listen to the views of the planners—who originally wanted to bulldoze the camp—of the county council, the district council and the many homeless people who would be only too ready and willing to move in.
  I hope that the newly-appointed Under-Secretary of State, the hon. Member for Durham, North-West (Mr. Armstrong), who played a large part in helping one village in my constituency to get the school it so desperately needed, might be involved in this exercise. We should welcome him in west Dorset. This camp, and many others in a similar condition, could provide homes for many thousands of people who would otherwise be on the homeless list for many years to come.
  6.55 p.m.
  Mr. Julius Silverman: I shall follow the speech of the hon Member for Dorset, West

  1031
  (Mr. Spicer) in one comment only—his reference to the admittedly high cost of financing public sector housing. The private sector costs the Government no less. Indeed, it costs more. If one adds up the total benefits to the private sector in mortgage relief, improvement grants to the owner-occupier and exemption from Schedule A, one finds that a higher benefit is given to the private sector than to the public sector. Mortgage relief is a subsidy. In this I declare an interest as a mortgagor. I have a mortgage with a building society and I derive these benefits. I am not asked to declare my means before I get these benefits or subsidies and I see no reason why a council house tenant should be treated less well.
  Mr. Eyre: I am sure the hon. Gentleman appreciates that the tax relief received by the average mortgagor is nowhere near as great as is the subsidy which has to be paid on a new council house.
  Mr. Silverman: The hon. Gentleman is referring only to new council houses not to the average council house. I do not accept some of the extravagant figures which have been mentioned, but it is true that a high level of public expenditure is involved in building new council houses. The council house sector caters for a housing demand which cannot be catered for in any other way. It is no good telling would-be council house tenants to buy a house because it is entirely beyond their pockets. That is the justification for building council houses, although I admit that the cost is very high.
  Talking generally the public sector and the private sector, the private sector gets more benefits than does the public sector. I hope that hon. Members will not concentrate upon the high cost of this public service. The high cost of building council houses has largely been caused by the cost of private sector houses sold in the free market almost doubling within about three years. That has resulted in hardship in the private sector and has also caused the cost of housing in the public sector to rise.
  The Opposition attack on the Government in the debate has proved to be a fiasco. I am amazed that when the Government have been in office for just over
  1032
  one year the Conservatives, with their record, should venture to introduce a debate on housing. I cannot understand their tactics. Naturally, the debate has resulted in comments on their past misdeeds and has shown up their bankrupt policies. Nothing has shown up that bankruptcy more than has the speech of the hon. Member for Aylesbury (Mr. Raison).
  They have no alternative policy. Any legitimate criticism, therefore, must come from the Government side of the House, and I have one or two things to say to the Government. I should like to deal with the point mentioned by the Secretary of State concerning the reduction in improvement grants for council houses. I hope we shall hear more about this when my hon. Friend the Minister replies to the debate. From 1964, and certainly under the Housing Finance Act 1969 under a previous Labour Government, a new strategy was introduced into housing. It was the strategy of conservation of the existing stock. It seemed then to make sense and it makes sense today.
  This policy is necessary not only in the private sector where there is bad housing requiring the provision of amenities, but in the public sector where hundreds of thousands of council houses lack amenities, some of them the basic amenities. Even in Birmingham, which is a progressive housing authority, many thousands of houses have outside toilets and many others are deficient, if not in the basic amenities, then in some desirable amenities.
  It is therefore necessary if we are to preserve and improve our housing stock that these houses should be given attention. I would have thought that was an elementary aspect of the Government's strategy. In order to pursue that policy local authorities have recruited staff, developed their labour forces and entered into arrangements with contractors. My right hon. Friend's announcement of the reduction has come as a considerable shock to them. If the figures that my hon. Friend gave today—I believe the reduction is from £310 million to £255 million—are correct I fail to see what all the fuss is about. I do not know why the Government ventured upon this reduction, especially since some of it hits the areas of greatest housing stress.

  1033
  I understand that in Camden, for instance, the amount asked was £13·7 million. The figure accepted by the Government was £6 million. The respective figures in Lewisham were £10 million and £2 million and in Islington £19 million and £8 million. These are the reported figures and they could be incorrect. In Birmingham, which is certainly an area of housing stress, £10 million was asked for, and taking account of inflation that should by now be £13 million. The figure accepted by the Government was £5 million. I am happy to say that after the Minister's statement and the arrangements he made in Birmingham the figure was increased to £7·1 million, although that is still little more than half what was originally sought.
  The consequence of all this is that staff must be laid aside or transferred, the overall policy is put entirely out of joint, and it will obviously be extremely difficult to resume the programme at the same pace as hitherto. Basically this is a policy of stop-go in housing. One of our greatest economic disasters under all Governments in the last 20 years has been the adoption of stop-go policies, and I can think of no worse way of seeking to introduce economies than by the stop-go method.
  These short-term shock economies always prove to be uneconomic. They do not make economic sense. We have been told of the resources which are available. In view of the number of unemployed building workers there is even less reason for pursuing such a policy.
  Perhaps I am addressing my remarks to the wrong Minister when I direct them to my hon. Friend the Minister for Housing and Construction. I should be talking to the Treasury, for without the slightest doubt it is from the Treasury that the instruction comes, and the timetable proves that to be the case. I hope that the Treasury will listen to what I have to say because what is proposed makes both housing and economic nonsense.
  I understand, although I believe the Minister might disagree on this score, that in London this may result, according to reports in the Local Government Chronicle and The Guardian, in large areas of estates in Haggerston, Hackney, being vacant because of the lack of
  1034
  improvements. The same will apply to the St. Katharines area at Tower Bridge. I know a little about that matter because I am a member of the environment subcommittee of the Expenditure Committee which has been looking into the development of dockland. It would be a tragedy if this sort of development were delayed by the denial of what in economic terms is not a very large sum of money. I hope that the Minister will look into this and make a more determined approach to the Treasury, telling it that these proposals are nonsense and unjustified.
  There is this point about the reduction of funds for council mortgages. The main function of a council mortgage in the past has been to cater for the type of housing which building societies will not provide mortgages for. This generally means older housing and sometimes leasehold housing. The reduction will leave a serious gap in the mortgage system. I do not wish to be dogmatic on this point and I say only that the Government must find some method of filling that gap. I leave them in consultation with the building societies to decide what it should be.
  There is the question of systems building. This method makes sense at a time of shortage of building labour, and I am sure that my hon. Friend the Member for Leeds, West (Mr. Dean) would agree with me on that point. When there was a shortage of site labour it made sense to construct as much as possible in a factory with the components being assembled on site in a short time. However, the system does not make sense when there is a huge reservoir of unemployed building labour in almost every category. I know of no systems building method which is significantly cheaper, or even cheaper at all, or better than the traditional method. I am always prepared to consider new systems but they do not make sense unless site labour is scarce, which it is not at the present time.
  I agree entirely with what many of my colleagues have said about the sale of council houses, because we have experienced this in Birmingham. People come to my weekly or fortnightly surgery and say, "We do not want to live in a flat. We want to live in a house." It appears that they would prefer to have the older pre-war type of house which, whilst it may have certain deficiencies, is a comparatively low-rent house. I have to tell

  1035
  them that I am sorry, but there are not sufficient houses and that the number has been significantly reduced by the sale of council houses.
  Bearing in mind all these facts certainly the sale of council houses does not produce a single additional house. It is simply a gimmick that undoubtedly results in increased hardship to those people who at present desire a council tenancy and especially a council house.
  I hope that the Minister will not follow the seductive Opposition voices calling for a large increase in council rents and a reduction in the amount of money spent on council houses.
  I am not suggesting that there is no case for an increase in council rents. If costs rise, the council tenant must pay his contribution towards those costs. If I tell a council tenant that the cost of repairs, management and interest has increased, I can reasonably go on to say that therefore he must pay more. He will object—and in my view quite reasonably—that if new houses are built at very high cost he should not have to pay any significant contribution towards them except as an ordinary ratepayer. This is one of the major items in the increasing cost of the housing programme at present.
  Therefore, I hope that although there may have to be increases in rent, those increases will be reasonable and not excessively onerous to council tenants. Beyond that, I congratulate the Government on what they have already achieved, in the short time they have been in office. I hope that my short speech will act as an encouragement and an incentive to them to improve their ways in certain respects.
  7.13 p.m.
  Sir Brandon Rhys Williams: It is proper to declare that I have an interest in the relationship between landlord and tenant.
  The housing problem is one of our most acute social difficulties. It is only partly a physical problem. It is much more a legal and cash problem which we have created for ourselves. There may be a physical shortage in some areas where there is an absolute shortage of accommodation of all kinds or where the housing stock has seriously deteriorated or
  1036
  is incapable of improvement because it is too old. But to take the example of Kensington, which is often regarded as the most acute example of housing stress, there is no shortage of housing: there is a shortage of availability of the houses for the people seeking them. The real shortage is of Government ideas for solving the cash and the legal difficulties.
  Let us examine the legal side. The Minister must surely soon be ready to admit that the Rent Act 1974 has created difficulties. The evidence of that is so obvious both inside and outside London that it is fruitless to deny it. It would be much better if we could go on together to try to solve the problems.
  The Rent Act aggravates the legal obstacles, because owner-occupiers are not clear what their rights are. Unless a person has access to expert legal advice it is extremely difficult to ascertain exactly what the position is. Then one can take the example of widows who are afraid to let their property—even though they are obviously owner-occupiers—because they know that when they die their relatives will not want to move into the same house and if they bequeath their house with a tenant in it the house will have a much lower value than if they bequeath it with vacant possession. So they come under pressure from relatives not to let although they would willingly do so and often need to do so.
  I have often pointed to the difficulties of people who have semi-commercial properties, such as a shop on the ground floor with empty accommodation above, which they dare not let because they will eventually need to sell the shop to obtain a reasonable asset for their retirement.
  Another difficulty is that rents are unattractive. The trouble of letting and the inconvenience caused of having someone in to ones own house is not necessarily compensated for by the rent which is obtainable.
  Another aspect of the same problem is that conversions are often not worth while. There are hundreds or perhaps thousands of basements which could be made into attractive small flats, but only at quite considerable outlay. They are left rotting and vacant all over London. Grants are available but the trouble, and the anxiety about what they might run into if they

  1037
  embarked on the expense of conversion makes many owners timid. There are also legitimate fears about the interminable difficulties and the unpleasantness of obtaining possession even if one is entitled to claim it.
  I believe that local authorities in one or two areas are pioneering a new idea—or perhaps they are reviving an old idea—of moving in as intermediaries. I would welcome this development if I were convinced that it would be a real solution, but I doubt if it will prove to be a popular idea. However, it may have a part to play.
  I have sought to make a specific recommendation to solve the legal difficulties in my Housing (Shorthold Tenacies) Bill. I recognise that it may only provide a partial solution, but it would take us a long way in an area where the parties concerned—the landlord and the tenant—are in need of a new legal framework and are entitled to look to the Government to provide it. I have made it clear that there have to be precautions. I suggest that property should only be let on short-hold subject to planning consent, with the prior establishment of a fair rent and only where the properties conform to the standards which would make them eligible for grants. Naturally I have chosen to set the criteria precisely where the grants would be available. And the tenant must know his rights and be sure exactly where he stands from the start.
  The point I want to emphasise to the Minister, who does not seem to have understood the position, is that these provisions would deprive no one of their existing security of tenure. Everyone would gain, no one would lose. I believe the Minister will be judged by the time he takes to get round to this idea. I am handing it to him and to his advisers; of course, with his considerable knowledge of housing, he could improve on the suggestions I have made; but I implore him not to reject the idea out of hand, considering the amount of misery that the present situation is causing—and quite unnecessarily. We have got ourselves into a legal tangle. We could easily cut ourselves out of it.
  I know that shorthold is a concept that cuts across the Department's policy of the euthanasia of the private landlord. It cuts across the Minister's own obses-
  1038
  sion with giving security of tenure even to people who do not want it or need it. The idea of the euthanasia of the private landlord does not apply in all cases. It brings misery and hardship to landlords. Of course, it is no good pleading to Labour Members to consider the landlords. But they should consider the wretched and unnecessary conditions of deprivation in which the tenants are having to live if they have to move; and they must also consider the continuing problem of the homeless.
  We have the housing, but we are not making use of it because of our prejudices and lack of willingness to adopt radical solutions. There is an urgent need for greater mobility which is all the more urgent now because of the problems of employment. Those seeking to move for the sake of their career or to look for jobs must have an opportunity to get themselves fixed up, if only on a short-term basis, while they are settling into their new job or waiting for a council house.
  Shorthold would be ideally suitable for such people. It would be ideal for people getting married and without many resources, wanting to make a fresh start outside the existing home of one or other of the families; those wanting temporary accommodation for professional or family reasons; and those looking for a smaller place. Not everyone needs to live in the family house after the children have grown up. Many would be willing to move into something smaller.
  So much for the legal side. On the cash side, I am much afraid that the fair rent system has become no longer fair, mainly because of inflation. We cannot pretend that it is fair any more. It has become an imposition on landlords. I think that many rent officers and tribunals recognise that the structure of rents that they built up by perhaps rather artificial concepts a few years ago has now been left behind.
  The Secretary of State recognised in his speech that rents must rise, and it is obvious that they must if we are to get housing improvements going again. But higher rents will certainly mean hardship for some. They will not mean hardship for everybody, partly because of rises in wages and other circumstances which go along with inflation. However there will

  1039
  certainly be hard cases if rents rise, and we need to apply our minds to them, to look for fresh solutions. We need to ask ourselves "Are we using the existing housing subsidies to best effect?"
  Let us look at the whole range of housing subsidies—rent allowances, rent rebates, option mortgage schemes, tax concessions for freeholders through building societies and other means, and local authority subsidies of all kinds. The national insurance scheme contains a subsidy within the structure of benefits for pensioners and those with industrial injuries and for the unemployed and the sick, although it is not called a household allowance. Anybody who studies the structure of the benefits sees that it is undeniable that a housing subsidy is included in the national insurance scheme. It is also included in supplementary benefit, because the element for housing must be identified.
  All this money pouring into subsidies constitutes a large sum. All too little is going to the people in real need, and too much is going to the people who could well afford to pay higher rents without hardship.
  We must end the housing subsidy chaos by a wholesale reorganisation. The time has passed when we would tinker with a little here, make adjustments there or switch subsidies between one sector and another or between local authorities of different characters. All that thinking must end. We must produce something which really reaches those who need help. We must determine the level of income of the recipients to decide how much in the way of housing subsidy they should qualify for.
  Local authorities are not the right people to carry out inquests into personal income and circumstances in order to decide on eligibility for housing subsidies. Those determinations in the end can be done only through income tax. Therefore, I again recommend a housing allowance as part of an overall tax credit scheme.
  We must also go forward quickly to the reform of rating, particularly to help freeholders on small fixed incomes. I am sure that it is not only in Kensington that we have many of such people suffer-
  1040
  ing acute hardship during the present inflation.
  Taxes and subsidies on housing are capricious, unfair and ineffective aspects of public policy. The Secretary of State and the Minister have it in their power to lose the Government the next election, and they are going a long way along the road to doing so, as I am sure Labour Members are aware. The Secretary of State has the opportunity to show himself a doer and not just a brilliant polemicist, but he and his hon. Friend must escape from the Labour Party's dogmas. I am glad that the Minister is listening to me, because he does not generally do so.
  We must look at housing policy as a matter of legal and cash problems which are unnecessary and soluble. This is a challenge for the Minister, and I hope that he will prove equal to it. I shall be the first to congratulate him if he improves on ideas that I have put forward. He could and should. I trust that he will admit that we are not getting anywhere as we are.
  It is within our society's ability to solve the legal and cash problems of housing, but a fresh mind, unprejudiced by party dogma, is needed. We shall not solve the problems while we have a Government bent on keeping Britain as two nations. But the mood of the hour is to move forward to something new, more harmonious and less retrospective, no longer concerned with the problems of the past.
  7.26 p.m.
  Mr. Maurice Orbach: I have listened to most of the debate, and I have been enlightened in many ways. I thank Conservative Members for having made housing the topic for this Supply Day debate. They have given me an opportunity for which I have been waiting a long time—not to discuss the general national housing problem but to discuss the problem in my constituency, and perhaps to relate it to some other constituencies.
  My hon. Friend the Member for Battersea, South (Mr. Perry) stressed the difficulties in London, where we all spend a great deal of our time. We are aware of the difficulties that arise not only from the peculiar housing situation but from

  1041
  transport problems—the great size of the metropolis, and the difficulty of obtaining work in the centre of the city, except for certain skills. To that extent, London is a little different from the other big cities or even smaller cities that most of us represent.
  Representing part of the town of Stockport, I am grateful to the Opposition for raising the subject, because for the past two years, since the reorganisation of local government, I have been placed in a most invidious position. Like every other hon. Member who runs a surgery, I have 20 or 30 people coming to see me every weekend, the vast majority of them concerned about their housing problems. Time and time again I write to the local authority or see the housing manager, who is now Director of the Environment and Housing Department of the Metropolitan Borough of Stockport. He has been upgraded.
  I hope that none of my colleagues suffers from the disadvantage that I have had for the past two years. After we were returned last October, my secretary told me in November "During the election I have been going through your correspondence, and I find that 24 different cases you submitted last March to the housing authority have not been answered." She produced the letters. I had copies Xeroxed and sent a further letter to the Stockport Department of the Environment and Housing. I have had replies to most of them. The last came, I think, a month ago. That is well over a year to receive replies to simple housing inquiries.
  Last week my secretary told me of 14 letters that had not been answered since last November. So this goes on and on. People ask me week after week or fortnight after fortnight "What about the replies?" The delays are a matter of great annoyance to me, and they are costly, particularly in view of the allowance we receive for secretarial purposes, because I have to ask my secretary to write two or three letters on the same subject without receiving a reply.
  I complained to the chief executive officer, who acknowledged my letter, with someone else signing the acknowledgment. I did not get a reply from him, but I was told in a letter that no housing case would be accepted from a Member
  1042
  of Parliament unless it was submitted by a local councillor. I wrote back what I hope he thought was an impertinent and rude letter. I said that I was not prepared to follow the advice of the chairman and chief officer of the department. Again, I got no reply.
  I followed it up after two weeks with a threat that I would raise the matter in the House on the ground of deprivation of some of my rights as a Member of Parliament in approaching local authorities. Since then, the chairman of the housing committee has declared at a public meeting that he will not be badgered by one of the Members of Parliament for Stockport who wants a house. I have had to threaten him with legal action, because I have not asked for a house for myself. I have merely asked for a house on behalf of a constituent.
  They must have been aware in Stockport that this matter was being brought up today by the Conservative Party because the Conservative council there has now come out with the information that 9,250 pre-1920 homes in its area are below standard and that it has little money to put any of them right. Of this figure, 5,700 have only outside toilets. I could go on to describe the number which have no bath and no central heating whatever, but I shall not weary the House with more figures because I know that Members representing Scotland, the North-East and the North-West of England have similar problems.
  At my request, my hon. Friend the Minister for Housing and Construction and the then Under-Secretary of State for the Environment—now moved to the Department of Industry—went to Stockport last year. They were rather scathing in dealing with the local authority, and they demanded that something be done to increase the size of the labour force responsible for the rehabilitation of old houses. The council has received £1,250,000 for that purpose, which it has declared to be paltry, yet it cannot even use that sum because it has bought so many non-municipal houses and in any case it has got rid of most of its labour force.
  In the meantime, to add insult to injury, in the seven years, with one short interruption, that Stockport has had a Conservative council, not a single municipal housing unit has been built.

  1043
  The council has used housing associations, which in turn employed private builders, who in turn went broke and have left houses, built about a year ago, derelict, with broken windows, sashes torn out and floorboards taken up. Perhaps as a result of publicity which may be given to this speech, something will be done to pull Stockport Metropolitan Borough Council and its officers into line.
  I want now to discuss a question which has been brought up by a number of hon. Members. Some of my hon. Friends have referred to it as a "gimmick", while hon. Members opposite have referred to it as the necessity for standardisation. I take the middle view. Certain things could be standardised and should be. My son, an alderman of Islington Borough Council, travels 20 times a year as a professor to the United States. I have been appalled by what he has told me about the cost of fittings. He says that their cost in the United States is one-third of the price here. He can bring such things as hinges, door locks and electrical fittings back with him and, including freight charges and whatever duties have to be paid, still make them available at a price lower than they are being offered to the local council.
  That brings me to a personal matter. I live in a flat in London. The bath is rather scarred. I have been living there for 34 years. My wife insisted upon a new bath. The landlord refused to put one in and said that I would have to pay for it myself. My wife insisted on a new white 5 ft 6 in bath—the size we had before. The old bath had got grubby because of the water. I set out for an estimate. This is what I got:
  "To shut down the supplies, disconnect and take out old bath and clear away.
  To supply a 5'6" white…bath complete with new trap, bath taps and a hardboard panel. Fit new bath in position, make all necessary connections and test and fit panel.—£190·08."
  But I am a hard-headed business man and a landlord, so I asked for an estimate from someone else. That produced one of £138. I thought that that was still rather dear since I could buy a bath for £25 as an ordinary customer. The trouble was I could not carry it or fit it.
  1044
  I got a third estimate. This one was for £75. We took it. The man and his mate brought the new bath, took away the old one and finished the job in five and a half hours, including time for food. They did not do badly out of it. I wish that hon. Members were paid as well as they were paid that day.
  This sort of incident illustrates the situation I found as chairman of hospitals in the London area—that many firms give a price and hope for the best. If a firm does not really want a job, it will ask £200; if it does want the job, it will ask £138; if it is really serious about the work, it will ask £75, still making anything up to £40 as a result. It illustrates that our architects and clerks of works are not pulled up sufficiently when they do municipal jobs, as I have tried to pull them up as an individual.
  While I have said nothing about the national problem—which I concede to be extremely serious—I emphasise once more that I must be concerned as a Member of Parliament in raising the problem we face in Stockport. It has become not only aggravating, annoying and tedious, but it gives one a weekend that is no respite from the House of Commons. It is bad enough being here for four and a half days a week without the necessity of tackling problems that one finds insoluble as an individual and in which one gets no assistance from the local authority.
  I have not yet approached the Minister on any of these problems except to ask him, "Please come to Stockport and shake these blighters up." My hon. Friend has tried and now gets blamed in the local Press for not giving enough money. Yet the local authority has not even spent the money it has already been given. I hope that Stockport will look up and I hope that the Minister will be prepared to listen to some of my hon. Friends who have talked such very good sense in the debate.
  7.40 p.m.
  Mr. Dafydd Wigley: I will not follow the hon. Member for Stockport, South (Mr. Orbach) into his bath, if he will forgive me, although I must say that I, too, have problems with local authority housing. I am not sure whether I feel more sympathy than animosity for the local authority, because in

  1045
  my area, as in his, it is in an invidious position. In my area, a rural area, there are serious housing problems.
  I have very little sympathy with the Conservative Party for initiating this debate today. Although we have some criticism of the present Government's failure to reach their targets, the record of the Conservatives when in office between 1970 and 1974 was dismal, particularly in Wales. It is nothing short of hypocrisy for them to have made some of the comments that have been made today.
  Despite the Government's denial, the housing situation in Wales remains chronic, and it is chronic in rural as well as urban areas. In 1974, completions amounted to 11,800, the lowest number since 1959 and 1960, when they were about the same level. Public authority completions in the year were 3,674 for the whole of Wales. In my constituency alone there are upwards of 2,000 families on the local authority waiting list and yet only 3,000 houses are available for the whole of Wales. That shows the size of the problem. That number of completions compares with 3,400 in the previous year, the lowest levels since 1946.
  This situation is scandalous. When we talk about housing it is not just a matter of figures and percentages. Many hon. Members have mentioned their surgeries on Saturday mornings when we meet the individual families and the individual situations resulting from a lack of adequate housing—husbands and wives living apart because there is no room under one roof, children separated from parents, people living in circumstances totally inadequate in the twentieth century. The problems of housing today are the problems of the social services tomorrow, because we are building problems for ourselves if we allow the housing situation to get out of hand.
  The 2,000 families on the waiting list in my area represent 9 per cent. of the equivalent housing stock, and this is a rural area. This surpasses the problems of many urban areas such as Cardiff and Newport where the absolute numbers are higher, but where the percentages are lower. There has been little change in the local situation since last year.
  Yet last year the Secretary of State for Wales assured the Welsh Grand Com-
  1046
  mittee that no administrative problem would be allowed to hold up the crash programmes that the Government wished local authorities to undertake. He said that there would be no red tape and added:
  "I have instructed my officials and technical officers to bring every problem that may get in the way of the programme to the attention of my hon. Friend the Member for Merthyr Tydfil (Mr. Rowlands) the Under-Secretary of State. For this purpose I would hope that he is 'Mr. Housing' in Wales to ensure that this crash programme really does get under way, as I have already stated."—[Official Report, Welsh Grand Committee, 8th May 1974; c. 7.]
  The crash programme has crashed and it is not only because the Under-Secretary has been swapped to the Foreign Office, which may be a suitable office in the circumstances. I have every sympathy with him for having left his job. Last year he went around Wales urging every local authority to go ahead with its housing programme at the maximum speed, and yet in the financial environment of this year he is not in a position to deliver the goods. In the circumstances one sympathises with his move.
  The problem of new housing in absolute terms is one aspect. The problem in my area is that of second homes, to which I have referred previously. It is a problem that persists. The Government have taken some steps to a solution in that they have done away with grants towards improvement for second and holiday homes, but that in itself is not enough.
  In Gwynedd there are villages where many families are waiting for housing and yet where 20 or 30 or even 40 per cent. of the houses are owned as second or holiday homes. They are empty for ten months of the year. That makes one's blood boil. There is need for further action, and planning sanctions are needed so that houses that would normally be fully residential all the year round are not acquired as holiday homes without planning permission.
  Local authorities need more specific powers of acquisition to take over second and holiday homes. More flexibility is needed in the standards that local authorities apply to houses bought from the private sector. After all, it is much better for a family to have a home that is 90 per cent. of the required standard

  1047
  than to be without a home if the standards are rigorously applied.
  There is also a need to take over many old rural houses. Some houses in my constituency are let for only £20 a year, but the owners refuse to do any remedial work, refuse to introduce water or sewerage, but simply wait until the occupants die so that the houses may be sold as second homes. Local authorities need greater powers of intervention in such a situation.
  In my area there is also a problem about maintaining houses. In one district in my constituency there are 600 council houses in sub-standard condition and in some of them the conditions are appalling. One person came to see me two weeks ago to complain that for months he had had to keep five buckets in his attic to hold the water that dripped through the roof. Bringing more houses into public ownership is not a full solution if conditions are allowed to deteriorate in this way.
  Arfon Borough Council, the council concerned, had a meeting on this subject last week with the Welsh Office and was told that the outlook was "very depressing and gloomy". In a small village in Snowdonia, Deiniolen, 100 council houses are in severe need of repair. The cost would be £180,000 for that small estate alone, and there are many similar estates in the villages around.
  This morning I had a very sad letter from a constituent whose mother came to see me a few months ago about getting repairs to her house, which was damp and in need of major renovation. The letter said that his mother had died from bronchitis and he had no doubt that her living conditions in a publicly owned house had contributed to her death. He is following that up in his own way, but that must be on the conscience of anyone who has anything to do with public authority housing.
  I have referred earlier in the debate to the cut-back in the money available for repairs in Wales from £29 million in 1974–75 to £9 million in 1975–76. The Secretary of State suggested that the differences in Wales were because of the different proportions of owner-occupiers. The proportion in Wales has not changed
  1048
  much in the two years and certainly that cannot be the sole reason for this tremendous decrease.
  The change must be reversed. In Wales 15,000 houses were approved for repairs in 1974 compared with 30,000 in 1973. That is the first setback since the figures were first compiled in 1961. A chronic part of the problem in my area is that repairs cannot be done because local authorities do not have sufficient manpower—and this in an area where there is 14 per cent. male unemployment. That is the size of the problem.
  We do not have the ability as Parliament and as a system of Government to bring the manpower resources to solve the problems that are staring us in the face. We have combined with a housing shortage a situation of derelict houses in Caernarvon, a situation caused by a road scheme which the Welsh Office insisted should go ahead, against local opposition, and which has now been put on ice, leaving a source of local blight, empty houses in which people could be living,— a disgraceful situation likely to last for several years.
  The total number of unfit houses in Wales increased from 92,000 in 1968 to 150,000 in 1973. The problem is getting progressively worse year by year. We were promised a Welsh housing condition survey last year. It still has not appeared. I urge the Government, if there are no figures which they are trying to hide, to publish this survey so that we may see the magnitude of the problem.
  I turn now to a problem which has been touched on by several hon. Members, namely the economics of building houses in the public sector at present. I understand that at the Public Works Loan Board rate of 14⅞ per cent. interest the capital and repayment costs over 60 years on a £10,000 house would be about £89,300—a staggering figure. When we compare that with the cost of a £10,000 mortgage with income tax relief at 35 per cent. over 25 years which amounts to £9,625 we can see that at the present going rate it would be more economical for the Government to consider making a substantial grant to first-time home buyers.
  This is something which the Government should examine seriously, not from a dogmatic point of view but from a

  1049
  practical point of view. In 1973–74 the subsidy to council houses was about £105 per annum per household in Wales. The comparable subsidy to the owner-occupier was £101 per annum per house. By now there is a much greater disparity. It would be economically worth while making a fairly significant grant to help people buying homes for the first time. If this can be done we can take some of the pressure off the public housing sector, which is already under enough financial pressure.
  Each of these statistics is a personal case. It can be a personal tragedy. If there have to be cuts in public expenditure I urge the Government in all seriousness to put housing at the end of their list of cuts. Every cut in housing means that there will be additional expenditure in some other sector in future.
  7.53 p.m.
  Mr. Frank Hatton: I welcome the opportunity to make some comments in this debate. I have every sympathy with the Minister because he inherited some large housing problems. As the hon. Member for Caernarvon (Mr. Wigley) has said, these are pressing social problems. I have spent a lifetime in local government with education as my premier interest. I am more convinced than ever that all of our social resources must be channelled into methods of dealing with the housing problem because of the widespread social difficulties that we still face as a result of the number of families living in intolerable conditions.
  I have no major complaints about the determination of my local authority in tackling the housing problems of a major provincial city. It is some time ago that the last houses considered unfit for human habitation were put into the slum clearance pipeline. The city of Manchester is now moving slowly towards the end of its slum clearance problem. At the end of the last war there were about 100,000 unfit properties. This is a major achievement and I am proud to pay my tribute to my city for the way in which it has tackled this task.
  We are still left with many extremely difficult housing conditions. I hope that that the Minister will lend a sympathetic ear to some of them which I will put before him. I firmly believe that even
  1050
  though we have built different types of new accommodation, what ultimately matters is the quality of life. Unfortunately we have not always improved this. I great regret much of the multistorey development that now defaces many of our major cities. People are herded together in a most inhuman way in what we term "deck access" dwellings. When we have cleared our slums some of the major provincial cities, my own included, will have to look at many of the social problems that remain as a result of this unsatisfactory development.
  I am especially concerned about two problems. When I return to my constituency at weekends I hear heartrending stories from people who are unable to obtain satisfactory accommodation. The most frequent complaints come from those who are trying to buy their own homes in view of the great length of the council waiting list. I speak mostly of those who wish to buy houses in the lower price bracket. I had a letter last Friday from a constituent who said that he had obtained promotion in his employment and was now able to think of buying a home. He said that he had found a house costing £8,500 in one of the suburbs of Manchester but that no one would give him a mortgage. This is one of the difficulties.
  The local authorities used to be able to assist and were more helpful than the building societies. Now no one wants to know such people. I hope that when he discusses the problem with the building societies my right hon. Friend will look closely at the possibility of channelling available funds through local authorities so that people such as my constituent may be assisted.
  There are also those people living in what are known as housing improvement areas in the big cities. I know that my right hon. Friend is sympathetic towards this type of development. Many local authorities are looking at such schemes because of the unsatisfactory nature of multi-storey development. There are, however, problems in obtaining land. Many housing improvement areas were making good progress but are now meeting difficulties in obtaining a loan to meet the cost of improvements. I hope that my right hon. Friend will look carefully at ways of getting building society funds into the hands of local authorities so that

  1051
  this important aspect of housing improvement can be accelerated and so that we can improve the whole quality of life in these run-down areas of the cities.
  This is one of the major areas of our social life for which resources must still be found, even in these difficult times. We must raise the quality of life.
  8.0 p.m.
  Mr. Reginald Eyre: It is a pleasure to follow the hon. Member for Manchester, Moss Side (Mr. Hatton) who spoke of the housing problems in the city areas. Many of the points he raised apply with equal strength and accuracy to the city of Birmingham, my own city, and to a number of other large centres of population throughout the country. Against today's economic background the speech of the Secretary of State this afternoon was somewhat unreal. Perhaps all of our debates suffer from this fault at present.
  It is due to the fact that the Government still have not put forward measures to deal with the imminent crisis of undeniably enormously serious proportions. The Secretary of State, to his credit, has used ominous words about discarding the present situation. For example, he has said to local authorities that the party is over and, referring to increases in incomes, that the country is on a suicide course. The Chancellor of the Exchequer is calling for the halving of the rate of inflation within a year, and, as hon. Members appreciate the great difficulty of achieving this, it is clear that the severe economic measures must be brought into operation very soon, probably before the House rises for the Summer Recess.
  Against this enormously threatening economic background, we must realise that the brunt of the measures to correct the Government's mistakes will be borne in the heavily populated urban areas, because it is in those areas that the most serious problems, including housing, exist. We should, therefore, discuss the steps most likely to minimise the harm which is bound to follow in the difficult years ahead.
  I refer to a number of heads of policy. The Government should hold on to as much of the improvement grant or renovation policy as possible because it is a
  1052
  wise spending policy in that it prevents older housing that is structurally sound from deteriorating into slums. I strongly support the points made by the hon. Member for Birmingham, Erdington (Mr. Silverman). The policy of renovation, when sensibly administered, is cheaper than having to provide entirely new housing in its place. As my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery) has said, the improvement grant or renovation programme is socially of considerable importance to families in the inner wards of large towns and cities. I therefore hope that the Government will do everything possible to maintain that programme at as high a level as possible.
  There is good value, in public spending terms, in keeping local authority mortgage lending at as high a level as possible because, concentrating as it does on the older villa-type house, it is particularly helpful to first-time purchasers who can afford only this type of property and of whom it can be said on their behalf that they are making determined efforts to help themselves. They therefore deserve encouragement. Economically, it means that prudent use is being made of public funds.
  Having mentioned two important though by no means major spending areas for public money in housing terms I want to refer to the area of vast housing expenditure in which, I believe, the Government will be compelled to review and cut their disastrously tangled spending policy, and that is in the provision of what are as a consequence of inflation extremely expensive new house building programmes in the public sector.
  Despite the increase in council rents that will have to be made throughout the country—and the Secretary of State was admirably frank today in saying that council house rents will have to rise even more next year—the cost of new building is now so high and the rents charged so relatively low that the general body of ratepayers, including council tenants, who sometimes mistakenly think that they do not make rate payments, will not countenance the continuation of the huge additional burdens being thrust upon them. The Government will be in no condition to maintain their present subsidies. The cut of £65 million in housing subsidies which has been announced is, in my view,

  1053
  only the beginning of a policy under which further severe cuts will have to be made. Therefore, despite the fact that increased interest charges affecting the whole public sector financing system are already likely to have to be introduced, the ratepayers and taxpayers will undoubtedly be calling for a halt as this year proceeds. Certainly there are strong signs in Birmingham that that will be so.
  It follows that we must realistically seek better value in housing for less public expenditure. Because of the seriousness of the crisis we must do this most vigorously in the next two or three years, otherwise there will be a danger of any housing programme collapsing.
  I come to a disappointing and ominous omission from the Secretary of State's speech of a subject which could be of great help in cities such as Birmingham and other large urban areas. The Secretary of State made no reference to the contribution which sponsored low-cost housing schemes could make to providing good accommodation for many thousands of people on the housing lists. The lists include people with a wide range of incomes since there is no qualification for going on the list other than that of residence or employment. Therefore, local authorities should be making available thousands of sites to small builders for the erection of low-priced houses so that people can embark with confidence on their first purchase of a new home.
  It is very disappointing that so little development of this kind is going on in Birmingham. Many thousands of young couples wishing to buy their first new house are driven out of the city to distant places such as Brownhills, Tamworth and Aldridge where small private builders provide them with what they want—small modern attractive houses at prices they can afford. Unfortunately, they are not helped in their journey to independence and self help because they have to pay high travelling costs to and from their jobs in Birmingham. It is shameful that Birmingham Council, which owns more than 17,000 housing sites and has more in the pipeline, makes practically no provision for schemes of this kind.
  Mr. Crosland: I hope that I can reassure the hon. Gentleman. We are strongly in favour of sponsored low-cost
  1054
  housing of the kind that he has in mind. Whether the building is done by private builders or occasionally by the local authority itself, as long as the result is the low-cost housing, we are strongly in favour of it. This plays a prominent part in the circular that we recently issued, "Housing Needs and Action".
  Mr. Eyre: I am grateful for what the Secretary of State has said. I realise that a circular has gone around, but as a result of my own experience I feel that not enough notice is taken of some of the good circulars which sometimes emanate from his Department. Sponsored low-cost housing is very important in cities like Birmingham and the large urban areas, and I feel that local authorities are not taking enough notice and not pursuing vigorous enough policies.
  No provision is made in Birmingham for older owner-occupiers who wish to sell their own semi-detached or detached houses on retirement and move to small units near their old neighbourhood. In a situation like that in Birmingham, where the local autority has a near monopoly—under Socialist control the city has pursued that policy—it is essential that the local authorities should sensitively and imaginately cater for such needs. In solving those problems they contribute towards solving the total housing problem in the city.
  The present situation in Birmingham and so many Socialist-controlled large towns gives an ominous warning of what the position will be when the Community Land Bill strengthens the monopoly power of local authorities in the allocation of land. They have not shown that they recognise these other needs and are sensitive enough in developing policies and actions to meet them.
  I should like to know why we heard nothing from the Secretary of State about the Housing Corporation, which is supposed to be assisting in these policies in all the industrial areas. It would be worrying if, for doctrinaire reasons, the Socialist councils in those areas were not co-operating with the Housing Corporation in providing sites. I believe that the corporation could play a useful part in bringing along development of small low-cost houses of this kind.
  Mr. Crosland: Birmingham is co-operating.
  Mr. Eyre: Yes, it is beginning to, now.
  As the standards of construction of the National House-Builders Registration Council are good enough for the owner-occupiers and the need for economy in housing will be so great it cannot be justifiable to maintain the expensive Parker Morris standards for all public sector housing. I do not believe that we shall be able to afford them in the years immediately ahead. I hope that the Minister will say what thought has been given to this possible adjustment, which could help enormously to save costs at this difficult time.
  The Secretary of State today lost an opportunity to explain how the Government would realistically amend their policies in these circumstances to lessen the damage through housing problems which could occur in what will be desperately difficult times ahead.
  8.14 p.m.
  Mr. George Cunningham: A number of hon. Members have referred to the under-occupation of houses. Looking around the Chamber tonight I am tempted to think that there are few houses in the country more under-occupied than this one. I mean that both in the sense of being under-used and in the sense of there being few people in the Chamber.
  I am undoubtedly in order, since we are debating the Adjournment, and might not have been if we were technically debating housing, in adding that some people feel that for this kind of House to debate such an important subject is a terrible reflection on Members of Parliament. I think it shows very good sense that they do not come in for a debate like this to talk about the subject, because they know that it will not make a bit of difference what they say on one side of the issue or the other. They prefer to use their efforts for something more practical elsewhere.
  There is a moral and a lesson to be drawn—namely, that instead of sticking to the anachronism of debate, as if no one had invented writing and reading and committees, the House should conduct more of its affairs in its working Committees. We should, of course, have a Select Committee on housing—and not just some hotchpotch sub-committee of the Enpenditure Committee which, with
  1056
  due respect to those who are members of it, covers housing among many other things. All the points which a small band of us—it is always the same small band—make in this Chamber could be made to more effect and in an up-to-date manner in a Committee discussion—
  Mr. Crosland: Hear, hear.
  Mr. Cunningham: I am glad to hear the Secretary of State agreeing. He once confessed to me that he had never served on a Select Committee. I hope that, in future, that will be regarded as a terrible confession by a Front Bench spokesman.
  To move on from that non-irrelevance, the hon. Member for Aylesbury (Mr. Raison) did an injustice to those of us who are present by indulging in a bit of "yah-boo" politics and putting forward no serious proposals, as it is his responsibility to do when the Opposition are not challenging the Government but moving their own motion.
  I want to address myself to some small detailed points and then come to what I regard as the essential principle which should guide our housing policy at a time when everyone should recognise that there is nothing like enough money to do all the things that we want to do. First, in the private rented sector, I regard it as very unwise that we have chosen to freeze the decontrol of the lowest controlled rents, those of the lowest rateable value. There is great resentment, and I think justified resentment, among landlords who are receiving derisory rents even for the bad accommodation that they are frequently providing. But they alone, only the last tranche, are frozen still in controlled rents. It is illogical to freeze the rent but then say to the landlord, as we do now under the legislation, "We recognise that this rent will not even let you do repairs which you are obliged by law to do. Therefore, if you do the repairs, we will let you recover their cost, in addition to the controlled rent, over a period of years." It would have been much more straightforward and sensible to provide that decontrol should continue and conclude and allow the landlord to pay for the repairs out of his normal rent.
  Then there is the question of fair rents being charged by housing associations. There is some confusion on this subject, at least in my mind, and I think among a

  1057
  number of housing associations. Housing associations are not obliged to charge fair rents but they are pressed to do so by circulars by the Department. What is still, so far as I can discover, unclear, is this. If a housing association is receiving housing association grant in respect of any dwellings it is, in practice, required to charge fair rents for those dwellings. Many associations, and more particularly many of the old-fashioned housing trusts, have a large number of dwellings in respect of only a few of which do they receive grant. Some of them seem to feel that they are obliged to charge fair rents for all their dwellings as a consequence.
  The circular was unclear on one point. In so far as people infer a meaning from it they seem to think that it means what I have just said. There is another difficulty. The Department said that if a housing association gets into trouble in future and looks to the Department for the emergency deficit assistance which was built into the Housing Act 1974, against the wishes initially of the Government, the Government would not be prepared to give that assistance unless the housing association had charged fair rents. If that is so—and that formulation of the position is taken, according to a letter to me from the former Under-Secretary—I invite the Secretary of State to reconsider the matter. If housing associations have no need otherwise to charge fair rents it would be foolish for them to do so and to build up a surplus, just to guard against the possibility that at some time in the future they might have to run to the Department of the Environment for emergency deficit assistance.
  It has been suggested, at least by the hon. Member for Aylesbury that Labour Members of Parliament are stuck ideologically on the proposal that a large proportion of the population should live in council accommodation. I wish that the Opposition would stop repeating that nonsense. Over the past 10 years only one step had any practical effect towards introducing more people to owneroccupation—which was the option mortgage scheme. That scheme was introduced by the Labour Government. That was the only practical step in this matter. It was the only step which led those people who could not otherwise afford to
  1058
  be owner-occupiers to buy houses. It is no good increasing the tax relief for people who would buy their own houses anyway. That does not enable more people to own houses. We must operate at the margin. The Labour Government have done that, but the Conservative Government did not do so.
  Those of us who have spent our lives in council housing accommodation have more reason than the Opposition to know the disadvantages of doing so. It is usually hell, because normally a local authority is inefficient in dealing with its tenants, whose repairs are not carried out and who are treated like dirt at the counter. When we retire we continue to pay for the accommodation which most people who own their houses have paid off long before.
  It was also said that the subsidy provided to each unit of council accommodation is far in excess of the subsidy provided to an owner-occupier by means of tax relief.
  Mr. Raison: If the hon. Gentleman is referring to me, I was talking about the subsidy for new council housing against that for new private housing.
  Mr. Cunningham: The hon. Gentleman put a qualification in his presentation of this point. He compared the subsidy for a new unit of council accommodation with the subsidy for an owner-occupier purchasing a house. He overlooked—the presentation of the statistics normally overlooks this—that in the case of the owner-occupied house the tax relief is provided every 15 years. As one would-be owner after another buys the house he obtains full tax relief, starting afresh, whereas the assistance to the council accommodation is spread over 60 years and then stops. The whole process is then finished and the council house is entirely paid for. The result is that the present generation of council tenants are paying for the final total acquisition of the bricks and mortar and the land, whereas the Government repeatedly, and with no ending, have an obligation in respect of tax relief.
  Mr. Raison: Once the purchaser has completed buying his house he ceases receiving tax relief—in other words, when he reaches the stage when tax relief does not apply. The same is true of housing in the council sector.
  Mr. Cunningham: There is a fundamental difference. In the case of council property the subsidy exists for 60 years and attaches to the property. In the case of the owner-occupied house it attaches to the owner and to its successive occupiers, who will attract tax relief time after time. There is a difficulty in comparing the two, as one subsidy attaches to the bricks and mortar while the other attaches to the person. It is not reasonable to compare the two as if only one lot of tax relief were directed at the owner-occupied house.
  In these difficult circumstances I should like to see the Department of the Environment draw up an action list of a number of practical points, each of which may be small but which in combination would achieve over the next two or three years a great deal. First it must do more to prune housing revenue accounts. This is an old story. The maintenance of estate streets is paid for from the housing revenue account, whereas streets outside council housing states are maintained on the normal rate fund. Some pruning has been done, but there is still room for a good deal more. This is not only a financial matter. It is important socially that there should not be council estates. There should be council houses and council blocks on normal streets. There is no reason why the streets which pass between and amongst council blocks should not be public streets, publicly financed and open to the public. That is financially and socially desirable.
  It is high time that the Department of the Environment carried out some research—as local authorities will never get round to doing this—into central heating in council accommodation. Many council tenants in modern accommodation pay an enormous proportion of their rent for bad central heating. The architects who have exercised their diseased imaginations on a variety of inefficient methods, putting the heating units in the ceilings, in the floor, by electricity, or by other undesirable methods, should be advised and guided from the centre on the cheapest and most efficient ways of providing central heating in modern conditions.
  The Department might also sponsor research into vandal-proof lifts. There is nothing more irritating than to live at the top of a tower block the lifts
  1060
  in which do not go out of order once in a blue moon but do so frequently. One needs to devise lifts which can resist the vandals.
  It is also time that the Department thought of pressing councils in the direction of a policy whereby minor repairs would be the responsibility of council tenants and not of councils. The story which one of my hon. Friends told about his bath is quite significant. The cost of doing minor repairs, especially to houses which are currently occupied—where on the first time of calling nobody is in, and one has to call a second time, only to find that again nobody is in—is enormous. Council tenants have to pay for that. They ask for the service because they know that they are paying for it and they think they might as well get it. If the system were changed they would realise that, although they would never be able to quantify the profit to themselves, they would be able to have lower rents than they would otherwise have if they were made responsible for minor repairs, with the provision that those who are unable to pay for the repairs would have them done by the council.
  I should like the Department to have a second look at home loss payments. I dare say that in many constituencies the home loss payments do the job that they are designed to do. A person loses his home as a result of the construction of a road, for example, and he receives a proper and due payment for the inconvenience of having to move, but I should like to refer to the way in which these home loss payments sometimes operate in an area like mine. A person may be living in damp, rat-infested accommodation. He may have been plaguing the life out of his councillors, quite rightly, for years to get him out of that accommodation. When finally he gets out of it and is moved to a modern flat he is astonished to find that he gets not only a modern flat but £200 or £300 as home loss payment. Human nature being what it is, he does not hand it back. When he hears that his neighbour has got it, first he is incredulous, and then he checks up and finds that he is entitled to it and he gets it.
  This is an appalling waste of public money. The system is too unsophisticated. If the case to which I am referring

  1061
  is very rare in relation to the total, let us overlook it, because it is an important payment for those who deserve it, but I have found it impossible to get from the other half of the Department information on the amount of money spent on home loss payments. Let us remember that the burden of the home loss payments is borne by council tenants in the end, in the accommodation built on the land which is acquired.
  Finally in this series of many improvements which could be made, I should like the Department to do a bit more than it is doing in giving assistance to the local authorities in housing management. As I said before, most of them are colossally inefficient in the way in which they deal with tenants, and I have treated the House on past occasions—and do not intend to do so again tonight—to the particular failures of the Greater London Council in that respect. The way in which council tenants are dealt with at the counter and the way in which their notifications of repairs and so on are dealt with are a proper subject for investigation—into the improvement of procedures. I am delighted at one change made by the Government, namely the reappointment of an adviser on housing management, an office which had been terminated by the previous Government. I hope the Minister does a bit of bottom-spanking during his tenure in office.
  The watchword which must characterise the Government's policy is discrimination. It is because policy has lacked discrimination in the past year that I have found myself so much in disagreement with it. We have had the improvement fiasco, in which every local authority applying for money to rehabilitate old accommodation had its bid cut down by an amount which bore no relation to the needs of different areas. I think the policy will become more discriminating now. It will certainly have to be.
  One cannot just assume that a rural municipality has the same degree of need as part of one of the inner cities. I understand the difficulty which the Department of the Environment has in discriminating. Each Member of this House would want the Department to discriminate in favour of his own constituency, and he would, no doubt, make a good case for that, but not all of them would be as good. The
  1062
  Department also has the difficulty that if it gets into this business of saying "So many millions for Manchester and so many other millions for Birmingham" the Department will be popular in at least one of those two places, and probably in both.
  However, at a time when we certainly do not have enough money to do all we need in the housing sector, we shall have to discriminate or else fail badly in the areas of highest housing stress.
  There have been some alternatives to discrimination. The Department seeks them as an easier way out. One of these is the obsession with areas—housing action areas, priority neighbourhoods, and general improvement areas. It is as if the Department were saying to local authorities "You decide for us where we should spend money and then we shall concentrate the money on those areas". Circular 64 /75, which the Department issued last week, sets out new categories where approval of expenditure will not be specifically required. I note that in paragraph 18(b) there is particular reference to housing action areas, priority neighbourhoods and general improvement areas.
  My local authority cannot be the only one which does not intend to have many—perhaps not any—housing action areas. It is not that my authority is being overly difficult towards the Department; it is just that it does not feel that this is a solution to any problems that we have in Islington. My authority wants, and it is right to want, to exercise a flexible policy to take action in respect of one house, one street or five streets, according to the nature of the problem and its extent. It does not see any point in drawing lines on the map and calling these areas housing action areas only in order to attract the greater priority that the Department of the Environment wants to accord to some areas as against others.
  Therefore, I hope that when the Minister replies he can assure me that if a local authority declines, for its reasons and with its knowledge of local circumstances, to declare many or any housing action areas, its application for funds and for CPOs will not be prejudiced by that decision. If we are allowed to exercise our authority more flexibly in an area such as Islington we shall do a great deal

  1063
  more good than we shall if we feel constrained to delineate these areas only because we feel this will please the Department of the Environment and lead to our getting more money for our essential purposes.
  8.38 p.m.
  Mr. Arthur Jones: I followed with considerable interest what the hon. Member for Islington, South and Finsbury (Mr. Cunningham) described as minor improvement proposals. I am sure that hon. Members of all parties would agree with many of the points that he made and many of the suggestions that follow from them. I also noticed that he both opened and closed his speech by saying that we have not enough money to do all that we need. Certainly that comment has been echoed in most of the speeches which have been made during the debate. Many of the hon. Members who have made that reference have also made the assumption that it is taxpayers' money that should meet the bill of increased resources in housing. This is a view which I shall try to contest.
  Certainly there is increasing concern over the level of housing subsidies. This has been admitted by the Secretary of State. Although he did not refer to it this afternoon, his comments today were quite out of line with the remarks that he has made in the past about the great economic and financial difficultes with which the country is faced. What the Secretary of State said last week in answer to a supplementary question from my hon. Friend the Member for Aylesbury (Mr. Raison), was very much nearer the great issue of resources in housing. The Secretary of State, referring to my hon. Friend the Member for Aylesbury, said:
  "…the hon. Member is right in saying that over the last few years rents have covered a substantially decreasing proportion of total housing costs, and we are likely to reach a situation in which the taxpayer and ratepayer combined will simply say 'we cannot go on indefinitely footing the bill'."—[Official Report, 11th June 1975; Vol. 893, c. 398.]
  I entirely agree with the Secretary of State. One is entitled to ask, however, where the view that he expresses carries in terms of the Government's housing policy.
  We all recognise that it is in part the escalation of the cost of building that has
  1064
  led to an intolerably high housing subsidy situation. Certainly this is adding to the burden of housing subsidies that cannot be described as running other than at an alarming rate.
  The House Builders Federation tells us in a recent memorandum:
  "Moreover the full public spending and public borrowing implications of these figures should also be noted. For if it is assumed that 150,000 local authority houses are built in each of the next five years and if it is assumed that the cost of building each of these houses is £10,000 and that the annual subsidy cost of £1,000, then by the end of the fifth year the recurrent annual subsidy on these houses alone would be running at about £750 million while the total public borrowing needed to finance their construction over the five-year period would be some £7,500 million."
  That is the magnitude of the requirement of capital availability and housing subsidies if—as the Secretary of State and other spokesmen for the Government and hon. Members on the Government side of the House are anxious to see—there is this continued high level of provision of public housing.
  An escalating situation such as this surely cannot be acceptable to the Government. We are entitled to ask how long they are prepared to let housing subsidy figures rise at this rate unchecked.
  What does the Secretary of State mean by saying
  "The taxpayer and the ratepayer combined will simply say 'We cannot go on indefinitely footing the bill'"?
  It is his duty to speak up for himself in this context. Does he not agree that the Government cannot go on indefinitely with a policy of this description, looking to the ratepayer and the taxpayer to foot the bill? When will the Government do something about this escalating problem?
  Mr. William Molloy: I have been interested in the figures given by the hon. Gentleman. I am sure that he would want to be fair to the House and to a large proportion of his fellow British subjects who live with their families in council houses. It might have been fair to mention among all these figures the fact that they pay rates and rent and that this contributes to the cost of the houses, and that the major cost of such houses is borrowing the cash. What the hon. Gentleman has just related—I am sure that the figures are correct—is

  1065
  the massive continuing victory for the principle of the three brass balls.
  Mr. Jones: The cost of borrowing is high, of course, and has a tremendous effect on the housing subsidy situation. This is an important factor to which we must have regard when considering the sort of housing policy which the country wants and, essentially, what it can afford. This is the dilemma with which the Government and all of us who have this matter close at heart are concerned.
  What of Government expenditure as a whole and the continuing cries for its curtailment from the right hon. Gentleman and some of his more responsible colleagues? He has said that central Government and local government expenditure must be contained, yet on the housing front very little regard is had to this advocacy. What the right hon. Gentleman and other Government spokesmen are continually referring to is the containment of local government expenditure. He is continually advocating that. It ill becomes them when they allow—indeed, encourage—the misdirection of resources, as we see in housing subsidies made available with almost complete disregard of need. I am in agreement with the hon. Member for Islington, South and Finsbury (Mr. Cunningham) when he says that housing should be selective. I have always maintained that much larger resources should be directed to the cities than are directed generally in the countryside. It is in the cities and great urban areas that the great deprivation of housing is to be found and where essentially our problem lies. I speak as someone who represents a country constituency, but that is the view I have always maintained.
  The escalation of rising subsidies is to be seen in the context of the Government's legislation against the fair rent policy of the previous Conservative administration, the Government leaving the question of rent levels and demands upon central Government funds entirely in the hands of local authorities. They in turn are caning their ratepayers, as the figures for rate contributions to the housing revenue accounts demonstrate. I will give the rate fund contributions for the current and the two previous years. In 1972–73, £73 million was put into the housing account from rate funds. For
  1066
  last year, 1974–75, the figure was £165 million. It is expected that the figure for the current year will be £200 million. Therefore, we have increments from the rate fund in addition to what is provided by central Government.
  Of course, local authorities have responsibility for the proper management of houses in their ownership, both council built and those acquired. This is another of the mini-improvements suggested by the hon. Member for Islington, South and Finsbury which I find entirely acceptable. But we must bear in mind the vacancies in council-owned property and the existence of voids.
  We had the disturbing information in the Daily Telegraph of 9th June that the total rent debt for every council in the country was nearly £26 million. That information was contained in a report by Mr. Gerald Bartlett which I have not seen contested in the past week. Responsibility for that debt must fall on local authority management. I know that there are some authorities which have greater problems than others. Those authorities should acquire the extra skills which are available and the extra determination to solve the problem. A little intelligent anticipation would be bound to reveal the solution. This must be a matter of serious concern for Government and for local authorities, the responsibility clearly resting on the authorities.
  In the circumstances, one wonders what sort of excuses are being given to the Department of the Environment and whether the Secretary of State and his colleagues have raised any questions with the local authorities concerned. It would be interesting to know the Government's policy or attitude as regards rapidly escalating rent arrears. From the Government spokesmen there is a complete denial of the growing inadequacy of Government policy, but the facts speak clearly for themselves.
  Today the Secretary of State gave the impression that he was almost entirely satisfied with his policy. I accept that he recognised the problems, but it seems that there is no new thinking and that Government policy is merely an adjunct to the pride and prejudice which is attached to their thinking. There is growing homelessness and an escalation of building costs. There is the lack of a rent policy

  1067
  to meet the rapidly deteriorating position. One inescapable conclusion is that political objectives are being given priority over the reality of our economic position and the wholesale mess into which our housing policy is drifting.
  We have seen evidence of the Government's approach in their legislation to protect tenants of furnished accommodation. That legislation has had the effect of a denial of tens of thousands of units of accommodation being available. The Government are now proposing to interfere with the perfectly satisfactory arrangement of tied houses for agriculture. When will they learn?
  Clearly, in the whole of the post-war period insufficient financial resources have gone into housing. When was it sensible to make available substantial subsidies to council tenants regardless of their ability to pay? It is nonsense for any Government to pursue a policy of that character. It has meant that many less well-placed have had partially to foot the bill of subsidised rents. As a social priority, the main responsibility for providing himself with shelter and a roof over his head should lie with the individual. Indeed, the wish to ensure this is fundamental to the character of man and his heritage and is essentially denied by the Government's housing policies.
  Mr. George Cunningham: Will the hon. Gentleman face the logic of what he has just said and say that tax relief for people who borrow money to buy a house should also take account of the needs of the beneficiary of that tax relief? The hon. Gentleman knows perfectly well that tax relief is worth more to a rich man than it is to a poor man, and more to the man who owns two houses than to the man who owns one—until the Government corrected that recently. That is directly contrary to the principle enunciated by the hon. Gentleman. Will he be consistent?
  Mr. Jones: I shall not follow that course. I shall continue my advocacy for the position I wish to see adopted and that is to ensure additional resources—
  Mr. Cunningham: Face up to it.
  Mr. Jones: The inadequate resources which have gone into housing lie at the root of a situation which, although it has
  1068
  significantly improved over the past 25 years, has led to widespread need for help. That help is a charge to public funds—that is, to the taxpayer and the ratepayer. Despite prohibitive costs, no solution to our housing problem is in sight. That is a fact of life which both sides of the House must face. None of the advocacy we have heard leads to a solution. The Secretary of State recognises this. When I asked what the Government intended to do about it, his colleague the Under-Secretary of State replied:
  "My right hon. Friend has instituted the most far-reaching housing finance review which has ever been conducted. The results will be available within the next year."—[Official Report, 11th June 1975; Vol. 893, c. 402.]
  So presumably nothing to alter the present policy will be done in the foreseeable future.
  A prerequisite to any positive steps in the right direction is a fair rent policy, and subsidy arrangements which direct help to those in genuine need. We need not waste a year in seeking justification for this or delaying its implementation—a delay which I suspect is, again, on political grounds.
  To look at the figures for housing subsidies is to recognise the enormity of the public expenditure involved. At 1969–70 prices, and during that year, United Kingdom subsidies totalled £281 million. At that time there were no rent rebates or allowances, but that figure included a rate fund contribution of £103 million. Cmnd. 5897 gives the figures at 1974 survey prices for the curent financial year: housing subsidies, including rate fund contributions and rent rebates and allowances £1221·2 million, improvement and renovation grants £124 million, local authority improvement investment £297·9 million, a total of £1643·1 million. I found it difficult to isolate the figures.
  The Under-Secretary of State has been moved elsewhere, but I give a warm welcome to his successor. I am sorry that he is not to join in the debate today, but I suppose that he has first to do his homework, although as a one-time teacher he knows much about housing problems in the urban area from which he comes.

  1069
  For England only, these figures include for housing subsidies and so on £1014·5 million, improvement and renovation grants £102·3 million and local authority improvement investment £210·8 million—that is, for England only, £1327·6 million. If one converts those to current prices—because all the figures are given at 1974 constant survey prices—the figures for England alone, are, respectively, £1218·4 million, £116·6 million and £290 million, a total of no less than £1625 million. This shows that inflation from last year to this has increased the bill for housing subsidies by about £247·7 million.
  With inflation for the last 12 months running at 25 per cent., clearly housing subsidies will continue to rise and, with increased local government expenditure by way of additional contributions to housing revenue accounts, including substantial rent arrears, housing subsidies are likely to be running at £2000 million per annum at the end of this current financial year.
  We have seen this tremendous escalation of housing subsidies. When I intervened in the Secretary of State's speech he said that they would cost over £2,000 million for 1973–74 and over £3,000 million for 1974–75.
  Mr. Freeson Mr. Freeson rose——
  Mr. Jones: I know that the right hon. Gentleman suggested that the Minister would be correcting those figures if necessary when he replied.
  Mr. Freeson: I need not wait until I make my speech to state that the figures quoted by my right hon. Friend were not subsidy figures but were amounts of total expenditure.
  Mr. Jones: Am I right in thinking that they include capital sums as well?
  Mr. Freeson Mr. Freeson indicated assent.
  Mr. Jones: It will be interesting to know the source of those figures, and I look forward to having the information from the Minister.
  At Question Time last week the Secretary of State said that total subsidies to local authority housing had roughly doubled in the last two or three years. He has now said that they have gone up by three times in the last five years.
  1070
  We have had repeated assurances from Socialist spokesmen that they wish to see an expansion of owner occupation. The Government are essentially committed to council housing, whatever lip service they may pay to the contrary. I call in aid a statement prepared by the conference of the chairmen of new towns on the consultation document "New Towns in England and Wales" of December of last year. In dealing with the sale of houses in new towns it reveals in stark terms the political content of the Government's recommendation.
  Referring to housing in new towns the Government make plain in their document at paragraph 4.13 that there will be no further sales. In their document the chairmen of the new towns say in paragraph 2.16,
  "The facts remain that most people would prefer to own their own homes."
  They go on to say in paragraph 2.18,
  "We strongly hope, therefore, that development corporations and the Commission will be allowed in the near future once again to offer tenants the opportunity to buy the homes they occupy."
  In referring to the escalation that must come in rents the Secretary of State said that they had risen 12 per cent. in the current year. He would not say how much they would go up next year, but on this score perhaps I could quote from a piece in this evening's Evening Standard by Mr. David Wilcox. In it he refers to Mr. John Mills, who is chairman of Camden Council and is widely recognised as an authority on housing difficulties. He is a member of the advisory group working on the subject at the Department of the Environment. Referring to rents in Camden Mr. Mills says:
  "In Camden total housing costs are about £30 million a year, of which some £7,000,000 is management, maintenance and repairs. Taxpayers provide £20 million subsidy, ratepayers £5,000,000 and rents about £5,000,000".
  In the article Mr. Mills is reported as saying that rents will need to go up very significantly in Camden which is considering putting up rents by £1·81 per week in October. This is an indication of the tremendous increase there will be in housing rents.
  The Government can never succeed in a housing policy in which political objectives so blatantly determine their policy. It is only by ensuring that substantial additional private resources go into

  1071
  housing that a solution will be found. This should, and if housing conditions are to be improved, must mean fairer rent policies, improved management by local authorities and encouragement to owner-occupation, including sales of council houses on a significant scale to existing tenants. Without the positive pursuit of these objectives progress cannot be made with regard to adequate housing for British people and early accommodation for the homeless.
  9.1 p.m.
  Mr. Geoffrey Finsberg: The debate has been useful in clarifying several issues. Opposition Members have tried to examine various solutions free from hard political preconceptions. Certainly the Government and their supporters appear to be bound by the dogmas and self-delusions that have marked the Labour Party ever since the war.
  When opening the case for the Government the Secretary of State was at pains to take credit for having held the mortgage rate at 11 per cent. He did not remind the House that this is not so in respect of local authority mortgages. We have had many promises that something will be done about this, but no results. I can only conclude that too much thought has paralysed action.
  Opposition Members welcome Circular 24/75 and its change of emphasis. It was necessary that the emphasis should be changed from the odd strategy upon which the Government originally embarked. A further circular is now needed from the Government to local authorities telling them to concentrate more priority and more sympathy on exchanges and transfers instead of leaving that area as the Cinderella section of all local authorities. I do not believe that there is any hon. Member, on either side of the House, who has not, week after week, had the frustrating experience of trying to persuade a local authority that a mere transfer or exchange between existing tenancies did not in any way prevent a further programme of decanting. Unfortunately, one gets a lesser grade of official in charge of transfers and exchanges. Much unhappiness in local authorities could be avoided by giving more priority to this area.
  The Secretary of State did not know what the Conservative policy was on
  1072
  housing. He must know, as one of the leading intellectuals of the Labour Party, that Oppositions can only formulate policies over a period of years. This is what we are now doing. He admitted that in one and a quarter years his Government had not solved the housing problem, but he had had four years to prepare for office. So it is five and a quarter wasted years. I can assure the right hon. Gentleman that long before that period has elapsed, if this Government should survive, there will be a detailed housing policy available.
  When opening the debate my hon. Friend the Member for Aylesbury (Mr. Raison) outlined some of the ideas which had to be examined. The Secretary of State then talked about the subsidy cuts suggested by my right hon. Friend the Leader of the Opposition. He asked how they would be carried out. One method by which housing subsidies will be cut is by higher rents, as the Secretary of State himself advocated today. That will be a major contribution towards reducing subsidies. I say "reducing", because I do not believe that it is possible to eliminate all housing subsidies in the foreseeable future, and no one on the Opposition benches has ever suggested it.
  We next had a warm and human speech from the hon. Member for Battersea, South (Mr. Perry), who spoke of acres of land lying vacant, land owned by private developers which could provide homes and be swiftly built on. It is fair to point out that the Greater London Council has a land bank equivalent to more than 10 years' building at its present rate, but it is still grubbing around to obtain more land. There is no possible apportionment of blame in which one can join the hon. Gentleman, except to say that anyone who possesses land should build on it. Certainly the Community Land Bill will not help in that direction.
  The hon. Gentleman appealed to the Secretary of State to ask building societies to lend more to would-be buyers in London, and he thanked the Secretary of State for his intervention. I think that the hon. Gentleman was rather misled by his right hon. Friend, because all that has happened is that the Secretary of State has cut the amount of money available for local authorities to make home loans, in order to make up some of the cuts made in

  1073
  improvement grant requests from local authorities. The right hon. Gentleman is now to ask building societies to try to help out. He has cut the amount of money that local authorities themselves can lend. Twenty-three London boroughs have already stopped lending, yet the only benefit from the slight reallocation of money will be that the municipalisation programme may be allowed to continue in some ways unchecked. Certainly there will be no benefit to home buyers. This is a great pity.
  My hon. Friend the Member for Wellingborough (Mr. Fry) spelt out the stark reality of the situation, and called for honesty. He asked for a statement by the Government and local authorities that they could never rehouse all those who want to go on council housing lists. That is a self-evident truth. I assure my hon. Friend that that sort of honesty does no harm. I made that statement in Hampstead one year after first being elected to the council in 1949. I said that it would be impossible for everyone then on the list to be rehoused. It apparently did me no harm, because it did not stop me being being re-elected on seven subsequent occasions. Sometimes people like to hear the truth, however unpalatable. That is why the Secretary of State might have told us in more detail of the measures he knows he will have to introduce in the not-to-distant future at the dictate of the Treasury.
  The hon. Member for Salford, East (Mr. Allaun), who always has a large heart in these matters of housing, but rather too little understanding of our grave economic position, told us why he was unhappy about a letter he had received from the Prime Minister. We should all like to see that interesting exchange of correspondence. But in the end all that the hon. Gentleman could do was to say that the extra money for housing could be found by further defence cuts. Let him be quite certain that there is a substantial majority of opinion in this country that does not want a defenceless Britain. Some of the people who would suffer most from the hon. Gentleman's defence cuts are those who would he added to the growing list of unemployed under this Government.
  The Liberal spokesman, the hon. Member for the Isle of Wight (Mr. Ross),
  1074
  described our suggestions for building for letting as unrealistic. I am not willing to accept that any proposals for helping this essential arm of our housing strategy are unrealistic. They want examination.
  The hon. Member for Leeds, West (Mr. Dean), one of the practical hon. Members who understand local government housing, was right to attack the gimmickry in building that is all too prevalent today, the idea that system building is necessarily all that much better than traditional building.
  My hon. Friend the Member for Dorset, West (Mr. Spicer) made a valid point about high council rents which in themselves ought to make purchase by council tenants attractive. After all, the late Richard Crossman made it clear that he did not wish to subsidise the well-off council tenant. Yet the rent freeze and the abolition of the Housing Finance Act have contributed to helping far more the wealthy tenants than those in the greatest need.
  The hon. Member for Stockport, South (Mr. Orbach) made a fascinating speech on his constituency. He is one of the two dozen or so Labour Members I have to represent in this House. I have an attractive constituency otherwise. I shall look with interest to see what is said in Stockport about his attack on one letter he received from his local authority.
  My hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) forewarned of the economic storm ahead and urged the Government to be ready to buttress two vital parts of their housing strategy—renovation projects and first-time house purchase.
  The hon. Member for Islington, South and Finsbury (Mr. Cunningham) gave some fascinating ideas. He always contributes to housing debates some gems of information. All of us were hoping for further instalments of the saga of his properties. Instead, he talked to us about Select Committees and the like. I wish that the Prime Minister would put him in the Department of the Environment, perhaps with a limited term—a shorthold. One year in the Department would produce a very interesting result and some very shaken-up civil servants.

  1075
  My hon. Friend the Member for Daventry (Mr. Jones) stressed the dangerous imbalance of subsidies, which is growing, between tenants on the one hand and ratepayers and taxpayers on the other.
  Certain points require reiteration. I will leave the devastating statistics quoted by my hon. Friend the Member for Aylesbury because they speak for themselves. In my judgment they are incontrovertible and the Government would do well to look at them again.
  I am happy that there is to be a closer examination of housing finance. There was such a close examination for some 15 months before the 1970 General Election. We did not see results from it, and I seem to remember one or two unhappy gentlemen at the time of the election. I hope that this new examination will produce somewhat quicker results than the last one.
  One facet which needs urgent examination throughout the country is the mounting scandal of rent arrears—and I say bluntly that it is a scandal. I shall merely quote one of the larger authorities, the GLC. In April 1973 its rent arrears totalled £970,000. By September 1973 this had risen to £1,888,000. That was six months after the change of control at County Hall. In September 1974, when Mrs. Jenkins—a name not unknown in this House—had become chairman of the Housing Committee, she said that the arrears had risen to £1,960,000 and that they would now be reduced. By May 1975 the total had risen to £2,412,000, and that excluded £578,000 owed by former tenants who had disappeared and other sums which had been written off.
  It cannot be a question of staff shortage because about 1,200 extra staff have been engaged by the GLC housing department since 1973. The situation reflects scandalous mismanagement, and it is the ratepayers, both private and council tenants, who are having to meet the cost.
  I hope that the Government will take drastic action against those authorities which are allowing rent arrears to amount to such appalling levels. It may well be that attachment of earnings orders is the way to deal with these tenants who are behaving so anti-socially towards their
  1076
  fellow tenants. Eviction is not the answer, because that throws an even heavier burden on the rates. Anti-social behaviour deserves something; what it does not deserve is no action by the majority of local authorities.
  The Labour Party took office with some grand ideas of social ownership, municipalisation and the end of the private landlord. The trouble, as in so many Labour policies, is that they were not thought through. Labour Members had not appreciated the vast costs, but these are now coming home to them Many authorities were encouraged by the Government to buy property virtually regardless of condition and virtually regardless of whether vacancies were purchased. I recently quoted at length some decisions of the Department of the Environment refusing consent to the GLC for buying even more properties when it was getting virtually no vacant accommodation. At least the Government have at last realised that municipalisation for its own sake is not worth the candle at this stage.
  The evil of a massive municipalisation programme ill-thought through is that the properties stand empty and become occupied by squatters. There are two categories of squatters, the genuine homeless and the parasites, and the majority of people on council waiting lists resent the fact that many of these parasites are jumping ahead of them in the waiting lists.
  We need the Government to realise that it is not necessary to go on even with a reduced level of municipalisation. That is not the answer. Whether or not it is true, as some Labour Members have said it is, that the sale of council houses does not help the total stock, equally the purchase of houses does not add to the total housing stock. It is the Government's job to concentrate on adding to the council housing stock, not to go on building new schemes regardless of cost.
  There are two schemes at present under way in the London borough of Camden where costs will produce figures in excess of £100 per week per unit, possibly as high as £130 per unit, and the rents may well be producing only £10 a week. Those two schemes had loan sanction refused by my own Government and yet

  1077
  the present Government have given the green light to such monstrously expensive schemes. They are indulging in what I can only call profligate expenditure. The right hon. Gentleman does himself no credit to give that sort of approval to that sort of authority.
  We contend that owner-occupation is a better bargain for the council tenant and a better bargain for the taxpayer. I go along and my party goes along with saying that there should be no objection to the sale of council flats to their tenants. The Scots are years ahead of us ignorant Sassenachs in the sale of flats in the private sector, and there is no reason why it cannot be done in the public sector on a co-ownership basis, the local authority of necessity keeping the freehold or letting it go to a committee of tenants. This is a better way. Why should the council tenant alone, after paying rent for 40 years, be deprived of having something to pass on to his children? This is unfair discrimination by the Labour Party.
  Mr. George Cunningham Mr. George Cunningham rose——
  Mr. Finsberg: The hon. Gentleman had 24 minutes in which to develop his argument. I have about the same time and I have to comment on observations.
  The February 1975 figures show that the average three-bedroomed council house in 1974 cost £10,000 to build. Loan charges, management and repairs cost about £1,000 a year. With an unrebated rent of approximately £300 a year, that leaves a subsidy of £700 a year. The tax relief—and I shall not be pushed away from this factual argument—for the first-time purchaser amounts to £241. Therefore the private owner buying his house does not get such a good deal as a council tenant.
  I turn to the problem of the private tenant. In Committee on the Housing Bill 1974 much was made by Government Ministers of the need to produce a comprehensive charter for tenants. The Minister for Housing and Construction made many passionate and eloquent speeches saying that he was considering this and that something would evolve. What he said was enough to prevent at least two of his hon. Friends, having spoken in favour of an amendment I tabled. [Interruption.] The Minister says that it was a stupid amendment. It
  1078
  may have been, but, as he knows, this was something that was wanted by tenants. He did nothing about it. Two of his hon. Friends who had supported the idea in their speeches in the Committee were dissuaded from voting by his siren voice. The amendment was made in another place and when the Bill came back to this House the Government had to accept it, although they said that it was not perfect. It was imperfect only because the Government had not produced something much greater, much more grandiose.
  The Minister has produced nothing. Now he has a duty to put this and other amendments into working order. If he does not do so he stands condemned as being more cynical than some of us think he is about the rights of private tenants.
  The Minister knows that the private tenants' associations and distinguished people like Muir Hunter want him to make regulations dealing with tenants' associations. They want him to clarify such points as how to deal with estimates for jobs costing £2,000. The Minister has a duty and he cannot just sit back smiling and expect to get away with it.
  We believe that owner-occupation deserves encouragement, even if only on the grounds of cost effectiveness, which we have proved to the satisfaction of fair-minded people. We have heard about the Birmingham 50–50 scheme. I noticed that when that was mentioned there were Labour Members who said that the idea came from a Labour council. So what? If it is a good idea, jolly good luck to it. We are not so hidebound as to reject good ideas coming from Labour local councillors. Incidentally, it is now only a Labour council because of the fiddling over the casting vote of the Lord Mayor—[Interruption.]—as the Minister of State, the hon. Member for Birmingham, Small Heath (Mr. Howell) knows fully well. I am happy to pay tribute to those in Birmingham who thought up this idea. I hope many more local authorities will adopt it.
  Equally we need to accept ideas which other people have been floating, such as that put forward by my hon. Friend the Member for Tonbridge and Mailing (Mr. Stanley) about equity sharing. That cannot be dismissed. It deserves close

  1079
  examination. It should not be laughed at.
  I turn now to direct encouragement tor the private sector. I do not say that the Opposition have worked out schemes in detail here. What we say is that there are ideas which have to be examined. The Government, backed up by the Civil Service, ought to be able to say whether some of the ideas are workable. When we were in Government we did not dismiss any ideas in such a cavalier fashion, no matter what quarter they came from.
  My hon. Friend the Member for Kensington (Sir B. Rhys Williams), in an excellent speech, mentioned his Bill dealing with shorthold. This concept would produce thousands of new lettings. It would not deny security of tenure to anyone who now enjoys it. New tenants obtaining shorthold leases would be in the same position as anyone who takes out a contract with London Transport to buy a fourpenny bus ride. They know the limit of the journey and that is the end of it. If they want to go on they pay more. There can be nothing wrong in this unless the Labour Party says that it is wrong for people to honour agreements.
  What can we do to encourage fresh money to come into the private rented sector? Provided the will is on the Government benches and that sheer dogma will not say "No more private rented accommodation", private developers could be told "If you will put up blocks of flats, make them available in the private rented sector, let the rents be fixed by the rent officer and guarantee that they will be left in the private sector for a minimum of 20 years, the Government will consider making, as the Labour Government of the 1960s did in respect of hotels, a capital once-and-for-all grant towards the cost of providing the accommodation". That would be far cheaper than many of the grandiose schemes being put forward by local authorities. That suggestion deserves close examination.
  Our first indictment of the Government and of Socialist councils is that they talk big to win elections and then forget that elections are about people. It is all very well for their study groups to say "We have all the ideas. We shall introduce a rent freeze. We shall make cer-
  1080
  tain that there will be no reduction in the amount of money available to local authorities to lend." The Government's manifesto went further and said "We shall make available an increasing amount of money to local authorities to lend." Within the last couple of weeks, they have cut it. I do not notice any screams from the guardians at Transport House of Labour's election manifesto. Perhaps they are selective guardians and, having been beaten as a result of the referendum are shy about saying what else should remain sacrosanct. [Interruption.] If the hon. Member for Ealing, North (Mr. Molloy) had been present at the beginning of the debate and had listened to my hon. Friend the Member for Aylesbury he would have heard some ideas. I cannot help him further.
  Our second indictment is that the Government have deceived those most in need—the homeless.
  Our third indictment is that they cannot think through a coherent and fair housing policy. Whenever ideas are put to them they look to see what the catch is. They ask, "Will it help somebody and not everyone?" They take grave exception to ideas which do not help everybody. In housing it is necessary to have priorities, and this is what the Government have failed to do. They have told local authorities to buy houses and are now letting them stand empty.
  No amount of juggling the figures will disprove the fact that most local authorities feel cheated by having been asked to put in bids for money to put property right and then having those bids substantially reduced. Therefore, those properties still lie empty. Many of them were not the best of properties, but if the private owners had had some encouragement to get a better return they would not have been allowed to drift into the condition they were in.
  The more hon. Members opposite put forward the view that there is to be an end of all private rented accommodation, the more difficult it will be to persuade anyone in the private sector to keep his property in good repair because he knows that it will be taken from him. That is not the way to proceed.
  Let me give a word of caution to the homeless and council tenants: put on the armour of doubt against the missionary

  1081
  spirit in Labour policy; remember that meddle and muddle, even under the banner of Socialist idealism, are still meddle and muddle. If I had to sum up 1¼ years of the Labour Government's housing policy, I should say that it was a question of meddling with the private sector and muddling the local authorities. One has only to talk to the officers in local government or the leaders of local authorities to know that they despair of ever getting through to the Ministry in Marsham Street the needs of local government.
  We offer what we believe to be an alternative free from dogma. We offer an alternative which is fair to all sections of society, and, without hesitation, we ask the House to support us in the Lobby tonight.
  9.30 p.m.
  The Minister for Housing and Construction (Mr. Reginald Freeson): I congratulate the hon. Member for Hampstead (Mr. Finsberg) on the vigour of his speech, but its content was rather sad.
  I should like to come down to specifics in housing policy. If I cannot deal with all the detailed points raised, I undertake to correspond with the hon. Members concerned. Although there has been some sloganising and the parading of shibboleths in the debate, it has to be accepted on both sides that an attempt to censure Government policy and action in housing has fallen flat, to say the least.
  Our objectives are clear even if the methods to fulfil them may have to be complex and an intertwining of many policies, and even if the attempts to get those policies applied are made even more difficult and complex by our difficult economic situation. Those objectives can be stated as the provision of the right kind and quantity of new houses, the achievement of social justice in housing, the renewal of the fabric of our towns and cities and building for the community not simply to achieve statistics but to provide environments worth living in.
  To achieve all this, we must organise to use our resources much more effectively, in good times as well as bad, we must seek and apply much more knowledge of the housing markets and social situations at local as well as national level than hitherto, and, above all, we must concentrate on the customer
  1082
  and the community we are supposed to be serving.
  The housing and urban problems with which we are confronted today and have been for many years are a complex of interrelated issues in our conurbations and in the countryside. We shall never tackle the problems of homelessness, squatting, insufficient building, under-occupation, lack of choice, substandard dwellings, environmental messes and the host of other symptoms of housing stress unless we understand that they are all interlinked and cannot effectively be treated in isolation, and that underlying them all are economic factors which have to be changed.
  What is needed from Government is a combination of policies to interact with one another, a comprehensive social and economic approach to the symptoms of housing stress and urban decay. At local as well as national level what is needed is corporate executive action, by various departments, using a wide range of agencies now acting separately—for example, and only for example, the Housing Corporation and the National Building Agency. Whatever the economic constraints which slow down the movement towards the development of such a policy, or inter-relationship of policies, this remains the underlying need.
  I will return to developments at the local level in a moment but I should like to spend some time outlining what, even in our short time in office and in a time of economic trial unprecedented since the Second World War, we have achieved so far in our attempt to create a comprehensive strategy for housing.
  First, the Housing Act 1974. I would have preferred and still would prefer a much more radical urban renewal measure and in due time we must come to this, but urgent action was needed when we came into office—to reform the Housing Corporation and housing association movement and to step up action in areas of severe housing stress, to avoid the bulldozers always having to be brought in as a solution to housing decline.
  The Housing Act 1974 provided the immediate mechanisms for these ends. Our aim is to transform the run-down residential areas of our towns and cities into decent civilised neighbourhoods by a

  1083
  careful mixture and phasing of redevelopment and rehabilitation which will result in gradual and continuous urban renewal over the years rather than excessive bulldozing and rebuilding. Disturbance and disclocation of resident communities which is both socially and economically damaging must be minimised.
  The new code for house renovation grants was geared to this new approach. Housing associations were provided with a new charter in that Act. They now receive much more support and more efficient management. Their resources and special experience with particular housing needs—for example, the elderly or the handicapped—and their experiments in varied forms of tenure can now be extended, bringing a useful flexibility into housing provision. The Act created the concept of the priority neighourhood and the housing action area to add to that of the general improvement area in the Housing Act 1969.
  I know of, and I appreciate considerably, the feeling in some quarters, which I largely share, that this kind of approach is still too small in dealing with run-down neighbourhoods. But we are working on other aspects of this policy. I hope that the time will come—I expect that the time will come—when further measures will develop in tackling, on a broader and more integral basis, the intermixture of housing and social and economic problems in our city areas.
  However, for the present these moves towards priority neighbourhoods and housing action areas, together with general improvement areas, provide the starting basis for comprehensive action based on overall assessments of needs, priorities and resources for the gradual renewal of decayed urban areas. Naturally the period since the 1974 Act, in these past seven months or so, has been one of reassessment for local authorities as they formulate their renewal strategies. But already up to the end of last month 26 housing action areas had been declared in England, seven of them in one authority and six in Wales.
  Although I deal briefly with this background it is not done in any way so as to understate the situation. To me the problem of urban renewal lies at the centre of any developing Government
  1084
  strategy in housing, whatever else needs to be done in the housing sphere. No one should understate the scale of obsolescence in private rented property, especially in our inner urban areas.
  The hard facts, as shown by the 1971 house condition survey, are that while the private rented sector constitutes only 16 per cent. of the total housing stock, 40 per cent. of the dwellings involved lacked at least one standard amenity, and were in that sector, while 23 per cent. of all the private rented sector stock was unfit. Of the national total of unfit dwellings 60 per cent. was in the private rented sector.
  That, briefly stated, is the justification for Labour's programme of designating stress areas within which local authorities should socialise rented property, with financial aid from the Government. When resources, both financial and organisational, allow, this policy will be extended. But already we have made a vigorous start by direct municipalisation, by expanding housing association action, by sponsoring already the tenants' co-operatives—which were put forward as if they were the result of a new idea sprung on us by the Tory Front Bench. We have legislated for them already, and by sponsoring them under our Housing Rents and Subsidies Act 1975 have provided for the shared equity or tenant ownership schemes now being mooted in Birmingham and elsewhere.
  Some £180 million was spent last year on municipalising 23,000 dwellings, large numbers of which were empty and were needed to be brought into use as quickly as possible. This impetus will be maintained in 1975–76—no matter what has appeared in the media recently. These purchases are mainly directed to housing stress areas so as to turn obsolescent houses into modern homes, but also to prevent a runaway situation in the rented market. This has been declining at the rate of about 100,000 dwellings a year for the past 15 years, whatever the Government, and possibly for even longer than that. It is estimated that in the three years before the Labour Government came back into office the loss was about 120,000 a year. However, the figure has varied from year to year. Some 100,000 a year is a rough average over the past 15 years.

  1085
  With the growth of owner-occupation, this has been largely inevitable, and to some extent it has been made good by local authority building. But in recent years the rate of its decline in relation to a decreasing base figure, along with a sharp cut-back of local authority building, has added much to stress, while conditions of shortage are being exacerbated by the growing number of small households, partcularly single young people, in these same areas.
  So the need for social intervention is two-fold. Extending security of tenure to most furnished tenants was an essential stop-gap until the programme of social ownership has been carried out. This situation points also to the need, set out in our policy circulars on "Housing Needs and Action" and "Housing the Single", for a much greater variety of provision for smaller households by local authorities, and indeed by private builders. [HON. MEMBERS: "Rents."] I said, "The provision of additional smaller accommodation by local authorities and by private builders"—and that has not to do with any attempts to break through the Rent Act 1974.
  Municipalisation is not simply a method to bring houses into direct ownership by local authorities. It is a means by which a greater variety of social ownership and tenures may be provided, and also a means by which housing can be treated as a means of improving the increasingly alienating conditions in the community for today's urban residents.
  The Housing Act 1974 stimulated the provision of dwellings by housing associations, and the higher level of direct municipalisation and repair recently achieved will be maintained. But there are other ways to extend social ownership which hopefully would add to housing resources and stimulate the creation of community and neighbourhood in our vast and growing conurbations, by involving more and more people at the grass roots within municipal and national housing strategies.
  I believe strongly in a pluralistic, rather than a monopolistic approach to social ownership, and I wish to apply this in housing policy. This is why the Housing Rents and Subsidies Act 1975 gives scope for financing and aiding tenant co-operative management and co-
  1086
  operative ownership schemes. The same Act also enables tenant/owner-occupier schemes such as those which the Housing Corporation and Birmingham City Council are now proposing. But there are other ways.
  Even were there no public expenditure constraints under present economic conditions, simply using the present methods of purchase by local authorities would be well below the rate of contraction and decay of the private rented sector, which are the main grounds for the Government's policy of social ownership.
  I am, therefore, considering the feasibility of local authority and housing association leasing, joint management arrangements between local authorities and owners, the equivalent of "producer-co-operatives" for small owners, landlord-tenant "co-ownership" schemes, community purchase by local authorities' associations and co-operatives and other forms of social tenure. These are being examined in the Department and they will be applied as soon as we can work out the details, which will take time, but this is the policy which we are embarking upon and we intend to pursue it.
  There is a need to retain and to bring fresh resources—both financial and managerial—into housing, and they would probably be beyond the capacity of any single institution to provide on the necessary scale, with the necessary flexibility, in the time required to get the job done—and we cannot talk in terms of decades. The job, in our inner city areas particularly, is too serious and urgent for that.
  Mr. Eyre: I should be grateful if the Minister would say what the Government propose to do to increase the degree of participation by tenants in the existing large council estates.
  Mr. Freeson: We already have legislation in the Housing Rents and Subsidies Act, as I explained to the House on Report, for sponsoring co-operative management schemes in local authority estates, as well as purchase and new building schemes, and also for sponsoring co-operative ownership schemes on a leasehold basis. We appointed the working party last autumn under the chairmanship of Harold Campbell to look into various forms of tenants' co-operatives. Part I

  1087
  of the draft report has been submitted. The report will be completed in about a month or so from now. The working party will be going out for consultation as a basis for future policy development. Work is being done. We do not leave it to sloganising exchanges across the Front Benches.
  From what I have said, it will be clear that improvement of dwellings, particularly those occupied by owner-occupiers and tenants lower down the earnings scale, has high priority. We have introduced rateable value limits, about which one or two hon. Members and others around the country have complained, on the issue of improvement grants to owners, the object being to get the money spread down the scale and not applied, as it has been increasingly applied in recent years and until now, for the better properties at the upper end of the scale.
  Apart from the £180 million being spent by local authorities and the £80 million being spent by housing associations on social ownership and repair of houses this year, about £255 million will be spent on capital improvements. This is an area which has caused considerable controversy and argument in recent times.
  First, I must make it clear that the figure we have provided is a good deal higher—despite the strictures of the hon. Member for Hampstead (Mr. Finsberg)— than the figure which was originally intended by the last Conservative Government in their White Paper on Public Expenditure. What is more, the method of control, about which the hon. Member complained, is based upon the very method of control that was in the draft Bill that the previous Conservative Government left behind when they lost office. Therefore, there is no distinction between us about procedures. However, there is a distinction about the levels of resources that we are prepared to put into this work.
  In a circular that was issued recently we made it clear that the municipalisation fund that local authorities will be spending can cover initial work on the repair of properties, including the provision of standard amenities and work carried out on properties that they purchased before
  1088
  the introduction of this control. The £255 million applies simply to improvement schemes and capitalised repairs. I wish to see more—make no mistake about that. As soon as economic conditions permit, that is what our Department will be aiming at. However, we cannot spend more than is provided at present.
  It is, therefore, my task—and I make no apology for this—to make sure, as far as it is within my power, that improvement capital expenditure is spent on the properties that are most in need. We have to recognise that in recent years a high proportion of the £250 million to £300 million a year that has been spent by local authorities has been spent on purpose-built estates which, although it was desirable for them to be improved and refurbished, were not priority cases. They were largely properties that already had the basic amenities, while millions of properties—both those in local authority ownership, and those which are now coming forward for municipalisation and other forms of social ownership—remain without the basic amenities. The least amount of money has been spent on the property that is in the worst condition. Within the limited resources, we have to get that application switched around so that more money is spent on the worst properties, if necessary deferring expenditure on the somewhat better properties until such time as more resources are available.
  It is our policy to continue the level of social ownership and repair of out-of-date properties. The recent policy circular that has been issued underlines this. It has not cut back the total expenditure. It seeks to establish that that expenditure, which will be running at the same level in real terms as last year—the increased level—will be spent on modernising the properties more urgently requiring it.
  Our aim, as I hope I have made clear in threading through all these policies, is to obtain a variety of tenure and the enhancement of social actions and values in the housing situation—a blend and balance where now there is increasing dominance of one or two kinds of tenure in far too many localities. It is against this background that the Government set their objection—and I make this clear—to the indiscriminate sale of council rented dwellings, which is a panacea

  1089
  trotted out by the Opposition for our housing problems.
  We are neither for all sales or for no sales. It is the job of a local authority—and of Government and Parliament—to look at the facts and to decide what action should be taken. If, for example, it was objectively shown that the rate of re-lets available to a council was cut by a given rate of sale of dwellings at a time when new lets were down and demand up, then clearly it would be wrong to continue such sales notwithstanding what is put forward by Opposition Members here or in town halls around the country. Clearly the reverse is true. Where it is possible to achieve a variety of provision by local authorities without harm to the ability to meet urgent needs in the rented sector, so be it—let us provide that variety of tenure. Indeed we shall see it undertaken.
  I have asked my officials in the Department to do some objective analysis of this question which could be of help to local authorities, as well as the Government, in future action. Meanwhile, I am considering how local authorities may help to meet the need for more houses to be built for sale to lower-income owner-occupiers, in addition to building for rent, and I am considering how housing associations might also contribute in this direction.
  As well as measures and proposals on tenure and ownership, the Government believe that it is essential to make the fullest use of our housing investment and housing stock. In March this year my Department issued the Circular "Housing: Needs and Action". It made specific recommendations for action to make fuller use of the existing stock of houses, to build more dwellings for small households where the need, through demographic change, is increasing, and to streamline costly and lengthy procedures in the development and planning process.
  Increasing attention will be paid to the better use of housing stock—often in conjunction with the advance of social ownership—to ensure that the waste caused by unused and underused properties, especially in stress areas, is minimised. I expect to come forward in the near future with practical proposals designed to enable speedy and effective action to be taken
  1090
  to bring such properties into full and appropriate use.
  Such action, together with our new building programme and the gathering momentum of urban renewal, offers the best scope for eliminating the phenomena of squatting and homelessness—at least to the extent that they are functions of a housing problem. In the coming months my Department will place a new emphasis on housing management, which grows ever more important as the size of municipal holdings and responsibilities grows. We shall aim to offer a higher level of professional guidance in this sphere to local authorities.
  We shall certainly take on board the several points strongly and rightly put to the House by my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham). But we must go beyond these kinds of initiative in building, improvement and management, important though these may be.
  One of the central tasks confronting anyone seeking to enhance the quality of life in our towns and cities is that of improving the wider physical and social environment, a point rightly commented on by my hon. Friend the Member for Manchester, Moss Side (Mr. Hatton). Of course, there are certain design solutions which can be prepared readily—tree planting, play areas, traffic management schemes and those rather fussier schemes that I recently saw described as "environmental diddy-patches". But in reality we are only just beginning to learn about what features of their surroundings people really regard as important, and what aspects positively reinforce the health and stability of a community and a neigh bourhood.
  Some improved knowledge will flow from the public involvement in housing action areas and general improvement areas. But we are also now engaged on a nationwide study of people's attitudes towards the areas in which they live so that we shall be in a much better position to decide what types of housing are likely to be regarded by people as socially unacceptable, and what policies are needed to bring about the necessary changes.
  We should remember that the existing definition of "unfitness" in the Housing Acts has been virtually unchanged for 50 years. It is high time we began

  1091
  seriously to consider what minimum environmental standards should be adopted, what the views of ordinary families up and down the land are on this subject—and they are the people whose views really matter—and what effect any change in minimum standards would have upon expectations, upon the pattern of housing demand and upon the kind of legislation needed to bring about sensible changes and more sensitive urban renewal. These are the kinds of issue we are acting upon and studying for future action.
  I have outlined the beginnings of a policy which in themselves are worthwhile and which in the long term will lead to efficiency and social justice. None the less, they are only beginnings. As my right hon. Friend the Secretary of State has said, the Department is engaged—
  Mr. Frank Allaun: This is a very interesting brief, Mr. Deputy Speaker, but I put it to my hon. Friend that he is winding up a debate and that he has not dealt with the arguments that have been put to him. I do not think that my hon. Friend is playing fair with the House. He is capable of much better than this.
  Mr. Freeson: So, with respect, is my hon. Friend. I hope that I have been dealing with some important matters of housing policy that have been raised today in various ways by hon. Members on both sides of the House. If my hon. Friend is dissatisfied, I can only hope that he will show an interest in some of these aspects of housing policy in future.
  My right hon. Friend has referred to a review of housing finance upon which the Department has embarked. During the course of the review we shall not stop at undertaking the most challenging investigation of all—[Interruption.] I suggest that Conservative Members who have just entered the Chamber should go back
  to the dining-room. We shall not hesitate in challenging the most basic concepts and assumptions that we have accepted over many years when dealing with housing. There are a number of fundamental questions which the review will need to answer and we shall not fall short of tackling the questions. We shall have to consider many important financial questions concerning the use of resources which have been put forward today by hon. Members from both sides of the House.
  Mr. Charles Irving Mr. Charles Irving (Cheltenham) rose—
  Mr. Freeson: At the end of the day I have to say as a Minister in a Labour Government that, given the measure of resources available to us, our first objective must be to get more houses built, more houses modernised and municipalised and a greater extension of social ownership. Those are the first priorities and others must fall in behind them. I stand by such a view of our priorities, given our resources. That is a view that I took when I was in local government before coming to this place. It is a view which I held throughout my years of membership of the party and it is a view that I shall put forward as a Labour Minister when dealing with housing policy.
  Mr. Michael Brotherton: The Minister has said that he stood by the view that the Government would municipalise more houses. Does that mean that the Government are firmly committed to a policy of bringing into the public sector all houses that are available for rent? One of the great problems at the moment is—in fact, I fear, it is that I must sit down because of the time.
  Question put, That this House do now adjourn:—
  The House divided: Ayes 266, Noes 294.

  Division No. 234.]

  AYES

  9.59 p.m.]

  Adley, Robert

  Bell, Ronald

  Boyson, Dr Rhodes (Brent)

  Aitken, Jonathan

  Bennett, Dr Reginald (Fareham)

  Braine, Sir Bernard

  Alison, Michael

  Benyon, W.

  Brittan, Leon

  Amery, Rt Hon Julian

  Berry, Hon Anthony

  Brotherton, Michael

  Arnold, Tom

  Biffen, John

  Brown, Sir Edward (Bath)

  Atkins, Rt Hon H. (Spelthorne)

  Biggs-Davison, John

  Bryan, Sir Paul

  Awdry, Daniel

  Blaker, Peter

  Buchanan-Smith, Alick

  Bain, Mrs Margaret

  Body, Richard

  Buck, Antony

  Baker, Kenneth

  Boscawen, Hon Robert

  Budgen, Nick

  Banks, Robert

  Bowden, A. (Brighton, Kemptown)

  Bulmer, Esmond

  Burden, F. A.

  Howe, Rt Hon Sir Geoffrey

  Price, David (Eastleigh)

  Carlisle, Mark

  Howell, David (Guildford)

  Prior, Rt Hon James

  Carr, Rt Hon Robert

  Hunt, John

  Pym, Rt Hon Francis

  Chalker, Mrs Lynda

  Hurd, Douglas

  Raison, Timothy

  Channon, Paul

  Hutchison, Michael Clark

  Rathbone, Tim

  Churchill, W. S.

  Irvine, Bryant Godman (Rye)

  Rawlinson, Rt Hon Sir Peter

  Clark, Alan (Plymouth, Sutton)

  Irving, Charles (Cheltenham)

  Rees, Peter (Dover & Deal)

  Clark, William (Croydon S)

  James, David

  Rees-Davies, W. R.

  Clarke, Kenneth (Rushcliffe)

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

  Held, George

  Clegg, Walter

  Jessel, Toby

  Renton, Rt Hon Sir D. (Hunts)

  Cockcroft, John

  Johnson Smith, G. (E. Grinstead)

  Renton, Tim (Mid-Sussex)

  Cooke, Robert (Bristol W)

  Jones, Arthur (Daventry)

  Rhys Williams, Sir Brandon

  Cope, John

  Jopling, Michael

  Ridley, Hon Nicholas

  Cordle, John H.

  Joseph, Rt Hon Sir Keith

  Ridsdale, Julian

  Cormack, Patrick

  Kaberry, Sir Donald

  Rifkind, Malcolm

  Costain, A. P.

  Kershaw, Anthony

  Rippon, Rt Hon Geoffrey

  Crawford, Douglas

  Kimball, Marcus

  Roberts, Michael (Cardiff NW)

  Critchley, Julian

  King, Evelyn (South Dorset)

  Roberts, Wyn (Conway)

  Crouch, David

  King, Tom (Bridgwater)

  Rodgers, Sir John (Sevenoaks)

  Crowder, F. P.

  Kitson, Sir Timothy

  Rossi, Hugh (Hornsey)

  Davies, Rt Hon J. (Knutstord)

  Knight, Mrs Jill

  Rost, Peter (SE Derbyshire)

  Dean, Paul (N Somerset)

  Knox, David

  Royle, Sir Anthony

  Dodsworth, Geoffrey

  Lamont, Norman

  Sainsbury, Tim

  Douglas-Hamilton, Lord James

  Lane, David

  St. John-Stevas, Norman

  Drayson, Burnaby

  Langford-Holt, Sir John

  Scott, Nicholas

  du Cann, Rt Hon Edward

  Latham, Michael (Mellon)

  Shaw, Giles (Pudsey)

  Durant, Tony

  Lawrence, Ivan

  Shelton, William (Streatham)

  Eden, Rt Hon Sir John

  Lawson, Nigel

  Shepherd, Colin

  Edwards, Nicholas (Pembroke)

  Le Marchant, Spencer

  Shersby, Michael

  Elliott, Sir William

  Lester, Jim (Beeston)

  Silvester, Fred

  Evans, Gwynfor (Carmarthen)

  Lewis, Kenneth (Rutland)

  Skeet, T. H. H.

  Eyre, Reginald

  Lloyd, Ian

  Smith, Dudley (Warwick)

  Fairbairn, Nicholas

  Loveridge, John

  Speed, Keith

  Fairgrieve, Russell

  Luce, Richard

  Spence, John

  Farr, John

  McAdden, Sir Stephen

  Spicer, Jim (W Dorset)

  Fell, Anthony

  MacCormick, Iain

  Spicer, Michael (S Worcester)

  Finsberg, Geoffrey

  McCrindle, Robert

  Sproat, Iain

  Fisher, Sir Nigel

  Macfarlane, Neil

  Stainton, Keith

  Fletcher, Alex (Edinburgh N)

  MacGregor, John

  Stanbrook, Ivor

  Fletcher-Cooke, Charles

  Macmillan, Rt Hon M. (Farnham)

  Stanley, John

  Fookes, Miss Janet

  McNair-Wilson, M. (Newbury)

  Steen, Anthony (Wavertree)

  Fowler, Gerald (The Wrekin)

  McNair-Wilson, P. (New Forest)

  Stewart, Donald (Western Isles)

  Fox, Marcus

  Madel, David

  Stewart, Ian (Hitchin)

  Fraser, Rt Hon H. (Stafford & St)

  Marshall, Michael (Arundel)

  Stokes, John

  Fry, Peter

  Marten, Neil

  Stradling Thomas, J.

  Galbraith, Hon. T. G. D.

  Mather, Carol

  Tapsell, Peter

  Gardiner, George (Reigate)

  Maude, Angus

  Taylor, R. (Croydon NW)

  Gardner, Edward (S Fylde)

  Maudling, Rt Hon Reginald

  Taylor, Teddy (Cathcart)

  Gilmour, Rt Hon Ian (Chesham)

  Mawby, Ray

  Tebbit, Norman

  Gilmour, Sir John (East Fife)

  Maxwell-Hyslop, Robin

  Temple-Morris, Peter

  Glyn, Dr Alan

  Mayhew, Patrick

  Thatcher, Rt Hon Margaret

  Godber, Rt Hon Joseph

  Meyer, Sir Anthony

  Thomas, Dafydd (Merioneth)

  Goodhart, Philip

  Mills, Peter

  Thomas, Rt Hon P. (Hendon S)

  Goodhew, Victor

  Miscampbell, Norman

  Thompson, George

  Goodlad, Alastair

  Mitchell, David (Basingstoke)

  Townsend, Cyril D.

  Gorst, John

  Moate, Roger

  Trotter, Neville

  Gow, Ian (Eastbourne)

  Monro, Hector

  Tugendhat, Christopher

  Gower, Sir Raymond (Barry)

  Montgomery, Fergus

  van Straubenzee, W. R.

  Grant, Anthony (Harrow C)

  Moore, John (Croydon C)

  Vaughan, Dr Gerard

  Gray, Hamish

  More, Jasper (Ludlow)

  Viggers, Peter

  Grieve, Percy

  Morgan, Geraint

  Wakeham, John

  Grist, Ian

  Morgan-Giles, Rear-Admiral

  Walker, Rt Hon P. (Worcester)

  Grylls, Michael

  Morris, Michael (Northampton S)

  Walker-Smith, Rt Hon Sir Derek

  Hall, Sir John

  Morrison, Charles (Devizes)

  Wall, Patrick

  Hall-Davis, A. G. F.

  Morrison, Hon Peter (Chester)

  Walters, Dennis

  Hamilton, Michael (Salisbury)

  Mudd, David

  Warren, Kenneth

  Hampson, Dr Keith

  Neave, Airey

  Watt, Hamish

  Hannam, John

  Nelson, Anthony

  Weatherill, Bernard

  Harrison, Col Sir Harwood (Eye)

  Neubert, Michael

  Wells, John

  Harvie Anderson, Rt Hon Miss

  Newton, Tony

  Welsh, Andrew

  Hastings, Stephen

  Nott, John

  Whitelaw, Rt Hon William

  Havers, Sir Michael

  Onslow, Cranley

  Wiggin, Jerry

  Hawkins, Paul

  Oppenheim, Mrs Sally

  Wigley, Dafydd

  Hayhoe, Barney

  Osborn, John

  Wilson, Gordon (Dundee E)

  Henderson, Douglas

  Page, John (Harrow West)

  Wood, Rt Hon Richard

  Heseltine, Michael

  Page, Rt Hon R. Graham (Crosby)

  Young, Sir G. (Ealing, Acton)

  Hicks, Robert

  Pattie, Geoffrey

  Higgins, Terence L.

  Percival, Ian

  TELLERS FOR THE AYES:

  Holland, Philip

  Peyton, Rt Hon John

  Mr. Adam Butler and.

  Hordern, Peter

  Pink, R. Bonner

  Mr. Cecil Parkinson

  NOES

  Abse, Leo

  Archer, Peter

  Atkins, Ronald (Preston N)

  Allaun, Frank

  Armstrong, Ernest

  Atkinson, Norman

  Anderson, Donald

  Ashton, Joe

  Bagier, Gordon A. T.

  1094

  1095

  Barnett, Guy (Greenwich)

  Gilbert, Dr John

  Mendelson, John

  Barnett, Rt Hon Joel (Heywood)

  Ginsburg, David

  Mikardo, Ian

  Bates, Alf

  Golding, John

  Millan, Bruce

  Bean, R. E.

  Gould, Bryan

  Miller, Dr M. S. (E Kilbride)

  Benn, Rt Hon Anthony Wedgwood

  Gourlay, Harry

  Mitchell, R. C. (Soton, Itchen)

  Bennett, Andrew (Stockport N.)

  Graham, Ted

  Molloy, William

  Bidwell, Sydney

  Grant, George (Morpeth)

  Morris, Alfred (Wythenshawe)

  Bishop, E. S.

  Grant, John (Islington C)

  Morris, Charles R. (Openshaw)

  Blenkinsop, Arthur

  Grocott, Bruce

  Morris, Rt Hon J. (Aberavon)

  Boardman, H.

  Hamilton, James (Bothwell)

  Moyle, Roland

  Booth, Albert

  Hamilton, W. W. (Central Fife)

  Mulley, Rt Hon Frederick

  Boothroyd, Miss Betty

  Hardy, Peter

  Murray, Rt Hon Ronald King

  Bottomley, Rt Hon Arthur

  Harper, Joseph

  Newens, Stanley

  Boyden, James (Bish Auck)

  Harrison, Walter (Wakefield)

  Noble, Mike

  Bradley, Tom

  Hart, Rt Hon Judith

  Oakes, Gordon

  Bray, Dr Jeremy

  Hatton, Frank

  Ogden, Eric

  Brown, Hugh D. (Provan)

  Hayman, Mrs Helene

  O'Halloran, Michael

  Brown, Robert C. (Newcastle W)

  Healey, Rt Hon Denis

  O'Malley, Rt Hon Brian

  Brown, Ronald (Hackney S)

  Heffer Eric S.

  Orbach, Maurice

  Buchan, Norman

  Horam, John

  Orme, Rt Hon Stanley

  Buchanan, Richard

  Howell, Denis (B'ham, Sm H)

  Ovenden, John

  Butler, Mrs Joyce (Wood Green)

  Hoyle, Doug (Nelson)

  Owen, Dr David

  Callaghan, Jim (Middleton & P)

  Huckfield, Les

  Padley, Walter

  Campbell, Ian

  Hughes, Rt Hon C. (Anglesey)

  Palmer, Arthur

  Canavan, Dennis

  Hughes, Mark (Durham)

  Park, George

  Cant, R. B.

  Hughes, Robert (Aberdeen N)

  Parker, John

  Carmichael, Neil

  Hughes, Roy (Newport)

  Parry, Robert

  Carter, Ray

  Irvine, Rt Hon Sir A. (Edge Hill)

  Pavitt, Laurie

  Carter-Jones, Lewis

  Irving, Rt Hon S. (Dartford)

  Peart, Rt Hon Fred

  Cartwright, John

  Jackson, Colin (Brighouse)

  Pendry, Tom

  Clemitson, Ivor

  Jackson, Miss Margaret (Lincoln)

  Perry, Ernest

  Cocks, Michael (Bristol S)

  Janner, Greville

  Phipps, Dr Colin

  Cohen, Stanley

  Jay, Rt Hon Douglas

  Prentice, Rt Hon Reg

  Coleman, Donald

  Jeger, Mrs Lena

  Prescott, John

  Conlan, Bernard

  Jenkins. Hugh (Putney)

  Price, C. (Lewisham W)

  Cook, Robin F. (Edin C)

  Jenkins, Rt Hon Roy (Stechford)

  Price, William (Rugby)

  Corbett, Robin

  John, Brynmor

  Radice, Giles

  Cox, Thomas (Tooting)

  Johnson, James (Hull West)

  Rees, Rt Hon Merlyn (Leeds S)

  Craigen, J. M. (Maryhill)

  Johnson, Walter (Derby S)

  Richardson, Miss Jo

  Crawshaw, Richard

  Jones, Alec (Rhondda)

  Roberts, Albert (Normanton)

  Crosland, Rt Hon Anthony

  Jones, Barry (East Flint)

  Roberts, Gwilym (Cannock)

  Cryer, Bob

  Jones, Dan (Burnley)

  Robertson, John (Paisley)

  Cunningham, G. (Islington S)

  Judd, Frank

  Roderick, Caerwyn

  Dalyell, Tam

  Kaufman, Gerald

  Rodgers, George (Chorley)

  Davidson, Arthur

  Kelley, Richard

  Rodgers, William (Stockton)

  Davies, Bryan (Enfield N)

  Kerr, Russell

  Rooker, J. W.

  Davies, Denzil (Llanelli)

  Kilroy-Silk, Robert

  Roper, John

  Davies, Ifor (Gower)

  Kinnock, Nell

  Rose, Paul B.

  Deakins, Eric

  Lambie, David

  Ross, Rt Hon W. (Kilmarnock)

  Dean, Joseph (Leeds West)

  Lamborn, Harry

  Rowlands, Ted

  de Freitas, Rt Hon Sir Geoffrey

  Lamond, James

  Ryman, John

  Delargy, Hugh

  Leadbitter, Ted

  Sandelson, Neville

  Dell, Rt Hon Edmund

  Lee, John

  Sedgemore, Brian

  Dempsey, James

  Lestor, Miss Joan (Eton & Slough)

  Selby, Harry

  Doig, Peter

  Lever, Rt Hon Harold

  Shaw, Arnold (Ilford South)

  Douglas-Mann, Bruce

  Lewis, Arthur (Newham N)

  Sheldon, Robert (Ashton-u-Lyne)

  Duffy, A. E. P.

  Lewis, Ron (Carlisle)

  Shore, Rt Hon Peter

  Dunn, James A.

  Lipton, Marcus

  Short, Rt Hon E. (Newcastle C)

  Dunnett, Jack

  Litterick, Tom

  Silkin, Rt Hon John (Deptford)

  Eadie, Alex

  Lomas, Kenneth

  Silkin, Rt Hon S. C. (Dulwich)

  Edelman, Maurice

  Loyden, Eddie

  Sillars, James

  Edge, Geoff

  Luard, Evan

  Silverman, Julius

  Edwards, Robert (Wolv SE)

  Lyon, Alexander (York)

  Skinner, Dennis

  Ellis, John (Brigg & Scun)

  Lyons, Edward (Bradford W)

  Small, William

  Ellis, Tom (Wrexham)

  Mabon, Dr J. Dickson

  Smith, John (N Lanarkshire)

  English, Michael

  McCartney, Hugh

  Snape, Peter

  Ennals, David

  McElhone, Frank

  Spearing, Nigel

  Evans, Fred (Caerphilly)

  MacFarquhar, Roderick

  Spriggs, Leslie

  Evans, loan (Aberdare)

  McGuire, Michael (Ince)

  Stallard, A. W.

  Evans, John (Newton)

  Mackenzie, Gregor

  Stewart, Rt Hon M. (Fulham)

  Ewing, Harry (Stirling)

  Mackintosh John P.

  Stott, Roger

  Feulds, Andrew

  Maclennan, Robert

  Strang, Gavin

  Fernyhough, Rt Hon E.

  McMillan, Tom (Glasgow C)

  Strauss, Rt Hon G. R.

  Fitch, Alan (Wigan)

  McNamara, Kevin

  Summerskill, Hon Dr Shirley

  Flannery, Martin

  Madden, Max

  Swain, Thomas

  Fletcher, Raymond (Ilkeston)

  Magee, Bryan

  Taylor, Mrs Ann (Bolton W)

  Fletcher, Ted (Darlington)

  Mahon, Simon

  Thomas, Jeffrey (Abertillery)

  Foot, Rt Hon Michael

  Mallalieu, J. P. W.

  Thomas, Mike (Newcastle E)

  Ford, Ben

  Marks, Kenneth

  Thomas, Ron (Bristol NW)

  Forrester, John

  Marquand, David

  Thorne, Stan (Preston South)

  Fowler, Gerald (The Wrekin)

  Marshall, Dr Edmund (Goole)

  Tierney, Sydney

  Freeson, Reginald

  Marshall, Jim (Leicester S)

  Tinn, James

  Garrett, John (Norwich S)

  Maynard, Miss Joan

  Tomlinson, John

  Garrett, W. E. (Wallsend)

  Meacher, Michael

  Tomney, Frank

  George, Bruce

  Mellish, Rt Hon Robert

  Torney, Tom

  1096

  1097

  Tuck, Raphael

  Weitzman, David

  Wilson, Rt Hon H. (Huyton)

  Urwin, T. W.

  Wellbeloved, James

  Wilson, William (Coventry SE)

  Varley, Rt Hon Eric G.

  White, Frank R. (Bury)

  Wise, Mrs Audrey

  Wainwright, Edwin (Dearne V)

  White, James (Pollock)

  Woodall, Alec

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

  Whitehead, Phillip

  Wool, Robert

  Walker, Harold (Doncaster)

  Whitlock, William

  Wrigglesworth, Ian

  Walker, Terry (Kingswood)

  Willey, Rt Hon Frederick

  Young, David (Bolton E)

  Ward, Michael

  Williams, Alan (Swansea W)

  Watkins, David

  Williams, Alan Lee (Hornch'ch)

  TELLERS FOR THE NOES:

  Watkinson, John

  Williams, Rt Hon Shirley (Hertford)

  Mr. J. D. Dormand and

  Weetch, Ken

  Williams, W. T. (Warrington)

  Mr. David Stoddart.

  Question accordingly negatived.

  BUSINESS OF THE HOUSE
  Ordered,
  That the British Leyland Bill may be proceeded with at this day's sitting though opposed, until any hour.—[Mr. Coleman.]

  BRITISH LEYLAND BILL
  Considered in Committee.
  [Mr. OSCAR MURTON in the Chair]

  BRITISH LEYLAND BILL
    Clause 1

      ACQUISITION OF SHARES
      Question proposed, That the clause stand part of the Bill.
      10.17 p.m.
      Mr. Michael Heseltine: I welcome the Under-Secretary of State for Industry in a personal capacity to his new place on the Front Bench. It is no fault of his that he should be expected, after just a weekend in the Department, to steer this Bill through Committee. But the Committee may feel it strange, to say the least, that the Secretary of State for Industry is not here himself. The Government's commitment, at £2·8 billion, is the largest single commitment ever made to one British company. As he has had three days longer in the Department than the Under-Secretary, it is strange that the Secretary of State is not here at least to listen to the arguments.
      But my surprise is tempered, because over the weekend I saw the right hon. Gentleman described as a consummate politician who never entered a room by an open door unless he could see another open door by which he could leave. Therefore, I well understand his reluctance to be at the Dispatch Box tonight.
      The Bill and the strategy it represents form an integral part of the Government's policy towards British Leyland. It is, in reality, an open-ended and undisciplined commitment of taxpayers' resources to a company that, for whatever reasons, has now no other alternative source of finance open to it.
      Indeed, for the past year, the company was encouraged to behave in a way that
      1100
      was bound to lead—what was intended to lead—to the very solution that the Committee is being asked to consider tonight. Mr. John Barber, in his evidence to the Select Committee on Expenditure on the motor industry, explained the attitude which induced the then Secretary of State in his negotiations with the company. Mr. Barber said:
      "We had been working on the assumption, from the middle of last year onwards in Lord Stokes' discussions with the Minister, that we would not be allowed to go to the wall In other words, we had not started retrenching in the way in which, if we had been a completely independent company, we would have had to do in order to stay in business."
      There is only one conclusion from those words—that the then Secretary of State had quite consciously led British Leyland to behave in a way which might have seemed attractive to him at that time but could not conceivably have been considered as being in the best interests of the company, or of its work people, or, in the last resort, of the taxpayers, who are now called upon to repair the damage done in that period of drift and vacillation.
      The position we consider in examining Clause 1 of the Bill is that no private investor could prudently invest new money in the company today. There are four reasons for that. First, the return by way of dividends will be nominal for years to come; secondly, the generation of adequate profits is expected so far in the future as to make the forecasts upon which those profits are based speculative and, at the most, charitable; thirdly, the assumptions about the company's ability to improve its performance and increase its market penetration are at odds with its past record of achievement; finally, there is not a shred of evidence to suggest that any person in the company, either employee, manager or director, feels one bit of commitment to the strategy which the Government have devised on behalf of the company.
      Indeed, the reverse is the case. The mere fact that the Government have devised and accepted the strategy has already provided the alibi which will be used in future to explain that deviations from that strategy were the failure of judgment by the Government and not failure of judgment by employees or managers. So it is important to ask how it is

      1101
      that the Government came to accept the strategy upon which the Bill is based.
      Once again, we have the evidence of Mr. John Barber to the Expenditure Committee. He said:
      "We were asked in British Leyland to develop a concept study over 10 years on certain assumptions. The two main ones were the rate of inflation and a fairly free availability of cash."
      I hope that the Committee will not lose sight of the fact that the only two inputs that the Governments felt competent to make into the study of the motor industry at the time were the free availability of cash and predictions about the future rate of inflation. That was the basis upon which British Leyland, on behalf of the Ryder team, undertook the investigation about the future markets available to it.
      The evidence is clear that British Leyland, putting forward the figures that it put forward, did not itself believe that those figures represented a realistic basis upon which investment judgments could be taken. The moment it had put forward those figures, it set about a realistic assessment of the conclusions and, indeed, costed alternative proposals upon which the company itself might well have proceeded if it had been in a position so to do.
      But the important question is whether either the Ryder team or the sponsoring Minister responsible for the report ever asked British Leyland what its opinion was of the strategy which emerged from its figures. The Committee will want to understand why, first of all, the Ryder team never asked British Leyland whether the figures which were produced on behalf of the Ryder team in order to chart the way forward were realistic figures upon which such investment proposals should be made.
      Even worse than that, when the Ryder Report was published the sponsoring Minister did not ask the Ryder team whether there was an alternative range of strategies, some lower, on a various scale lower, some involving a different organisation of the company, and some involving different priorities for development within the company. None of those questions was ever asked by the Secretary of State for Industry at the time.
      The reality is that the conclusions were produced and accepted without question by the Government. That is a totally
      1102
      inadequate way in which to expect management and employees to respond to the challenge facing British industry. It is a totally reckless way to dispose of taxpayers' money on any scale, let alone the largest scale ever undertaken in this context by any British Government.
      I want briefly to spell out the sort of reasons why acceptance of this strategy is misconceived. First, the Government as a whole do not believe the figures upon which the forecasts themselves are based. If they do, why have they commissioned CPRS to undertake a long-term marketing forecast of world demand for motor cars and trucks? In fact they know perfectly well that the figures are not reliable, and it has therefore been necessary to set up a Government inquiry of the sort now going forward.
      If anyone considering the basis of the figures upon which the calculations are made asks whether it is not the collective wisdom of the motor industry, which to some extent it is, I would merely point out that it is the same collective wisdom that has led to a situation in which there is a world capacity to produce 20 million vehicles when the realistic demand is for only 12 million.
      Secondly, the most important new business upon which the new development of British Leyland is based is an assumed doubling of car sales to Western Europe by 1985. As British Leyland exports are now lower by volume and by percentage of output than when the group was formed in 1968, it is difficult to encourage investment on that sort of prospectus.
      Thirdly, the involvement of this company permanently with the public sector will raise a number of questions for the company that are serious and damaging for its future. First, no attempt has been made by the Ryder team, which perhaps should not have responsibility for it, or by the Government, who certainly are responsible, to show that the future returns to be derived merit the equivalent of the entire investment for British manufacturing industry for no less than six months. That is to say, the commitment to British Leyland amounts to the entire investment programme for the entire range of British manufacturing industry for six months.
      Secondly, it has not been shown what profitable opportunities exist for the funds

      1103
      now being committed, funds that will be denied others because the resources will be committed to British Leyland. Perhaps even the most ardent enthusiast on the Labour benches for the White Paper "The Regeneration of British Industry" would like to contemplate for a moment just how much regeneration the National Enterprise Board will produce in circumstances in which it has £750 million and British Leyland has now cleaned up £2·8 billion.
      The submergence of the British Leyland investment programme in public sector investment can have no alternative but the inevitable stop-and-go techniques that have affected every investment programme, particularly recently in the steel industry, as it comes under ministerial political or Treasury accounting.
      Perhaps the single most serious objection to the whole strategy is one I have referred to earlier, namely that it is not the strategy of the unions, the employees or the directors. It is solely the strategy of the Government. Every failure, every deviation, will be blamed on the defective judgment of the Ryder strategy because no one in British Leyland has any incentive to do otherwise.
      10.30 p.m.
      Mr. Eric S. Heffer: Is the hon. Gentleman aware of the fact that in Western Germany the Volkswagen company is now contemplating laying off 25,000 workers? That company's strategy is to solve its problems with unemployment. Is the hon. Gentleman suggesting that this Government should contemplate such action rather than seek to rescue the jobs of the workers involved? Is he suggesting that the Government ought not to invest in industry but simply allow those workers to be thrown on the streets without any action being taken on the part of the Government? If that is what he is suggesting, I am certain that the car workers and workers throughout industry will note what he is putting forward on behalf of the Conservative Party.
      Mr. Heseltine: The hon. Gentleman makes a fair point and I will answer his question in clear and coherent terms which he will understand. It is that question which lies at the heart of the inability of this country to agree about
      1104
      industrial policy. It is the fear of unemployment, often exploited for political ends, that makes it difficult for management and unions to be reconciled with the gut problem facing us.
      The hon. Member knows, in asking the question, that what the German Government did with the Volkswagen company was to provide the most generous redundancy payments at a level which vastly exceeds those available here. They produced retraining schemes relevant to redeploying labour where it can be permanently and profitably employed. They gave incentives for alternative sources of employment to be provided by other private sector companies so as to give more secure jobs for those employees. They said to the German worker. "Let us understand that this company cannot any longer guarantee your security and therefore this Government will help you."
      Is that not more realistic than what the Government have done, which is to produce a report in which they say that there will be economies from the labour redundancy programme worth £400 million and then send Ministers round the country trying to pretend that not a single man will lose his job in any circumstances?
      Mr. Heffer: Is the hon. Gentleman aware that the trade union involved in West Germany opposed the Government strategy, as did all the supervisory workers? The German workers were bitterly opposed to the proposal. Is it not clear why this was so? There are now over 1 million unemployed in Western Germany. Is the hon. Gentleman suggesting that this is a strategy we should adopt?
      Mr. Heseltine: I have listened at over 40 Sittings of the Industry Bill to the hon. Member speaking on behalf of the British worker. It is a refreshing change, in this post-referendum phase, to find him speaking on behalf of the German worker. I am sure that the German worker will feel all the better for his support. The reality is that the German trade union movement is prepared to contribute a degree of constructive support to the capitalist philosophies of Western Germany of a sort which has led to the prosperity of the German worker on a scale with which we cannot begin to compete.

      1105
      This House will meet over the year or so ahead to hear of unemployment reaching the 1½ million mark at a time when the German unemployment figures will be decreasing and at a time when the real living standards of the German people will be continuing to outstrip the standards of workers in this country. Perhaps for the best of reasons the hon. Member is not prepared to allow the truth to emerge. The truth is that unless we cure the gut issue of overmanning, wherever the fault may lie, there is no way in which we can equal the real standard of living anywhere in the western world, let alone Germany.
      Mr. Hal Miller: Does my hon. Friend accept that the Ryder Report is based on a significant manning reduction in British Leyland and that one of the objections to continued injections of public funds is that there has been no commitment by the management, unions or employees to the size of that reduction, and until that bench mark is established there must be great caution about further injections of public money into this outfit? I am one of those who voted for the additional £50 million until that bench mark was established.
      Mr. Heseltine: I am aware that my hon. Friend voted in that way. In all the circumstances, I am grateful that he was the only one who did.
      My hon. Friend is right in saying that there is no commitment, not just from the trade union movement—because that would be a start, although perhaps the least likely start—but from the employees, the management or the directors of the company. Unless one understands that the essence of running any company depends on the people in it, and unless one gets their wholehearted support for the policies of the company, there is no way in which one will make a success of that company.
      When the Government lay down the precise management formula and management command chain, when Sir Don Ryder, on the morning of the report, sacks the chief executive of the company without asking the board of directors or the unions, and without, as far as I can see, owning a share in the company, when it is said that £400 mil-
      1106
      lion worth of economic benefit will come from reductions in labour and increased productivity and one does not spell out to the people concerned what that means, one is deceiving the employees of the company. Because the Government will reap the wrath of the people who believe that they have been given a licence to go on behaving as they have behaved without being called to check, the Government have badly mishandled the way in which the report was conceived, prepared and presented to the people of British Leyland and this House.
      There is another example along the lines of the £400 million, and it is another curious, almost unbelievable, omission from the report. How can the Committee make a serious judgment about a situation in which Chrysler has 13 plants and Ford has 21 plants in this country producing between three and four models and British Leyland has 55 plants producing 18 models and yet the rationalisation of those 55 plants, which everybody knows is necessary, does not merit a single sentence in the report? What interpretation are the employees of British Leyland to put on that omission other than that the business will go on as before? If it is to go on as before, there is no prospect of selling the cars on the scale and at the price that the strategy says they must be sold to bring the company back to profitability and respectability.
      The reality is that the report has had the effect of glossing over the challenge which faces not just British Leyland but the entire range of manufacturing industry. The devastating charts which have been produced time and again showing that we are virtually bottom of every manufacturing league in output per man can no longer be avoided if we are to do what has to be done in matching the competition which is increasingly thrust on us from the outside world.
      It is comprehensible to argue for this strategy only if it is hoped that some miracle will change the approach of the company and its personnel. They have not been asked to make a commitment. there has been no explanation what the commitment is and that is why the commitment cannot be expected and will nor be forthcoming.
      There remains the central, hard-line British problem. We have to improve our

      1107
      productivity. This is a classic case in which the Government could have moved forward, decisively and generously, to do so. They have missed an opportunity and have failed to respond to the need of that moment.
      We shall not solve this critical problem if the Government pray for it or the taxpayers pay for it. But that is all that the Clause offers, and I ask the Committee to reject it.
      Mr. Maurice Edelman: The hon. Member for Henley (Mr. Heseltine) has made a typically negative and destructive speech. From his apologia for the past management of British Leyland, one would have thought that all the ills from which the company now suffers had been created since the dismissal of Mr. John Barber. But, as is clearly spelled out in the Ryder Report, the problems of British Leyland were due to an accumulation of causes for which the past management of must take responsibility—the facts that there were too many models, that the plants were irrationally distributed, that there was over-manning not of workers but of management. All these things were well-known and have been confirmed by the Ryder Report.
      When shareholders write to me complaining about the fact that workers have gone on strike and saying, wrongly, that workers have been responsible for the low output at British Leyland—the facts speak against them, because the level of strikes at British Leyland has been relatively low—I feel that they should be directed towards the directors and the management of the past who had full responsibility for the conduct of affairs and at whose door the near-bankruptcy of the company must be laid.
      The company came to this sorry condition because it failed to invest adequately and to modernise and re-equip. The hon. Member for Henley talks of increasing productivity. He must know that the main reason for the debacle was that there was a lack of new equipment, which made it one of the most backward complexes of motor firms in the whole Western world.
      Mr. Percy Grieve: Does not the hon. Gentleman appreciate that sui-
      1108
      cidal strike after suicidal strike in the Ley-lands factories, particularly Cowley and Longbridge—
      Mr. Ray Carter: Rubbish.
      Mr. Grieve: —have resulted in a lack of confidence which itself has produced a vicious circle of lack of investment. That is the key to the problem.
      Mr. Edelman: I fear that the hon. and learned Gentleman has the facts wrong. What he calls "suicidal strike after suicidal strike" was simply strike after strike for which there were legitimate occasions. If he suggests that a strike is itself illegitimate, he is on a different point, but as long as workers who have a grievance have the right to strike, they are entitled to exercise it. That is what happened at British Leyland. The fault for these strikes, as my hon. Friends know who represent British Leyland constituencies, must be laid at the door of past management.
      I want to talk more constructively. There is a lot which needs to be said about the Ryder Report. We are dealing with the livelihood of 170,000 men and their families and with the injection of £1 million a day for about eight years of public money into British Leyland and other issues of public accountability. These matters, despite the late hour, should not be decided on the nod, but require debate.
      10.45 p.m.
      I regret the conclusion of the Ryder report that there should be a hybridisation of the company. I should have preferred nationalisation of the company, which would have created the basis of public accountability so that the firm could become thereafter more directly answerable to the House than in the indirect ways which are proposed in the Ryder report. Nationalisation would have provided a simple and direct way of doing that. There would not have been the conflict of interests which is bound to emerge later on.
      At a later stage it is inevitable that the regular shareholders in the company will have different criteria for judging the success of the company, whereas those who are concerned with public investment in the company will ask how much re-equipment and modernisation

      1109
      has taken place. The shareholders will want to see the payment of dividends as rapidly as possible so that they may receive a return on their shareholdings. There will be a conflict of interests inside the company, which is likely to lead to danger.
      The major shortcoming of the Ryder report, on which the hon. Gentleman touched briefly, is the fact that there is no general strategy ahead. We can see only a bottomless well into which this money will be poured. No one can see the shape of the strategy for this company.
      Today the British machine tool industry is in grave difficulties. It is clamouring for the investment of about £16 million to put it on its feet. British Leyland will absorb as part of the rescue operation—and rightly so—£l million a day for purposes which we do not know in any detail. What harmonisation will there be between the purposes of British Leyland and those of the British machine tool industry? Will the £1 million a day be spent in a great orgy of buying foreign machine tools? Will the money be spent in some rapid exercise of buying machine tools in Switzerland, Austria, Germany or France, or will there be an attempt, by means of a mechanism, to harmonise the purposes of the British machine tool industry with those of the British motor industry?
      Mr. John Biffen: Does the hon. Gentleman accept that in the context of the referendum and the continuing British membership of the Community there is an obligation upon any public sector ordering agency not to discriminate against other Community machine tool suppliers? Is not he therefore misleading British machine toolmakers to suppose that the Government will be in a position to adopt a buy-British policy?
      Mr. Edelman: I am sorry that the hon. Gentleman, with his normally acute mind, does not see the difference between discrimination against a foreign machine tool exporter and positively harmonising the interests of the British machine tool industry with those of the British motor industry. There is nothing in the Treaty of Rome saying that the managing director of British Leyland, or one of its divisions, should not go to the managing director of Alfred Herbert in
      1110
      Coventry and say "Let us plan together our future programme for the next five years, so that your firm can produce the numerical control machines which we need, so as to develop a logical process in our motor factories."
      When I speak of the logical process of production, let me instance the manufacture of Renault cars in France. There we can see a piece of metal going in at one end and emerging as a motor car at the other. There we can see the difference between the techniques of production, which exist through a highly integrated system of production, and what existed in the United Kingdom in the past, when some of our machine tools were over 30 years old. The Ryder report failed to emphasise the need for a broad strategy for the integration of the motor industry with the machine tool industry.
      I should like to say a few words about a major point touched on in the Ryder Report which has not been developed and which is of great concern to those who work in the industry. The hon. Member for Henley very properly said that the only way in which the British motor industry can achieve success is by those who are involved in it feeling that they belong to it and that they have some part to play in it, so that they can all work together in the general interest. In the Ryder Report a whole chapter is devoted to industrial democracy and participation.
      The Ryder Report is a kind of package in which the money is being offered to the company and in return the expectation is that there will be a form of industrial democracy in which the workers will be allowed to play their part, not simply by standing day by day in the production line and slogging it out in every shift but by having some sort of participation in the running of the firm. In the Ryder Report there is a sub-clause which says that until the Government's intentions are made clear about industrial democracy and participation, and the recommendations in the Labour Party Green Paper and the TUC report on industry have been crystallised, nothing can be done.
      If my hon. Friend imagines that he is going to pour money into British Leyland without involving the workers of British Leyland in the judgment of its expenditure, then indeed he is riding for a fall,

      1111
      and so are the Government and the country. Until and unless there is a proper structure of participation by the workers from the shop floor upwards, we shall not get that sense of involvement in the firm which is necessary for its success.
      We live in an age of patronage. We live in an age of Government intervention which Mr. Gladstone when he produced his Northcote-Trevelyan Report had not dreamed of. The Civil Service Commission which was created in those days has long failed to cover the whole area of Government intervention, as patronage has reached a degree such as Walpole himself never dreamed of. This is directly relevant to the Ryder Report and to this Bill.
      We have to ask ourselves how the appointments to the company are to be made. We know that in the NEB it is the Minister who has the statutory duty, and that the appointments are within his gift. While one has a benevolent and efficient Minister—the Secretary of State for Industry, as we have had and as we have—we have certain guarantees. But the fact is that in connection with British Leyland, unless there is some form of structural arrangement for the workers to participate, through councils or committees, in some kind of autogestion within the firm, we shall have the old confrontations of the past which have led to so many troubles and even to the illusions held by the hon. Member for Henley about what he called, I think, suicidal strikes.
      If we are to inject a new spirit into British Leyland we must have some constitutional structure in which the workers will be as much shareholders, with their own persons and energies, as those who have financial investments in the firm. Therefore, if there is any question of obtaining the wholehearted co-operation of the workers of British Leyland—and I believe that is the case—this very day when there are wage claims put forward and when the old discussion across the table is still as sharp and acute as it ever was, unless some sort of new structure of worker participation is married to this Government involvement in the firm, we shall get all the evils and the abuse and no benefits from this massive outpouring of money.
      1112
      I fear that unless there is some sort of participatory monitoring, we shall get a Concorde situation with the same sort of open-ended commitment in which, because the Government and the taxpayer are tied to an enterprise and so profoundly committed, we shall see an outpouring of public expenditure without any adequate and relevant return.
      Mr. Tim Renton: I do not altogether follow the hon. Gentleman's reasoned remarks. I wonder whether he has read a sentence in the Ryder Report which said
      "Efforts by British Leyland to set up a consultative council at corporate level have not been welcomed by the trade unions".
      Can he explain why he thinks union members will take a very much different attitude when they are nationalised than they have taken in recent years?
      Mr. Edelman: It depends on the nature of the council. It is possible to have the sort of sham councils we have seen in the past when people have been concerned with the working of the canteen and not the working of the company. There must be a much more profound participation by workers from the shop floor upwards. It is also not enough—and I say this boldly—to pluck out some trade union official and put him in a post of authority on the board of this company.
      I do not believe that the traditional arrangements referred to in the TUC report on industrial democracy are adequate. There must be a real form of industrial democracy in which workers from the shop floor have direct participation so that their interest in the place of work finds proper expression.
      I hope that my hon. Friend, when he replies, will tell us something about the monitoring of the public money which is being spent. Does this mean that somebody from the Treasury will go along to Oxford or Coventry, look at the books, see that the accounts tally and then go away again?
      If that is what is meant by monitoring, it is not monitoring in the concept which I and many hon. Friends have of public accountability. The problem now facing British Leyland is to make sure that public accountability is concerned not only with the arithmetic but with the wisdom of the expenditure.

      1113
      The real issue facing the Committee is not so much whether we should pay out the money provided for in the Bill. I think most sensible people would agree that the company has to be rescued and that the livelihood of the people involved has to be preserved. Few, except the most extravagantly doctrinaire, would want to drop the axe on those many people who have spent their lives in British Leyland and turn them on the streets overnight. That would be not only foolish, but iniquitous. If hon. Gentlemen opposite vote against the clause tonight, they will be voting in favour of a cruel and ruthless policy which will lead to a great misery and do damage to our greatest exporting industry.
      The worker in his place of work has as much right to consideration as the shareholder in his own remote position. We are concerned today with the rights of the worker and the opportunities for him to fulfil his duty in his place of work, not simply by turning a part but by exercising and contributing his wisdom to the well-being of his firm.
      11.0 p.m.
      Mr. Michael Marshall: I am glad to have the opportunity of speaking after the hon. Member for Coventry, North-West (Mr. Edelman). From many of his remarks, I felt that there were at least certain reservations which I could share. In a recent article he described very effectively the "bran tub approach" to doling out Government money, which certainly covers some of the problems I want to discuss.
      I join with my hon. Friend the Member for Henley (Mr. Heseltine) in expressing some reservations about the Ryder Report, which, after all, is virtually enshrined in the measure we are considering. The first basic problem which has to be restated is that the whole of the report seems to ignore fundamental changes in the whole of our economic situation. The changes which came upon British Leyland as a result of the energy crisis do not receive the recognition which it is self-evident should have gone into the report. I do not see how the problem of that great company can possibly be divorced from the similar problems of so many other major car manufacturers throughout the Western World.
      1114
      It has been rightly stated as a fact that there are four major car companies in this country, and yet in the whole of the United States four major car manufacturers are sufficient for that vast market. The problem is, therefore, self-evident. As The Economist pointed out recently, there is indeed the argument, which must hold water, that car manufacturing companies must either merge or die. It is this first point that strikes me as a notable omission from the Ryder Report.
      Some of us—and perhaps some Labour Members—have had opportunities of questioning Lord Ryder on these matters, but we have got very little change out of suggestions that the merger aspect has been closely considered. This has been pushed to one side, with the suggestion that it was looked at but not thought appropriate. All the way through in considering this report, one has the feeling that the judgments reached in many cases are far too shallow.
      Similarly, we have had very little evidence of a serious examination whether other sources of money could have been found to help the company in this situation. The opportunities to seek re-cycled Arab investment, opportunities for investment consortia in this country—[Interruption.] Hon. Members may laugh, but these are possibilites which should be considered with the greatest care. I do not think that Labour Members would necessarily want to put all their eggs into one basket. After all, we are talking now about a massive investment which is outstripping the technological development costs of Concorde or even the cost of the Channel Tunnel. In considering measures of this sort we are entitled to ask why every other possibility was not fully explored and made clear to us as representatives of the taxpayers and the future shareholders of British Leyland.
      I have reservations about the Ryder Report in general and I share the views which have been expressed frequently on both sides of the Committee that there are problems within the company which run, as it were, not in any one quarter but right across the spectrum of the company. One of the problems the report brought out was the lack of consultation with middle management. The Government must address themselves to this factor, in

      1115
      a way which at present they appear not to be doing by looking at the National Enterprise Board as their chosen instrument, talking in terms of top management and in terms of the shop floor via the trade unions. This is an important element to which the Government must address themselves.
      There is also the worry which anyone who has read the report must have that it seems totally to ignore the effect of the energy crisis on other motor-car manufacturers—in other words, on the major competitors of British Leyland. Many hon. Members have read accounts of the report by Euroeconomics, which speaks of the unreality of the export projections in the Ryder Report. This is a grave concern to many people. If those projections are adrift and if one takes any kind of view as to the impact of the energy crisis on buying habits—the fact that people who were thinking in terms of a second car will no longer be doing so—all this brings one to the inescapable conclusion that it is not as easy as many would suggest simply to seek extra business outside this country. There is a fear that the level of trading demand may be drastically curtailed.
      It is for that reason that I welcome the Government's intention to use the think tank in reviewing the situation. I hope that the Under-Secretary of State will tell us a little more about that. The fact that the CPRS has been put into bat so soon after the Ryder Report suggests to many of us that perhaps there have been some second thoughts about Ryder and points to the importance of the study as regards future borrowing requirements.
      The problems that British Leyland faces—and they are not unique—add up to what Ford recently described as being in the survival business. Being in that business is clearly a fact of life for many major motor manufacturers. In that situation there must be once more a return to some consideration of commercial principles.
      Anyone who has had anything to do with industry must sometimes find it hard to accept the way in which the political battle lines are so quickly drawn up over the fate of a great company such as British Leyland. It is an inescapable fact—I move straight into the sensitive
      1116
      ground—that no one in the Committee can honestly deny that the Ryder Report could have been rather more blunt and honest and have said that British Leyland, as presently constituted, could have the same output and yet have a workforce some 30,000 to 40,000 smaller than it is today. That is the estimate of judges whose judgment we are entitled to respect. What are the Government's policies in that area?
      We must address ourselves to the problems concerning the workforce. On such matters I have respect for what the hon. Member for Liverpool, Walton (Mr. Heffer) says. When dealing with great companies and manufacturing industry, is it not one of the cruellest deceptions to suggest that we can prop up a workforce which is inflated when it is clear that there must come a point at which people will not buy motor cars which they do not want.
      Mr. F. A. Burden: Does my hon. Friend agree that the situation is somewhat the same as when the Secretary of State for Energy said in the House on 2nd August 1971, in another capacity, that in June 1969 he had written to Upper Clyde to the effect that unless management was reorganised, restrictive practices done away with and the labour force slimmed by 7,000 there would not be one more penny forthcoming from Government in support?
      Mr. Marshall: I entirely agree with what my hon. Friend says. That points to the fact that across party lines there are moments when reality comes through. I believe that that was one such instance. I suggest that in the present situation we must have from the Government some clear-cut view as to their policy on job protectionism. That is the underlying ethos to be put forward and it should be put forward by the Prime Minister.
      I was arguing that it is the cruellest deception to suggest that there is an opportunity for people to continue their careers in a company after the moment at which cars cannot be sold in sufficient numbers. I think that everyone accepts that there is a limit to what any Government and to what the nation can afford. Surely it is not merely a matter whether demand will meet productivity. Is it not one of the cruellest things we can do in this technological age to try to keep

      1117
      large numbers of people under-utilised? In a country where people have far greater opportunities for education, is it not a sad reflection on our society that we seem to be endeavouring, through the Government's industrial policy, to keep too many people doing jobs that many clearly find boring when we should be able to introduce machines to make work more interesting and less onerous? That is what the package is supposed to he about.
      Mr. Leslie HuckfieldIf 15,000 or 20,000 of my constituents lose their jobs through the reorganisation which the hon. Gentleman foresees, where will they find alternative employment?
      Mr. Marshall: The hon. Gentleman should put that question to his own Front Bench. The Government's thinking is devoid of constructive proposals for the meshing in of redeployment, retraining and redundancy payments. That is the constructive approach, as opposed to the protectionist approach.
      There are one or two matters which are particularly worrying in relation not so much to the Ryder report as to the Government's policy. The danger of massive Government finance has to be spelt out clearly. The first obvious danger of massive Government finance is that over-manning is difficult to handle and becomes a political argument. We have seen that again and again. Hon. Members on both sides of the Committee, will have to face the constituency problem referred to by the hon. Member for Nuneaton (Mr. Huckfield). These are not easy options, but the nettle must be grasped. If we continue to treat arguments of this sort on a short-term political basis, any hope of long-term economic judgment goes out of the window.
      Each British Leyland situation creates A precedent. It adds massively to the public borrowing requirement and to the economic strains, as even the Treasury Bench has to acknowledge. The public are being forced to buy this pup.
      I hope that the Under-Secretary of State will show his hand tonight in his "new broom" ministerial approach in the Department of Industry. Will he say whether job preservation is or is not the prime purpose of Government industrial
      1118
      policy? Will he recognise the problems which I have enunciated? Will he say whether the Government believe in the creation and preservation of giant monoliths? The Government bear a special responsibility. It was the former Secretary of State for Industry who, with the IRC, brought this corporation into being—a massively mistaken planning judgment, as history shows. That decision was made with insufficient capital backing by the IRC.
      That raises once more the basic question which hon. Members must answer for themselves. Do we want to go on creating massive monolithic organisations, when we know the problems which result? It is possible for parts of companies to be hived off. For example, it is possible to split specialist car production from mass consumer car production. That would give individual companies the opportunity effectively to stand on their own feet. In a sophisticated economy such as ours it should not be beyond the wit of the Government and the City to come together in an effective working arrangement to facilitate that type of development.
      I come to the question of Government planning versus commercial judgment. If the Bill goes through, the Government must tell us how they expect to implement the package. I do not believe the suggestion in the Explanatory Memorandum that no further staff will be required as a result of this legislation. I do not see how this can be so. If it is so, it is of great concern to us all.
      One of the great lessons from the Rolls-Royce situation is that there are insufficient people with commercial judgment in Whitehall. Whether it is in the National Enterprise Board or the Department itself, somewhere along the way there must be found people of ability in commercial matters if the Government are to play any meaningful role in the dialogue with the future British Leyland.
      11.15 p.m.
      Finally, any Government's general investment strategy, in which they force the taxpayer to become an investor, should, if it is to be helpful, back some of the winners in this country and not just some of the lame ducks. I accept that all Governments have not shown the best judgment in trying to be more selective and more effective.

      1119
      If we cannot be clear that the Government have a coherent industrial strategy, the Bill is simply throwing money down the drain and bringing in a short-term political judgment about unemployment for motives which I am sure attract many of the best feelings of many hon. Members. But I believe it enshrines a cruel deception that somehow all will be well if we can keep everyone doing what they are doing at present. I do not think that any hon. Member who hopes to see the regeneration of British industry could give such a deception his support.
      Mr. Richard Wainwright: I hope that the Under-Secretary of State, whom we wish well in his new appointment, will realise the deep interest and concern in the matter put to him by the hon. Member for Coventry, North-West (Mr. Edelman) on the role of the British machine tool industry in the proposed re-equipment of British Leyland. I hope that the hon. Member for Coventry, North-West will get a full and detailed answer. It will also be of great interest to other hon. Members.
      I want to approach the question from a different angle. I want to press the Under-Secretary of State to say how far he considers the machine tool industry is at present ready to fulfil the orders which will arise from the first and second tranches of Government money to British Leyland in its new shape. The hon. Gentleman must be aware that the pattern of re-equipment, and, from that, the sources of re-equipment, will be largely determined by where the orders go arising from the first and second tranches of new capital.
      If the British machine tool industry is not equipped to meet most of the orders arising from this early expenditure, its chances of catching up later, even if it becomes harmonious, will be very much less. I hope that we shall have a full statement of the entire rôle of the machine tool industry in this matter.
      Is it too much also to hope that, even at this stage of the Bill, we shall have at last, with the change of personnel at the Department, some effort to put this vast sum into the context of the general needs of British manufacturing industry. Everyone knows that many sectors in British industry are desperately in need of invest-
      1120
      ment. Yet there appears to be no inventory. The former Ministers at the Department were not even willing to guess at an inventory of the total requirements of British industry, alongside which this vast sum has to be judged.
      For instance, as a random example, the national economic development council associated with the British clothing industry—a great employer of labour and in many ways one of our leading industries—recently made a detailed recommendation that a comparatively modest sum should be allocated to its requirements. Yet the Department has dragged its feet week after week on the issue, presumably because there has been such a massive pre-emption of Government funds for British Leyland and the purposes associated with the Bill. If Parliament is to retain its self-respect there must be an attempt before we send the Bill to another place to give us the context in which the whole matter falls.
      Is it too much to hope, now that there has been time for the new set-up at British Leyland to do some stocktaking, that there might be a gesture from British Leyland's side, when all this money is being voted, to offer some of its peripheral activities as a means of providing a small part of the money? There are Aveling-Barford, Coventry Climax and Prestcold. Surely it would be reasonable—some people might think decent—for British Leyland to say "We are not supermen, and maybe others could manage these non-manufacturing businesses just as well as we could, or almost as well, and they would fetch a tidy sum on the market". That would be some contribution from within to set alongside the vast contribution the long-suffering British taxpayer, or the long-suffering creditors of the British Government, are being dragooned into making.
      This is all being done on a prospectus which, if it were introduced in a normal commercial context, would be criticised throughout the financial Press as flimsy, if not extra-statutory or illegal. [An hon. Member: "Fraudulent."] It may turn out to be fraudulent, but I am not prepared to go that far now. I simply say "flimsy and inadequate". In our professional or personal capacities, or in advising our maiden aunts on their investments, we would never dream of recommending investment on the basis of the

      1121
      Bowdlerised version of the Ryder Report and the speeches of the former Secretary of State for Industry.
      But the Government have the chance if not to open a new chapter at least to turn a page tonight. I hope that we shall be treated more frankly and with more care and respect by the incoming administration at the Department than that with which the House was treated by the previous incumbents. Nevertheless, however eloquent and frank the Under-Secretary is tonight, I shall recommend the Liberal Members to vote against the clause standing part of the Bill.
      Mr. Leslie Huckfield: We have all noted the shift of Government resources on the Front Bench from mobile homes into mobile cars. I welcome my hon. Friend the Under-Secretary to the Committee's deliberations.
      What intrigued most of us who sat through the Second Reading debate, and still intrigues all of us on the Government benches, is precisely what the Opposition intend to do if the Bill does not go through tonight. I ask exactly what the Opposition would do, because as far as I can judge from all the speeches last time, and all that we have heard from the Opposition tonight, if they had their way most of my constituents would be on the dole.
      In particular, we are anxious to hear what the Opposition would do with Austin-Morris, because we have all heard now what they would do with Aveling-Barford, Coventry Climax, Prestcold and the rest of the more profitable parts of the British Leyland empire. What will the Opposition do with the Austin-Morris part of the combine? They did not tell us last time, and my bet is that they will not tell us tonight. I hope that my constituents and the constituents of my hon. Friends representing Longbridge and the other parts of the British Leyland combine have noted that.
      Mr. Tom King Mr. Tom King (Bridgwater) rose—
      Mr. Huckfield: If the hon. Gentleman is prepared to tell the Committee what the Opposition intend to do with Austin-Morris, I shall give way.
      Mr. King: The hon. Member is about to vote for a Bill which carries very severe implications for his constituents.
      1122
      What assessment has he made of the implications of the Bill for them?
      Mr. Huckfield: That only proves the folly of giving way to the hon. Member He still has not answered my question. Conservative Members bemoan the losses that Austin-Morris is supposed to have made. One of the biggest losses of that division was probably in 1969–70 when it lost about £16 million. What is £16 million when set beside the £144 million loss of Volkswagen last year? What is £16 million when set beside the loss of £100 million by Citroen last year in France? If we are to examine Austin-Morris losses we should compare them with the performance of Continental manufacturers and then consider the way in which European Governments have been prepared quickly to help them out because those Governments appreciate the desirability of having a domestic car industry. I hope that that lesson will rub off on to the Opposition tonight.
      In that big loss-making year Austin-Morris lost less than Vauxhall lost last year—£18 million—and less than Chrysler last year—£17 million. If the Conservatives want Austin-Morris to go bankrupt—and I am sure that it what the hon. Member for Oswestry (Mr. Biffen) will say if he catches your eye, Mr. Murton—they must compare that division's performance with losses in other parts of the industry. If the Opposition believe that Austin-Morris should go to the wall what is their feeling about the other companies with even larger losses? I believe that Austin-Morris is well worth saving. I am glad that the Ryder Report recommends that it should be saved and that this is what is planned.
      The Conservatives talk about overmanning. If they saw some of the First World War equipment with which my constituents have to work in Coventry they would understand why there is overmanning. By the time they have got together the man who puts the fag packet in the right place, the second man who is needed to turn the handle because one man is insufficient, the men who have to push the cars round at the end of the track—and bearing in mind some of the self-pushing tracks which are used in British Leyland—there is no wonder that by comparison with plants on the Continent there is overmanning here. Hon. Members will not find men having to

      1123
      push cars down the track in BMW. They will not find it happening in Daimler-Benz, Peugeot or Renault, but they will find it in British Leyland. It is because of the antiquated, almost antediluvian equipment in British Leyland factories that the extra men are required.
      Mr. Michael Marshall: Does the hon. Gentleman accept as the logic of his argument that if modern equipment is put in there should be a rapid reduction in the manning force where those workers are being used ineffectively?
      Mr. Huckfield: I have never concealed the fact—and if the hon. Gentleman had attended the Second Reading debate he would have noted then that I made the point—that if we equip British Leyland to the same level of capital output ratio as Datsun, Nissan or Fiat it will be necessary to use a smaller workforce. I accept that, and I questioned my hon. Friend who was then on the Front Bench on exactly that kind of point.
      11.30 p.m.
      I have taken up several of these matters with the Prime Minister and with the previous Secretary of State for Industry. But I should still like more reassurance, because I know that some of my constituents would, about the proposals in the Bill to integrate the quality car parts of British Leyland with the volume parts of British Leyland.
      I speak as one of those who believe that the whole corporation should be preserved. I do not believe that Austin and Morris should be jettisoned, for the reasons I have just enumerated. But I doubt the wisdom of going in for a strategy that, as far as I and many of my constituents can see, will integrate Jaguar, Rover and Triumph with Austin and Morris.
      When I took up this matter last time, I got half an answer and the answer my constituents have been given in Coventry is that a committee has been set up which is supposed to be looking into ways of preserving Jaguar, for example, as an independent entity. It will take a bit more than that committee to persuade me and my constituents that we shall see the Jaguar car company preserved as an entity in five years' time, because we very much fear that the next Jaguar to be produced will be not a Jaguar but a Rover with a Jaguar badge on the front.
      Mr. Alan Clark: Would the hon. Member give way.
      Mr. Huckfield: If the hon. Gentleman has a good point to make.
      Mr. Clark: I leave that to the hon. Member's judgment. Would he not agree that if the Jaguar car company were to be offered in the City as a single independent entity, it would be perfectly possible to raise the capital not only to produce the Jaguar car but probably to expand its production more effectively and to maintain the whole work force now employed at Browns Lane?
      Mr. Huckfield: The hon. Member knows that some of my constituents work at Browns Lane and Radford and other places. He also knows that the strategy that I have put forward and the strategy that the Government have put forward are to save not just Jaguar but the whole of British Leyland. That is why I support the implementation of the Ryder Report.
      But in the implementation of the Ryder Report we have to take a lesson from what has happened to Fiat and Lancia. The Lancia car company got into considerable difficulties and was bought out by Fiat. Now Fiat is trying to produce a Fiat car with a Lancia badge, and that just will not work. I hope that British Leyland will not produce an Austin-Morris car—and I say this with the greatest respect to my hon. Friend the Member for Birmingham, Northfield (Mr. Carter) who represents Austin—or a Rover car, with a Jaguar badge on the front, because that will not work.
      I return to the subject of the wisdom of fully integrating the quality car parts of British Leyland with the volume car parts. I apologise for enmeshing my hon. Friend the new Under-Secretary in the details of the car industry so soon after his appointment but my next question is where British Leyland is to produce its sports cars. I declare an interest as an MG owner. I am not particularly convinced by the great rash of publicity that is trying to persuade people to buy more MGs under the slogan "You can do it in a MG". [HON. MEMBERS: "Can you?"] You can in the GT version. [HON. MEMBERS: "What about the gear lever?"] In the automatic version. I am not entirely persuaded that British Leyland intends to maintain sports car production

      1125
      at Abingdon. Nor am I persuaded that British Leyland intends to maintain production of the Triumph Stag at the Triumph works at Coventry.
      What concerns me is that in future sports car production by British Leyland will be concentrated on Speke with the production of the Triumph Bullet in Liverpool. That may be welcome to my hon. Friends who represent Merseyside, but we should hear from my hon. Friend about the rationalisation and the centralisation upon which the changed management is now or should be embarking.
      My constituents in Coventry want to know what kind of production facilities we can expect to see concentrated there. My hon. Friend knows that at the moment British Leyland is not doing too well in the truck and bus division, although it is not doing too bady with its heavy truck range. No one seems to be keen to take the Leyland National bus. My hon. Friend must know that British Leyland intends to concentrate production on the Park Royal factory for its new National double decker. What concerns me is that unless we have some policy decisions fairly quickly about where British Leyland is to concentrate bus production it will be the buses of the Swedes and the Germans that we shall see on the roads of many more of our cities.
      I ask my hon. Friend to bear in mind the point of view of the municipal operators, the National Bus Company and the GLC, all of whom have to take some replacement decisions in the near future. I hope that he will be able to tell us something about the strategy of British Leyland in this direction, particularly about what it will do in future to produce standard single and double deckers.
      My constituents need some kind of assurance that the Jaguar Car Company, in particular, will not be too integrated with other parts of British Leyland. I hope that my hon. Friend will tell us something about where British Leyland intends to concentrate sports car production and where the company intends to concentrate its single and double decker bus production.
      I recognise that this Bill ought to pass through speedily because it is a Bill which will guarantee this country its own car
      1126
      industry for what I hope will be a long time.
      Mr. Nicholas Fairbairn: Unlike the hon. Member for Nuneaton (Mr. Huckfield) I do not have the privilege of representing one person employed in the car industry. But it should not be overlooked that this Bill involves every constituent in every constituency. Constituents are being asked to commit their money to this Bill. The extent to which they are being asked to do so should not be misunderstood. Although large in area—being 8,000 square miles—my constituency has only 35,000 constituents. Under this Bill, which, like all Bills involving large amounts of money, is short, they will be committed over the next eight years to raising £2,100,000 between them.
      Before any hon. Member overlooks that point he should make the same computation in respect of his own constituents and ask himself whether he is prepared to go home and tell his constituents what he has committed them to. This commitment is to be made on the basis of what I believe is a bad report. That report assumes a rate of inflation which neither the assurances of the Prime Minister nor the Treasury Bench, would cause me to regard as reliable. That is the basis of the Ryder Report.
      I come to this word "shareholder". It is a word hated by the Labour Party below the Gangway. But, by God, every single constituent of mine will become a shareholder in British Leyland, whether he likes it or not. They will not be able to restrict their investment and they will not receive even a controlled dividend from it.
      Mr. Peter Rost: Not a vote.
      Mr. Fairbairn: Yes, not a vote.
      When we talk about the great concept of democracy of those involved in industry, let us be clear that every person in the country will have to be an investor, and there will be no democracy for them about how much money they invest, what return they will get or what the company does.
      The second fallacy of this proposed investment on behalf of our constituents is that it is based on a report which involves

      1127
      itself in a concept which the House of Commons has for far too long assumed to be wise, namely, the concept of the shifting of blame or committee decisions. I find it strange that when the British Leyland company was politically created it was seen as reasonable, when it failed commercially, that one could bring together a small group of men who, in a few months, would produce a report which the House assumed to be total wisdom.
      I do not think that it is a good report, a reliable report or an accurate report, but for some reason the House always accepts the reports of those to whom it shifts political and commercial responsibility. Every time it does, so every time it gets it wrong. It is time that the House stopped taking the attitude that commercial responsibility can be shifted to a committee whose decisions it can accept with alacrity and whose results it assumes to be accurate. This is a false approach.
      I come to the immense and responsible matter of employment. I have the priviledge of serving on the Industry Bill Committee and I have heard many speeches on that matter, the most significant being that of the hon. Member for Bethnal Green and Bow (Mr. Mikardo). Nothing is more important to the dignity of the human being than that his employment should be an extension of his personality and a right of his existence. But nothing could be less likely to promote it than that an inefficient business should be allowed, by taking money from other people who are employed, to give a false manning to a bad company.
      I have seen no commitment by the management, unions or work force to the concept of making the company more efficient or making the jobs more intelligent and more fulfilling. A commitment of £1 million a day to be paid out of the pockets of other employed people will not, in the long run, guarantee the jobs of those employed. People will have to change their jobs unless this country is to commit itself to a political situation in which the employed remain for ever employed in an increasingly unviable industry or commitment. The message of the Bill seems to be that we shall take a badly organised and managed company, over-manned, inefficient and unattractive, and keep it as it is for ever at the expense
      1128
      of those who earn their livelihood in every other way.
      11.45 p.m.
      Let us relate the commitment of £265 million to reality. In our constituencies, it may be difficult for the noblest of charities, with the greatest effort, to raise £500. The Government own no money. We are committing the money of individual, human working people. We are not getting it out of the ground or issuing it from treasuries. We are extracting it from the efficient to give to the inefficient. [An HON MEMBER: "Printing it."] Printing it is just another way of demoting the salaries of those who earn.
      The Bill should not cross party political boundaries. I know that the Labour Party would like to think that it guarantees employment while we deny it——
      Mr. Huckfield: Hear, hear.
      Mr. Fairbairn: That is exactly what they like to imagine. But I believe that if one insists on anachronising society—[HON. MEMBERS: "What?"] I know that none of those who have been comprehensively educated will understand language—[HON. MEMBERS: "Cheap."] If hon. Members opposite do not want a relevant——
      Mr. J. W. Rooker: Get on with it.
      Mr. Fairbairn: If hon. Members do not want a relevant observation on their interruptions, they have the opportunity not to interrupt.
      Let us be clear what we are talking about. We are committing a vast amount of the money of individual human beings in order to ensure that a firm will not be competitive with any of its international competitors. We may decide to do that, but in the long run it will ensure that all those whom Labour Members pretend to care about will he infinitely more damaged.
      Mr. Rooker: Until the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) spoke, this debate had moved on from the hysterical meanderings of the hon. and learned Member for Solihull (Mr. Grieve) who, in an intervention was once again screaming at the top of his voice about suicidal

      1129
      strikes, singling out the workers at Cowley, who can be adequately defended from this side. But they do not need our defence. That of the former industrial relations manager at Cowley should be sufficient. Writing in The Guardian 10 days ago, Mr. Richardson, who was industrial relations manager from 1966 to 1970, was talking about the introduction of the Austin Maxi in 1969. Production lines were laid down, he said, to flow at a rate of assembly which could not be matched by the production of body panels and which was subsequently found to be at a higher rate than that at which engines could be manufactured. The mess that that created among the labour force was never overcome, however good the industrial relations.
      Those hon. Members who say that the Government are by implication not telling the truth about likely job losses in British Leyland are not doing justice to the Ryder Report. The hon. Member for Henley (Mr. Heseltine) said that there was not one sentence in the report that suggested that there would be any transfer or rationalisation of labour or loss of jobs. He knows that that is not true. The summary of the chapter headed "Production" reads:
      "(i) BL should reorganise its car manufacturing operations to provide for specialisation in body assembly work, power train and transmission or parts manufacture.
      (ii) The existing plants in the body assembly group should be engaged in all operations from receipt of stamped panels to final assembly of complete vehicles…
      (vii) BL should undertake an urgent programme to introduce plant layout."
      That passage should be coupled with the sentence which says that careful forward manpower planning will be needed, particularly in the areas where major rationalisation of production facilities is undertaken.
      It is all very well looking at those passages through the jaundiced eyes of the Opposition. However, looked at through the eyes of someone working in the industry, those words can be reinterpreted. My constituents, who are most affected, work in an old-fashioned British Leyland plant, where I once worked. There will be job losses. Anyone reading this report who does not think that British Leyland workers must move or lose their jobs is living in a fool's para-
      1130
      dise. The facts are in the report. It is not true to say that when the rationalisation takes place the Opposition will cry that the Government did not tell the truth, or that the Ryder Report did not tell the truth. It is all in the report.
      Some plants produce the body panels, weld them together, paint them and put the windows in, but they do not fit the engines or wheels. The bodies are transported 10 or 15 miles on the back of a lorry, six at a time. That must stop. Ryder will put a stop to that. The alternative will be either to put the engines in at the one factory, or not to assemble the paint and bodies at the factory where that work now takes place. The Ludlow plant will become a body pressing plant, or the assembly tracks will be moved from Longbridge, with the consequent loss of jobs. We cannot have it both ways.
      It is not true to say that the Ryder Report did not indicate that there would be job losses and job rationalisation. They will take place on a massive scale. Only someone reading the report through the jaundiced eyes of a politician would deny it.
      What will be the situation of outside directors on the new British Leyland board? We often hear about the contribution which outside directors can make to our great public companies. The name of Jim Slater appears on the list of outside directors of British Leyland. He has served on the board for years. What contribution has he made to British Leyland? Will he be reappointed as an outside director? I should be glad if the Under-Secretary would answer that question.
      Another point worth raising concerns the present state of industrial relations at British Leyland. We are supposed to see a clean sweep of management and a change in attitude. One example came to my attention at the weekend. At the Fisher Ludlow plant the management has constituted and, at long last, allowed a few trade unionists to sit on the joint consultative safety committee. The management has laid down all the rules in that plant, including how long the members will serve on the committee. There were no negotiations. This was a post-Ryder decision. If that is how British Leyland management intends to
      conduct itself at the local plants we are buying a pig in a poke.
      Mrs. Jill Knight: Less and less does this House do what the people want it to do. Let there be no misunderstanding about this. If a referendum were to take place on whether this Bill should be passed, the people of Britain would overwhelmingly reject it.
      We are talking about spending £265 million of taxpayers' money. We are discussing this matter without being in possession of all the necessary facts. Where is the company's circular? It is essential that the company's circular, under the Companies Act arrangements, should be made available. Where is it? It is certainly not in the Vote Office. It is rumoured that it is in draft, but if it is in draft why have we not had it for this debate? How can even the Government properly discuss this issue without it? There are many questions yet unanswered. What about the employees? How will the shareholder stand? At the moment they do not know whether they should stay in with the Government as a partner or sell out at the derisory sum offered.
      I am also gravely concerned at some of the things which are happening in the motor car industry. I have here a report from The Guardian of 20th May pointing out that one senior British Leyland executive last year received payments totalling £2,400 from the company which supplied Jaguar with more than £600,000 of assembly equipment. He worked at that time for Jaguar. He now works for British Leyland.
      Mr. Leslie Huckfield: On a point of order. Is it in order for the hon. Lady to discuss a matter which is now before the courts?
      The Chairman (Mr. George Thomas): My attention was for the moment taken up with other matters. The hon. Lady will have heard the point of order, and she will know that we are discussing the Question, "That the clause stand part of the Bill."
      Miss Knight: It is all right, Mr. Thomas. I have finished discussing the point. It is scandalous and ought to have been checked by the Government
      1132
      that the Jaguar management and unions—I hold no brief for either of them—have connived together in a scheme which will cheat the taxpayer because the management have agreed with the union that they will form the men's work pattern so that, working full time, they can still draw unemployment pay. This is an appalling scandal, and I put down a Parliamentary Question about it and asking that such cheating—[HON. MEMBERS: "Oh!"] It is always very revealing that hon. Members opposite think it is very amusing that people should cheat the taxpayers. I do not. I asked the Minister to look into this practice and to stop it, and the answer that I received was a curt "No".
      Many things are wrong with the British car industry. I have mentioned merely two. But let the Government not for one moment imagine that what they are trying to do tonight has the support of the people of Britain.
      The Under-Secretary of State for Industry (Mr. Gerald Kaufman): I thank the hon. Member for Henley (Mr. Heseltine) and others for their kind welcome to me in my new Department.
      I confess that listening to the hon. Member for Henley when he accused the Government, in this Bill, of entering into an open-ended and undisciplined commitment of the taxpayers' resources, I thought that I was back in my old Department, listening to the Leader of the Opposition talking about 9½ per cent. mortgages.
      It is the Opposition who have blazed this trail that we are following tonight. The hon. Member for Henley quoted Mr John Barber on the subject of retrenchment. Retrenchment is not an issue in this debate. It may be an issue in so far as the Opposition are demanding it of us. What we are calling for and what the Ryder team call for in their report is rationalisation based on new investment.
      The hon. Gentleman said that the assumptions for the future in the Ryder Report were at odds with the past record of British Leyland. But that past record, as my hon. Friend the Member for Coventry, North-West (Mr. Edelman) has pointed out, is based upon a sorry record of under-investment. As the Ryder team point out in chapter 9 of the Report, one

      1133
      of the main reasons why British Leyland workers produce less than workers at Fiat or Volkswagen is that so much less has been spent by British Leyland on new plant and equipment. One of the objectives of the new regime is to increase investment.
      Mr. Rost: Will the hon. Gentleman give way?
      Mr. Kaufman: I will not give way.
      Mr. Rost Mr. Rost rose——
      The Chairman: Order. We cannot have two hon. Gentlemen on their feet at the same time.
      12 midnight.
      Mr. Kaufman: The hon. Gentleman had the opportunity to take part in the debate had he wanted to do so. He had the opportunity of intervening in the speeches of his hon. Friends or mine.
      The hon. Member for Henley claimed that no one accepted the strategy that had been put forward, but the company and the workers both accept the strategy and a great deal of work is in hand to implement it.
      Substantial progress has been made in the preliminary work needed to approach the shareholders for approval of the scheme. The court has now directed that meetings of shareholders should be held, and these are expected to take place on 14th July. A document giving full details of the proposed scheme, together with a covering letter from the board of British Leyland, is being despatched to all shareholders and convertible unsecured loan stockholders on 18th June.
      The company has continued to make progress to bring about the re-organisation of the business along the lines proposed by the Ryder Report. Preparatory work on the scheme of arrangement is at an advanced stage and, as I shall be pointing out to my hon. Friend the Member for Coventry, North-West, who raised the matter, the Ryder Report proposals for involvement of the work force in decision-making processes have been the subject of preliminary discussions.
      Mr. Heseltine: As the hon. Gentleman says the work force has accepted the strategy, can he fill in details of how many redundancies there will be this
      1134
      year, next year and the year after on the basis of which the work force accepted the strategy?
      Mr. Kaufman: I am coming to that very point. The hon. Gentleman has been in correspondence with the Secretary of State on this matter.
      The hon. Member for Henley claimed that this scheme had been forced on British Leyland and on the Ryder team by the Government, but the Ryder team makes clear in its report that it examined all possibilities before arriving at the scheme it put forward.
      The hon. Gentleman also suggested that the money being employed for investment and loans for British Leyland could be used more profitably in some other way, but that would mean doing away with British Leyland and creating a hole one would then try to fill. But one would not have the same amount of money.
      The Opposition Members who claim that the best solution would be to let British Leyland or Austin-Morris go to the wall do not take into account the massive sums of redundancy pay that would be necessary and the social cost of allowing British Leyland or Austin-Morris to go to the wall. They seem to assume there would be gross sums rather than net sums available for investment.
      Nor do they take into account the massive effect on our balance of payments of letting British Leyland or Austin-Morris go under. This was one of the main reasons advanced by the Prime Minister for the Government's action over British Leyland. The company's direct exports in 1973–74 were worth £485 million. There would also be a very large flood of imports sucked in to fill the vacuum created by the failure of British Leyland.
      The hon. Member for Henley has asked about possible redundancies and he was supported by the hon. Member for Bromsgrove and Redditch (Mr. Miller). But the hon. Member for Henley has totally misunderstood what the rationalisation will bring about. He seems to assume that rationalisation and money saving automatically means redundancies. Indeed, he wrote a most learned and complicated letter to my right hon. Friend the Secretary of State for Industry, in which he set out various computations,

      1135
      based on even reduction, variable reduction and parabolic reduction, of what saving would mean in terms of redundancies.
      But my right hon. Friend the Secretary of State clarified the situation—and totally undermined what the hon. Gentleman was putting forward—when he said in his reply to the hon. Gentleman,
      "I am somewhat surprised that you have attempted to convert all the effects of improvements in efficiency envisaged in paragraph 14.11 into redundancies. It is quite clear from the sentence in the report that you have quoted that redundancies are not the only path to increased efficiency envisaged by the Teams: mobility and interchangeability of labour is involved here too".
      My right hon. Friend concluded,
      "I can only say that it is quite incorrect to suppose that the total saving of £400 million can be simply converted into an equivalent number of net redundancies. Sir Don Ryder has said publicly that if British Leyland achieve the sales targets and increased efficiency envisaged in the report, he expects the company's total manpower requirements in the early 1980s to be broadly similar to present employment levels".
      Mr. Heseltine: As the Under-Secretary will be insisting, under the Industry Bill which he will be recommending to the House, that every British company explains precisely the number of people it employs in any given three-year period, will he now say what is the number of people who will be employed by British Leyland over the next three years and what it amounts to in the Ryder Report, and explain clearly the basis upon which the calculations amounting to £400 million-worth of savings are made?
      Mr. Kaufman: My right hon. Friend has replied very fully to the hon. Gentleman's invalid calculations. As for the future of British Leyland, this is clearly a matter for the British Leyland board. We are only now starting out upon this path. The company has not yet been set up. The hon. Gentleman is asking for impossible information at this stage, and he knows that very well.
      Mr. Heseltine: I have listened to the hon. Gentleman's refusal to give the information which will be demanded from every major British company under the Industry Bill. Will the hon. Gentleman now say that if a British company replies to his right hon. Friend in the same terms as those in which the hon. Gentleman
      1136
      has replied to the Committee, it will be deemed to be sufficient excuse for not providing the facts which the Industry Bill gives his Department the ability to demand?
      Mr. Kaufman: The hon. Gentleman knows very well that that is an invalid question. He knows the pitfalls of trying to tell the House one thing and then having to put it right later. From personal experience, the hon. Gentleman is very well aware of those pitfalls, and the necessity to apologise to the House if one misinforms it deliberately.
      Mr. Tim Renton: Will the hon. Gentleman give way?
      Mr. Kaufman: No, I have given way several times.
      Mr. Renton Mr. Renton rose——
      The Chairman: Order. If the Minister is not giving way——
      Mr. Renton: He has done so. The Minister must have given way as soon as I turned my head.
      The Chairman: I should have turned it sooner.
      Mr. Renton: I apologise, Mr. Thomas. I thought that the Under-Secretary had given way. Perhaps from the back benches I could help the Under-Secretary on the point that my hon. Friend the Member for Henley (Mr. Heseltine) has been making. Is it not a fact that within the motor industry most people believe that 50,000 jobs at British Leyland will have to go if British Leyland is to get anywhere near continental levels of efficiency?
      Mr. Kaufman: The hon. Gentleman is retailing rumour second hand. The Ryder Report is backed by a great deal of background information and I prefer the word of Ryder and his experts to that of the hon. Gentleman.
      The hon. and learned Member for Solihull (Mr. Grieve) waxed eloquent on strikes, but the Ryder Report states clearly that the team did not subscribe to the view that all the ills of the company should be laid at the door of any kind of strike-prone or work-shy labour force. The report pointed out the handicap of operating with plant and equipment older than that in comparable firms. My hon.

      1137
      Friend the Member for Nuneaton (Mr. Huckfield) described that situation graphically. The report reads:
      "it is both essential and feasible to look for…more realistic manning levels and more mobility and interchangeability of labour."
      Later it reports:
      "The improvement of productivity will inevitably mean a gradual reduction in the number of workers required to produce a given number of vehicles…".
      Of course, that is the position.
      My hon. Friend the Member for Coventry, North-West (Mr. Edelman) and the hon. Member for Colne Valley (Mr. Wainwright) asked valid questions about the purchase of machine tools. We very much hope that our machine tool manufacturers will take the utmost advantage of the great opportunities presented by British Leyland's intention to equip itself with new machine tools. Meetings with the representatives of the machine tool industry have already taken place. From what I hear of the outcome of those meetings, the outlook is promising. What we want to do is precisely what my hon. Friend and the hon. Gentleman have asked for—namely, a phased operation so that the machine tool industry can get itself ready to respond in a phased manner to the needs of British Leyland as it expands.
      Mr. Edelman: I welcome my hon. Friend's answer, but is it the intention to set up some ongoing constitutional committee, as between the motor industry and the machine tool industry, so as to keep in being a continuing dialogue?
      Mr. Kaufman: Without guaranteeing a constitutional framework, I can assure my hon. Friend that the ongoing dialogue for which he asks will be—[Interruption.] Conservative Members below the Gangway would do a great deal better telling us about civilisation rather than having an ongoing dialogue. That kind of relationship is needed if what my hon. Friend and the hon. Member for Colne Valley rightly ask for is to be brought about.
      It has been implied that the reorganisation which was being proposed disregarded the wishes of British Leyland. Lord Stokes, in the letter which he sent out on 1st May to his shareholders, made it quite clear that a high proportion of the conclusions and recommendations of the Ryder Report are not regarded as in
      1138
      any way controversial. Lord Stokes said that they were derived from the corporation's existing plans and from various contributions made to the team by management.
      The hon. Member for Henley implied that the report did not refer to the need for rationalisation. However, as my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) pointed out, the report refers to rationalisation in various places. I refer the hon. Gentleman to paragraphs 8.6, 8.7 and 8.10.
      My hon. Friend the Member for Coventry, North-West rightly stressed the need for the implementation of the industrial democracy and industrial participation that is mentioned in the report. Mr. Harry Urwin, the Assistant General Secretary of the Transport and General Workers' Union, served on the Ryder team. He made it clear again and again in his evidence to the Trade and Industry Sub-Committee of the Expenditure Committee that the machinery proposed, while not ideal from his point of view, was the best of its type operating in any company in British industry.
      12.15 a.m.
      I assure my hon. Friend that the Ryder Report identifies "Progress towards industrial democracy" as the most crucial factor in improving industrial relations at British Leyland and creating the conditions for improved productivity. The Ryder report made specific proposals for new consultative arrangements between the management and the work force.
      The proposals have since been discussed at a meeting between Sir Don Ryder and my right hon. Friend the Secretary of State for Energy and a joint committee of officials from the CSEU and shop stewards from British Leyland. At this meeting the union side expressed its keenness to begin discussions with the company about the new arrangements. An initial meeting between management and a small group of work force representatives has already taken place within the company to discuss these proposals, and further discussions are planned for the near future.
      In reply to my hon. Friend's question about monitoring arrangements, I refer him to the statement made by my right hon. Friend the Prime Minister on 24th April.

      1139
      My hon. Friend the Member for Nuneaton (Mr. Huckfield), was, rightly, concerned about the future of Jaguar. As he said, he has been in correspondence with my right hon. Friend the Prime Minister, and I trust that he was satisfied with the assurance he received. I am in a position to add to the assurances given by my right hon. Friend to my hon. Friend the Member for Nuneaton.
      The Ryder Report recommends that British Leyland Cars should be run as a single profit centre. The report also stressed the need to make the most effective use of all the design, engineering, manufacturing and marketing resources of the new car company. However, Ryder considered that this structure need not detract from the distinctive product identities of the specialist cars.
      British Leyland has adopted this structure, and the new managing director for British Leyland Cars, Mr. Derek Whittaker, has been appointed. He has given a good deal of attention to finding the most efficient form of organisation and has publicly stated that he is determined that Jaguar should retain its pre-eminence and reputation for high quality and distinction. He has also said that the recently announced decisions to make Jaguar Engineering report directly to him, and to set up a "Jaguar Operating Committee" will play a vital part in maintaining the Jaguar image and reputation.
      We have listened to a number of speeches from the Opposition benches tonight, and it is perfectly clear that there has emerged from those speeches no coherent policy on this issue. In the Second Reading debate, the right hon. Member for Down, South (Mr. Powell) and the hon. Members for Cirencester and Tewkesbury (Mr. Ridley) and Wolverhampton, South-West (Mr. Budgen) put-forward a logical but disastrous alternative to the Government's policy—the alternative of allowing British Leyland to slide into bankruptcy. They speak only for themselves.
      The right hon. Member for Leeds, North-East (Sir K. Joseph) in a speech he made at the week-end appeared to agree with them when he said:
      "All ideological expenditures must be stopped sine die: nationalisation plans for British Leyland".
      1140
      One must read the message carefully, because the right hon. Gentleman went on to say:
      "The message must be got over: no more wholesale rescues."
      Like his hon. Friend the Member for Henley—who advised workers in Cowley to take up bucolic pursuits in the Chilterns—the right hon. Member dared not propose closing down the whole concern because it would be too serious a blow for the economy, too serious a blow to Tory prospects in marginal seats. Like the Leader of the Opposition, he wants to avoid having a policy at all. The dangers to the Opposition of not having a policy in this matter were validly pointed out by the right hon. Member for Sidcup (Mr. Heath) in a speech in which he warned his right hon. Friends the Leader of the Opposition and the hon. Member for Leeds, North-East that people are no longer prepared to be the passive victims of soulless textbook theory, seeing their living standards suddenly cut or finding themselves jobless. He, at least, has had to administer these matters and he knows the problems.
      Our policy, unlike that of the Opposition, is clear. It is to save British Leyland as a national asset, an asset in terms of jobs, in terms of regional policy and in terms of the balance of payments. This is a rescue operation, but it is not merely a negative operation. It is a positive attempt to fashion a new, more efficient, more productive, more prosperous concern, with maximum participation by the working force. This is not pessimistic Toryism. It is constructive Socialism.
      12.20 a.m.
      Mr. John Peyton: There was a time during this debate when I was a little nervous that we were not going to hear from the Government. Now I am not sure that I would not have been right to be content to live with my apprehensions and that it would not have been better not to hear from the Government.
      Although the Under-Secretary of State is to be congratulated on his new appointment, and to be welcomed at the Dispatch Box in it, he nevertheless deserves sympathy in having been landed with this unpleasant job tonight. The Secretary of State is to be even more congratulated on his discretion in staying

      1141
      away. Obviously there was very little for him to say.
      Perhaps I can help the Under-Secretary of State on the question with which he was not able to deal—on the redundancies in particular. It was put by my hon. Friend the Member for Henley (Mr. Heseltine). Mr. Pat Lowry, the industrial relations director of British Leyland, who is retaining his job, is even more positive. He has said:
      "We have to persuade people, whether there is a Ryder Report or not, that the need to reduce manning levels is absolutely paramount."
      He went on to say that there was a danger that, with the large amounts of capital that the Government were investing, many employees would think they had arrived at Eldorado. So the Government have not changed anything very basically.
      As my hon. Friend pointed out, large sums of public money are involved. We greatly regret that the Government business managers should have seen fit to push this proposal through at this late hour of the night, with only an Under-Secretary here to support it. I do not want to go into that subject at the moment, but the way the House is being treated at this time by the Government—for instance, in the proceedings on the Community Land Bill—is an outrage and a current indication of the Government's scant respect for Parliament. I know there must be limits to your patience, Mr. Thomas, and you know that there are virtually no limits to my tolerance, so, although I am entitled to make that point, I shall not press it any further.
      What we are complaining of tonight is that the Government, in their handling of this matter, have been guilty of providing a deficiency of information, of a deficiency of courtesy, of a deficiency of fairness, and of a deficiency of prudence.
      Mr. Heifer: The right hon. Gentleman is suffering from a deficiency of argument.
      Mr. Peyton: Deficiency of argument is something on which the hon. Member for Liverpool, Walton (Mr. Heller) has long been an expert. He has long been good at covering up his own deficiency
      1142
      of argument. If he likes to press the point tonight, he can do so, but it will be at the price of keeping his right hon. and hon. Friends out of their beds.
      On my first complaint—of deficiency of information—I am informed that the Secretary of State has in his possession now a draft circular, addressed to British Leyland shareholders, which gives fuller information that is yet available to this Committee. It the hon. Under-Secretary of State can deny it, I am only too happy to give way so that he can do so now.
      Mr. Kaufman: There is certainly a letter that is being sent out to shareholders of British Leyland, but my reading of it—and I have read it—[Laughter.] It is dated later this week, which is why I have not—[Interruption.] I have read the letter, and it very closely parallels the information in the Ryder Report. It also offers certain advice to shareholders. But it would be highly inappropriate for me to quote in the Chamber a document which will not be published until later this week. It would be most discourteous, unfair and wrong. I am sure that the right hon. Gentleman will accept that.
      Mr. Peyton: I had not thought too much of this point until the Under-Secretary rose to deal with it. The fact that the letter is dated later this week is a matter of no importance to the Committee. It would have been of interest to all of us to have a chance to see the information it contained. If it means anything at all, that letter must deal with the way in which large sums of public money are to be handled. The Government are perhaps being less than—[An HON. MEMBER: "Frank?"] I think that is the word, but I was going to use a rougher word. The Government are falling short of the standards which we are entitled to expect, in not making such a letter available before the debate.
      I also complained about a deficiency of courtesy. I wonder whether the management of British Leyland has been treated with the courtesy to which, as human beings, it is entitled. My information is that it was given the expurgated version of the report at about the same time as its contents were made available to the House and the Press.

      1143
      I also complained that there had been a deficiency of fairness. In this respect I wonder whether Sir Don Ryder—[An HON. MEMBER: "Lord Ryder."] Sir Don Ryder has not yet informed us what exact nomenclature he will adopt. I wonder whether he and his colleagues who have sat in judgment upon the management of British Leyland would have been happy to be treated in this way themselves. It is very hard for people who have the burdens carried by the managements of immense industrial enterprises to be condemned upon the basis of a report the full version of which they have not yet seen.
      The expurgated version that we have before us was rightly described by my hon. Friend the Member for Arundel (Mr. Marshall) as containing judgments which were too shallow. It would have been better if the report had been both more blunt and more honest.
      There are some very important omissions from the version of the report which is before us. Chapter 2, "Prospects for the industry", is omitted. Chapter 5, the "Product range and markets", is aslo left out, although it is true that reference is made to the prospects in the summary, in which paragraphs 5 and 6 deal with the marketing prospects for cars, paragraph 5 dealing with the home market and paragraph 6 with the overseas market. These are very short paragraphs dealing with immensely complicated matters. The Committee would be well justified in concluding that the information given to it is of the most superficial and meagre kind possible to imagine.
      The management has been greatly chastised on the basis of a report it has not seen. Only the most delicate hints have been given to the fact that all is not well on the industrial relations side—and it is important that we should make this point quite clearly. Although these enormous sums of Government money will be applied to this company over a fairly long future, nothing has been discussed, nothing demanded and certainly nothing offered by the trade union side.
      1144
      No arrangement has been made for monitoring the progress of the company with the backing of this huge investment. The interesting remark by the hon. Member for Coventry, North-West (Mr. Edelman), who could manage to say only that it was essential to have some sort of adequate monitoring or we should be faced with a Concorde situation, is the kind of vagueness we are living with in this quite unacceptable proposal.
      The right hon. Member for Bristol, South-East (Mr. Benn), who was until recently the Secretary of State for Industry and is now the Secretary of State for Energy, has been fond of making the point that the nationalised industries are responsible to Ministers who are answerable to Parliament. Anybody who has been in this House for a number of years must know that the process of making nationalised industries accountable to Parliament is one of the thinnest and hollowest farces known to our democratic procedures. No one on either side of the Committee is entitled to take any comfort from the reflection that there will be some means from time to time of challenging Ministers as to progress. It is highly unlikely, judging by past experience, that Ministers or their Departments will be capable of exercising any effective control until matters have gone beyond the stage at which they can be put right.
      We have been challenged to say what we would do. We never would have put Austin-Morris together with Leyland, Rover Triumph and the rest. That was a very bad mistake. There is now a great deal to be said for separating them. The Government have far more information than we do. I greatly regret that they should have sought the assistance of Sir Don Ryder, who has produced a report which it seems to me is superficial and thin in its recommendations and unfair to the people it criticises and which pays very little regard to the public interest and the enormous sums which are involved at a time when the country can hardly be said to be at the peak of its prosperity.
      Question put, That the clause stand part of the Bill:—
      The Committee divided: Ayes 285, Noes 242.

      Division No. 235.]

      AYES

      [12.34 a.m.

      Allaun, Frank

      Fernyhough, Rt Hon E.

      McElhone, Frank

      Anderson, Donald

      Fitch, Alan (Wigan)

      MacFarquhar, Roderick

      Archer, Peter

      Flannary, Martin

      McGuire, Michael (Ince)

      Armstrong, Ernest

      Fletcher, Raymond (Ilkeston)

      Mackenzie, Gregor

      Ashton, Joe

      Fletcher, Ted (Darlington)

      McMillan, Tom (Glasgow C)

      Atkins, Ronald (Preston N)

      Ford, Ben

      McNamara, Kevin

      Atkinson, Norman

      Forrester, John

      Madden, Max

      Bagier, Gordon A. T.

      Fowler, Gerald (The Wrekin)

      Magee, Bryan

      Bain, Mrs Margaret

      Freeson, Reginald

      Mahon, Simon

      Barnett, Guy (Greenwich)

      Garrett, John (Norwich S)

      Mallalieu, J. P. W.

      Bates, Alt

      Garrett, W. E. (Walisend)

      Marks, Kenneth

      Bean, R. E.

      George, Bruce

      Marquand, David

      Benn, Rt Hon Anthony Wedgwood

      Gilbert, Dr John

      Marshall, Dr Edmund (Goole)

      Bennett, Andrew (Stockport N.)

      Ginsburg, David

      Marshall, Jim (Leicester S)

      Bidwell, Sydney

      Golding, John

      Meacher, Michael

      Bishop, E. S.

      Gould, Bryan

      Mellish, Rt Hon Robert

      Blenkinsop, Arthur

      Gourlay, Harry

      Mikardo, Ian

      Boardman, H.

      Graham, Ted

      Millan, Bruce

      Booth, Albert

      Grant, George (Morpeth)

      Miller, Dr M. S. (E Kilbride)

      Boothroyd, Miss Betty

      Grant, John (Islington C)

      Mitchell, R. C. (Solon, Itchen)

      Bottomley, Rt Hon Arthur

      Grocott, Bruce

      Molloy, William

      Boyden, James (Bish Auck)

      Hamilton, James (Bothwell)

      Morris, Alfred (Wythenshawe)

      Bradley, Tom

      Hamilton, W. W. (Central Fife)

      Morris, Charles R. (Openshaw)

      Bray, Or Jeremy

      Hardy, Peter

      Morris, Rt Hon J. (Aberavon)

      Brown, Robert C. (Newcastle W)

      Harper, Joseph

      Moyle, Roland

      Brown, Ronald (Hackney S)

      Harrison, Walter (Wakefield)

      Mulley, Rt Hon Frederick

      Buchan, Norman

      Hart, Rt Hon Judith

      Murray, Rt Hon Ronald King

      Buchanan, Richard

      Hatton, Frank

      Newens, Stanley

      Butler, Mrs Joyce (Wood Green)

      Hayman, Mrs Helena

      Noble, Mike

      Callaghan, Jim (Middleton & P)

      Healey, Rt Hon Denis

      Ogden, Eric

      Campbell, Ian

      Heffer, Eric S.

      O'Halloran, Michael

      Canavan, Dennis

      Henderson, Douglas

      O'Malley, Rt Hon Brian

      Cant, R. B.

      Horam, John

      Orbach, Maurice

      Carmichael, Neil

      Howell, Denis (B'ham, Sm H)

      Ovenden, John

      Carter, Ray

      Hoyle, Doug (Nelson)

      Owen, Dr David

      Carter-Jones, Lewis

      Huckfield, Les

      Padley, Walter

      Cartwright, John

      Hughes, Rt Hon C. (Anglesey)

      Palmer, Arthur

      Clemitson, Ivor

      Hughes, Mark (Durham)

      Park, George

      Cocks, Michael (Bristol S)

      Hughes, Robert (Aberdeen N)

      Parker, John

      Coleman, Donald

      Hughes, Roy (Newport)

      Parry, Robert

      Conlan, Bernard

      Irvine, Rt Hon Sir A. (Edge Hill)

      Pendry, Tom

      Corbett, Robin

      Irving, Rt Hon S. (Dartford)

      Perry, Ernest

      Cox, Thomas (Tooting)

      Jackson, Colin (Brighouse)

      Phipps, Dr Colin

      Craigen, J. M. (Maryhill)

      Jackson, Miss Margaret (Lincoln)

      Prentice, Rt Hon Reg

      Crawford, Douglas

      Janner, Greville

      Prescott, John

      Crawshaw, Richard

      Jay, Rt Hon Douglas

      Price, C. (Lewisham W)

      Crosland, Rt Hon Anthony

      Jeger, Mrs Lena

      Price, William (Rugby)

      Cryer, Bob

      Jenkins, Hugh (Putney)

      Radice, Giles

      Cunningham, G. (Islington S)

      Jenkins, Rt Hon Roy (Stechford)

      Rees, Rt Hon Merlyn (Leeds S)

      Dalyell, Tam

      John, Brynmor

      Richardson, Miss Jo

      Davidson, Arthur

      Johnson, James (Hull West)

      Roberts, Albert (Normanton)

      Davies, Bryan (Enfield N)

      Johnson, Walter (Derby S)

      Roberts, Gwilym (Cannock)

      Davies, Denzil (Llanelli)

      Jones, Alec (Rhondda)

      Robertson, John (Paisley)

      Davies, Ifor (Gower)

      Jones, Barry (East Flint)

      Roderick, Caerwyn

      Deakins, Eric

      Jones, Dan (Burnley)

      Rodgers, George (Chorley)

      Dean, Joseph (Leeds West)

      Judd, Frank

      Rodgers, William (Stockton)

      de Freitas, Rt Hon Sir Geoffrey

      Kaufman, Gerald

      Rooker, J. W.

      Delargy, Hugh

      Kelley, Richard

      Roper, John

      Dell, Rt Hon Edmund

      Kerr, Russell

      Rose, Paul B.

      Dempsey, James

      Kilroy-Silk, Robert

      Ross, Rt Hon W. (Kilmarnock)

      Doig, Peter

      Kinnock, Neil

      Rowlands, Ted

      Dormand, J. D.

      Lamble, David

      Ryman, John

      Douglas-Mann, Bruce

      Lamborn, Harry

      Sandelson, Neville

      Duffy, A. E. P.

      Lamond, James

      Sedgemore, Brian

      Dunn, James A.

      Leadbitter, Ted

      Selby, Harry

      Dunnett, Jack

      Lee, John

      Shaw, Arnold (Ilford South)

      Eadie, Alex

      Lestor, Miss Joan (Eton & Slough)

      Sheldon, Robert (Ashton-u-Lyne)

      Edelman, Maurice

      Lewis, Arthur (Newham N)

      Shore, Rt Hon Peter

      Edge, Geoff

      Lewis, Ron (Carlisle)

      Silkln, Rt Hon John (Deptford)

      Edwards, Robert (Wolv SE)

      Lipton, Marcus

      Silkin, Rt Hon S. C. (Dulwich)

      Ellis, John (Brigg & Scun)

      Litterick, Tom

      Sillars, James

      Ellis, Tom (Wrexham)

      Lomas, Kenneth

      Silverman, Julius

      English, Michael

      Loyden, Eddie

      Skinner, Dennis

      Ennals, David

      Luard, Evan

      Small, William

      Evans, Gwynfor (Carmarthen)

      Lyon, Alexander (York)

      Smith, John (N Lanarkshire)

      Evans, Ioan (Aberdare)

      Lyons, Edward (Bradford W)

      Snape, Peter

      Evans, John (Newton)

      Mabon, Dr J. Dickson

      Spearing, Nigel

      Ewing, Harry (Stirling)

      McCartney, Hugh

      Spriggs, Leslie

      Faulds, Andrew

      MacCormick, Iain

      Stallard, A. W.

      Stewart, Donald (Western Isles)

      Urwin, T. W.

      Willey, Rt Hon Frederick

      Stewart, Rt Hon M. (Fulham)

      Varley, Rt Hon Eric G.

      Williams, Alan (Swansea W)

      Stott, Roger

      Wainwright, Edwin (Dearne V)

      Williams, Alan Lee (Hornch'ch)

      Strang, Gavin

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

      Williams, Rt Hon Shirley (Herford)

      Strauss, Rt Hon G. R.

      Walker, Terry (Kingswood)

      Williams, W. T. (Warrington)

      Summerskill, Hon Dr Shirley

      Ward, Michael

      Wilson, Gordon (Dundee E)

      Swain, Thomas

      Watkins, David

      Wilson, William (Coventry SE)

      Taylor, Mrs Ann (Bolton W)

      Watkinson, John

      Wise, Mrs Audrey

      Thomas, Dafydd (Merioneth)

      Watt, Hamish

      Woodall, Alec

      Thomas, Jeffrey (Abertillery)

      Wcetch, Ken

      Woof, Robert

      Thomas, Mike (Newcastle E)

      Weitzman, David

      Wrigglesworth, Ian

      Thomas, Ron (Bristol NW)

      Wollbeloved, James

      Young, David (Bolton E)

      Thompson, George

      Welsh, Andrew

      Thorne, Stan (Preston South)

      White, Frank R. (Bury)

      TELLERS FOR THE AYES:

      Tierney, Sydney

      White, James (Pollock)

      Mr. David Stoddart and

      Tinn, James

      Whitehead, Phillip

      Mr. Laurie Pavitt.

      Tomlinson, John

      Whitlock, William

      Torney, Tom

      Wigley, Dafydd

      NOES

      Adley, Robert

      Fox, Marcus

      Le Marchant, Spencer

      Aitken, Jonathan

      Fraser, Rt Hon H. (Stafford & St)

      Lester, Jim (Beeston)

      Alison, Michael

      Fry, Peter

      Lewis, Kenneth (Rutland)

      Amery, Rt Hon Julian

      Galbraith, Hon. T. G. D.

      Lloyd, Ian

      Arnold, Tom

      Gardiner, George (Reigate)

      Loveridge, John

      Atkins, Rt Hon H. (Spelthorne)

      Gardner, Edward (S Fylde)

      Luce, Richard

      Awdry, Daniel

      Gilmour, Sir John (East Fife)

      McCrindle, Robert

      Baker, Kenneth

      Glyn, Dr Alan

      Macfarlane, Neil

      Banks, Robert

      Godber, Rt Hon Joseph

      MacGregor, John

      Bell, Ronald

      Goodhart, Philip

      Macmillan, Rt Hon M. (Farnham)

      Bennett, Dr Reginald (Fareham)

      Goodhew, Victor

      McNair-Wilson, M. (Newbury)

      Berry, Hon Anthony

      Goodlad, Alastair

      McNair-Wilson, P. (New Forest)

      Biffen, John

      Gorst, John

      Madel, David

      Biggs-Davison, John

      Gow, Ian (Eastbourne)

      Marshall, Michael (Arundel)

      Blaker, Peter

      Gower, Sir Raymond (Barry)

      Marten, Neil

      Body, Richard

      Grant, Anthony (Harrow C)

      Mates, Michael

      Boscawen, Hon Robert

      Gray, Hamish

      Mather, Carol

      Boyson, Dr Rhodes (Brent)

      Grieve, Percy

      Maude, Angus

      Braine, Sir Bernard

      Grist, Ian

      Maudling, Rt Hon Reginald

      Brittan, Leon

      Grylls, Michael

      Mawby, Ray

      Brotherton, Michael

      Hall, Sir John

      Maxwell-Hyslop, Robin

      Brown, Sir Edward (Bath)

      Hall-Davis, A. G. F.

      Mayhew, Patrick

      Bryan, Sir Paul

      Hamilton, Michael (Salisbury)

      Meyer, Sir Anthony

      Buchanan-Smith, Alick

      Hampson, Dr Keith

      Mills, Peter

      Buck, Antony

      Hannam, John

      Miscampbell, Norman

      Budgen, Nick

      Harrison, Col Sir Harwood (Eye)

      Mitchell, David (Basingstoke)

      Bulmer, Esmond

      Harvie Anderson, Rt Hon Miss

      Moate, Roger

      Burden, F. A.

      Hastings, Stephen

      Molyneaux, James

      Carlisle, Mark

      Havers, Sir Michael

      Monro, Hector

      Carr, Rt Hon Robert

      Hawkins, Paul

      Montgomery, Fergus

      Chalker, Mrs Lynda

      Hayhoe, Barney

      Moore, John (Croydon C)

      Channon, Paul

      Heseltine, Michael

      More, Jasper (Ludlow)

      Churchill, W. S.

      Hicks, Robert

      Morgan-Giles, Rear-Admiral

      Clark, Alan (Plymouth, Sutton)

      Higgins, Terence L.

      Morrison, Charles (Devizes)

      Clark, William (Croydon S)

      Holland, Philip

      Morrison, Hon Peter (Chester)

      Clarke, Kenneth (Rushcliffe)

      Hooson, Emlyn

      Mudd, David

      Cockcroft, John

      Hordern, Peter

      Neave, Airey

      Cooke, Robert (Bristol W)

      Howe, Rt Hon Sir Geoffrey

      Nelson, Anthony

      Cope, John

      Howell, David (Guildford)

      Neubert, Michael

      Cormack, Patrick

      Hunt, John

      Newton, Tony

      Costain, A. P.

      Hurd, Douglas

      Nott, John

      Critchley, Julian

      Hutchison, Michael Clark

      Onslow, Cranley

      Crouch, David

      Irvine, Bryant Godman (Rye)

      Oppenheim, Mrs Sally

      Crowder, F. P.

      Irving, Charles (Cheltenham)

      Osborn, John

      Davies, Rt Hon J. (Knutsford)

      James, David

      Pattie, Geoffrey

      Dean, Paul (N Somerset)

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

      Percival, Ian

      Dodsworth, Geoffrey

      Jessel, Toby

      Peyton, Rt Hon John

      Douglas-Hamilton, Lord James

      Johnson Smith, G. (E. Grinstead)

      Pink, R. Bonner

      Drayson, Burnaby

      Jones, Arthur (Daventry)

      Powell, Rt Hon J. Enoch

      du Cann, Rt Hon Edward

      Jopling, Michael

      Prior, Rt Hon James

      Eden, Rt Hon Sir John

      Joseph, Rt Hon Sir Keith

      Pym. Rt Hon Francis

      Edwards, Nicholas (Pembroke)

      Kaberry, Sir Donald

      Raison, Timothy

      Elliott, Sir William

      Kershaw, Anthony

      Rathbone, Tim

      Eyre, Reginald

      Kimball, Marcus

      Rawlinson, Rt Hon Sir Peter

      Fairbairn, Nicholas

      King, Evelyn (South Dorset)

      Rees, Peter (Dover & Deal)

      Fairgrieve, Russell

      King, Tom (Bridgwater)

      Rees-Davies, W. R.

      Farr, John

      Kitson, Sir Timothy

      Renton, Rt Hon Sir D. (Hunts)

      Fell, Anthony

      Knight, Mrs Jill

      Renton, Tim (Mid-Sussex)

      Finsberg, Geoffrey

      Knox, David

      Rhys Williams, Sir Brandon

      Fisher, Sir Nigel

      Lamont, Norman

      Ridley, Hon Nicholas

      Fletcher, Alex (Edinburgh N)

      Lane, David

      Ridsdale, Julian

      Fletcher-Cooke, Charles

      Langford-Holt, Sir John

      Rifkind, Malcolm

      Fookes, Miss Janet

      Lawrence, Ivan

      Rippon, Rt Hon Geoffrey

      Fowler, Norman (Sutton C'f'd)

      Lawson, Nigel

      Roberts, Michael (Cardiff NW)

      1148

      1149

      Rodgers, Sir John (Sevenoaks)

      Sproat, Iain

      Tugendhat, Christopher

      Ross, Stephen (Isle of Wight)

      Stainton, Keith

      van Straubenzee, W. R.

      Rost, Peter (SE Derbyshire)

      Stanbrook, Ivor

      Vaughan, Dr Gerard

      Royle, Sir Anthony

      Stanley, John

      Viggers, Peter

      St. John-Stevas, Norman

      Steel, David (Roxburgh)

      Wainwright, Richard (Colne V)

      Scott, Nicholas

      Steen, Anthony (Wavertree)

      Wakeham, John

      Shaw, Giles (Pudsey)

      Stewart, Ian (Hitchin)

      Wall, Patrick

      Shelton, William (Streatham)

      Stokes, John

      Walters, Dennis

      Shepherd, Colin

      Stradling Thomas, J.

      Warren, Kenneth

      Shersby, Michael

      Tapsell, Peter

      Weatherill, Bernard

      Silvester, Fred

      Taylor, R. (Croydon NW)

      Wells, John

      Skeet, T. H. H.

      Taylor, Teddy (Cathcart)

      Whitelaw, Rt Hon William

      Smith, Cyril (Rochdale)

      Tebbit, Norman

      Wiggin, Jerry

      Smith, Dudley (Warwick)

      Temple-Morris, Peter

      Young, Sir G. (Ealing, Acton)

      Speed, Keith

      Thatcher, Rt Hon Margaret

      Spence, John

      Thomas, Rt Hon P. (Hendon S)

      TELLERS FOR THE NOES:

      Spicer, Jim (W Dorset)

      Townsend, Cyril D.

      Mr. Adam Butler and

      Spicer, Michael (S Worcester)

      Trotter, Neville

      Mr. Cecil Parkinson.

      Question accordingly agreed to.
      Clause 1 ordered to stand part of the Bill.
      Clause 2 ordered to stand part of the Bill.
      Bill reported, without amendment.
      Motion made, and Question put, That the Bill be now read the Third time:—
      The House divided: Ayes 284, Noes 239.

      Division No. 236.]

      AYES

      [12.50 a.m.

      Allaun, Frank

      Deakins, Eric

      Heifer, Eric S.

      Anderson, Donald

      Dean, Joseph (Leeds West)

      Henderson, Douglas

      Archer, Peter

      de Freitas, Rt Hon Sir Geoffrey

      Horam, John

      Armstrong, Ernest

      Delargy, Hugh

      Howell, Denis (B'ham, Sm H)

      Ashton, Joe

      Dell, Rt Hon Edmund

      Hoyle, Doug (Nelson)

      Atkins, Ronald (Preston N)

      Dempsey, James

      Huckfield, Les

      Atkinson, Norman

      Doig, Peter

      Hughes, Rt Hon C. (Anglesey)

      Bagier, Gordon A. T.

      Dormand, J. D.

      Hughes, Mark (Durham)

      Bain, Mrs Margaret

      Douglas-Mann, Bruce

      Hughes, Robert (Aberdeen N)

      Barnett, Rt Hon Joel (Heywood)

      Duffy, A. E. P.

      Hughes, Roy (Newport)

      Bates, Alf

      Dunn, James A.

      Irvine, Rt Hon Sir A. (Edge Hili)

      Bean, R. E.

      Dunnett, Jack

      Irving, Rt Hon S. (Dartford)

      Benn, Rt Hon Anthony Wedgwood

      Eadie, Alex

      Jackson, Colin (Brighouse)

      Bennett, Andrew (Stockport N.)

      Edelman, Maurice

      Jackson, Miss Margaret (Lincoln)

      Bidwell, Sydney

      Edge, Geoff

      Janner, Greville

      Bishop, E. S.

      Edwards, Robert (Wolv SE)

      Jay, Rt Hon Douglas

      Blenkinsop, Arthur

      Ellis, Tom (Wrexham)

      Jeger, Mrs Lena

      Boardman, H.

      English, Michael

      Jenkins, Hugh (Putney)

      Booth, Albert

      Ennals, David

      Jenkins, Rt Hon Roy (Slechford)

      Bottomley, Rt Hon Arthur

      Evans, Gwynfor (Carmarthen)

      John, Brynmor

      Boyden, James (Bish Auck)

      Evans, Ioan (Aberdare)

      Johnson, James (Hull West)

      Bradley, Tom

      Evans, John (Newton)

      Johnson, Walter (Derby S)

      Bray, Dr Jeremy

      Ewing, Harry (Stirling)

      Jones, Alec (Rhondda)

      Brown, Robert C. (Newcastle W)

      Faulds, Andrew

      Jones, Barry (East Flint)

      Brown, Ronald (Hackney S)

      Fernyhough, Rt Hon E.

      Jones, Dan (Burnley)

      Buchan, Norman

      Fitch, Alan (Wigan)

      Judd, Frank

      Buchanan, Richard

      Flannery, Martin

      Kaufman, Gerald

      Butler, Mrs Joyce (Wood Green)

      Fletcher, Raymond (Ilkeston)

      Kelley, Richard

      Callaghan, Jim (Middleton & P)

      Fletcher, Ted (Darlington)

      Kerr, Russell

      Campbell, Ian

      Ford, Ben

      Kilroy-Silk, Robert

      Canavan, Dennis

      Forrester, John

      Kinnock, Neil

      Cant, R B.

      Fowler, Gerald (The Wrekin)

      Lambie, David

      Carmichael, Neil

      Freeson, Reginald

      Lamborn, Harry

      Carter, Ray

      Garrett, John (Norwich S)

      Lamond, James

      Carter-Jones, Lewis

      Garrett, W. E. (Wallsend)

      Leaobitter, Ted

      Cartwright, John

      George, Bruce

      Lee, John

      Clemitson, Ivor

      Gilbert, Dr John

      Lestor, Miss Joan (Eton & Slough)

      Cocks, Michael (Bristol S)

      Ginsburg, David

      Lewis, Arthur (Newham N)

      Coleman, Donald

      Golding, John

      Lewis, Ron (Carlisle)

      Conlan, Bernard

      Gould, Bryan

      Lipton, Marcus

      Corbett, Robin

      Gourlay, Harry

      Litterick, Tom

      Cox, Thomas (Tooting)

      Grahamm, Ted

      Lomas, Kenneth

      Craigen, J. M. (Maryhill)

      Grant, John (Islington C)

      Loyden, Eddie

      Crawford, Douglas

      Grocott, Bruce

      Luard, Evan

      Crawshaw, Richard

      Hamilton, James (Bothwell)

      Lyon, Alexander (York)

      Crosland, Rt Hon Anthony

      Hamilton, W. W. (Central Fife)

      Lyons, Edward (Bradford W)

      Cryer, Bob

      Hardy, Peter

      Mabon, Dr J. Dickson

      Cunningham, G. (Islington S)

      Harper, Joseph

      McCartney, Hugh

      Dalyell, Tam

      Harrison, Walter (Wakefield)

      MacCormick, Iain

      Davidson, Arthur

      Hart, Rt Hon Judith

      McElhone, Frank

      Davies, Bryan (Enfield N)

      Hatton, Frank

      MacFarquhar, Roderick

      Davies Denzil (Llanelli)

      Hayman, Mrs Helene

      McGuire, Michael (Ince)

      Davies, Ifor (Gower)

      Healey, Rt Hon Denis

      Mackenzie, Gregor

      McMillan, Tom (Glasgow C)

      Price, William (Rugby)

      Thomas, Jeffrey (Abertillery)

      McNamara, Kevin

      Radice, Giles

      Thomas, Mike (Newcastle E)

      Madden, Max

      Rees, Rt Hon Merlyn (Leeds S)

      Thomas, Ron (Bristol NW)

      Magee, Bryan

      Richardson, Miss Jo

      Thompson, George

      Mahon, Simon

      Roberts, Albert (Normanton)

      Thorne, Stan (Preston South)

      Mallalieu, J. P. W.

      Roberts, Gwilym (Cannock)

      Tierney, Sydney

      Marks, Kenneth

      Robertson, John (Paisley)

      Tinn, James

      Marquand, David

      Roderick, Caerwyn

      Tomlinson, John

      Marshall, Dr Edmund (Goole)

      Rodgers, George (Chorley)

      Torney, Tom

      Marshall, Jim (Leicester S)

      Rodgers, William (Stockton)

      Urwin, T. W.

      Meacher, Michael

      Rooker, J. W.

      Varley, Rt Hon Eric G.

      Mellish, Rt Hon Robert

      Roper, John

      Wainwright, Edwin (Dearne V)

      Mikardo, Ian

      Rose, Paul B.

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

      Millan, Bruce

      Ross, Rt Hon W. (Kilmarnock)

      Walker, Terry (Kingswood)

      Miller, Dr M. S. (E Kilbride)

      Rowlands, Ted

      Ward, Michael

      Mitchell, R. C. (Soton, Itchen)

      Ryman, John

      Watkins, David

      Molloy, William

      Sandelson, Neville

      Watkinson, John

      Morris, Alfred (Wythenshawe)

      Sedgemore, Brian

      Watt, Hamish

      Morris, Charles R. (Openshaw)

      Selby, Harry

      Weetch, Ken

      Morris, Rt Hon J. (Aberavon)

      Shaw, Arnold (Ilford South)

      Weitzman, David

      Moyle, Roland

      Sheldon, Robert (Ashton-u-Lyne)

      Wellbeloved, James

      Mulley, Rt Hon Frederick

      Shore, Rt Hon Peter

      Welsh, Andrew

      Murray, Rt Hon Ronald King

      Silkin, Rt Hon John (Deptford)

      White, Frank R. (Bury)

      Newens, Stanley

      Silkln, Rt Hon S. C. (Dulwich)

      White, James (Pollock)

      Noble, Mike

      Sillars, James

      Whitehead, Phillip

      Ogden, Eric

      Silverman, Julius

      Whitlock, William

      O'Halloran, Michael

      Skinner, Dennis

      Wigley, Dafydd

      O'Malley, Rt Hon Brian

      Small, William

      Willey, Rt Hon Frederick

      Orbach, Maurice

      Smith, John (N Lanarkshire)

      Williams, Alan (Swansea W)

      Ovenden, John

      Snape, Peter

      Williams, Alan Lee (Hornch'ch)

      Owen, Dr David

      Spearing, Nigel

      Williams, Rt Hon Shirley (Hertford)

      Padley, Walter

      Spriggs, Leslie

      Williams, W. T. (Warrington)

      Palmer, Arthur

      Stallard, A. W.

      Wilson, Gordon (Dundee E)

      Park, George

      Stewart, Donald (Western Isles)

      Wilson, William (Coventry SE)

      Parker, John

      Stewart, Rt Hon M. (Fulham)

      Wise, Mrs Audrey

      Parry, Robert

      Stoddart, David

      Woodall, Alec

      Pavitt, Laurie

      Stott, Roger

      Woof, Robert

      Pendry, Tom

      Strang, Gavin

      Wrigglesworth, Ian

      Perry, Ernest

      Strauss, Rt Hon G. R.

      Young, David (Bolton E)

      Phipps, Dr Colin

      Summerskill, Hon Dr Shirley

      Prentice, Rt Hon Reg

      Swain, Thomas

      TELLERS FOR THE AYES:

      Prescott, John

      Taylor, Mrs Ann (Bolton W)

      Miss Betty Boothroyd and

      Price, C. (Lewisham W)

      Thomas, Dafydd (Merioneth)

      Mr. John Ellis.

      NOES

      Adley, Robert

      Cormack, Patrick

      Gower, Sir Raymond (Barry)

      Aitken, Jonathan

      Costain, A. P.

      Grant, Anthony (Harrow C)

      Alison, Michael

      Crltchley, Julian

      Gray, Hamish

      Amery, Rt Hon Julian

      Crouch, David

      Grieve, Percy

      Arnold, Tom

      Crowder, F. P.

      Grist, Ian

      Atkins, Rt Hon H. (Spelthorne)

      Davies, Rt Hon J. (Knutsford)

      Grylls, Michael

      Awdry, Daniel

      Dean, Paul (N Somerset)

      Hall, Sir John

      Baker, Kenneth

      Dodsworth, Geoffrey

      Hall-Davis, A. G. F.

      Banks, Robert

      Douglas-Hamilton, Lord James

      Hamilton, Michael (Salisbury)

      Bell, Ronald

      Drayson, Burnaby

      Hampson, Dr Keith

      Bennett, Dr Reginald (Fareham)

      du Cann, Rt Hon Edward

      Hannam, John

      Berry, Hon Anthony

      Eden, Rt Hon Sir John

      Harrison, Col Sir Harwood (Eye)

      Biffen, John

      Edwards, Nicholas (Pembroke)

      Harvie Anderson, Rt Hon Miss

      Biggs-Davison, John

      Elliott, Sir William

      Hastings, Stephen

      Blaker, Peter

      Eyre, Reginald

      Havers, Sir Michael

      Body, Richard

      Fairbairn, Nicholas

      Hawkins, Paul

      Boscawen, Hon Robert

      Fairgrieve, Russell

      Hayhoe, Barney

      Boyson, Dr Rhodes (Brent)

      Farr, John

      Heseltine, Michael

      Braine, Sir Bernard

      Fell, Anthony

      Hicks, Robert

      Brittan, Leon

      Finsberg, Geoffrey

      Higgins, Terence L.

      Brotherton, Michael

      Fisher, Sir Nigel

      Holland, Philip

      Brown, Sir Edward (Bath)

      Fletcher, Alex (Edinburgh N)

      Hooson, Emlyn

      Bryan, Sir Paul

      Fletcher-Cooke, Charles

      Hordern, Peter

      Buchanan-Smith, Alick

      Fookes, Miss Janet

      Howe, Rt Hon Sir Geoffrey

      Buck, Antony

      Fowler, Norman (Sutton C'f'd)

      Howell, David (Guildford)

      Budgen, Nick

      Fox, Marcus

      Hunt, John

      Bulmer, Esmond

      Fraser, Rt Hon H. (Stafford & St)

      Hurd, Douglas

      Burden, F. A.

      Fry, Peter

      Hutchison, Michael Clark

      Carlisle, Mark

      Galbraith, Hon. T. G. D.

      Irvine, Bryant Godman (Rye)

      Carr, Rt Hon Robert

      Gardiner, George (Reigate)

      James, David

      Chalker, Mrs Lynda

      Gardner, Edward (S Fylde)

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

      Channon, Paul

      Gilmour, Sir John (East Fife)

      Jessel, Toby

      Churchill, W. S.

      Glyn, Dr Alan

      Johnson Smith, G. (E. Grinstead)

      Clark, Alan (Plymouth, Sutton)

      Godber, Rt Hon Joseph

      Jones, Arthur (Daventry)

      Clark, William (Croydon S)

      Goodhart, Philip

      Jopling, Michael

      Clarke, Kenneth (Rushcliffe)

      Goodhew, Victor

      Joseph, Rt Hon Sir Keith

      Cockcroft, John

      Goodlad, Alastair

      Kaberry, Sir Donald

      Cooke, Robert (Bristol W)

      Gorst, John

      Kershaw, Anthony

      Cope, John

      Gow, Ian (Eastbourne)

      Kimball, Marcus

      1152

      1153

      Silvester, Fred

      Morgan-Giles, Rear-Admiral

      Smith, Cyril (Rochdale)

      King, Evelyn (South Dorset)

      Morrison, Charles (Devizes)

      Smith, Dudley (Warwick)

      King, Tom (Bridgwater)

      Morrison, Hon Peter (Chester)

      Speed, Keith

      Kitson, Sir Timothy

      Mudd, David

      Spence, John

      Knight, Mrs Jill

      Neave, Airey

      Spicer, Jim (W Dorset)

      Knox, David

      Nelson, Anthony

      Spicer, Michael (S Worcester)

      Lamont, Norman

      Neubert, Michael

      Sproat, Iain

      Lane, David

      Newton, Tony

      Stainton, Keith

      Langford-Holt, Sir John

      Nott, John

      Stanbrook, Ivor

      Lawrence, Ivan

      Onslow, Cranley

      Stanley, John

      Lawson, Nigel

      Oppenheim, Mrs Sally

      Steel, David (Roxburgh)

      Le Marchant, Spencer

      Osborn, John

      Steen, Anthony (Wavertree)

      Lester, Jim (Beeston)

      Pattie, Geoffrey

      Stewart, Ian (Hitchin)

      Lewis, Kenneth (Rutland)

      Percival, Ian

      Stokes, John

      Lloyd, Ian

      Peyton, Rt Hon John

      Stradling Thomas, J.

      Loveridge, John

      Pink, R. Bonner

      Tapsell, Peter

      Luce, Richard

      Powell, Rt Hon J. Enoch

      Taylor, R. (Croydon NW)

      McCrindle, Robert

      Prior, Rt Hon James

      Taylor, Teddy (Cathcart)

      Macfarlane, Neil

      Pym, Rt Hon Francis

      Tebbit, Norman

      MacGregor, John

      Raison, Timothy

      Temple-Morris, Peter

      Macmillan, Rt Hon M. (Farnham)

      Rathbone, Tim

      Thatcher, Rt Hon Margaret

      McNair-Wilson, M. (Newbury)

      Rawlinson, Rt Hon Sir Peter

      Thomas, Rt Hon P. (Hendon S)

      McNalr-Wilson, P. (New Forest)

      Rees, Peter (Dover & Deal)

      Townsend, Cyril D.

      Madel, David

      Rees-Davies, W. R.

      Trotter, Neville

      Marshall, Michael (Arundel)

      Renton, Rt Hon Sir D. (Hunts)

      Tugendhat, Christopher

      Marten, Neil

      Renton, Tim (Mid-Sussex)

      van Straubenzee, W. R.

      Mates, Michael

      Rhys Williams, Sir Brandon

      Vaughan, Dr Gerard

      Mather, Carol

      Ridley, Hon Nicholas

      Viggers, Peter

      Maude, Angus

      Ridsdale, Julian

      Wainwright, Richard (Coine V)

      Mawby, Ray

      Rifkind, Malcolm

      Wakeham, John

      Maxwell-Hysiop, Robin

      Rippon, Rt Hon Geoffrey

      Wall, Patrick

      Mayhew, Patrick

      Roberts, Michael (Cardiff NW)

      Walters, Dennis

      Meyer, Sir Anthony

      Rodgers, Sir John (Sevenoaks)

      Warren, Kenneth

      Mills, Peter

      Ross, Stephen (Isle of Wight)

      Weatherill, Bernard

      Miscampbell, Norman

      Rost, Peter (SE Derbyshire)

      Wells, John

      Mitchell, David (Basingstoke)

      Royle, Sir Anthony

      Whitelaw, Rt Hon William

      Moate, Roger

      St. John-Stevas, Norman

      Wiggin, Jerry

      Molyneaux, James

      Scott, Nicholas

      Young, Sir G. (Ealing, Acton)

      Monro, Hector

      Shaw, Giles (Pudsey)

      Montgomery, Fergus

      Shelton, William (Streatharn)

      TELLERS FOR THE NOES.

      Moore, John (Croydon C)

      Shepherd, Colin

      Mr. Adam Butler and

      More, Jasper (Ludlow)

      Shersby, Michael

      Mr. Cecil Parkinson.

      Skeet, T. H. H.

      Question accordingly agreed to.
      Bill read the Third time and passed.

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

      A19 (ROAD WORKS)
      1.2 a.m.
      Mr. Ian Wrigglesworth: The case which I want to bring before the House is one of the disruption and distress which have gone on in my constituency for a very long time. At this late hour I do not wish to go into the full and lengthy details of all the disruptions and distress which have been caused by the A19 road to the residents of Newport and Whinney Banks, but I cannot refrain from mentioning that they began substantially with the public inquiry into the route of the road in September 1970 when one of my predecessors, Dr. Jeremy Bray, now the hon. Member for Motherwell and Wishaw,
      1154
      called the road that was to be put through the centre of the constituency a barbaric thing that would cause the area to become a "derelict wilderness". He was challenged on that phrase at that time, but in fact he is now proved to be correct because many areas in Newport and Whinney Banks in my constituency have become a derelict wilderness as a result of the building of this road through the constituency.
      I should like to thank the Minister for the help and sympathy that he has shown to the residents and the organisations which have been affected by this road, and, indeed, if I may say so, by the other major road works proposed in my constituency in the Thornaby area, the A66 road works. He has been most helpful in alleviating the distress which has been caused. My criticism is not of the present administration. It is of the system.
      I first took up the case of distress that has been caused to my constituents when I became the candidate in the constituency in 1973. I have had a constant series of complaints—of which I shall mention one

      1155
      or two—from different organisations and constituents since that time, which have led to my raising the matter in the House tonight. One of the principal organisations affected is the Allotments Club which is both a recreational and, more important, almost a business enterprise for many of the constituents in that area of Middlesbrough. The new road cuts right through their property and separates the clubhouse from the allotments. The most recent complaint I have had from them was that a meeting they wish to have with the Department of the Environment and the contractors took nine months to organise.
      These are ordinary working men who have their allotments and are members of the social club. They have to work during the day and can get to meetings only in the evenings. Their lives have been disrupted and their recreation in their allotments has been disrupted by the building of the road. It has taken them nine months of frustration and annoyance to get that meeting organised. Access to their allotments has been constantly interrupted, the club's property has been trespassed on by contractors, and they have had to spend £1,000 on solicitor's fees and £1,000 on surveyor's fees as a result of the building of the road. Pipes supplying water to the allotments have been burst and the bill for 150 allotments has gone up from £60 a year to about £1,000 a year. All this has caused a tremendous amount of disruption and inconvenience to the people who have allotments there. The club premises, unlike other properties affected by the road, are not to be double glazed—and that is another of the irritations they have had as a result of the building of the road.
      I have had very strong complaints from Captain Beck of 216 Stockton Road, and other residents that, although their windows are to be double glazed, no double glazing has been supplied for the french windows at the back which are only a few feet from the road. The whole impact of double glazing the houses is being spoilt because of the regulations stopping the double glazing of french doors.
      In Ashford Avenue, the residents of 67 to 73 were left isolated at the end of the road, sticking out at the bottom of the avenue right next to the road works. One
      1156
      or two of the residents felt very strongly that, with the road being so close, their houses should have been compulsorily purchased. After a battle of two years, in which I was involved as a candidate and Member, their houses have finally been taken over. But it has caused an enormous amount of inconvenience, stress and strain.
      Probably the worst example of the way in which people's lives have been upset is in the Crathorne Crescent and Maldon Road area where the ratepayers' association has been complaining to the Department and the contractors ever since work on the road began in July 1972. They have complained about vibration from heavy equipment, mud, noise, damaged water pipes and property and dangers to children. They have had to employ a solicitor, and in the file I got from him there are more than 70 letters—correspondence between them and the Department, the contractors and their insurers.
      The Minister has told us in correspondence that there is no simple solution and that people can claim damages for injury or neglect against those responsible. But as the correspondence with which I have been presented clearly shows, time and again there is evidence of buck passing—it is time that came to an end.
      The residents have to decide whether they should act individually or together. They have to contend with two major contractors, Cementation and Earthstrip, consulting engineers and their solicitors, and insurers and their solicitors. They have to appoint and pay their own solicitors and surveyors for technical reports on the effect of the road works on their property.
      All this is because the community wants that road to go right past their property. They did not ask for the road. It was the community which wanted it to go there. It seems quite wrong in these circumstances that they should be put to the added inconvenience of having to fight to get compensation through this awful maze, this plethora of firms and legalities, at considerable expense and inconvenience, when they have already had all the dirt, inconvenience and disruption of three years of road building.
      My view is that in these circumstances the Department should do two things.

      1157
      First, from the very earliest stages of a road building exercise such as this, the Department should appoint a troubleshooter, preferably someone from the locality, to whom the residents and organisations affected by the building of the road can go in order to get answers to their queries. Way back in 1972 the Department and the contractors organised meetings for the residents, but they were not continued. The residents were promised bulletins which would keep them in touch with developments, but they did not come. Much of the confusion, unrest and disruption has been caused by the lack of information.
      It is my firm belief that if, as I suggested back in 1973, the Department had appointed a trouble-shooter, as Middlesbrough Council did when it was responsible for building a road right next to this one, the Northern route going through Middlesbrough, many of the problems that have arisen over the last three years would have been easily overcome, and all the irritations and difficulties that may constituents have had to put up with would have been greatly lessened.
      If the Department is embarking upon similar road works in other parts, and certainly if they come to the other part of my constituency, the A66 in Thornaby, the Minister should carefully consider appointing someone, preferably from the locality, who could receive all the complaints and reply to them adequately and be a source of information about what is going on and why it is going on.
      Secondly, the Department and the Minister must accept the responsibility for the claims for compensation. Perhaps the legal responsibility under the contracts does rest with the contractors. But I have seen the correspondence. It is an intolerable situation for people who have been put to this trouble to have to find their way through this maze of solicitors and other individuals and organisations involved. At the very least, the Department could give much greater assistance to individuals who are suffering from the effects of major road works such as these. It could guide them much more carefully and give them information about their rights and about what action they should take in order to satisfy their demands for compensation for the inconvenience and
      1158
      for the damage to their property which has been sustained.
      If the Minister could give me some reassurance that there will be greater co-operation as the last stages of this road are completed and that some guidance will be given to the residents and organisations still affected by these road works, my constituents will be well satisfied. We cannot turn the clock back to 1972 when these road works started and begin talking at this stage about appointing the trouble-shooter I have mentioned. However, I hope that my hon. Friend will bear this suggestion in mind in relation to future road works.
      When I wrote to the Minister in March of this year, I said that I should be grateful if he could give me an assurance along these lines. In his reply the Minister told me that basically the residents, the people who are claiming compensation, must go through the legal processes. They are prepared to do that, but they would appreciate any gesture of good will to assist them in doing so. Mrs. Dorothy Wedlake, the Chairman of the Crathorne and Maldon Ratepayers' Association, wrote to me only this week. She wrote:
      "All the members of our association are disgusted at the evasive actions being taken by the Department of the Environment and wish to give you their sincere thanks for your involvement. Regardless of the outcome we press on through the courts."
      I hope that if they have to press on through the courts—they did not want to be involved in this way but they have been forced into it by the circumstances—they will have at least the guidance and co-operation of the Department from this point onwards.
      1.16 a.m.
      The Under-Secretary of State for the Environment (Mr. Neil Carmichael): I am grateful to my hon. Friend the Member for Thornaby (Mr. Wriggles-worth) for giving me this opportunity to speak on the importance of the A19 for the area which he represents. I congratulate my hon. Friend on the courteous but forceful way in which he has made his points both personally and in correspondence.
      For the benefit of hon. Members who may not be familiar with the area, it may

      1159
      be helpful if I could attempt to place the road works with which my hon. Friend is particularly concerned in the context of the improvement of the A19 as a whole. The A19 forms the main part of the major trunk route carrying heavy traffic from the A.1 at Dishforth, near Ripon, to Cleveland and the other industrial areas on the North-East coast between the Tees and the Tyne. It is being virtually replaced by a new road.
      The need for this new route was recognised in the White Paper entitled "The North East, a programme for Regional Development and Growth", which recommended, among other improvements in the communication system of the North-East, the replacement of the present A19 north-south route through Stockton by a new route probably crossing the Tees between Stockton and Middlesbrough. Thus the new road is being built as part of the economic regeneration of the North-East of England.
      Improvements of the A19 recently completed include the Thirsk Bypass and the dualling of the route between there and the North Yorkshire boundary. The section between Billingham and Easington, and the Sunderland Bypass, have also been dualled. The Teesside diversion, which is the part that particularly concerns my hon. Friend, is currently under construction. Immediately to the north of it will be the Billingham diversion, on which the general public were consulted about a number of alternative routes last year. An announcement of the preferred route for that section was made in April this year. The public are currently being consulted about alternative lines for the continuation of the route southwards beyond Dishforth in order to provide a link with the M1.
      Let me now deal in a little more detail with the Al9 Teesside diversion. This part of the new road will start approximately one mile south of Crathorne and terminate approximately a quarter of a mile north-west of Haverton Hill Road south of Billingham. There will be grade separated interchanges with the existing A19 just north of Crathorne with the new Teesside Parkway north of Maltby, with Mandale Road and Stockton Road in Thornaby and with Haverton Hill Road. There will be two major bridges, one
      1160
      1,130 ft. long over the Leven valley and one 6,350 ft. long between the Stockton Road and Haverton Hill road interchanges, carrying the new road over the existing A66, the railway marshalling yards and the River Tees.
      We hoped that the whole of the Teesside diversion would be complete and open to traffic by the end of this year. However, because of difficulties and delays with the Leven Valley and Tees Bridges, this will not now be possible. Construction of the Leven viaduct was hampered by ground conditions which necessitated redesigning the foundations, and the Tees Bridge was delayed by the energy crisis of 1973–74, bad weather and a hold-up in the supply of steel reinforcing.
      We now propose to open the Teesside diversion in phases as those parts of the road which form a viable link with the existing highway network are completed. We hope to open the length of new road between the Teesside Parkway and Haverton Hill Road interchanges and the Mandale Road interchange in November this year. The northbound carriageway of the Tees Bridge will carry both northbound and southbound traffic.
      Both carriageways of the Tees Bridge will be opened in February 1976 and the Stockton Road interchange will be opened in the autumn of 1976 on completion of the roads with which it will connect. The Leven viaduct will also be completed in the autumn of 1976 and the whole of the Teesside diversion will then be open. Until then the section between the Crathorne interchange and Teesside Parkway will be used by contractors' traffic only. These proposals will make the maximum use of the road works while they remain partially completed.
      I appreciate that the arrangements are not wholly satisfactory but, nevertheless, they will provide a considerable measure of relief in the area. I can assure my hon. Friend that my colleagues in the Department and I are well aware of the serious human problems which can be caused to those whose living conditions are changed by the building of new roads. I share his concern that as much as is reasonably possible should be done to ensure that those who are obliged to live close to these roads should not suffer as a result.

      1161
      As my hon. Friend described, part of the Teesside diversion passes very close to a densely developed industrial and residential area, and it is the effect on this area, especially in the neighbourhood of the Stockton Road interchange, that caused us most concern and gave rise to most complaint. It is, unfortunately, inevitable that in such an area the construction of such a major new road, particularly when it includes a complex interchange, will be a cause of distress and disturbance to those living nearby.
      It was in an effort to be able to provide means of reducing these adverse effects as far as possible that the Land Compensation Act 1973 was passed. I think most people would agree that this Act has meant a significant step forward in the past year or two towards improving the lot of those who, against their will, happen to find themselves adjacent to new public works of one kind or another.
      Part I of that Act created a new right to compensation for people from whom no land is taken for the works but whose property when in use loses value because of its closeness to the works. Owners of many properties may now be compensated for any depreciation of more than £50 in the value of their property caused by such physical factors as noise, smell, fumes, vibration and dust, and so on from any new or improved highway which came into use on or after 17th October 1969.
      Part II of the Act contains powers to make regulations about sound insulation. The Noise Insulation Regulations 1973 provide certain rights to insulate residential property—for example, double glazing and supplementary ventilation if necessary—against noise from traffic on new or improved roads. Properties may be insulated against noise from road construction. My hon. Friend asked about double glazing of french windows. A way has now been found to remedy the problem, and he will receive fairly soon a letter from me explaining this to him.
      It is obviously not always possible because of physical and financial limitations to eliminate entirely features which are visually intrusive or which result in disturbance to neighbouring areas. We have tried treatments such as earth mounding on the Al9 scheme which can both hide the new road and lower the
      1162
      level of noise imposed on the surrounding area. However, I must reiterate that it is unrealistic to hope to build a major road in an urban area entirely without noise and other nuisances, but we have tried to minimise the problem on the Al9 during the construction period.
      The Teesside diversion was one of the large number of schemes which were actually being built when the Land Compensation Act 1973 came into force, and while it was obviously not possible to introduce major design changes, measures were taken to implement the Act as far as possible.
      Full use continues to be made of these powers in connection with the Teesside diversion, and, to date, some 85 properties have been identified as eligible for insulation which has been authorised, and about half of this work has already been carried out. Some properties have been purchased under powers conferred by Part II of the Act.
      I turn now to some of the specific complaints which my hon. Friend has drawn to my attention. He has told me that the Newport, Middlesbrough, Co-operative Allotment Society has a number of grievances which it wished to discuss with representatives of the Department and that the North-Eastern Road Construction Unit had failed to hold a meeting promised some eight or nine months ago.
      I have since written to my hon. Friend about this. The unit did indeed have approaches from members of the society and also from the society's solicitors. Unfortunately, the precise details of the complaints were not always clear. A date was fixed for a meeting in January, but this was cancelled at the request of the society. I am pleased to be able to say, however, that a meeting did take place on Tuesday, 27th May, at which various matters were discussed and understandings reached. I very much hope that this will have dealt with all the society's immediate problems.
      My hon. Friend has also mentioned that he has been approached by residents of Malden Road and Crathorne Crescent whose property, he said, had been damaged as a result of the construction of the new road at the rear of their houses. He maintained that, since the contractors employed by the Government

      1163
      were responsible for the damage caused, the Government should accept responsibility for claims for compensation.
      It is a basic principle of the existing law, however, that an independent contractor is responsible for his own actions and omissions. The Department, like other public authorities, adopts the practice, invariably followed in construction contracts, of requiring the contractor to indemnify it against claims arising out of his performance of the contract, and to cover his liability under that indemnity by insurance.
      The Department's unwillingness to be involved—to the exasperation of my hon. Friend and others—in such claims is due not to perversity but to sheer practical necessity. If anything goes wrong in the performance of the contract, for example, the chances are that the contractor is more likely to know about it than the authority employing him. It is up to the contractor to see that his work people and sub-contractors behave carefully and avoid causing injury to other people. He is in a much better position to do this than the Department.
      Negotiations must, in the end, take place between the claimant and the person with ultimate legal responsibility for payment, so the Department does not negotiate directly with the claimant or settle claims which probably lie within the contractor's or his insurers sphere of responsibility.
      I have also been conscious of the effect on traffic on the existing roads in the area. In order to reduce to a minimum any adverse effects created by the construction of the Teesside diversion, a special consultative committee has been in existence since the early days of the contract. Representatives of the Department, of the contractor, the consulting engineer, the local authority, the police and major industrial interests have all
      1164
      taken part. Representatives of the bus operators attend the meetings when required. The meetings are held regularly about every two months, and any major problems likely to involve the public, such as temporary road closures or the diversion of bus routes, are discussed, and steps are taken to ensure adequate publicity through the Press.
      In this way, difficulties are anticipated, and, as far as possible, dealt with in advance. I am not aware of any serious failure in these arrangements, and I think the committee is to be congratulated on successfully avoiding any major interference with existing traffic flows.
      I have considerable sympathy with my hon. Friend's constituents in the disturbance I know they are suffering while these major road works are in progress. I am concerned that their discomfort should be reduced to the minimum. The powers of the Land Compensation Act are at our disposal in an attempt to achieve this, and I am sure that my hon. Friend will continue to bring to my attention any instances where he thinks we can do more than we are doing. I hope that he and his constituents appreciate the difficulty we would be in if we as a Department attempted to take responsibility for claims for damage arising from the performance of the contractor, and I hope that his constituents' difficulties in this respect will soon be resolved. In the meantime, I think that as the works are completed over the next few months they can now look to a progressive reduction in the disturbance to which they are subjected.
      I shall read with care the points made by my hon. Friend in his eloquent speech. I shall give them more consideration and perhaps speak to him or write to him about them later.
      Question put and agreed to.
      Adjourned accordingly at half-past One o'clock.

PRICES AND CONSUMER PROTECTION
  Tariffs
  Tariffs
  Metrication
  Metrication
  Price Code
  Price Code
  Inflation
  Inflation
  Credit Purchasing (Purpose Loans)
  Credit Purchasing (Purpose Loans)
  Aerosol Cans
  Aerosol Cans
ENERGY
  North Sea Oil
  North Sea Oil
  Coal Output
  Coal Output
  Offshore Oil Rigs
  Offshore Oil Rigs
  Drax B Power Station
  Drax B Power Station
  Coal Reserves (Scotland)
  Coal Reserves (Scotland)
  Oil Depletion
  Oil Depletion
  Conservation
  Conservation
  Tied Housing (National Coal Board)
  Tied Housing (National Coal Board)
  Coal Industry Financing
  Coal Industry Financing
  Coal Exports
  Coal Exports
  Natural Gas
  Natural Gas
  Fissile Material
  Fissile Material
  British Steel Corporation
  British Steel Corporation
INDUSTRY
  Industrial Policy
  Industrial Policy
  Alfred Herbert Limited
  Alfred Herbert Limited
  Advance Factories
  Advance Factories
  Steel
  Steel
  Pipelines
  Pipelines
  Post Offices
  Post Offices
  British Ship Research Association
  British Ship Research Association
  International Computers Limited
  International Computers Limited
  British Aircraft Corporation
  British Aircraft Corporation
  Zip Fasteners
  Zip Fasteners
  European Community
  European Community
  Concorde
  Concorde
  British Steel Corporation
  British Steel Corporation
AGRICULTURE, FISHERIES AND FOOD
  Milk and the Dairy Herd
  Milk and the Dairy Herd
  Skimmed Milk Powder
  Skimmed Milk Powder
  Lobster Fishing
  Lobster Fishing
  Raspberry Pulp
  Raspberry Pulp
  £ Sterling (Community Rate)
  £ Sterling (Community Rate)
CIVIL SERVICE
  Transport Costs
  Transport Costs
  Her Majesty's Stationery Office
  Her Majesty's Stationery Office
FOREIGN AND COMMONWEALTH AFFAIRS
  Hong Kong
  Hong Kong
  Mr. Joe Mallett
  Mr. Joe Mallett
  Textiles and Footwear
  Textiles and Footwear
  Hare Coursing
  Hare Coursing
  Rhodesia
  Rhodesia
  Simonstown Agreement
  Simonstown Agreement
HOME DEPARTMENT
  Television Licences
  Television Licences
  Park Hall Camp, Oswestry (Shooting Incident)
  Park Hall Camp, Oswestry (Shooting Incident)
  Comprehensive Community Programmes
  Comprehensive Community Programmes
  Drugs (Safe Keeping)
  Drugs (Safe Keeping)
  Prisoners
  Prisoners
  Holloway Prison
  Holloway Prison
  Car Parking (London)
  Car Parking (London)
  Women Prisoners
  Women Prisoners
  Parole Board
  Parole Board
  Parole Prisoners
  Parole Prisoners
  Parole Declined
  Parole Declined
  Parliamentary Electorates
  Parliamentary Electorates
ENVIRONMENT
  Commercial Development (Policy Review)
  Commercial Development (Policy Review)
  Coaches (Speed Limits)
  Coaches (Speed Limits)
  Buses (Countryside)
  Buses (Countryside)
  Lorries
  Lorries
  Driving Licences
  Driving Licences
  Disabled Drivers' Licences
  Disabled Drivers' Licences
  Mineral Rights
  Mineral Rights
  A1 (Darrington Crossroads)
  A1 (Darrington Crossroads)
  Churches
  Churches
  Rents
  Rents
  Tenants' Associations
  Tenants' Associations
  Tynemouth (Compulsory Purchase Order)
  Tynemouth (Compulsory Purchase Order)
  Tied Cottages
  Tied Cottages
  Caravans
  Caravans
TRADE
  Policyholders Protection Bill
  Policyholders Protection Bill
  Footwear
  Footwear
  Export Credits (Pre-Shipment Finance)
  Export Credits (Pre-Shipment Finance)
  Ships (Dumping)
  Ships (Dumping)
  Life Assurance Policyholders (Uganda)
  Life Assurance Policyholders (Uganda)
  Shipping and Aircraft Earnings
  Shipping and Aircraft Earnings
  Aviation
  Aviation
  Investment
  Investment
  Professional Firms and Practices
  Professional Firms and Practices
  Exports
  Exports
  USSR
  USSR
  Imports (Dumping)
  Imports (Dumping)
DEFENCE
  Married Quarters Rent Rebates
  Married Quarters Rent Rebates
  Radar Base (Western Isles)
  Radar Base (Western Isles)
  Rockets
  Rockets
  Quarters
  Quarters
  Textile Purchases
  Textile Purchases
  RAF Manby
  RAF Manby
  HMS "Pembroke"
  HMS "Pembroke"
  RAF (Redundancy Scheme)
  RAF (Redundancy Scheme)
  Army (Reorganisation)
  Army (Reorganisation)
  Infantry
  Infantry
  Artillery
  Artillery
  Army Air Corps
  Army Air Corps
NATIONAL FINANCE
  Industrial Productivity
  Industrial Productivity
  Corporation Tax
  Corporation Tax
  Value Added Tax
  Value Added Tax
  Credit (Statistics)
  Credit (Statistics)
  Wages
  Wages
  Exchange Rates
  Exchange Rates
  Development Gains Tax
  Development Gains Tax
WALES
  Bronglais Hospital, Aberystwyth
  Bronglais Hospital, Aberystwyth
  Rate Rebates
  Rate Rebates
EDUCATION AND SCIENCE
  Medical Schools
  Medical Schools
  Handicapped Children
  Handicapped Children
  Tied Housing
  Tied Housing
  Comprehensive Schools (Medway)
  Comprehensive Schools (Medway)
  Secondary Schools (Reorganisation)
  Secondary Schools (Reorganisation)
  Corporal Punishment
  Corporal Punishment
  Languages
  Languages
  School Governors and Managers
  School Governors and Managers
EMPLOYMENT
  Forest of Dean
  Forest of Dean
  School Leavers (Macclesfield)
  School Leavers (Macclesfield)
  Trade Unions (Powers)
  Trade Unions (Powers)
  Vacancies (Notification)
  Vacancies (Notification)
  Meals on Wheels
  Meals on Wheels
  Northern Region
  Northern Region
SCOTLAND
  Electricity Grid (Sales and Purchases)
  Electricity Grid (Sales and Purchases)
  Electricity Generating
  Electricity Generating
  Electricity Demand and Supply
  Electricity Demand and Supply
  Fish Farming
  Fish Farming
  Poultry
  Poultry
NORTHERN IRELAND
  Invalid Vehicles
  Invalid Vehicles
  Water Supply (Donaghadee)
  Water Supply (Donaghadee)
  Disabled Drivers (Parking Discs)
  Disabled Drivers (Parking Discs)
  Educational Psychologists
  Educational Psychologists
  Harland and Wolff Ltd.
  Harland and Wolff Ltd.
  Royal Ulster Constabulary
  Royal Ulster Constabulary
SOCIAL SERVICES
  Drugs
  Drugs
  Retirement Pensions
  Retirement Pensions
  Child Benefits
  Child Benefits
  Family Income
  Family Income
  Alcoholism
  Alcoholism
  Unemployment Benefit
  Unemployment Benefit
  Fire Precautions and Accidents (Hospitals)
  Fire Precautions and Accidents (Hospitals)
  Departmental Forms and Publications
  Departmental Forms and Publications
  Benefits (European Community Nationals)
  Benefits (European Community Nationals)
  Family Allowances
  Family Allowances
  USSR Reciprocal Agreement (Medical Treatment)
  USSR Reciprocal Agreement (Medical Treatment)
  Child Care Costs
  Child Care Costs
  Benefits (Publicity Costs)
  Benefits (Publicity Costs)
  Tied Housing (Hospitals)
  Tied Housing (Hospitals)
  Mentally Handicapped Persons
  Mentally Handicapped Persons
  National Health Service Pensions
  National Health Service Pensions
  Mobility Allowance
  Mobility Allowance
  Herbs and Homeopathic Remedies
  Herbs and Homeopathic Remedies
  Psychiatric Patients (Juveniles)
  Psychiatric Patients (Juveniles)
  Widows
  Widows
  Supplementary Benefits
  Supplementary Benefits
  Holmfirth (Departmental Office)
  Holmfirth (Departmental Office)
  Dentists
  Dentists
  Computer Centre and Redhill Hospital
  Computer Centre and Redhill Hospital
  Redhill General Hospital
  Redhill General Hospital
  Hospital Emergency Cases (Surrey)
  Hospital Emergency Cases (Surrey)
  Gatwick Airport
  Gatwick Airport

Preamble
The House met at half past two of the clock: The Principal Deputy Chairman of Committees on the Woolsack.
Prayers—Read by the Lord Bishop of Sheffield.

EEC PARLIAMENT AND DIRECT ELECTIONS
Lord DUNCAN-SANDYS: 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 they will give their full support to the early introduction of direct elections to the EEC Parliament.
The PARLIAMENTARY UNDERSECRETARY of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): Noble Lords will have noted from the Statement which my right honourable friend the Prime Minister made in another place on 9th June and which my right honourable friend the Lord Privy Seal repeated in your Lordships' House, that the Government intend to play a full and constructive part in all Community policies and activities. The question of direct elections to the European Assembly is one that deserves and will receive most careful study.
Lord DUNCAN-SANDYS: My Lords, while thanking the noble Lord, may I ask whether we can interpret from his reply that Her Majesty's Government support the principle of a directly-elected European Parliament; because it is very unclear from the Answer which has just been given? If not, how does the noble Lord reconcile that with the joint declaration made by the Prime Minister and the President of Italy in which they declared unequivocally that the European Community must be supported by a democratically-elected Parliament?
Lord GORONWY-ROBERTS: My Lords, the Paris Summit meeting of December, to which I think the noble
656
Lord referred, indicated that as soon as renegotiation and the referendum had been settled, we should be giving to the question of further democratisation of the institutions of the Community very full and favourable attention. I cannot go beyond what I have said, but I should be surprised if this country or any constitutional Party within it were against democratic elections.
Lord DUNCAN-SANDYS: My Lords, why have the Government got to reconsider a matter on which they have already expressed themselves in the manner to which I have referred? Is the noble Lord aware that it will be received with dismay on the Continent if we are seen to be hedging and prevaricating on a matter so simple compared with the basic objectives of the Community to which we are pledged under the Treaty of Rome?
Lord GORONWY-ROBERTS: My Lords, the noble Lord who played a prominent and honourable part in the struggle for European unity is not doing his cause the greatest possible advantage in speaking as he does. I did not say that we would reconsider. We shall sensibly consider how to move on with our other partners in the Community on the road to full democratisation. I should have thought that my reply was one of hope and encouragement to all who believe in the principle of democratic election.
Lord SHINWELL: My Lords, may I ask my noble friend whether he will be kind enough to define "democratisation"? Is it related to the subject of federalism? Is he aware that his right honourable friend the Prime Minister has condemned with bell, book and candle the prospect of federalisation?
Lord GORONWY-ROBERTS: My Lords, I think that my noble friend has indicated in his supplementary question the need for careful consideration of how we move on in this very important matter. There are all sorts of proposals favoured by various individuals, bodies and indeed countries, which must be considered before one can say what will be the final outcome. There must be in this country, and I should imagine in other countries in Europe, what I have called very careful consideration of how to move on.
The EARL of LAUDERDALE: My Lords, will the noble Lord say whether the Government have given any thought yet to a matter which has been raised three times in this House since we joined the Community; namely, that our representatives at Luxembourg and Strasbourg should be elected by the House and not nominated by the Whips? Is that going to be carefully and sympathetically considered by the Government?
Lord GORONWY-ROBERTS: My Lords, that is what I meant by the process of democratisation. It may well be that there will be stages on the road to the kind of situation the noble Earl and others—and I would not except myself from this view—wish to see. The very first stage, and a hopeful stage, is that a recommendation is on its way to the Parliamentary Labour Party that they should at this time select a delegation to the European Assembly.
Lord BOOTHBY: My Lords, with all due deference to my noble friend Lord Duncan-Sandys, who is a pioneer of the European movement, may I ask the noble Lord to consider that it is of vital importance to preserve the link between the national Parliaments and the European Parliament; and that during the seven years that I was a delegate to the Consultative Assembly of the Council of Europe we found it of inestimable benefit that Members of that Assembly were also Members of their own national Parliaments, and could therefore preserve the link between the two? Would the noble Lord seriously consider the possibility of direct election of Members of one or the other House of Parliament by one or other of those Houses of Parliament in this country, as the most surely democratic method, and the best method of preserving the necessary link between this Parliament and the Parliament of Europe?
Lord GORONWY-ROBERTS: My Lords, I can assure the noble Lord whose experience, especially in the Consultative Assembly, is most apposite, that what he has said will certainly be very carefully considered. There is a very strong view that the link between national Parliaments and any international assembly that may finally emerge from the discussions shall be fully maintained.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, does it not emerge from the difference of opinion which has been betrayed in this exchange, that we should be wiser to let things shake down a bit after the referendum before proceeding to any new measures?
Lord GORONWY-ROBERTS: My Lords, as usual in these cases, I could not have put it better myself.
Lord POPPLEWELL: My Lords, can the noble Lord say what is the procedure adopted by other members of the Community? Do they elect direct? Do they nominate? What procedure do they adopt?
Lord GORONWY-ROBERTS: My Lords, I am not aware that any member State of the Community directly elects or enables its electorate directly to elect to the European Assembly. This is not to say that a great many of them—probably all of them—wish to see the kind of progress which the noble Lord, Lord Duncan-Sandys, pointed out.
The EARL of LAUDERDALE: My Lords, regarding the process of shaking down, to which my noble and learned friend has referred, would the noble Lord agree that it might be helpful to that end if time were found by the Government for a debate on the Motion in my name on the Order Paper on this very subject? Would he further agree that, unless and until this House and the other place elect their representatives to Strasbourg and Luxembourg, it will be seen to be somewhat of an insult to that Assembly merely to send nominated members chosen by the Whips?
Lord GORONWY-ROBERTS: My Lords, no doubt the usual channels will be fully seized of the importance of the noble Lord's Motion.
Lord DUNCAN-SANDYS: My Lords, is the noble Lord aware of a very interesting plan which was prepared by the former Foreign Secretary, Mr. Michael Stewart, which covered just what the noble Lord, Lord Boothby, suggested—with which I fully agree—and provided for the direct election of members of the European Parliament, while at the same time maintaining their link with the national Parliaments, which I believe to be of the greatest possible importance?

659
So long as the Committee of Ministers holds the power, it is essential that our representatives in the European Parliament should have contact with Ministers and the Government in their national Parliaments.
Lord GORONWY-ROBERTS: My Lords, I have no doubt that that valuable paper will indeed figure in the consideration to which I have alluded, and so will others; for instance, a paper put forward at about that time by the Dutch Government.

BANABAN INDEPENDENCE AND FIJI
2.45 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 reply has been given to the request of the Banaban's Council of Leaders that their island should be permitted to become an Associated State of Fiji.
Lord GORONWY-ROBERTS: My Lords, Her Majesty's Government are still considering the request of the Banaban Council of Leaders for the independence of Ocean Island.
Lord BROCKWAY: My Lords, may I thank the Minister? Would he agree that the Banabans are among the most unhappy victims of the industrialisation of nature? Would he confirm that they were exiled from their island to Rabi in the Fiji group when their island was devastated by phosphorus production; that they became slaves under the Japanese, when they showed extraordinary loyalty to the Western cause; and that they contributed from their meagre resources to the reconstruction of Plymouth and Portsmouth? The phosphorus production is likely to end in 1978, and many of these people wish to return to their island—many remaining in Rabi—and to be associated with Fiji, with which they have the happiest relations. Fiji is willing. Therefore would it not be desirable that Her Majesty's Government should agree to this proposal?
Lord GORONWY-ROBERTS: My Lords, I would not dissent from what my noble friend says about what has been in many ways the unhappy history of this small island and this attractive community. We are engaged in discussions, which are necessarily somewhat prolonged, in trying to find a way out whereby the entity of these scattered islands—and it is a group of small communities which should not lend themselves unduly to fragmentation is maintained. The Banabans, and, in particular, Ocean Island, have a constitutional personality and the fullest possible autonomy within a large organisation. So far they have not acceded to proposals on these lines. However, the Chief Minister of the Gilbert and Ellice Island Colony Government has put forward some helpful and generous proposals to this end, and we still hope that the Banaban Council of Leaders may take a favourable view of these excellent proposals. It may assist my noble friend who, I know, is very concerned about this kind of case—as we all are—if I place in the Library of the House a full report of the Chief Minister's latest proposals. It is rather lengthy to quote during these exchanges; but I think it might assist Parliament if I did that.
Lord BROCKWAY: My Lords, may I thank the Minister? May I put another, I hope briefer, supplementary question? May I ask him constructively whether it would be desirable to have a conference of representatives of Australia, New Zealand, Fiji, the Gilbert and Ellice Islands and representatives of the Banabans with Great Britain to consider the whole problem? Is not that the constructive way to approach a solution?
Lord GORONWY-ROBERTS: My Lords, we certainly would not rule out such a conference; indeed, we should welcome it. However, there is a certain reluctance on the part of those mentioned by my noble friend to consider such a conference; but I welcome the suggestion contained in his question. Speaking for my part, I should like to see a new conference which was as comprehensive of all the interests as possible.
Lord BROCKWAY: But, my Lords, have not Australia, New Zealand and Fiji, according to the report published

661
yesterday by Sir Bernard Braine, the distinguished Conservative member, and Mr. John Lee, the objective Labour member, indicated that they are ready to engage in such a conference, and that Australia and New Zealand are prepared to contribute towards the rehabilitation of Ocean Island?
Lord GORONWY-ROBERTS: My Lords, the noble Lord may well be right in his interpretation of what has been said. Her Majesty's Government have to deal directly with those Governments and to confirm exactly what they are prepared to do.
Lord LEE of NEWTON: My Lords, quite apart from the outcome of the dispute with the Banabans, in view of the fact that Ocean Island will be bereft of phosphates in a few years, could my noble friend say whether arrangements are being made to help to finance the Governments themselves which rely heavily on the income from the phosphates that are sold to Australia?
Lord GORONWY-ROBERTS: My Lords, it is true that it is likely that the supply of phosphates in this island will run out in about three years. In any constructive negotiations that may take place, no doubt arrangements, as always in the case of Dependencies, will be discussed and, one would hope, agreed upon in order to assist successor States, whatever form they may take, to continue in the future. A good deal depends upon the readiness of all those concerned to come together to discuss something less than independence. Speaking from this Box, once more I should like to make an appeal. In an area like this, which is a very small area of small communities, the danger of continuing fragmentation, once it starts, is a real one and might lead to economic disaster.

SHEEP EXPORTATION TO FRANCE
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 their joint inquiry with the French Government into the exposure by BBC 1 of the cruelty and suffering
662
to sheep exported live to France and subsequently conveyed across France is now complete, what are their findings and what steps have been taken to ensure that no further occurrences of this nature take place either to sheep or cattle in France or elsewhere in Europe.
Lord STRABOLGI: My Lords, a thorough investigation has been carried out into the allegations made in the BBC programme. The evidence pointed to a breach of French law and the French authorities are taking appropriate action. British animal welfare regulations had not been broken, but following the incident our export procedures have been tightened, especially by requiring exporters to declare in writing the exact final destination of every consignment of animals. Arrangements have also been made for still closer liaison with the French authorities.
Lord de CLIFFORD: My Lords, I thank my noble friend for his reply. Perhaps he will scrutinise these applications closely, because it would be good to know how a licence was issued when everybody knew the markets from which these sheep were being bought, who was buying them and exactly where they were going.
Lord STRABOLGI: My Lords, first of all I would pay a tribute to the BBC programme, which was a very efficient and objective piece of reporting. The Government are grateful that it has brought the question into the open. I have gone into this question carefully, and the loophole had already been spotted. The Department were in the process of tightening up the procedure for issuing certificates.
Lord HOUGHTON of SOWERBY: My Lords, is my noble friend aware that the Parliamentary Animal Welfare Group is re-showing the BBC film in the Grand Committee Room at six o'clock this evening? If my noble friend has not had the opportunity to see the film, he may care to go and look at it. Then I think that his judgment of the reliability of French assurances may be a little modified.
Lord STRABOLGI: My Lords, I have, of course, seen the film. I may say that the French, who are just as keen

663
on animal welfare as we are, are anxious to co-operate and that a prosecution is already under consideration by the French authorities.

AIRCRAFT PURCHASES BY NATO COUNTRIES
2.55 p.m.
Lord SHINWELL: 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 the negotiations by Norway, Denmark, the Netherlands and Belgium to purchase the General Dynamics F 16 aircraft Britain as a member of NATO was consulted.
Lord WINTERBOTTOM: My Lords, Her Majesty's Government participate fully in discussions of defence matters affecting the NATO alliance, but responsibility for the negotiations for the purchase of the selected aircraft rests entirely with the nations concerned.
Lord SHINWELL: My Lords, I welcome the decision which has been taken by the Governments concerned. But would this not have been a wonderful opportunity for the United Kingdom to assist in the promotion of the standardisation of weapons and military equipment which would have the effect of saving probably hundreds of millions of pounds annually and at the same time would help to strengthen NATO, a much desired object?
Lord WINTERBOTTOM: My Lords, I am in full agreement with my noble friend's wish to see a much higher degree of standardisation within NATO. Unfortunately, the question of time-scale enters into it. Whereas the four nations of the consortium had an immediate requirement for an interceptor aircraft, that time-scale did not apply to other members of NATO, including ourselves.
Lord SHINWELL: My Lords, is my noble friend aware that he has failed to respond to what I said about welcoming this decision? Is not the strengthening of NATO a decision that should be welcomed by all concerned? Why should the United Kingdom contract out of this?
664
May I ask this question, and I hope that it will not be regarded as offensive—certainly not by the Minister personally? Is there some reluctance on the part of the United Kingdom Government to be involved in this very welcome decision because of the reaction of France? Is the Minister aware that France has reacted in a surprising fashion by deciding not to proceed any further with the construction of the Mirage aircraft?
Lord WINTERBOTTOM: My Lords, may I go back to the beginning of my noble friend's question? Of course I welcome this step towards standardisation, but so far as this country is concerned we have our own policy and our own time-scale for interceptor aircraft. The Phantom is now taking over from the Lightning as an interceptor, and in due course this will be replaced by the interceptor version of the Multi-Role Combat Aircraft.
Lord HALE: My Lords, could my noble friend say when there came into force the rule that Britain need not be consulted about NATO purchases? Because time after time in years past, both on the Floor of another place and in Downing Street, I have been told in relation to the products of A. V. Roe of Oldham of the absolute necessity of Britain consulting her allies in NATO before placing forward orders for British aeroplanes.
Lord WINTERBOTTOM: My Lords, consultation takes place, but the decision must still lie with national Governments.
Lord WYNNE-JONES: My Lords, can my noble friend say how many of the NATO countries are going to purchase the Multi-Role Combat Aircraft to which he has referred?
Lord WINTERBOTTOM: My Lords. three—Germany, Britain and Italy.
Lord BOOTHBY: My Lords, may I ask the noble Lord why progress towards the standardisation of weapons, which everybody approves of in principle, has been so deplorably slow; and why decision after decision is announced almost daily in the Press which puts even further off that progress towards standardisation?
Lord WINTERBOTTOM: My Lords, this is surely one of the problems that

665
arises from somewhat outmoded nationalism.
Lord LEATHERLAND: My Lords, is my noble friend aware of the fact that the theory of standardisation can be carried too far? Does my noble friend recollect—perhaps he does not because he was fighting for us at the time—that during the last war one particular make of British aircraft proved to be vulnerable to German attackers and that therefore it is very useful during any war to have in the air an alternative type of aircraft?
Lord WINTERBOTTOM: My Lords, I am grateful to my noble friend for his constructive reminiscence.
Lord DUNCAN-SANDYS: My Lords, while fully supporting the plea which has been made by the noble Lord, Lord Shinwell. may I ask the Government whether they could not make it clear to our allies in NATO that the time for paying lip service to the idea of standardisation is past, and could not Her Majesty's Government take the lead in pressing for action, which means setting up the necessary machinery and having the will to see that decisions are reached? This is the only way by which we can increase the strength of our defences without increasing expenditure.
Lord WINTERBOTTOM: My Lords, I am in full sympathy with what the noble Lord has said. I feel that a mini-debate or an Unstarred Question on this subject would be of value.
Viscount MONCK: My Lords, on this question of General Dynamics, is the noble Lord aware that today is the birthday of my noble friend Lord Aberdare and would he like to wish him many happy returns of the day?
Lord WINTERBOTTOM: My Lords, very briefly I think we are giving him a pleasant present in a few moments.

POLICYHOLDERS PROTECTION BILL [H.L.]
3.1 p.m.
Report of Amendments received.
Lord PEDDIE Lord PEDDIE moved Amendment Nos. 1, 2 and 3:
Before Clause 1 insert the following new clause:
Restrictions on issue of long term policies
("Restrictions on issue of or alterations to long term policies and on investment of long term business
.—(1) An authorised insurance company established in the United Kingdom shall not issue a long term policy of any description, and an authorised insurance company established in a country outside the United Kingdom shall not issue a long term policy of any description where the contract of insurance evidenced by the policy was made in the United Kingdom—

(a) if the premium chargeable under the policy is not in accordance with premium rates fixed for that description of policy with the approval of the person who is for the time being the actuary to the company under section 15(1) of the Insurance Companies Act 1974 or section 3(5) of the Insurance Companies Amendment Act 1973; or

(b) if the policy terms are not in accordance with policy terms fixed for that description of policy with the approval of the actuary to the company.

(2) An authorised insurance company shall be deemed to have the approval of the actuary to the company for the premium rates and policy terms for any description of policy only when it has obtained and submited to the Secretary of State—

(a) a certificate for that description of policy signed by the actuary to the company certifying that in his opinion the premium rates are adequate and in accordance with sound insurance principles and that the policy terms are in accordance with sound insurance principles; and

(b) a statement for that description of policy signed by the actuary to the company setting out the terms of the policy and the formula and basis by which the premium rates have been calculated, including for this purpose the mortality and interest bases, a statement of the provisions for taxation and expenses, and the maximum rate of commission provided for.

(3) The actuary to the company shall not for the purposes of this section approve premium rates for any description of long term policy unless he is satisfied that they are adequate and in accordance with sound insurance principles, nor shall he approve policy terms for any description of policy unless he is satisfied that they are in accordance with sound insurance principles.
(4) Where in the case of any authorised insurance company premium rates for any

667
description of long term policy are approved by the actuary to the company, the company shall not pay or allow in respect of any policy of that description any commission or other remuneration in any form to persons not in the employ of the company, greater in cost to the company than the maximum rate of commission certified by the actuary.
(5) The actuary to the company in giving his approval in respect of the premium rates or policy terms for any description of long term policy shall state whether, in his opinion, there are any circumstances in which it would become unsound for the authorised insurance company to continue to issue policies of that description on the basis of the certificate and statement required by subsection (2), and the company shall not in those circumstances continue to issue policies of that description.
(6) An authorised insurance company which issues a long term policy or pays or allows a commission or other remuneration in contravention of this section shall be guilty of an offence.
(7) A person guilty of an offence under this section shall be liable—

(a) on conviction on indictment, to imprisonment for a term not exceeding two years, or to a fine, or to both;

(b) on summary conviction, to a fine not exceeding £400."

Insert the following new clause—
Restrictions on alterations to long term policies
(".—(1) An authorised insurance company established in the United Kingdom (in respect of a long term policy of any description) and an authorised insurance company established in a country outside the United Kingdom (in respect of a long term policy of any description where the contract of insurance evidenced by the policy was made in the United Kingdom) shall not—

(a) grant a surrender value, unless the amount of such surrender value is in accordance either with a scale guaranteed on the issue of the policy which scale is one of the policy terms, or with a scale in being at the time of surrender and fixed for that description of policy with the approval of the person who is for the time being the actuary to the company under section 15(1) of the Insurance Companies Act 1974 or section 3(5) of the Insurance Companies Amendment Act 1973:

(b) grant a paid-up policy, unless the amount of such paid-up policy is in accordance either with a scale guaranteed on the issue of the policy which scale is one of the policy terms, or with a scale in being at the time of conversion to a paid-up policy and fixed for that description of policy with the approval of the person who is for the time being the actuary to the company; or

(c) otherwise make a financial alteration to the policy, unless the terms of such alteration are in accordance either with a basis guaranteed on the issue of the policy which basis is one of the policy terms, or with a basis in being at the time of alteration and
668
fixed for that description of policy with the approval of the person who is for the time being the actuary to the company.

(2) An authorised insurance company shall be deemed to have the approval of the actuary to the company for the scales of surrender values and paid-up policies for, and the basis for the financial alteration of, any description of long term policy only when it has obtained and submitted to the Secretary of State a certificate for that description of policy signed by the actuary to the company certifying that in his opinion such scales and basis are in accordance with sound insurance principles.
(3) The actuary to the company shall not for the purposes of this section approve scales of surrender values and paid-up policies for, and basis for the financial alteration of, any description of long term policy unless he is satisfied that they are in accordance with sound insurance principles.
(4) The actuary to the company in giving his approval in respect of the scales of surrender values and paid-up policies for, and basis for the financial alteration of, any description of long term policy shall state if, in his opinion, there are any circumstances in which it would become unsound for the authorised insurance company to continue to use such scales and basis for that description of policy, and the company shall not in those circumstances continue to use such scales and basis.
(5) An authorised insurance company which uses a scale of surrender values for, a scale of paid-up policies for, or a basis for the financial alteration of, any description of long term policy in contravention of this section shall be guilty of an offence.
(6) A person guilty of an offence under this section shall be liable—

(a) on conviction on indictment, to imprisonment for a term not exceeding two years, or to a fine, or to both;

(b) on summary conviction, to a fine not exceeding £400.")

Insert the following new clause—
Restriction on investment of long term business.
(".—(1) Every actuary who in his professional capacity signs a certificate after the passing of this Act relating to an authorised insurance company in accordance with Regulations made under section 13(3) of the Insurance Companies Act 1974 or under section 4(3) of the Insurance Companies Act 1958 shall at the same time inform the company in writing of the nature of the changes in the investments of its long term business which may affect the validity of his certificate, and in so doing shall have regard to the nature of both the liabilities and the assets of the long term business of the company.
(2) An authorised insurance company shall not make a change in the investments of its long term business of the kind specified in subsection (1) above without first obtaining and submitting to the Secretary of State a certificate signed by the actuary referred to in subsection (1) above certifying that in his opinion the proposed change does not affect

669
the validity of his certificate referred to in subsection (1) above, or if the actuary referred to in subsection (1) above is not the person who at the time of the proposed change in investments is the actuary to the company appointed under section 15(1) of the Insurance Companies Act 1974 or section 3(5) of the Insurance Companies Amendment Act 1973. a certificate from the actuary so appointed certifying that in his opinion the proposed change would not affect the validity of the certificate referred to in subsection (1) above.
(3) Any person who makes a change in the investments of the long term business of an authorised insurance company in contravention of this section, or is aware that such a change is being made and does not inform the Secretary of State shall be guilty of an offence.
(4) A person guilty of an offence under this section shall be liable—

(a) on conviction on indictment, to imprisonment for a term not exceeding two years, or to a fine, or to both;

(b) on summary conviction, to a fine not exceeding £400.")

The noble Lord said: My Lords, with the permission of the House, I should like to move Amendments Nos. 1, 2 and 3 together. Noble Lords will be aware that a consideration of this important Bill has been most interesting and, indeed, illuminating. On Second Reading there was an almost universal condemnation of the Bill, primarily because it was considered as inadequate to fulfil the purpose which the Title indicated. At the Committee stage, my noble friends and myself and others moved a series of Amendments and each in turn was withdrawn. At times, some may have wondered why that policy was pursued. It was pursued because we recognised that this is an exceedingly technical Bill and my noble friends and I were anxious that the House, together with the Government, should have adequate opportunity to consider in detail the various points that we were making. Thus at Report stage we hope that Members of this House will probably be better informed and certainly have a clearer idea of what we have in mind.
Some discussions have taken place and my noble friends and I have now tabled only four Amendments, all of them being concerned with important points of principle. At least, we had tabled four Amendments up to Thursday of last week but then an extremely important Government Amendment, No. 62, appeared, which reintroduced the rescue provision on the lines of the old Clause 16 which was lost at Committee stage after the
670
first debate, and my noble friends and I considered it necessary to table an Amendment to that Government Amendment.
These three Amendments are concerned with two vital principles. First, the preventive legislation must be strengthened so as to prevent the irresponsible management practices which led to the failure of two fringe life insurance companies last year; and hence reduced substantially the chance that any fringe insurance company would fail in future. That, I contend, should be the most important feature of a Bill of this description. The second point of principle is that if, nevertheless, a fringe insurance company fails so badly in future that the Policyholders Protection Board has to incur expenditure in order to protect the policyholders of the failed company, then the cost of meeting that expenditure should be borne as fairly as possible. Those, then, are the two basic principles.
These three Amendments are concerned with strengthening the protective legislation. They are identical with the Amendments that were moved at Committee stage, when my noble friend Lord Beswick said that he entirely shared the spirit of the Amendments and so did the Government. I was very pleased indeed that the noble Lord, Lord Aberdare, also showed sympathy with the Amendments and expressed the view that I should have everyone's sympathy in trying to put prevention ahead of any sort of later rescue. Noble Lords will recollect that it was suggested at the time by the noble Lord, Lord Beswick, that these Amendments fell outside the scope of the Bill and he may be still of that opinion. My noble friend and I simply cannot accept that view, and I sincerely hope that the point of view which I am expressing is shared by this House.
This Bill is concerned with policyholders' protection—that is the Title of the Bill—and there is no better way of protecting policyholders than by preventing the failure of insurance companies. The Bill is also concerned, if an insurance company fails, with levying policyholders in all other insurance companies in order to provide funds so that a minimum level of benefit can be paid to the policyholders in the failed company. To protect the policyholders in all the other

671
insurance companies it is therefore highly desirable to reduce to a minimum, by strengthening the protective legislation, the risk that a fringe company may fail. For both these reasons, it seems to me to be beyond doubt that the new clauses in these Amendments are fully within the scope of the Bill and are, indeed, more important for policyholder protection than any other provisions in this Bill. That point of view was confirmed and supported by a succession of speakers on Second Reading.
In essence, these new clauses provide that an insurance company may not issue or alter life insurance policies or change the investments of its life insurance funds on terms which the appointed actuary of the company considers would imperil the solvency of the company, although of course the company has the right to change its appointed actuary with the knowledge of the Department of Trade. As I pointed out in Committee, the present legislation requires the annual accounts of every life insurance company to obtain a certificate from the actuary certifying the solvency of the company, but it seems utterly ridiculous to have such a statutory requirement when the actuary's certificate can be invalidated even immediately after it has been given by a switch in the investments made by the proprietors, possibly even without the knowledge of the actuary. As my noble friend Lord Brown pointed out on Second Reading, Clause 12 in this Government Bill provides for excessive life assurance benefits of failed companies to be scaled down in accordance with an actuarial report. Would it not then be better to require the actuarial assessment before the policies are offered, and prohibit the issue of policies on known unsound firms? This is precisely what Amendment No. 1 does.
All the regulations under the 1973 and 1974 Insurance Acts have not yet been made, but a memorandum from the Department of Trade dated 25th May 1975 states that it is intended to require quarterly certificates from their appointed actuary that would ensure that new policies are issued subject to sound insurance principles and also that the quarterly actuaries' certificates shall come in on the acceptability of changes in investment since the previous quarterly certificate. What is the significance of that? It is
672
just this: that the Government are virtually at one with my colleagues and myself except for the vital difference that the Government propose to rely on quarterly returns after the event, after the reckless management act has taken place, whereas my noble friends and I think it is essential to prevent such actions. Once a fringe company has issued a large block of policies on unsound terms, policies requiring lump sum payments from policyholders, or invested a large proportion of the life insurance funds in an unsuitable investment, no subsequent quarterly reporting can prevent that company from being in trouble if conditions become adverse.
The Government never denied that even if all the regulations had been made, the present legislation would not have prevented the reckless management which led to the failure of Nation Life and London Indemnity. As I indicated in Committee, it would be surprising if complicated new clauses such as these were presented in their best form even though tremendous care has been taken in their drafting. I would emphasise that the important matter is in the principle that the Amendments are accepted. Discussions can then take place between the Government, professional bodies, insurance trade associations and representatives of consumer interests and if need be modifications to the wording can be made later.
May I make one final point? I mentioned in Committee that the Institute of Actuaries had some reservations about the proposed new clauses, but it has indicated that it would be prepared to consider positive proposals for strengthening the preventive legislation, which is what these new clauses are. Of course I would emphasise, as I did previously, that the Institute is not the only organisation concerned. The purpose of the new clauses is to protect the public and the policyholders and I agree that the Institute should be fully consulted before the additional duties are placed on actuaries. As I said when moving the corresponding Amendment in Committee, in my opinion these proposed new clauses are the cornerstone of genuine policyholder protection and are of the greatest importance. Therefore I sincerely hope that my noble friends, the Government, will accept these proposals intended to strengthen the Bill. I beg to move.
3.14 p.m.
The MINISTER of STATE, DEPARTMENT of INDUSTRY (Lord Beswick): My Lords, as my noble friend said, the Committee stage was interesting and illuminating, and I hoped he was going on to say that it was also constructive because some very interesting and constructive contributions were made as a consequence of which we have what I hope will be an acceptable run of quite basic Amendments. I hope very much that the House will agree that, by and large, we have made of this Bill, which was criticised at the beginning, something which broadly can be accepted by us all. The fact that we have proposed these constructive Amendments makes me all the more sad that I cannot start by accepting the Amendments proposed by my noble friend. I cannot accept them for reasons which I hope and believe will be understood by the House.
I made it clear at the Committee stage—and my noble friend has reminded me again this afternoon—that I expressed sympathy with the aim of these Amendments. He wants to ensure that the terms of all policies are in accordance with sound insurance principles. It is with this in mind that Clause 12 is included in the Bill, to reduce the protection to be provided by the Board below 90 per cent. to the extent that benefits under long-term policies are excessive. As to the specific provisions of these Amendments, we believe that they are unnecessary because, under our existing powers in the Insurance Companies Act 1974, we are already going most of the way towards achieving the objectives which my noble friend is seeking. Quite rightly, he places great emphasis upon prevention; but the fact is that this is not the vehicle through which we seek to get prevention. This is a Bill for protecting the policyholder and the prevention of the sort of things we have in mind suggest that we want to protect the policyholder if something goes wrong. That is done by the 1974 Act, and that Act has been and will be used for the purposes that my noble friend seeks.
The Secretary of State will shortly be laying regulations before Parliament to require companies to submit to him quarterly returns and accompanying certificates from appointed actuaries designed
674
to ensure that long-term insurance business is conducted in accordance with sound insurance principles with regard to premiums and policy conditions. My noble friend says that these will be quarterly reports, and although I think he agrees that quarterly reports keep the Department more up to date than annual reports he maintains that it would be possible, after the submission of a report, for a company immediately to vary the conditions of their policy. If an insurance company does that sort of thing I should have thought they would have been caught in other ways.
I was most interested to hear what my noble friend said in his Amendment about the kind of things he would wish to see provided for by law, He says that there shall be a statement for that description of policy signed by the actuary to the company setting out the terms of the policy and the formula and basis by which the premium rates have been calculated, including for this purpose the mortality and interest bases, a statement of the provisions for taxation and expenses, and the maximum rate of commission provided for. Supposing that statement were put to the Department before any policy was concluded or together with any policy, all these details apparently would have to be considered by the Government. If this company about which my noble friend is suspicious went ahead before obtaining the agreement of the Government, then he is not achieving anything more than he would get from the Bill as I have now redrafted it. On the other hand, if the company had to wait until a Government Department goes into the terms of the policy and the formula and the basis by which premium rates have been calculated, including for this purpose the mortality and interest bases and all the rest of it, what sort of business is the insurance company going to conduct?
I should have thought it would be quite impossible for business, if carried on in this way. Indeed, although my noble friend quoted the President of the Institute of Actuaries as apparently in support of what is proposed here, in fact he was not entirely guiding the House aright, because the President of the Institute of Actuaries, in a letter to the Economist dated 24th May, said:
"The regulations under the Insurance Companies Act 1974 are likely to provide for

675
quarterly reporting including a certificate by the actuary, with responsibility to comment on any dangerous trends which might lead to insolvency—for example, inadequate premiums rates for investment speculation at such short intervals will provide a much improved early warning system for the controlling authority."
Then he says that the responsibility here should be placed fairly upon the profession. The actuary, as Mr. Bailey says, has a vital and central role in all this to provide objective professional reporting to the Government, the company, policyholders and the public. He has nowhere, so far as I can make out, asked for any further preventive legislation other than that which will emanate by regulation under the 1974 Act.
If we got to the situation which my noble friend is advocating to the House, we should he getting very near to complete control of insurance business by a Government Department. In the final paragraph of a letter which he also sent to the Economist, Mr. Toogoode, the chairman of the Co-operative Insurance Society, said:
"The only alternative may be the Government control of premium rates, policy terms and investment policies, which I for one would very greatly regret."
That is what Mr. Toogoode would get, in effect, if we had subsection 2(b) as the law of the land.
In addition to all that, my noble friend will be aware also of the guidance notes issued recently by the two professional bodies, the Institute of Actuaries and the Faculty of Actuaries in Scotland, for the guidance of appointed actuaries. These state quite explicitly that premium rates, policy conditions, surrender values, and so on are matters on which the actuary must be informed by the company. It is incumbent on him to make sure that the necessity for such information is fully understood by the company, and that suitable arrangements are made to ensure that this information is forthcoming. If the actuary is not satisfied with this or with other matters vitally affecting the prospects of the company, he is advised to notify the Department of Trade. So, together with the regulations which it is proposed to issue under the 1974 Act, there is already under this Bill a clear and firm control of all these matters. Given these guidance notes and the
676
arrangements to be made for quarterly certificates, we see little difference in practice between what is proposed in the Amendment and what will happen in future under the arrangements already proposed.
So far as Amendment No. 3 is concerned, again I share the view of my noble friend that our control over insurance companies' investments must be strengthened. I assure him we are engaged on preparing regulations designed to do exactly that. On the 1st February this year we brought into operation new regulations made last December on the valuation of the assets of insurance companies. We hope to follow this up later in the year with regulations on the admissibility of assets. It is also our intention to revise the terms of the appointed actuary's statutory balance sheet certificate so as to include specific reference to the long-term business assets, although the precise wording is still under consideration.
Therefore, I hope my noble friend will accept that under existing powers we are already going a long way to achieving the objectives he is seeking. We have already discussed, in connection with the previous Amendment, the regulations that the Secretary of State will shortly be laying before Parliament requiring quarterly actuarial certificates from companies' actuaries, and the guidance notes issued by the two professional bodies. The latter refer explicitly to the existing investments and the continuing investment policy as being included in these matters on which information must be made available to the appointed actuary. As I have already said, it is incumbent upon the appointed actuary to make sure that the necessity for such information is fully understood by the company, and that suitable arrangements are made to ensure that this information is forthcoming. Therefore, while I understand and sympathise with what my noble friend is seeking, I hope that he will realise we are already well on the way to achieving what he is after.
3.25 p.m.
Baroness FISHER of REDNAL: My Lords, before my noble friend sits down, may I say that it has been very difficult for noble Lords to make Amendments to this Bill for the simple reason that many of the regulations which my noble

677
friend has just enunciated are unknown to us as individuals. Of course, my noble friend, as the Minister in charge, has prior knowledge. Therefore, had it been possible for regulations to the previous Insurance Act to have been brought before the House at an earlier date, we should not now be in difficulties in debating this Bill.
One has to accept that what my noble friend Lord Peddie is saying is that prevention is better than cure. All Governments of any political complexion do not accept this premise. They always seem to legislate after the offence, whatever it is, has taken place, when they feel they have got to do something about it. I was interested to hear what my noble friend said. There are people who go in for certain doubtful investments with policyholders' money, without the approval of the actuary. They indulge in the practice of altering policies, and altogether operate under unsound business principles. But they will not be the ones to be caught in other ways. I should like my noble friend, if he can, to give the ways and means by which these people will be caught in other ways, inasmuch as I can say from my reading of the Bill that the only people to he caught in other ways will be those little people, if I may use the term, who insure with what, for want of a better word, we would call the reputable insurance companies—the Mrs. Browns and Mrs. Joneses, who my noble friend completely understands because of his previous service in the other place. So could my noble friend tell us more specifically how those regulations will operate, so that in the future the people who are doing very well out of unsound business practices will pay the penalty as much as the small people.
Lord ALLEN of FALLOWFIELD: I rise to support the statement made by the noble Lord, Lord Peddie, in moving Amendments Nos. 1, 2 and 3. In doing so, it is absolutely necessary to recall the debate that occurred on Second Reading. Anyone who listened to that debate could not help but reach the conclusion—and I must submit that nothing my noble friend the Minister has said in his reply leads me to any other conclusion—that we are at present debating a thoroughly bad Bill. Indeed, there is no doubt at all about that, because of the massive num-
678
ber of suggested Amendments, mostly in the name of the Government. I think it is charitable to describe it as a thoroughly bad Bill. In my considered view, the evidence submitted against the Bill is very convincing indeed.
My noble friend the Minister, in reply to my noble friend Lord Peddie, said that the Bill is for protecting policyholders. My Lords, the main reason for the opposition to the Bill—and I regret that I have to remind my noble friend of this—is that the scheme is extremely unfair to policyholders in traditional insurance companies who could never benefit from the guarantee scheme but who will be called upon to pay the levies. This much has been said very many times in previous debates; indeed it has been stressed also by the chairmen of a large number of insurance companies in statements they have made from time to time to their shareholders and others.
It is not always realised—and I am wondering whether the Minister realises; I am sure he does, but he gave no indication of it in his reply—that nearly two-thirds of the money paid in life assurance premiums, excluding pension schemes, is paid to the familiar insurance man calling at the door, and much other life insurance is taken out by persons with comparatively low incomes. These would be the people who would pay most of the cost of the levies, whereas the fringe insurance companies, the inefficiency of whose conduct is the motivation of this Bill, have issued mainly speculative types of policy requiring substantial lump-sum payments.
The Department of Trade has argued, in correspondence and elsewhere, that the policyholders of every insurance company will gain extra protection because of the scheme, because an insurance company which is sound when a policy is taken out can fail at some later date when the policy is still in force. I submit that this totally ignores the difference in character between the traditional life assurance companies, which issue the bulk of their policies on a with-profit basis, which because they can always reduce bonuses in adverse conditions cannot become insolvent, short of an economic catastrophe against which no guarantee scheme would be of any use at all, and the more recently formed fringe life insurance companies, which have issued

679
the bulk of their policies with purportedly guaranteed benefits. In the non-life field it also ignores the difference between the large established companies with immense reserves, which no guarantee scheme would protect in the extremely unlikely event of their becoming insolvent, and the fringe companies operating on a different basis.
My Lords, the Bill provides for no strengthening of the preventive legislation. My noble friend the Minister has made a host of promises, but it is very difficult to identify within the Bill the kind of strengthening that would be necessary if we are as of now dealing with cure and not prevention. The essence of the Amendments, the essence of the opposition to the Bill throughout, has always been prevention as opposed to cure. Although when all the provisions of the 1974 Act have been brought fully into force by the regulations the protection will be considerably strengthened, nevertheless the unsound management practices which led to the failure of Nation Life and London Indemnity will still not be prevented. In our view, in the view of the sponsors of the Amendments, they should be prevented, and specific proposals have been put forward to that end. I conclude in the way I started. I believe this is a thoroughly bad Bill. The commentary on it is the fact that there are a massive number of Amendments. I support the Amendments put forward by my noble friend Lord Peddie, and his opposition to the Bill.
3.34 p.m.
Lord ABERDARE: My Lords, as the noble Lord, Lord Peddie, mentioned my name, perhaps I may say a few words. I preface my remarks once again at this stage, and I hope that other noble Lords will do the same, in declaring my interests in this matter. I am a director of a small life insurance company and also an underwriting member of Lloyds. I repeat what I said previously, on Committee, that I have a great deal of sympathy with the noble Lord, Lord Peddie, and those who support him, in respect of one thing, that prevention is better than cure. Indeed, there can be no question but that that is also the point of view of the Government. But I am not so sure that the proposals that they are putting forward for this Bill
680
are really either right or indeed practicable. I believe that the preventive measures that noble Lords want to see are indeed much more appropriate to the 1974 Act. I believe too that the regulations that are currently being made under that Act will certainly strengthen the prevention powers of the Department, and I wonder very much whether the noble Lord, Lord Allen, is correct in saying that these powers would not have prevented a disaster like Nation Life. There were certain aspects of the Nation Life affair which, if at intervals the investments were being looked at by the Department, I should have thought would have emerged and would have brought about the prevention of that disaster. However, that is no doubt a matter of opinion.
I am satisfied by what the noble Lord, Lord Beswick, said, that the Government think that these regulations are the best means of preventing disasters. I think that the proposals in these Amendments may well go a little too far. First of all, in the direction of overcontrol, I do not think it appropriate that every proposal for every policy put forward by every insurance company should be vetted by the Government. I think it much more appropriate that the quarterly control system should be introduced. The other point is that I do not really think that the Institute of Actuaries is very happy about coming in to the extent to which the noble Lord, Lord Peddie, wishes. The noble Lord said this was only one of many bodies involved, but it is certainly the most important body in the context of the new clauses which he is proposing. My hope is that the noble Lord, Lord Peddie, will not press these new clauses on the House. I think he has done a service in drawing attention to the need for preventive measures, but for my money the preventive measures the Government are envisaging are just about right, and the Amendments proposed go too far.
Lord BESWICK: My Lords, I am grateful for what the noble Lord, Lord Aberdare, has said, and certainly it is true that I am every bit as keen as he and my noble friends to see that prevention is strengthened, but I simply say again that the instrument for strengthening control is the 1974 Act and not this Bill. My

681
noble friend Lord Allen said that this was a thoroughly bad Bill. If he will allow me to say so, I recognise that phrase in two documents that I had this morning from the CIS. One of them, I see, is dated 9th January 1975, and the other is dated April 1975, and both these dates predate the consultation which is going on. The massive number of Amendments to which my noble friend Lord Allen refers do really change this Bill, and what may have been a thoroughly bad Bill is now an acceptable Bill. I would hope, therefore, that he would not belabour me too severely, because he is looking at the Bill before the Amendments we have in mind.
My noble friend Lady Fisher of Rednal said ought we not to have known before now about the regulations to which I have referred. Of course, the regulations were laid before the House, and it is quite possible for anyone to study those regulations. The insurance industry itself has been applying those regulations as from December and, of course, is well aware of them. The new batch of regulations to which I referred are not yet drafted, but they will come before this House and there will be an opportunity for everyone to study them.
My noble friend Lady Fisher was obviously doubtful about the extent of the proposals for strengthening prevention which are contained in the new guidelines issued by the Institute of Actuaries and the Faculty of Actuaries of Scotland. I see in paragraph 4, for example, that the duties of the appointed actuary include the following. They have to be aware of the premium rates on which existing business has been and current new business is being written. They have to be aware of the nature of the contracts in force and currently being sold, with particular reference to all guarantees, existing investments and the continuing investment policy. They have to be aware of the marketing plans, in particular the expected volumes and cost of sales, the current and likely future level of expenses, and the extent of the company's free estate. They are all provisions which, as the guidelines say, must be made available to the appointed actuary for him to carry out the necessary financial investigations and to be able to satisfy himself as to the continuing financial state of the company.
682
With that knowledge before a professional body, surely it is going to be more difficult in future to carry out any malpractices. The only difference between us here is whether the responsibility should be placed upon a professional body of that kind or whether we are to have a Government Department going over a policy and ensuring that it comes up to the sort of standards that are set out in these guidelines.
My noble friend Lord Peddie said that although the actuary may provide a certificate based on this kind of information, it would be possible for a director or the directors of an insurance company to ignore the actuary's report or certificate. If that is so, then it would be an unusual body of directors in charge of an insurance company. If any director ignored the certificate of the actuary, it would be possible under Section 28 of the 1974 Act for that director to be declared by the Department of Trade as unfit. If the directors are declared unfit, the company can be stopped from carrying out further business. I beg my noble friend to believe that there is now considerable control, and that that control will be strengthened even further. On the basis of those assurances, I hope that my noble friend will be able to withdraw these first three Amendments.
3.43 p.m.
Lord SHINWELL: My Lords, there is just a possibility—I shall not say a probability—that there may be a Division, and I want to know where I should go: to the right or to the left. I make a confession: apart from being a policyholder I am completely ignorant of the technicalities of this measure. I want an assurance from my noble friend the Minister that, as a policyholder, at some stage of the remainder of my mortal existence I am not going to be levied. May I have an assurance of that kind, because that seems to me to be fundamental? Policyholders universally—not in particular—must be faced with the same situation; they do not want to be levied. In particular they do not want to be levied if they are not responsible for any misdemeanour. It may be that the misdemeanour, if any, is due to the real culprit, the insurance company that defaults, and the policyholder is quite an innocent party. We who are policyholders ought to be given an assurance

683
by my noble friend that we shall not be levied at some time.
This is a remarkable Bill—I will not say it is a bad Bill. It is remarkable because those who have proposed the Amendments have declared it to be a bad Bill. They go further than I am prepared to go. However, my noble friend the Minister admitted that the original Bill was also a bad Bill. It seems to me that if the Government produce a bad Bill, that is a good reason for opposing it. I do not know whether that would appeal to Members in general, but that is how it appears to me. It is another reason why, if there is a Division, I feel inclined to support my noble friends.
I do not like the coalition that has emerged. We are getting too many of these coalitions. Indeed, the newspapers today are full of the prospects of further coalitions. The Conservatives have given an assurance—I used the term "assurance" in another context earlier in my remarks—that if anything happens to the Government, or is likely to happen, they are ready to come in with all their strength and influence and authority to ensure that the Government shall not be defeated, and that is precisely what has emerged this afternoon. The noble Lord, Lord Aberdare, whose integrity is beyond question —I said his integrity is beyond question because of what I am about to say—told the House frankly, and with the utmost candour and honesty, as one would expect from him, that he happens to have an interest in this matter as a director of an insurance company. I should have thought that anybody who is a director of an insurance company should have kept out of this discussion.
Lord ABERDARE: My Lords, I should not like the noble Lord to go wrong. I happen to be the only one so far who has declared his interest.
Lord SHINWELL: My Lords, that is perfectly true, but it makes the matter even more serious. There may be others who have interests to declare but who have hitherto not declared them. In the circumstances, I realise that it is purely a personal issue so far as I am concerned. But I want an assurance from my noble friend, for whom, as he knows, I have a great regard indeed, that at some stage in the future I am not, because of some
684
misdemeanour, some fault on the part of some insurance company, going to be levied. On that assurance I will vote with the Government; without that assurance, I will vote against them.
3.48 p.m.
Lord HOUGHTON of SOWERBY: My Lords, I have been hoping for some advice from the Benches opposite. I have heard that there are literally dozens of directors of insurance companies on the Benches opposite. Why are they not saying something? I notice the noble Viscount. Lord Harcourt, and he is known to be a distinguished director of an insurance company; I believe I have a policy with that company. Where are the others, and what are they saying to help those of us who are in difficulties about these Amendments?
The Bill may have been made better by many of the Amendments introduced by the Government, but the method of dealing with the Bill is certainly no better than I expected and, indeed, is quite a lot worse. When we had the Second Reading the only voices in support of the Bill came from the Government Front Bench—nowhere else. It was clear that, to be acceptable to both sides of this House, the Bill had to be radically changed. Indeed, it had to be reconstructed, because the principle in the original Bill was one which did not commend itself to your Lordships without considerable modification.
We recently had a Committee stage of the Bill. Long Amendments were put down by my noble friend Lord Peddle and other noble Lords, explanations were given, the Minister replied and there was little other debate. The Amendments were withdrawn one after the other. I made a facetious comment at the time that never had more Amendments been withdrawn by one noble Lord than on that afternoon. Yet here we are at the Report stage. Only two Amendments were carried during the Committee stage and now we have this long assortment of changes proposed by the Government, accompanied by additional Amendments from my noble friend Lord Peddie. How on earth your Lordships can do business under these conditions, I do not know!
I thought that my own was the most sensible proposal made on Second Reading. That was to send the Bill to a

685
Select Committee where we could take evidence and hear the arguments and examine more closely the complexity of this matter. We are dealing with one of the most important industries in the land, one which is holding astronomical sums on behalf of policeholders in this country and all over the world. Britain may not be the centre of much else today, but it is the centre of the insurance industry. I think we are dealing with this Bill in a most shameful way. If I may respectfully say so, this is not the way to put legislation together—not without a great deal more time and a great deal more attention than it is possible to give to a Bill at the Report stage. I think that those of us who have recently come to this House feel considerable dismay at the way in which legislation is dealt with here—legislation which we were led to believe was going through the hands of an expert revising Chamber. But it goes through an indolent Chamber, one which apparently cannot respond to the challenges which a complex Bill of this kind throws out.
We have a long way to go on this Bill. I do not wish to delay your Lordships more than a minute or two more but the issue before us, complex though it is, is whether we try in this Bill to insert preventive measures as well as curative measures, or rely on the regulations that the Government can make and, I believe, propose to make under the earlier legislation. We feel that to put a kind of safety net under the policyholders who are in the hands of unwise companies, doing nothing more for them than pick up the pieces after the collapse of an insurance company, is not a satisfactory protection for policyholders. There ought to be closer supervision over what the companies are doing before they come to a state of collapse. I think we are all agreed about that. The question is this: what supervision? How much of it? Shall it be riddled with bureaucracy and detail and a whole network of scrutiny, which might impede the reasonable dispatch of ordinary business or the launching of new policies? How close is this oversight to be? How can we be assured that the supervision will be adequate without being tiresome to whose who have to discharge their responsibilities in insurance companies?
686
My predisposition is the same as that of my noble friend Lord Peddie. I want to have some safeguards in this Bill, but I am prepared to forgo them if we can be satisfied that the purposes of these Amendments will be fully achieved by alternative means, such as by regulations. My noble friend the Minister has, I think, given a pretty firm assurance that the purposes of the Amendments will be achieved. The question that those of us who are laymen in regard to this complex matter would like to ask is this. Is that the opinion of this House? Is that the opinion of noble Lords present who are better able to bring their experience and judgment to bear than people like myself and my noble friend Lord Shinwell, who have no interest in this Bill except that of ordinary policyholders? I would say that if my noble friend Lord Shinwell still has a whole life policy then some insurance company is probably doing pretty well out of him. It may be his misfortune that he did not take out the right policy, but that is only a comment by the way. I am still waiting to hear whether there is any hope of getting the assurance which will enable me to ask my noble friend Lord Peddie to withdraw these Amendments—at least for the moment—and see whether there is anything further to be done with them before we finally dispose of the Bill in this House.
Lord DRUMALBYN: My Lords, before the noble Lord, Lord Peddie, adresses your Lorsdhips again, may I just ask this question? Perhaps I should preface it by saying that, while it may be true that we are dealing with one of the most important industries in the country, it is also true that we are dealing with this Amendment at this moment. The question is this. Will this Amendment do what the noble Lord, Lord Peddie, thinks it will do? Will it provide a safety net, and will the safety net be extremely cumbersome or have a great many holes in it?
I put this question to the noble Lord. Does he intend that the safety that he expects to be given by this Amendment will lie in the action of the Government? Is it the Secretary of State to whom the actuary is to send a certificate? Is it the Secretary of State who is to provide the safety? Will he look at the exact terms

687
of the long-term policy, or whatever it is? If that is so, then obviously, as the noble Lord, Lord Houghton, has said, it will be a very cumbersome procedure. Or is he merely intending that the insurance company will give an assurance to the Government by having the actuarial certificate? If that is so, then a great deal will depend on the judgment of the actuary; and it is not only a matter of his actuarial judgment, because there are a lot of market considerations as well that he will have to take into account, as the noble Lord, Lord Beswick, said. It is crucial for us to see exactly what the Amendment is designed to achieve.
Viscount HAREOURT: My Lords, since the noble Lord, Lord Houghton, mentioned me by name in this context, I should like to declare myself as being strongly in support of what was said by the noble Lord, Lord Peddie, and by my noble friend Lord Aberdare. These three Amendments are, to my mind, unworkable, a clog on the whole insurance industry, unnecessary and in the wrong place. The place for these protective controls is in the regulations under the Insurance Act 1974, and not in this Bill. In this Bill, they would merely be a complication and an appalling clog on the smooth working of a very large industry. I beg the noble Lord, Lord Beswick, to withdraw these three Amendments in the light of the very firm assurance given by the noble Lord, Lord Beswick, that these matters will be dealt with under the Insurance Act 1974. That is a far-ranging, broad Act and it is the right place for this sort of protective clause, which is totally unrelated to the matters which are being dealt with in this Bill.
Lord HAWKE: My Lords, as the noble Lord, Lord Houghton, wants to hear from the directors of insurance companies, I should like to add two or three sentences. I refer to Amendment No. 3, the first subsection of which says that the actuary is required at the same time to,
"inform the company in writing of the nature of the changes in the investments of its long-term business which may affect the validity of his certificate …"
When one has an investment committee investing on behalf of an insurance company over a wide field, including gilt-edged, loans, property, equities and so on, how on earth can the actuary say in
688
his certificate what may affect its validity? Noble Lords will all remember the case of Rolls-Royce, which was regarded almost as the Bank of England among equities. Could an actuary have foreseen that, somehow or another, the board and the Government between them would bankrupt Rolls-Royce? This would require the actuary to be a seer or a soothsayer. It is absolutely impracticable.
There is another point in Amendment No. 2 to the effect that the actuary must constantly keep up a species of miming commentary. An insurance company will be in and out of the investment market all the time. It will have transactions in the gilt-edged market every day, buying and selling shares. Has the actuary to be consulted every time before a split-second decision is taken; for instance, to take a profit of a quarter of a point on £1 million of gilt-edged stock? The intention is worthy, but I am afraid that the Amendments are impracticable.
Lord ROBBINS: My Lords, may I say that I have no interest at all to declare except that, as a very young man, I took out an extremely small insurance on my life on which I have continued—perhaps foolishly—to pay the premiums until my present advanced age. I entirely sympathise with what has been said by the noble Viscount, Lord Harcourt, and by the noble Lord, Lord Hawke. I agree that these Amendments involve complications which would make them almost intolerable to carry out. However, I must also say that I completely agree—and I am glad to be in a position to do so for once—with the noble Lord, Lord Shinwell. I think the Bill rests on an entirely wrong principle, which is that the well-managed and prudent insurance companies are to suffer a levy to redeem the mistakes of the ill-managed and imprudent. If that principle is to be carried out throughout the industry and finance of this country, then I have no further hope.
Lord THOMAS: My Lords, as one of those who have been invited by the noble Lord, Lord Houghton, to declare an interest as a director of an insurance company, may I say that I wholly support what has been said by the noble Viscount, Lord Harcourt, and the noble Lord, Lord Robbins. I hope that the Amendment will be withdrawn.
Lord PEDDIE: My Lords, I believe that I make my comments at this point by leave of the House. I shall take the opportunity of replying to one or two points and of making some comments on the change of mind on the part of some noble Lords opposite. I shall also venture some speculation as to the possible reasons for that change of mind.
My noble friend Lord Beswick has, in commenting on the Amendments, once again indicated that they are outside the scope of the Bill. I realised that that would be said again and I took the trouble of looking up Erskine May and I see quite clearly in the Parliamentary Bible that,
"Amendments are not necessarily limited by the Title of the Bill, since a Committee is empowered to make Amendments relative to the subject matter of the Bill, provided that, where such Amendments are outside the Title, the Committee extends the Title so as to cover them."
I hope, therefore, that the attitude of noble Lords will not be influenced by the fact that the subject matter of the Amendments is outside the Bill.
One or two noble Lords have made the comment that this will be cumbersome, difficult and so on. May I say in the most forceful manner possible that that is utter and complete nonsense. Also, if those views were held, they should have been stated much earlier and not in response to the very right challenge issued by my noble friend Lord Houghton. It may be that some people will not want these provisions because they want no interference with management; it is quite likely. I can see that these provisions will be most unacceptable to quite a large number of companies, companies which are concerned with immediate profit and not with the policyholders as is my noble friend Lord Shinwell. I see that they would feel a measure of restraint if an actuary had to give a certificate to support a certain line of action. Is that difficult? Where is the difficulty?
We have already heard my noble friend Lord Beswick say that the Government support the principle and we had a long statement about the sort of things the Department has in mind, what it has been doing and what it intends to do. None of those comments was made on Second Reading or at the Committee stage but, somehow or another and in a
690
most confused way, all sorts of isolated suggestions have been put forward as offering the same type of protection as the Amendments offer. I suggest that there is no such protection. Why did it not operate in the case of the recent collapse of Nation Life and London Indemnity? Why did all these protective actions by Government not operate in those circumstances?
It has been suggested that there should be a quarterly report. The principle of an actuarial statement is already accepted by the Government. Where lies the difference? I have tried to put this in clear and concise terms and to answer the points made by the noble Lords, Lord Hawke and Lord Drumalbyn, and also to do something to meet the point made by my noble friend Lord Shinwell. We already have the principle, which is accepted and stated by the Government, that they feel the necessity for an actuarial statement to endorse the action of management in the conduct of an insurance company. They have stated that and agreed to it, but it is a quarterly report.
My noble friends and I feel—and I am sure that every Member of this House will agree—that a quarterly report is ideal for an inquest but we are anxious that these companies do not reach the grave, with the policyholders losing in consequence. Therefore, we say that it is as simple as this—and if anyone objects to the wording it can be changed—that every company has an expert actuary who is basically responsible for determining the policy conditions and so on. There is no compulsion in law at the present moment for that company to conduct its affairs in line with the strict professional standards laid down by the actuary. We have companies today—and some of them have gone broke—which were offering a surrender value that was utterly ridiculous. No actuary in his right senses would ever have given a certificate to endorse it. There are companies which went into various kinds of investment and no actuary in his right senses would have endorsed them. It has been suggested that this would mean over-control, but the contrary is the case. This would mean less control in Government terms. It simply means that the expert in the company will have knowledge and will be capable of reporting to that company, highlighting

691
the changes which could be detrimental to the operations of that company.
I am utterly at a loss to understand how any noble Lord opposite can say that this will mean too much intervention. I am amazed at the change of heart on the part of the noble Lord, Lord Aberdare—perhaps I should say "change of mind", because all sorts of things that may affect the mind do not affect the heart—who said that he is quite anxious that we should have some means of increasing and strengthening the protection but that the actuaries are not happy. I have already said that the President of the Institute of Actuaries has indicated that the actuaries are prepared to consider positive proposals for strengthening the preventive legislation. If he said that as recently as a few days ago, how on earth can it be said from the Front Bench that the Institute of Actuaries is in complete agreement that the present legislation is adequate to deal with the situation? According to what their President has said, that is not so, and in consequence one can discard the comments that have been made by the Minister in that regard.
Lord HAWKE: My Lords, would the noble Lord explain exactly what he means by the phrase in Amendment No. 3 to which I referred because I cannot see how any actuary could possibly conform to it? It says that the actuary
"… shall … inform the company in writing of the nature of the changes in the investments of its long term business which may affect the validity …".
"May affect" is something in the future. Does the noble Lord mean that the actuary must get a certificate and send it to the company saying, "If you change any of these investments it may affect the validity of my certificate," or does he mean that the actuary has to be informed when a change takes place and he will say what will be the effect of it?
Lord PEDDIE: My Lords, professional advice must obviously come within the range of "may be". If he were to say it with absolute certainty, then the action of the company or the management would be brought almost within the criminal category, but they could be making decisions which, in his opinion, may affect the stability of that company, and then it is up to management to decide. Thus,
692
it is indeed crystal clear that all that that means is that whenever changes take place in regard to surrender value, large-scale investments, offers made to policyholders and so on—all those things that can affect the operations of an insurance company —they should be subject to the scrutiny of the actuary.
I conclude on the simple note that this is what the actuarial profession is all about, and therefore if it is suggested that this is going to be an over-interference, then I say it may be, but what are we here for? We are here to consider the question of the protection of the policyholder, and I speak as one who has no interest in insurance companies except as a policyholder. I therefore urge noble Lords not to be diverted by the sort of comments we have heard. These are simple Amendments which simply call on actuaries to perform in greater detail their responsibilities not only to the company but, through the company, to the policyholder, about whom we are very much concerned today. I therefore feel that my noble friends and I cannot accept the vague, almost woolly, assurances that have been given, when here in clear and precise terms it is possible in the most simple sort of way to give a measure of protection to the policyholder.
Lord BESWICK: My Lords, with the leave of the House I will answer some questions that have been put to me. My noble friend Lord Peddie has again quoted the President of the Institute of Actuaries in support of his Amendment. I quote again from the letter of 24th May in The Economist in which the President said in reply to the chairman of the Cooperative Insurance Society:
"Mr. Toogoode advocates removing major areas of responsibility for the management of life insurance companies from the directors to the actuary. I consider this wrong in principle and impracticable in operation."
It may well be the case that the President of the Institute of Actuaries has said that he is prepared to consider further measures for the strengthening of control of insurance companies, and of course that is being done. I said in my opening speech that consultation is now taking place with the insurance industry about the further regulations that it is proposed to lay under the 1974 Act. My noble friend Lord Houghton of Sowerby wanted an assurance that the substance of what

693
my noble friend Lord Peddie is seeking is achieved by other methods, and he invited comment from across the Floor of the House. I hope that the comment he had was acceptable to him, and I strengthen what has been said by pointing out that the 1974 Act, the regulations that have been, and the regulations that will be laid under it, plus the strengthening of the guidelines issued to the actuaries, will have the effect of giving all the control which my noble friend Lord Peddie is seeking.
I was asked by my noble friend Lord Shinwell to answer a simple question. He asked whether he will or will not be levied. His question reminded me rather of a question that was once put to an American Secretary of State for Defence who was asked whether a particular weapon was or was not offensive, and the Secretary of State gave the reply, "It depends at which end of the barrel one is standing." I cannot give my noble friend an absolute guarantee that the company with which he is insured will not be levied. I do give him a guarantee, however, that if in future the company with which he is insured gets into difficulty, the others will stand by him by way of levy and, after all, this is the essence of the insurance business. It is quite likely that if my noble friend's house is burnt down the premium which I have paid will go towards recouping him for his
loss. That is insurance. However, it would be quite absurd for me to ask for a guarantee that never in any circumstances will my premium be used to pay or repay any loss that he may suffer.
I was asked again about the importance of prevention. I absolutely agree that prevention is more important than ultimate protection. I think it is a little unfair to be twitted on that now simply because the Bill dealing with prevention was accepted by this House before the present Bill. That is the proper order of priorities, and under that Bill there is provision for the regulations which I have assured the House will be forthcoming. My noble friend Lord Peddie said that there was no control at all along the lines being suggested in the present Bill, but that is quite untrue. There is control; control is specifically there in the 1974 Act, in the regulations. The actuary has to submit a certificate quarterly, guaranteeing that certain requirements are met and I should have thought that this goes pretty well all the way to meeting what my noble friend is after.
4.19 p.m.
On Question, Whether the said Amendments (Nos. 1, 2 and 3) shall be agreed to?
Their Lordships divided: Contents, 11: Not-Contents, 120.

CONTENTS

Allen of Fallowfield, L.

Mais, L.

Rusholme, L.

Bacon, B.

Maybray-King, L.

Shinwell, L.

Brockway, L.

Pannell, L.

Wynne-Jones, L.

Fisher of Rednal, B. [Teller.]

Peddie, L. [Teller.]

NOT-CONTENTS

Aberdare, L.

Buckinghamshire, E.

Fraser of Kilmorack, L.

Adcane, L.

Byers, L.

Gainford, L.

Airedale, L.

Carrington, L.

Gaitskell, B.

Aldenham, L.

Champion, L.

Geddes of Epsom, L.

Alport, L.

Clifford of Chudleigh, L.

Glasgow, E.

Amherst, E.

Clitheroe, L.

Gordon-Walker, L.

Amulree, L.

Collison, L.

Gore-Booth, L.

Arran, E.

Cottesloe, L.

Gridley, L.

Auckland, L.

Cowley, E.

Grimston of Westbury, L.

Balfour of Inchrye, L.

Crathorne, L.

Hailsham of Saint Marylebone, L.

Balniel, L.

Cromartie, E.

Balogh, L

Daventry, V.

Harcourt, V.

Banks, L.

de Clifford, L.

Harris of Greenwich, L.

Barrington, V.

Denham, L.

Hawke, L.

Belstead, L.

Derwent, L.

Henderson, L.

Berkeley, B.

Drumalbyn, L.

Hornsby-Smith. B.

Beswick, L.

Effingham, E.

Hylton-Foster, B

Birk, B.

Elles, B.

Jacques, L. [Teller.]

Bledisloe, V.

Emmet of Amberley, B.

Jessel, L.

Blyton, L.

Erskine of Rerrick, L.

Kilbracken, L.

Killearn, L.

Onslow, E.

Strange, L.

Lauderdale, E.

Paget of Northampton, L.

Strathcona and Mount Royal, L.

Leatherland, L.

Pargiter, L.

Lee of Newton, L.

Platt, L.

Strathspey, L.

Llewelyn-Davies of Hastoe, B.

Popplewell, L.

Sudeley, L.

Lloyd of Hampstead, I..

forritt, L.

Summerskill, B.

Lloyd of Kilgerran, L.

Pankeillour. L.

Taylor of Mansfield, L.

Long, V.

Rathcavan, L.

Thomas, L.

Loudoun, C.

Reigate, L.

Vickers, B.

Lovell-Davis, L.

Ritchie-Calder, L.

Vivian, L.

Lyell, L.

Ruthven of Freeland, Ly.

Wakefield of Kendal, L.

Lyons of Brighton, L.

Sackville, L.

Wallace of Croslany, L.

McLeavy, L.

St. Just, L.

Ward of North Tyneside, B.

Macleod of Borve, B.

Sandford, L.

Wells-Pestell, L.

Mancroft, L.

Seear, B.

Wigg, L.

Mansfield, E.

Segal, L.

Wigoder, L.

Melchett, L. [Teller.]

Sempill, Ly.

Winterbottom, L.

Mowbray and Stourton, L.

Snow, L.

Wise, L.

Northchurch, B.

Stewart of Alvechurch, B.

Wootton of Abinger, B.

Nugent of Guildford, L.

Stow Hill, L.

Young, B.

Ogmore, L.

Strabolgi, L.

On Question, Amendment agreed to.

Resolved in the negative, and Amendments disagreed to accordingly.
Clause 1 [The Policyholders Protection Board]:
4.30 p.m.
Lord BESWICK Lord BESWICK moved Amendment No. 4:
Page 2, line 2, at end insert ("and section (Companies in financial difficulties: transfers of business, etc.)")
The noble Lord said: My Lords, I propose, with the agreement of the House, that with this Amendment we speak to Amendments Nos. 62, 75, 85, 86, 87, 88, 103 and 104. I hope that my noble friends are making a careful note of these as I should not like to have the argument again when we reach those Amendments. These Amendments are all concerned with the new clause to replace the old Clause 16. That clause deals with the Board's power which we deleted in the Committee stage to secure the continuance of an insurance company's business. The clause has been substantially redrafted. It is intended to meet the criticisms expressed at that time, and I hope that the revised clause will be acceptable to noble Lords.
May I refer in some detail to the main changes from the previous clause? The clause will no longer come into operation on a reference by the Secretary of State, but it will in any one of the following cases (listed in subsection (1)): (a) if a provisional liquidator has been appointed; (b) if an insurance company has been proved, in proceedings on a petition for winding up under the Companies Acts, to be unable to pay its debts; or (c)
696
if an application has been made to the courts under the relevant provision of the Companies Acts for the sanctioning of a compromise or arrangement between the company and its creditors involving a reduction of benefit under policies. When we discussed this matter on Committee stage all manner of possibilities were advanced by noble Lords (none of whom I see in the Chamber now) as to what might "trigger off" the reference by the Secretary of State. They feared undue pressure from constituencies, and so on. The general apprehension was that the Board might find themselves under irresistible pressure to effect a rescue. I hope that these alternative "triggers" will provide an objective indication that a company is in difficulties, and I understand these "triggers" have the agreement of the industry.
Secondly, we have written into the clause in subsection (8) the proviso that the Board may not exercise their powers to arrange for the rescue of a company where it appears to them that it would cost less (that is, that the call on the levies would be smaller) to allow the company to go into liquidation and to protect policyholders under Clauses 6 to 11. I was hoping that my noble friend Lord Houghton of Sowerby would be here because I wanted to say that his views expressed at Committee stage on this particular matter were taken into account. We had assumed that in any case the Board would have regard to this factor and, if they wished, the Secretary of State would issue guidance to this effect. I accept it is probably more satisfactory to have the point spelt out unequivocally in the Bill.
A further change is that the restriction on benefit to shareholders and persons involved in the circumstances giving rise to the company's need for assistance has been tightened (this is dealt with in subsection (6)). The restriction now applies to any assistance given by the Board under this clause, whether direct to the company in difficulties or to another company to enable it to receive a transfer of business. The Board will be debarred from using their powers under this clause in any case where it seems to them that shareholders of the company in difficulties, or,
"persons who had any responsibility for or who may have profited from the circumstances giving rise to the company's financial difficulties",
would benefit materially from the Board's intervention.
The other feature of the new clause which appears to differ substantially from the old wording is the final subsection (9). This change is, however, purely one of drafting consequent upon the abandonment of the phrase "protected policyholder" in earlier parts of the Bill. There is no change at all of substance. I hope that in view of the extensive revisions we have undertaken the House will feel able to support the new clause. As I explained in Committee, we regard provisions of this sort as an essential feature of the protection scheme, since it may sometimes be in the interests both of policyholders and of the industry as a whole to rescue a company rather than allow it to go into liquidation. I understand, indeed, that the insurance industry, particularly the life side, have come round to this view, since they agree that it is important for life policyholders, where possible, to be provided with continued cover at a reduced level. It may well be easier to achieve this by keeping a company in being rather than allowing it to go into liquidation and then seeking to arrange a transfer of business or the issue of substitute policies. With that explanation, I hope we shall be able to agree to Amendment No. 4, which is the paving Amendment to the new clause which we shall come to later.
4.37 p.m.
Lord ABERDARE: My Lords, the House will be grateful for that explanation of the new clause, which is really
698
what we are discussing on this paving Amendment. When we were considering the old Clause 16 which was removed at Committee stage, the situation was that the Secretary of State would have been able to identify a company at risk and refer it to the Board. The Board would have been able to rescue that company, either by transferring its business to another company or by using levy funds to keep the company in business. It was our view at the Committee stage that this might well result in automatic rescues and the use of levy funds to support badly managed companies. Now we have an entirely new clause, and I welcome the Government's initiative in putting this in. I believe it goes a long way to meet our criticisms.
In the first place, the Secretary of State has disappeared from the scene. Instead, the clause operates only if the company is in provisional liquidation. That is the first big improvement which has been made by this Amendment. In the second place, the noble Lord has already drawn our attention to the new subsection (8), which allows the Board to rescue a company in financial difficulties only if it appears to them that to do so would not cost more than to protect the policyholders as provided in the other clauses of the Bill or to allow the company to go into liquidation. In my view the new clause is acceptable, and I say that for two reasons. The first is that it is up to the Board to make the decision. The wording is, "the Board may exercise any power"; there is no reason why they should do so. It is a permissive clause, and the Board, of whom the majority come from the insurance industry, can make the crucial decision.
Therefore, this is a safeguard which is of enormous importance. It will allow the benefits, which the noble Lord has rightly said can be brought about by allowing a fund to continue in operation, to be received; but the fact that the Board have a permissive power means that this will not happen in all cases where perhaps it would not be to the general advantage. The second reason why I think that the clause is acceptable is because of subsection (8). If we were not to accept this clause, it would mean that in every case the company would go into liquidation—and that

699
would mean greater cost to the levy than if it were kept in being.
For those two reasons, I personally believe that this is a sensible clause; that the modifications which have been made are satisfactory and that your Lordships should agree to its inclusion. However, I recognise that some of the Life Offices feel that there are difficulties about it. These are highlighted in the Amendment of the noble Lord, Lord Peddie—Amendment No. 62A—in particular the possibility that policyholders may receive more than 90 per cent. of their benefits as a result of a rescue operation and, secondly, that a company which is offering excessive benefits might be rescued and its policyholders continue to receive excessive benefits at the expense of policyholders in conservative and old-established companies.
I have some sympathy with those points of the noble Lord, Lord Peddie, especially with his second point regarding excessive benefits. On the other hand, one has to recognise that this is a permissive power of the Board. If the company concerned were offering excessive benefits, presumably there would be no need for the Board to offer any rescue provisions and they would allow the company to go into liquidation. Again, therefore, that safeguard remains. I see that the noble Lord, Lord Peddie, has left the Chamber. When we come to his Amendment perhaps we shall discuss it in greater detail, but for the moment I am perfectly content to see this clause incorporated in the Bill.
Lord WINTERBOTTOM Lord WINTERBOTTOM moved Amendment No. 5:
Page 2, line 18, at beginning insert ("Subject to subsection (3A) below").
The noble Lord said: My Lords, with the permission of the House, I should like to speak to Amendments Nos. 5 and 6 together. As noble Lords will remember, the purpose of these two Amendments is to place a limit of £10 million on the aggregate borrowings of the Board. At Committee stage an. undertaking was given to my noble friend Lord Peddie that the Government would propose a borrowing limit on Report.
The Board's main source of income will be the levies. The purpose of the borrowing power is to enable the Board to provide themselves with funds when recourse to the levy is impossible— for example, before 1st April 1976, or later if their requirements temporarily exceed the product of the maximum levy permitted—or if it should be inconvenient, for instance, when their immediate requirements are so small that a levy on all companies would be unduly cumbersome. If the Board had no power to borrow money, they would almost certainly face considerable administrative inconvenience, and policyholders might possibly experience temporary hardship while waiting for payment out of some levy.
The figure of £10 million was chosen with regard to the total amount that the levies could produce in the first year of operation. This is estimated at about £24 million for general business and long-term business together. However, this seemed to the Government unduly large for an initial limit and the figure settled upon and proposed in this Amendment is £10 million. This is a figure which we believe is likely to prove sufficient for both the immediate and the longer-term needs of the Board. The figure has been discussed with the British Insurance Association which makes no objection to it. I beg to move.
Lord DRUMALBYN: My Lords, the noble Lord, Lord Beswick, was good enough to write to me on a cognate subject. Supposing that there are no claims, which would mean that a levy would never be required to be made, the Board would go on borrowing simply to remain in existence. It seems very odd to set up a Board which ticks over on borrowed money until something happens. And if it never happens, then it ticks on for ever.
Lord WINTERBOTTOM: My Lords, certainly this is an interesting thought! I assumed that this had been covered at some other position in the Bill, but at such short notice I cannot remember whether it is. As I understand it, the Board are paid expenses, et cetera only if they are functioning. If there is no crisis there is no work and, therefore, no expense; and presumably no borrowing

701
power is required. However, I am speaking from memory and am subject to correction, and if the noble Lord, Lord Drumalbyn, can be more precise than I can be I shall be grateful.
Lord WINTERBOTTOM: My Lords, I beg to move Amendment No. 6.
Amendment moved—
Page 2, line 20, at end insert:
("(3A) The aggregate amount outstanding in respect of the principal of any money borrowed by the Board under subsection (3) above shall not exceed £10 million.")—[Lord Winterbottom.)
4.45 p.m.
Lord BESWICK Lord BESWICK moved Amendment No. 7:
Page 2, line 25, after second ("time") insert ("after consultation with the Board").
The noble Lord said: My Lords, a number of criticisms were made in Committee of the power given to the Secretary of State in this clause to give guidance to the Policyholders Protection Board. After consideration of the points made, the Government remain of the view that the clause is a useful and desirable part of the Bill. As we pointed out at Committee stage, the Bill leaves the Board scope for discretion in certain areas, and it could prove helpful, for the Board at least as much as for the Government, that they should be able to receive guidance as to the performance of their functions. It is true that the discretionary element in the Board's powers has been reduced by various Amendments. but there remain areas in which the Board will have some discretion and where guidance could, in the light of experience, prove valuable to them, particularly if they were seeking support for their general approach to the exercise of their powers. I would say, incidentally, that the guidance could be of only a general nature; the term could not be interpreted to cover guidance on individual cases.
I should say to the noble Lord, Lord Drumalbyn, that the £10 million that was worrying him will, of course, be invested. If things tick over without a levy, I should think everyone will be happy and the money will not be wasted; when it comes to a winding up, if at all, there should be quite a nice little kitty. The use of the Board's borrowing powers may
702
be a matter on which there could usefully be guidance—also the use of their powers to give interim assistance to policyholders of companies in financial difficulties under Clause 15.
Having said that, I recognise that the clause has caused some concern. I was particularly impressed by what the noble Earl, Lord Balfour, had to say, and I undertook in Committee to consider whether it might be possible to amend the clause. I have emphasised that we see the position as being of some benefit to the Board, and to make our intentions quite explicit we now propose to include a provision requiring the Secretary of State to consult the Board before giving them any guidance on any topic. Guidance will thus only be issued in the full knowledge of the Board's views. Similarly, the Board will be fully apprised of the Secretary of State's ideas before any guidance can be issued. I hope that with this Amendment, together with the more explicit definition of the Board's powers in certain other parts of the Bill, this clause will be acceptable to the House.
Lord BALFOUR of INCHRYE: My Lords, I am grateful to the Minister for meeting the point that I made.
Lord ABERDARE: My Lords, the matter we were worried about at Committee stage was in general the wide powers of the Secretary of State, especially, as my noble friend Lord Balfour has said, on Clause 2, coupled with the sweeping powers in Clause 14, and we are glad to see that the Government have tabled an Amendment to take out Clause 14. The introduction in Clause 2 of consultation with the Board is helpful, coupled with the assurances that the guidance will be general. Therefore, the position now will be that before the Secretary of State gives the general guidance he will have to consult the Board (and again it is worth remembering that the Board have a majority of members from the insurance industry) and then, having consulted the Board, he has to get an affirmative approach from both Houses of Parliament. So if the Board should raise any objections when they are consulted their views will undoubtedly be well known to both Houses when such a Resolution comes before them. In the circumstances, I feel that the Government have gone all the way one could possibly expect them to go

703
in modifying this clause, and I would advise your Lordships to accept it.
Lord REIGATE: My Lords, before we abandon discussion on this Amendment it seems to me that we have now made it almost an unnecessary clause. As I understand the position, the Secretary of State can give guidance, but first he must consult with the Board as to what guidance he will give them. Then he issues directions to them—presumably if they agree with the directions—and then it has to come before Parliament. I sincerely hope that this cumbersome engine will never need to be invoked: and as I should think it is almost impossible to use it at all it might just as well be abandoned.
Lord BESWICK: My Lords, I take the point made by the noble Lord, Lord Reigate, but I do not think he quite appreciates what I said about the help that there may be to the Board if a Government issue clearly a guidance which can be fully understood by the industry or by others. They would appreciate the general spirit and the general guidance under which the Board would be likely to operate in the future.
Lord REIGATE: My Lords, I accept that and I quite realise that no harm would be done by it.
Lord DRUMALBYN: My Lords, would it not also be of help to Parliament to know on what lines the Board will act if the guidance is given and laid before Parliament?
Clause 4 [Protected policies and protected policyholders]:
4.54 p.m.
Lord BESWICK Lord BESWICK moved Amendment No. 8:
Leave out Clause 4 and insert the following new clause:
"Protection confined to United Kingdom policies
.—(1) A policyholder is eligible for the assistance or protection of the Board in accordance with any provision of sections 6 to 15 and section (Companies in financial difficulties: transfers of business, etc.) below only in respect of a policy of insurance which was a United Kingdom policy for the purposes of this Act at the material time for the purposes of the provision in question.
(2) A policy of insurance is a United Kingdom policy for the purposes of this Act at any time when the performance by the insurer of any of his obligations under the contract evidenced by the policy would constitute the carrying on by the insurer of insurance business of any class in the United Kingdom."
The noble Lord said: My Lords, I have a feeling that some of my noble friends behind me are missing something, because with Amendment No. 8 I propose, with the leave of the House, to speak to Amendments 9, 10, 11, 17, 19, 21, 23, 24, 25, 26, 27, 29, 34, 36, 57, 58, 59, 60, 61, 65, 67, 70, 71, 93, 94, 95 and 96.
Lord HAWKE: My Lords, will the noble Lord read those out again? He spoke too fast.
Lord BESWICK: As the right honourable gentleman Mr. Macmillan once said, "I am only a once-nightly performer". Is the noble Lord really serious?
Lord HAWKE: No, my Lords, it will be all right.
Lord BESWICK: My Lords, in the light of the views expressed at Committee stage, the Government undertook to look at Clause 4 and the two subsections which define the policies in respect of which policyholders would be eligible for protection under the Bill, because some feeling was expressed during the Committee stage that the original definition was too wide. These Amendments reflect our endeavours to get agreement on a new form of words. In the light of the views expressed in Committee, the Government have had further discussions with the industry. We recognised that the original definition relating to policies, "made in the United Kingdom" and policies involving at least one premium payable in the United Kingdom, was not entirely satisfactory, and the new definition contained in the proposed new clause to replace Clause 4 was worked out in agreement with the industry.
Subsection (1) of the new clause defines policyholders eligible for protection under the Bill in terms of policies that are "United Kingdom policies" (as defined) at the material time. Subsection (2) provides that a policy is a "United Kingdom policy" for the purposes of the Bill at any time when the performance by the insurer of any of his obligations under it
"would constitute the carrying on of insurance business of any class in the United Kingdom".

705
This wording reflects the wording used in the Insurance Companies Act 1974 defining the classes of insurance business for the carrying on of which an insurer requires authorisation under the Act. The definition no longer looks back to where the contract of insurance was originally made, perhaps many years ago, or to where any one premium may at some time have been paid; instead it has regard to whether at the material time—that is, at the time of the recording of the premium income in the company's accounts in the case of the levy, or the time of the beginning of the liquidation in the case of the duties to protect policyholders under Clauses 6 to 11—the company would require an authorisation under United Kingdom insurance legislation to perform its obligations under the policy.
The Government are persuaded—and I think this time they have carried the industry with them—that this is a more realistic and satisfactory way of defining eligible policyholders. However, because the old term "protected policies" has now been replaced by the term "United Kingdom policies" and because under the definition a policy may now change during its life from being a United Kingdom policy for the purposes of the Bill to not being one, and vice versa, a large number of consequential changes to following clauses have been necessary. These include some rearrangement of Clause 15 as well as smaller amendments to Clauses 6, 8 to 11, 16 and 24. None of these Amendments changes the substance of the clauses in question except to the extent necessary to carry out this new definition.
It will have been noticed that in proposing the deletion of the old Clause 4 we are also sweeping away the exclusion from the Bill of marine, aviation and transport insurance and of reinsurance business in old Clause 4(4). However, the exclusion of MAT insurance and reinsurance business in the general field—and I know that the noble Lord, Lord Aberdare, is interested in this point and spotted the apparent difficulty—is restored by Amendment No. 23 to Clause 8; and Amendment No. 27 to Clause 10 restores the exclusion of long-term reinsurance business. Replacement of the old Clause 4 also has the effect of deleting the Secretary of State's power in subsection (5) of
706
that clause to bring MAT insurance and reinsurance within the scope of the Bill by order. This, along with other order-making powers, was criticised in Committee by the noble Lord, Lord Balfour, and I am sorry that the noble Lord, Lord Aldington, is not here because he castigated the Government, if not myself, very strongly about it. I hope it will be agreed that what we have decided will go a long way to meet what was said by the noble Lord, Lord Aberdare, and his noble friends. In view of these changes I hope all these Amendments will be acceptable. I beg to move Amendment No. 8.
Lord BELSTEAD: My Lords, as drafted, the Bill made the payment of only one premium by the person insured the yardstick for inclusion within the scope of the Bill, and as the noble Lord, Lord Beswick, has said, reservations were expressed from various parts of the House that this made the scope of the Bill wider than presumably anyone had intended. I should have thought that it was more satisfactory to make the activity of the insurer the yardstick by using the wording of the 1974 Act, and as this is the effect of Amendment No. 8 I certainly accept it and thank the Government for bringing it forward. At the same time, apart from the consequential Amendments, the noble Lord spoke to Amendments Nos. 23 and 27 which deal with marine, aviation and transport insurance. Here, again, the Government are meeting what I think were broadly two points raised by noble Lords in Committee.
The first was that MAT ought not to be included in the Bill at all; and secondly, that certainly an order-making power to bring MAT within the scope of the Bill would be wholly inappropriate for such a major step, affecting both MAT itself and also the position of private policyholders who would suddenly find this enormous wedge of insurance brought within the Bill. Noble Lord after noble Lord felt that if MAT and reinsurance were to be brought into the scope of the Bill it should be done by new legislation. Among other noble Lords, my noble friend Lord Aldington spoke with some conviction on this point and I should like to say to the Government that he has to be abroad and very much regrets that he cannot be here for this stage of the Bill. For those reasons,

707
I also accept and thank the noble Lord for bringing forward Amendments Nos. 23 and 27.
Lord BALFOUR of INCHRYE: My Lords, I, too, should like to thank the noble Lord. In life one never gets everything one wants but the noble Lord has given us most of what we want and I am grateful.
Lord HAWKE: My Lords, failing the other Amendment which we agreed with, this lessens our apprehension about the length of the proceedings.
Lord BESWICK: My Lords, together with Amendment No. 8 we will include Nos. 9 and 10 and, in addition, I have covered Amendments Nos. 11, 17, 19, 21, 23, 24, 25, 26, 27, 29, 34, 36, 57, 58, 59, 60, 61, 65, 67, 70, 71, 93, 94, 95 and 96. I apologise for putting all these together, but it will be appreciated that it was a term which ran right through the Bill. I therefore beg to move.
Clause 6 [Compulsory insurance policies and societies]:
Lord BESWICK: My Lords, I beg to move Amendments Nos. 9, 10 and 11.
Amendments moved—
Page 4, line 37, leave out ("protected")
Page 5, line 7, leave out ("protected")
Page 5, line 12, leave out paragraph (a)—(Lord Beswick.)
5.4 p.m.
Lord WINTERBOTTOM Lord WINTERBOTTOM moved Amendment No. 12:
Page 5, line 23, leave out ("subsection (5) below") and insert ("section (Exclusion and modification of duties of the Board where payments are made by other persons, etc.) below and the following provisions of this section.")
The noble Lord said: My Lords, I hope it will be of help to the House if I group a number of Amendments together. In order to fit the jig-saw puzzle together, may I say that the key Amendment is No. 55 which inserts a new clause after Clause 13. In the main, I shall be speaking on this new clause and the other Amendments are consequential to
708
it. May I mention the Amendments which are linked with the key Amendment No. 55, which I am going to move together? These are Nos. 12, 14, 18, 20, 28, 32 and 50, and, as I said, No. 55 is the key Amendment. The new clause is a redrafting of subsections (2), (3), (4) and (5) of Clause 13 as it now stands, and Amendment No. 50 to Clause 13 provides for deletion of the subsections superseded by the new clause. I shall therefore concentrate my comments on the new clause.
The purpose of subsections (2) to (5) of Clause 13 was to guard against a policyholder receiving payment twice over in respect of the same liability, and this remains the only purpose of the new clause. Clause 13 was already something of an omnibus clause, and now that we are proposing to add further general provisions to it we thought it convenient to off-load subsections (2) to (5), dealing as they do with one distinct problem, into a separate clause. In transferring subsections (2), (3), (4) and (5) of Clause 13 into the new clause, we have extensively redrafted them. The original formulation proved to be deficient in certain respects. For instance, the original subsections (3) and (4) of Clause 13 do not relieve the Board of their duty when someone other than the Board secures the object specified in Clause 11(1) by arranging a partial or complete transfer or replacement of a protected policy—the same defect applies to the original subsection (5) of Clause 13—and we are not on reflection satisfied that the provisions in subsection (3) regarding the order in which sums received from third parties are to be applied will always operate fairly for the policyholder. The new clause attempts to remedy these deficiencies, though it does not alter the general principles and purpose of the original provisions.
Subsection (1) of the new clause is designed to prevent the Board's duties under Clauses 6, 7 and 8—which relate only to general insurance business—leading to double payments to policyholders or others. It relieves the Board of the duty to make or secure payments in so far as the prospective recipient has already received payments from the Board or from elsewhere in respect of the liability out of which the Board's duty has arisen. There are many channels by which someone entitled to the Board's protection in

709
relation to a general business policy might receive payment; for example, from the Board under their discretionary power in Clause 15; from another United Kingdom protection scheme, such as the Motor Insurers' Bureau in respect of a compulsorily insurable Road Traffic Act liability; from a trust or other arrangement established for the benefit of policyholders in the event of liquidation; from an overseas policyholder's protection scheme; from the liquidator paying a dividend. These are all examples where a double payment might be drawn. In these and other cases it is clearly right to relieve the Board of any obligation to make double payments.
Subsections (2) to (5) of the new clause are designed similarly to prevent the Board's duties in respect of long term policies in Clauses 10 and 11 leading to double payments. The operative provisions are contained in subsections (4) and (5), subsections (2) and (3) being definitional. Subsection (4) relieves the Board entirely of the duty to assist a policyholder under Clauses 10 and 11 when it appears to them wholly inappropriate to do so in view of assistance or protection received by the policyholder from elsewhere. Subsection (5) deals with cases where the assistance received by the policyholder from elsewhere seems to the Board to make their own assistance only partially inappropriate; here the Board are entitled to reduce the scale of their own assistance to whatever level seems appropriate to them in the circumstances. Subsections (2) and (3) define the kinds of assistance and protection of which the Board is to take account in relation to subsections (4) and (5). The assistance from other sources with which these subsections are concerned could come to a policyholder, for example—from an overseas policyholder's protection scheme under which the policyholder was entitled to assistance in respect of the same liability; from a trust or other arrangement established for the benefit of policyholders in the event of liquidation; or from the liquidator paying a dividend. These are points I made earlier.
The purpose of subsection (6) is simply to ensure that any sums received by a policyholder from the Board under Clause 11(5) go to reduce any claim he may have to the Board's assistance under subsections (6) or (7) of Clause 11 in respect of
710
the capital value of his policy in the winding up. Subsection (7) enables the Board to postpone taking action in fulfilment of their duties under Clauses 6 to 11 where it appears to them that, independently of any measures they may take, any other person—apart from the liquidator—may make a payment that would under subsections (1) to (5) of this new clause have justified a reduction of any sum they were to pay or secure. This, again, is directed against the possibility of the duties of the Board under the clauses quoted above leading to double payments, and ensures that the Board need not fulfil those duties until other sources of protection or compensation are exhausted. It is this subsection which, for the time being, releases the Board from the duty of protecting policyholders and others under Clause 6(4) and Clause 7 who are entitled to protection from the Motor Insurers' Bureau, thus allowing the MIB arrangements to continue undisturbed. It also releases the Board from their duties of protecting a person for as long as it appears to them that he may qualify for payments under an overseas protection scheme. Subsection (8) explains references in subsections (1) and (2)(a) of this clause to payments referable to a liability of a company in liquidation. Having said all that, I hope that the new clause as drafted, with the explanation I have given, will enable your Lordships to agree to it.
Lord LYELL: My Lords, I should like to thank the noble Lord, Lord Winterbottom, for the extremely clear way in which he set out this new clause. I must admit that I am a trifle baffled but I have made the best attempt I can to go through it. I was a little mystified by one or two of the definitions that the noble Lord gave. I did not see the word "definitional" in Clause 24. I think the word "definitive" might be better. We were discussing this point during the Committee stage, and it may be a question of mere drafting. However, we are grateful for the clarification given by the noble Lord. There were a number of points of doubt about double payments, and about whether policyholders could reclaim further benefits than were clearly intended by the Bill. So far as we can see, the very full new clause which has been presented to us removes almost all

711
of these doubts. Therefore, we are grateful to the noble Lord, and wish to accept the Amendment.
5.15 p.m.
Lord BESWICK Lord BESWICK moved Amendment No. 13:
Page 5, line 28, leave out ("or on behalf of")
The noble Lord said: My Lords, I beg to move Amendment No. 13, and I propose to take with it Amendments Nos. 15, 22, 30 and 49, if that is agreeable to your Lordships. If your Lordships will look at Clause 13, the substantive Amendment is to that clause. The new subsection (1) of Clause 13 elaborates the circumstances in which the Board may exercise their duties by securing the payment of sums to persons other than policyholders. It is a drafting Amendment designed to make the intention of the provision clearer; it does not represent any change of policy. The Amendments to Clauses 6, 8 and 10 are simply consequentials of the new Clause 13(1).
The new subsection (1) of Clause 13 applies where the Board are required to make payments under Clause 6, compulsory insurance policies; Clause 8, general policies other than compulsory insurance policies; Clause 10, payment of claims under long-term policies; and subsections (5), (6) and (7) of Clause 11, payments to holders of long-term policies arising after a liquidation. The new subsection makes it clear by virtue of paragraph (a) that where it appears to the Board that payment in respect of any sums falling due under a policy could have been made in accordance with the policy to a person other than the policyholder, the Board may secure payment in respect of such sums to that person, instead of to the policyholder. This allows, in particular, for payments direct to third parties to whom the policyholder is under a liability.
Furthermore, by virtue of paragraph (b) of the new subsection, where it appears to the Board that any sums paid under a policy would have been subject to any trust, charge or other agreement binding on the policyholder, the Board may secure payment in respect of such sums to the person appearing to them to
712
be entitled under the trust, charge or agreement in question, instead of to the policyholder. This provision is designed to cover, for example, cases where the nominal policyholder is a trustee, and not the beneficiary under the policy; or where the policyholder may have deposited his policy with someone else as security for a loan, authorising the company to make payments under the policy to the creditor. In the Bill as originally drafted, there was some doubt as to whether the Board possessed the necessary flexibility, particularly under Clause 11, to deal with such cases. Any payment made by virtue of this subsection to any person other than the policyholder will be treated for the purposes of the provision in question as a payment to the policyholder; it may thus be made on such conditions, concerning assignment of the recipient's rights to the Board, as the Board think fit, in the same way as payments to policyholders.
The new subsection (1) of Clause 13 entails minor drafting changes and consequential Amendments to the first six lines of the old subsection (1). This has been done by making the old subsection (1) into subsection (1A) and including the redrafted passage at the end of Amendment No. 49. It also entails minor consequential Amendments to Clauses 6, 8 and 10. The purpose of these Amendments, taken together, is to make the drafting in general somewhat simpler. I can well imagine some eyebrows being raised about that, but I am assured that for those who have to work by it, it will in fact be more simple to understand. They remove any ambiguity there may have been as to the circumstances in which the Board could secure the payment of sums to a person other than the nominal policyholder. On that basis, I hope it will be agreed that we can accept Amendment No. 13, and subsequently take Amendments Nos. 15, 22, 30 and 49. I beg to move.
Lord LYELL: My Lords, we are once again grateful to the noble Lord, Lord Beswick, for clarifying these points. I think probably there was a certain amount of ambiguity so far as third parties were concerned, as to who should and who should not receive benefits from the Board. Although they may not appear to be simple, I think these Amendments clarify many of the points which were raised at Committee stage. I am

713
instructed that these Amendments are of a drafting nature and that they do clarify the Bill, and we are glad to accept them.
Lord BESWICK: My Lords, we have dealt with Amendments Nos. 14 and 15. I beg to move.
Amendments moved—
Page 5, line 35, after ("13") insert ("and section (Exclusion and modification of duties of the Board where payments are made by other persons, etc.) and subsection (7A)")
Page 5, line 41, leave out ("or on behalf of")—(Lord Beswick.)
5.21 p.m.
Lord BESWICK Lord BESWICK moved Amendment No. 16:
Page 6, leave out line 5 and insert ("all of whom are individuals")
The noble Lord said: My Lords, this is an Amendment designed to meet points that were made at Committee stage. Where insurance is not compulsory, protection under the Bill in the field of general business is confined to private policyholders as defined in Clause 6(7). Subsection (7) defines "private policyholder" as an individual or a partnership or unincorporated body containing at least one individual. In preparing this definition we had in mind the case of an individual member of a partnership or other incorporated body some of whose fellow members may be limited companies. Unlike his corporate fellow members he would have unlimited personal liability for his share of any claims that were made against the body, and if the body's insurance company were liquidated he could suffer hardship and merit the Board's protection as much as any other individual policyholder.
In Committee we accepted that the original wording was unsatisfactory in that it breached the principle that, except in compulsory insurance cases only individuals and not corporate bodies should be eligible for the Board's protection. We did not immediately accept the Amendment tabled by noble Lords opposite because we wanted to consider whether we could devise a formula that extended protection to individual members only in partnerships or other unincorporated bodies. Since this gave rise to legal complications, we have now decided to accept
714
the original proposal. I hope, therefore, as it sprang from the other side, it will be acceptable to them on this occasion. beg to move.
Lord BELSTEAD: My Lords, this Amendment exactly repeats one which was moved from this side of the House. Although, like the Government, we realise that there is this reservation about the question of partnerships, as the Government have not been able to see their way round the point and neither indeed could we, I should like to thank the noble Lord for meeting the major point by bringing forward this Amendment.
Lord BESWICK: I beg to move Amendments Nos. 17 to 27.
Amendments moved—
Page 6, line 6, leave out subsection (8) and insert—
("(7A) The duty of the Board under subsection (4) or (6) above shall not apply—

(a) in the case of any policy, unless it was a United Kingdom policy at the beginning of the liquidation; or

(b) in the case of any security in respect of third-party risks, unless it would have been a United Kingdom policy at the beginning of the liquidation if it had been an insurance policy and the contract governing the security had been a contract of insurance.

(8) References hereafter in this Act to policies which were United Kingdom policies at any time and to policyholders in respect of such policies shall be construed as including references to—

(a) securities to which this section applies which would have been United Kingdom policies at the time in question if they had been insurance policies and the contracts governing the securities had been contracts of insurance; and

(b) security holders in respect of such securities").

Clause 7 [Third-party rights against insurance companies in road traffic cases]:
Page 6, line 13, after ("13") insert ("and section (Exclusion and modification of duties of the Board where payments are made by other persons, etc.)").
Clause 8 [General policies other than compulsory insurance policies]:
Page 6, line 26, leave out from ("any") to ("a") in line 28 and insert ("general policy other than").
Page 6, line 30, after ("13") insert ("and section (Exclusion and modification of duties

715
of the Board where payments are made by other persons, etc.)").
Page 6, line 34, after ("applies") insert ("which was a United Kingdom policy at the beginning of the liquidation").
Page 6, line 34, leave out ("or on behalf of").
Page 6, line 38, at end insert—
("(4) In this Act "general policy" means any policy evidencing a contract the effecting of which constituted the carrying on of general business of any class, not being—

(a) a contract the effecting of which constituted the carrying on of marine, aviation and transport insurance business, or

(b) a contract of reinsurance.").

Clause 9 [Limits on the ditties of the Board under sections 6 to 8]:
Page 6, line 41, after ("policyholder") insert ("in respect of a policy of a company in liquidation which was a United Kingdom policy at the beginning of the liquidation").
Page 7, line 4, leave out from ("any") to first ("to") in line 5 and insert ("general policy which was a United Kingdom policy at the beginning of the first-mentioned company's liquidation").
Clause 10 [Long term policies]:
Page 7, line 16, leave out ("protected").
Page 7, line 18, at end insert ("not being a contract of reinsurance").—(Lord Beswick.)
Lord BESWICK: My Lords, we dealt with Amendment No. 28 with Amendment No. 12. I beg to move.
Amendment moved—
Page 7, line 19, after ("13") insert ("and section (Exclusion and modification of duties of the Board where payments are made by other persons, etc.)").—(Lord Beswick.)
Lord BESWICK: My Lords, we have already dealt with Amendments Nos. 29 and 30. I beg to move.
Amendments moved—
Page 7, line 22, after ("policy") insert ("which was a United Kingdom policy at the beginning of the liquidation").
Page 7, line 23, leave out ("or on behalf of").—(Lord Beswick.)
Clause 11 [Special provision for future benefits under long term policies]:
Lord WINTERBOTTOM Lord WINTERBOTTOM moved Amendment No. 31:
Page 7, ine 25, at beginning insert—
("( ) References hereafter in this section to relevant future benefits under any long term
716
policy of a company in liquidation are references to sums which would have fallen due to be paid to the policyholder by the company in accordance with the terms of the policy if the company had not gone into liquidation.").
The noble Lord said: My Lords, with the agreement of the House, I should like to group together Amendments Nos. 31, 38, 40 and 41. These are simply drafting Amendments designed to simplify Clause 11 by substituting in subsections (1), (2) and (4) the expression "relevant future benefits" for the cumbersome phrase "sum which would have fallen due to be paid by the company … if the company had gone into liquidation" and parallel phrases. Amendment No. 31 introduces a new subsection at the beginning of the clause defining the expression "relevant future benefits" accordingly. The meaning of the clause and the duties of the Board under it are not affected in any way. I think your Lordships will agree that the short phrase "relevant future benefits" with its definition is superior to that which appeared In the original text, and for this reason I commend it to your Lordships. I beg to move.
Lord BESWICK: My Lords, we have already dealt with Amendment No. 32. I beg to move.
Amendment moved—
Page 7, line 25, after ("13") insert ("and section (Exclusion and modification of duties of the Board where payments are made by other persons, etc.)").—(Lord Beswick.)
Lord BESWICK Lord BESWICK moved Amendment No. 33:
Page 7, line 26, leave out ("to secure") and insert ("as soon as reasonably practicable after the beginning of the liquidation, to make arrangements for securing").
The noble Lord said: My Lords, with Amendment No. 33 I suggest we take No. 42. They are both drafting Amendments which do not materially affect the substance of the clause. Their purpose is to make clear the timing of the duties of the Board under subsections (1) to (4). The present text of subsection (1) requires the Board to secure—no particular time is mentioned—that a policyholder "receives or will receive" the appropriate payment "as soon as reasonably practicable after the time when the sum would"

717
but for the liquidation "have fallen due under the policy". On consideration the Government took the view that the phrase "as soon as reasonably practicable" should rather govern the commencement, after the liquidation, of the Board's efforts to secure payments, and that it should be the Board's aim to have the payments made to the policyholder at the time when they would have fallen due, but for the liquidation, rather than as soon as reasonably practicable afterwards. It is a fine point, but I hope on balance it will be acceptable. Amendment No. 42 which relates to subsection (5), is simply a consequential Amendment to the Amendment to subsection (1). I beg to move.
Lord BESWICK: My Lords, I beg to move Amendment No. 34.
Amendment moved—
Page 7, line 29, leave out ("receives or") and insert ("which was a United Kingdom policy at the beginning of the liquidation").— (Lord Beswick.)
Lord BESWICK Lord BESWICK moved Amendment No. 35:
Page 7, line 30, leave out from ("receive") to ("in") in line 34 and insert ("ninety per cent. of any relevant future benefit under the policy at the time when the benefit").
The noble Lord said: With this Amendment I would propose, if noble Lords agree, to take Amendments Nos. 37 and 39. Amendment No. 35 contains a change which is consequential on Amendment No. 31 to Clause 11. The new words in Amendment No. 37 are consequential to Amendment No. 8 to Clause 4. These three Amendments, however, also give effect to a matter of substance: they provide that the Board's duty under Clause 11 in seeking to arrange a transfer of the company's long-term business or the issue of substitute policies is to secure that the policyholder will receive 90 per cent. of any relevant future benefit, as defined in the new subsection at the beginning of this clause. As previously drafted, the Board's duty was to secure that the policyholder received at least 90 per cent. The Amendments represent an attempt by the Government to meet the purpose of certain Amendments moved by the noble Lord, Lord Peddie, to Clause 11 in Committee. As he has now joined us,
718
I hope that he will accept that this does what he sought to do. I beg to move.
Lord BESWICK: My Lords, I beg to move Amendments Nos. 36 to 42.
Amendments moved—
Page 7, line 41, leave out ("protected") and insert ("long term")
Page 7, line 42, leave out ("at least") and insert ("which were United Kingdom policies at the beginning of the liquidation")
Page 7, line 43, leave out from ("any") to end of line 44 and insert ("relevant future benefits under those policies")
Page 8, line 11 leave out ("at least")
Page 8, line 12, leave out from ("any") to ("the") in line 14 and insert ("relevant future benefit under")
Page 8, line 17, leave out from ("any") to end of line 18 and insert ("difference between any relevant future benefits under the policy it replaces and the corresponding benefits provided for under the substitute policy")
Page 8, line 19, leave out ("secure" and insert ("make arrangements for securing")— (Lord Beswick.)
5.31 p.m.
Lord WINTERBOTTOM Lord WINTERBOTTOM moved Amendment No. 43:
Page 8, line 23, leave out from ("13") to end of line 32 and insert ("and section (Exclusion and modification of duties of the Board where payments are made by other persons, etc.) and subsection (8) below, to secure that ninety per cent. of any relevant future benefit under any such long term policy of the company as is so mentioned which would have fallen due in accordance with the terms of the policy during that period is paid to the policyholder as soon as reasonably practicable after the time when the benefit in question would have fallen due under the policy; and any arrangements made by the Board in pursuance of subsection (2) or (3) above shall not be required to cover any such benefit in so far as any sums have been paid to the policyholder in pursuance of this subsection by reference to that benefit")
The noble Lord said: My Lords, this Amendment is simply a revision of the drafting of subsection (5). Its effect is threefold: first, it makes the wording of subsection (5) of Clause 11 more consistent with that of Clause 10(2), to which it is parallel, the only difference being that Clause 10(2) relates to benefits under a policy that mature before a company's liquidation and Clause 11(5) refers to benefits maturing after the beginning of a liquidation; secondly, it makes

719
it clear that the Board's duty is to protect the policyholder to the extent of 90 per cent. and not more than 90 per cent. of the benefits he would have been entitled to under his policy; and thirdly, it permits the Board, in so far as they may have secured payments for the policyholder under this subsection, to reduce the scale of any protection they may subsequently provide under subsection (2) or (3). The Amendment has also been drafted in terms that reflect drafting changes proposed elsewhere in the Bill in other Government Amendments. I beg to move.
Lord BESWICK Lord BESWICK moved Amendment No. 44:
Page 8, line 37, leave out from ("13") to end of line 41 and insert ("and section (Exclusion and modification of duties of the Board where payments are made by other persons, etc.) and subsection (7) below, to pay to the policyholder a sum equal to 90 per cent. of the value attributed to his policy for the purposes of any claim in respect of his policy in the winding up of the company, as soon as reasonably practicable after any such claim ").
The noble Lord said: My Lords, the purpose of this Amendment is to remedy a minor technical defect in the original version of subsection (6). I am advised that in the case of insurance companies that are being wound up by the court or under the court's supervision it is not uncommon for the court to dispense with the submission of formal "proofs" of debt by policyholders. The Amendment therefore eliminates references to the admission of "proofs" and instead refers to the admission of "claims" attributable to the value of the policy. The intention behind the subsection remains unchanged. I beg to move.
5.36 p.m.
Lord BESWICK Lord BESWICK moved Amendment No. 45:
Page 9, line 10, leave out ("this section") and insert ("subsections (2) to (5) above").
The noble Lord said: My Lords, this Amendment improves the original text of subsection (8). This subsection enables the Board to make their assistance to a policyholder under Clause 11 conditional upon his payment of any premiums that would, but for the liquida-
720
tion, have fallen due under his policy. However, it is not appropriate that the Board should be in a position to impose conditions of this kind when they are protecting policyholders under subsections (6) and (7) of Clause 11. These two subsections relate to the value attributed to a policy in the winding up of the company (or otherwise, as may be required by regulations under subsection (7)), a value which would be assessed as at the beginning of the liquidation. When protection is given on this basis it would be wrong for the policyholder to be required to pay premiums due since the beginning of the liquidation. The Amendment accordingly excludes assistance provided to policyholders under subsections (6) and (7) from the scope of subsection (8). I beg to move.
Clause 12 [Disproportionate benefits under long term policies]:
Lord WINTERBOTTOM Lord WINTERBOTTOM moved Amendment No. 46:
Page 9, line 18, after ("policy") insert ("of a company in liquidation which was a United Kingdom policy at the beginning of the liquidation").
The noble Lord said: My Lords, this Amendment is necessary as a consequence of the Amendment accepted in Committee which places the Board under an obligation, rather than giving them discretion, to refer a long-term policy to an independent actuary if it appears to them that the benefits are or may be excessive in any respect. Without the words "of a company in liquidation etc.…" the clause might be interpreted as placing the Board under an obligation to refer any such policy to an actuary. A duty to do so arises only in the case of a company in liquidation. The new phrase "… which was a United Kingdom policy at the beginning of the liquidation" is consequential of the new definition of eligible policyholders in Clause 4. I beg to move.
Lord BESWICK Lord BESWICK moved Amendment No. 47:
Page 9, leave out lines 24 to 34 and insert—"—

(a) stating, with respect to any of the benefits provided for under the policy, that

721
in his view the benefit or benefits in question are excessive; and

(b) recommending, accordingly, that for the purposes of sections 10 and 11 above any liability of the company under the policy or any future benefit under the policy should be treated as reduced or (as the case may be) disregarded;

then, for the purposes of the application of section 10, of any provision of subsections (1) to (5) of section 11, or of any provision of any regulations made under subsection (7) of section 11 above in relation to the policy (as the case may require), the liability or benefit in question shall he treated as reduced or (as the case may be) disregarded in accordance with the actuary's recommendation.
(3) In any case where—

(a) a claim has been admitted in the winding up of a company in respect of any policy which is the subject of a report by an actuary under subsection (2) above; and

(b) that report indicates, or the actuary makes to the Board a further report in writing indicating, what value would in his view have been attributed to the policy in the winding up if any future benefit under the policy to which any recommendation in the report under subsection (2) above relates had been treated as reduced or disregarded in accordance with the recommendation in determining the claim in respect of the policy in the winding up;

subsection (6) of section 11 above shall apply as if the value so indicated were the value attributed to the policy for the purposes of the claim in respect of the policy in the winding up.
(4) In this section "future benefit", in relation to any long term policy of a company in liquidation, means any sum which might have become payable by the company in accordance with the policy if the company had not gone into liquidation (whether or not it is a relevant future benefit under the policy within the meaning of section 11 above).".
The noble Lord said: My Lords, Amendment No. 47 is an extensive Amendment, but is only a drafting Amendment. Having said that it is only a drafting Amendment, let me say it is an important drafting Amendment, and it gives effect to a point made by my noble friend Lord Peddie in an Amendment which he later withdrew and which I undertook to have examined. The Amendment is designed partly to make the wording of the clause reflect the revised wording of Clause 11, and partly to rectify certain defects in the original clause which made the application of the clause slightly less comprehensive than it should have been. The intention remains that any duty of the Board under Clauses 10 or 11 in relation to a policy which is referred to an actuary
722
under Clause 12 shall be modified in accordance with the actuary's recommendation.
The revised subsection (2) deals with the reduction of sums the payment of which the Board are required to secure in respect of outstanding claims or future benefits under long-term policies, or as a result of regulations made by the Secretary of State under subsection (7) of Clause 11. Paragraph (a) deals with the actuary's statement that benefits provided for under a policy are excessive, and paragraph (b) with his recommendation that benefits be reduced. I understand that this is what my noble friend wanted. I should not like it to be thought that we are not amending the Bill as a result of what he has said. The revised wording makes explicit what was implicit in the original version, that if only some of the benefits under a policy are excessive the actuary may recommend that they, and not the others, be reduced; and that the actuary may recommend that any benefit be disregarded altogether. I beg to move.
5.40 p.m.
Lord PEDDIE Lord PEDDIE moved Amendment No. 48:
After Clause 12 insert the following new clause:
Priority of debts to policyholders of protected policies in winding up
"Priority in liquidation for outstanding insurance claims and requirement that liquidator shall make payments on insurance claims covered by an indemnity from the Board.
.—(1) In the winding-up of a company in liquidation, every liability of the company in liquidation towards any policyholder under the terms of any policy evidencing a contract the effecting of which constituted the carrying on of general business of any class, being a liability which existed before the beginning of the liquidation to make a payment to a policyholder (all such liabilities being hereafter in this section referred to as "outstanding insurance claims"), shall be paid in priority to all other debts other than those specified in section 319 of the Companies Act 1948.
(2) The liquidator of a company in liquidation, as soon as practicable after the beginning of the liquidation, shall ascertain whether the assets of the company in liquidation, other than the assets representing the fund or funds maintained by the company in respect of its long term business, are sufficient to pay the debts specified in section 319 of the Companies Act 1948 and the outstanding insurance claims.
(3) If the said assets are sufficient for this purpose, the liquidator shall pay the debts specified in section 319 of the Companies Act 1948 and the outstanding insurance claims as soon as practicable after he has ascertained that the said assets are sufficient for this purpose, and before paying any other debts owing by the company in liquidation.
(4) If the said assets are insufficient for this purpose, or if the liquidator is uncertain whether or not the said assets are sufficient for this purpose, but the assets are sufficient to pay the debts specified in section 319 of the Companies Act 1948, the liquidator shall pay these debts and such percentage of the outstanding insurance claims as the liquidator considers the remainder of the said assets will cover provided such percentage is 90 per cent. of more.
(5) If the percentage ascertained in accordance with subsection (4) above is less than 90 per cent. the liquidator shall pay 90 per cent. of all outstanding insurance claims in respect of which the Board is prepared to indemnify the liquidator against all actions, claims and liabilities which may be incurred by him as a result of making such payments, and the percentage ascertained in accordance with subsection (4) above of all other outstanding insurance claims, provided the assets of the company in liquidation are sufficient for this purpose.
(6) If in order to discharge the duty placed on the Board by section 10 or section 11(5) above the Board indemnifies the liquidator against all actions, claims and liabilities which may be incurred by him as a result of making the payments specified by the Board, the liquidator shall forthwith make such payments from the assets of the company in liquidation, provided such assets are sufficient for this purpose."
The noble Lord said: My Lords, this Amendment, which deals with priority in liquidation, is similar to Amendments which my noble friend and I moved in Committee but it has been modified and improved in the light of the comments made at that stage. The wording relating to the indemnity to the liquidation in subsections (5) and (6) has been altered, as a result of legal advice I have received, to give fuller indemnity. As I mentioned earlier, my noble friends and I are very much concerned to ensure that if an insurance company fails, the cost of any protection arrangements should be borne as fairly as possible and this Amendment is directed simply towards that end. If an insurance company transacting general insurance—that is, insurance other than life insurance—fails, then the policyholder claimants in the liquidation fall into two classes. First, there are those who had an insurance claim on the policy before
724
the liquidation but the claim has not been made or paid before the company failed; for example, a man's house might be burnt down, and I gave an illustration on a previous occasion. Secondly, there are policyholders without claims outstanding but who have a claim in the liquidation for a refund of the proportionate part of the last premium they paid so that they may replace the insurance with another insurance company.
In this country these two kinds of claim in the liquidation rank equally so that if, for example, the assets of the failed company were sufficient to cover, say, 80 per cent. of the liabilities, then a person with an outstanding £10,000 fire claim on his house would receive £8,000 from the liquidator, usually after very considerable delay, perhaps running into several years, while a person who had just paid a £20 premium could receive, say, £16 from the liquidator. This is quite different from the practice in most other countries, where the outstanding insurance claims take priority over claims for part refund of premium. In most other countries the £10,000 fire claim would be met in full but the claim for a premium refund of, say, £20 might be met only to the extent of £12, depending on the assets available.
This Amendment seeks to bring the position in this country into line with most other countries. It does, of course, make a small change in the liquidation law as it applies to insurance companies, and this point was mentioned in reply to my contention when we discussed this matter on the last occasion. However, there is in my opinion nothing wrong with that in a Bill dealing with policyholder protection. I might say in passing that the Insurance Act 1973 made quite substantial changes in the liquidation law applying to insurance companies. The proposed change is important for two reasons. First, it would mean that outstanding insurance claims of all kinds would normally be paid in full whereas the guarantee scheme in the Bill guarantees payment only at the 90 per cent. level, and then only on policies held by individuals. Secondly, it would reduce the cost of the guarantee scheme because in most cases the outstanding insurance claims would be met in full from the assets of the failed company, so that more than likely there would be no cost under the guarantee scheme.
I am sure that in due course we shall bring our insurance liquidation procedures into line with those of Europe, and this will include the change to which I am referring, but this is not likely to occur for a number of years, perhaps ten years or so. It is therefore important to make this change now, when we are discussing this whole question of protection of the policyholder, both to protect the insurance claimants in any insurance company which may fail in the next 10 years or so, and also to protect the policyholders in other insurance companies who have to pay the levy. The provisions in the Amendment would in no way prejudice further changes to come into line with Europe, if that be our ultimate intention.
Subsections (2) and (3) require the liquidator to ascertain whether the assets of the failed company are sufficient to cover the statutory preferential creditors and the outstanding insurance claims and then to pay such claims as soon as possible. Subsections (4) and (5) cover the the position where there is doubt whether the assets are sufficient to cover the preferential creditors and outstanding claims, although this will rarely be the position if the Department of Trade has acted reasonably promptly when the insurance company commenced to fail. These subsections provide that the liquidator shall pay 90 per cent. of the outstanding insurance claims with a full indemnity from the Board in respect of claims covered by the guarantee scheme, if this is necessary. These subsections deliberately do not provide for the 100 per cent. payment on compulsory insurance claims because to give a super priority to compulsory insurance claims would unnecessarily complicate the position in liquidation. In order to implement the 100 per cent. guarantee for these claims, which noble Lords will recollect is provided for in the Bill, the Board can always proceed by arrangement with the liquidator or alternatively can implement the guarantee separately. As I have mentioned previously, it should be very unusual for the assets of the failed company to be insufficient to meet the preferential creditors and the outstanding insurance claims in full—that is, unless there has been considerable delay in intervening in the affairs of the company which was on the point of failure.
Subsection (6) relates to life insurance and provides that if the Board should decide to meet its obligations under the Bill in respect of the life insurance business of a failed company by giving the liquidator a full indemnity, then the liquidator should accept the indemnity and make the payments accordingly. This provision is required simply to avoid difficulties similar to those which have arisen with Nation Life, where the liquidator has felt unable to accept the indemnity offered without first obtaining the authority of the court, and this has delayed matters very considerably. This Amendment is important in order to treat fairly both the policyholders of the failed insurance company and the policyholders in other insurance companies who have to nay the levy.
I frankly admit—I am sure this will be mentioned—that the drafting of the Amendment is legal and highly technical and may in consequence be imperfect. If the Government advisers consider that it is technically imperfect, I suggest that it is for the Government to draft a technically correct Amendment which will achieve the same result and not to refuse it or refuse to do anything about it because it is inconvenient. I believe that this Amendment is valuable and moves a considerable step forward in the whole aspect of protection.
Baroness FISHER of REDNAL: My Lords, my comments will be brief because my noble friend Lord Peddie has enunciated the technical reasons for the Amendment. I intend to adopt a common sense approach, although that does not mean that my noble friend did not move the Amendment in a common sense way. If we are to look at consumer protection —and one thinks of this as a consumer protection Bill, though, as we go further through it we shall have to be very careful that, instead of being a Policyholders Protection Bill it does not become a Policyholders Penalty Bill—we must recognise that policyholders who are not ambitious in their insurance will be left holding the baby while all the other people get away scot free. It is important—and I feel that my noble friend Lord Peddie made this quite clear—to recognise that what is required is a review of the liquidation procedures so that we do not have the lengthy and expensive liquidation procedures of the present

727
time. We should be able to avoid that and to achieve a system which would enable benefits to continue to be paid during those liquidation procedures. What we are asking for is good consumer protection and reasonable fairness. By that, we are saying that, before we ask policyholders in any other companies which might be called on to make payment under the guarantee scheme, we should first of all make the first claim on the assets of the company which is the defaulter. I do not feel that this is an unusual request. I believe that such a procedure is fairly general in other parts of the world.
However, the most important thing—and I believe my noble friend made this point with the example which he gave this afternoon and on previous occasions about the person who is involved in fire insurance—is, if we are to protect the policyholder who is in difficulties, to protect him while his company is also in difficulties. I feel that our Amendment does what is necessary; that is, it makes sure that hardship is avoided so far as possible. I believe my noble friend made it quite clear that the need of a person who has to draw on his insurance company because of a disaster of some magnitude is greatest and that it should be met first. The claim of such persons should have priority under this new procedure. I support my noble friend's observations.
Lord BESWICK: My Lords, as my noble friend Lord Peddie said, the substance of these Amendments is similar to the new clauses which he proposed in Committee in Amendments Nos. 69 and 70 and which were later withdrawn. However, I see that he has acknowledged some flaws in the drafting of those Amendments.
Subsections (1) to (5) apply in relation to general business and would have the effect of creating a preferential class of creditors—namely, protected policyholders whose claims had accrued due before the beginning of the liquidation proceedings. We have a number of reservations about this proposal which I shall give in some detail, and some of which were given at the Committee stage. However, the principal objection to the new clause is that we think it would be wrong
728
to make a fundamental change in the arrangements for winding up insurance companies in this ad hoc, incidental way. As my noble friend Lady Fisher said, a review of liquidation procedures is required. I agree with her. As a result, a detailed study of the subject is now under way in the Department of Trade, and, while changes will undoubtedly be necessary, I feel that she would agree that, until the study is complete and conclusions have been offered, alterations should not be made. Moreover, there will have to be extensive consultation with the insurance industry. I have no doubt that what my noble friend Lord Peddie has said reflects the views of one insurance company, but there are other views as well and they must all be considered before we have such a revision of the liquidation procedures.
There are a number of difficulties and it might be helpful if I enunciated them. In the first place, the proposals in the new clause would, in effect, result in money which, under the present law, would have been paid to non-protected policyholders and other creditors being used to compensate protected policyholders. Moreover, as the effect of the Amendment would be substantially to worsen the position of ordinary creditors in a winding-up, it could well lead to such creditors being less willing to extend credit to insurance companies. It could thus have a damaging effect on the conduct of the business of insurance companies. Indeed, if creditors were to be dealt with in the way suggested here, they would clearly seek to counteract the effects of the provision by insisting on the provision of security for their debts which would give them priority over the protected policyholders. Then we should be in a worse position than we are now.
Lord PEDDIE: My Lords, there is no suggestion that they should have priority over such creditors, because the latter are already protected under the Act.
Lord BESWICK: But, my Lords, the effect of what is proposed here would be that ordinary creditors would be in a worse position in relation to the category of people whom my noble friend proposes to put into a position of priority. I am saying that, if that were done, any company dealing with the insurance company would seek to safeguard its position and

729
that the second position might well be worse so far as the policyholder was concerned.
Subsection (6) applies to long term business. Here again, we have doubts for the same general reason as I have given for the other provisions in the new clause. In particular, the proposed new clause would interfere with the carrying out by the liquidator of his duty to exercise his powers for the benefit of the creditors as a whole, and would thus be liable to prejudice the interests of other creditors. It may be that the proposers of the Amendments envisage that losses suffered by other creditors in this way would be covered under the indemnity. If so, there is a risk that, in certain circumstances, the compulsory indemnity would, in practice, prove more expensive to the Board. I emphasise that if it were more expensive to the Board it would be more expensive to the insurance industry which will finance the Board. I am sure that that is something my noble friend does not want. I put to him that there is that risk in certain circumstances and that it would be cheaper to make payments to policyholders themselves. The proposed system seems likely to give rise to complex and expensive disputes between the Board, the liquidator and the other creditors.
I feel that there are merits in some of what my noble friend is proposing but, in so far as there are such merits, after consultation we feel that the way to deal with them would be in legislation effecting a comprehensive revision of the arrangements for winding up insurance companies. On the understanding that that is being done, I hope that my noble friend will withdraw the Amendment.
Lord LYELL: My Lords, before the noble Lord sits down, may I ask him how quickly we may expect some definite news from the Department of Trade and Industry about this matter? We are gratified to hear that the position of insurance claims is receiving special consideration by the Department, because some of us feel that insurance claims and insurance creditors, being in a very special position, merit special considerations. We are very grateful to hear that their case is being considered. Can the noble Lord tell us when we may expect some definite news? Will it be next year or two years ahead, or is it somewhat
730
further away—perhaps five years? Or is it even a question of its going so far as to be contained in a complete revision of company legislation? If the noble Lord can give some indication, we shall be very grateful.
Lord BESWICK: My Lords, I am afraid that I cannot answer the latter part of the noble Lord's question. But in relation to the first part of it, so far as the time scale is concerned, I understand that next month there is to be a meeting with the insurance industry on this matter. When legislation would result will depend on the Parliamentary timetable.
Lord DAVIES of LEEK: My Lords, may I ask my noble friend a question which has occurred to me? I shall try to make it simple and clear, and perhaps my noble friend Lord Peddie will then help me. Let us consider subsection (6) of the new clause suggested by my noble friend, with much of which I agree, and let us put the semantics into plain English. The subsection states:
"If in order to discharge the duty placed on the Board by section 10 or section 11 …"
What do Sections 10 and 11 do? They enable the Board to meet policyholders; under Section 10 the long-term policyholders first. Is that correct?
Secondly, there is the question of special provision for future benefits. Let us suppose that I insure my granddaughter for the period when she goes to university on a long-term basis. I happen to be now insured with an insurance company that has gone into liquidation. The clause proposed by my noble friend Lord Peddie now covers me, as the old man, for my long-term policy, and it covers my granddaughter for her university grant when she goes to university; which, looking forward to establishing an intelligent progenitress after me, I hope will happen.
Such cases have to be paid first. But my brother rents to the agent of this company a nice little house in the middle of a South Wales area that is now very prosperous. Suddenly the agent owes my brother £250 in back rent, and he has not been able to pay it because the entire firm has collapsed. Under subsection (6) of the proposed clause my granddaughter and myself would get

731
priority, but no legal action could be taken in the case involving my brother, because the clause exempts the company from legal action. That I believe is, in English, the gist of subsection (6). What is the position?
Lord PEDDIE: My Lords, subsection (6) indicates the way in which the indemnity can facilitate the operation of the liquidator in meeting the claims. In short, the Board are seeking to give a measure of protection. The liquidator is bound by current liquidation laws. Whatever claims there may be—whether they be from one's grandson, mother, or whoever it may be—have to wait until the liquidator has made his decision by being able to collect together all the necessary evidence. At the end of that period he will pay out in accordance with the assets, in relation to the claims made through him.
The new clause will mean that those people whom we are seeking to protect will have a prior claim, and the liquidator can deal with those payments out of the assets of the company. At present the law does not permit this. At the moment he cannot pay anyone out until he has been able to ascertain the full position. The liquidator could not do that unless he received an indemnity, and it is suggested here that an indemnity be given to the liquidator and, indeed, that the liquidator be compelled to accept it, which is equally important, so that he can proceed with expedition. It is as simple as this. As my noble friend said a few moments ago, it is no use talking about protection unless that protection is related to need and is provided quickly. The whole clause is operating towards that end.
I was very appreciative of some of the comments made by my noble friend Lord Beswick. He said that much of what is expressed by my noble friends and myself through the Amendment has a great deal of merit, but he also indicated some of the difficulties. Of course there are always difficulties. During the many long years that I have been in your Lordships' House I have never heard a reply from the Front Bench when there has not been a parade of difficulties. That never happens, unless an Amendment happens to have been prompted by the Front Bench in the first place. There are always
732
difficulties; there will be here. But at least abroad these difficulties have been overcome. What we propose operates abroad, and there is no difference in this regard in the operation of a company abroad as compared with the situation here. Furthermore, with regard to the alteration of the liquidation laws I repeat what I said in my opening statement. The 1973 insurance Act created very substantial changes in our liquidation law. Therefore, I cannot accept the argument that we cannot interfere with liquidation laws, because we happen to be dealing with a Bill at present which gives protection, if already there is precedence for so doing.
I now turn to another valid point which my noble friend Lord Beswick made on a previous occasion, and to which we must pay regard; that is, if we are giving emphasis in liquidation to certain classes will it cause, in the minds of the normal creditors, some fear of dealing with insurance companies? Again, I point out that where this sort of operation takes place on the Continent no one is reluctant to deal with insurance companies. I am quite certain that big scale creditors—let us say, the landlords of office premises—will hardly be less willing to extend credit to insurance companies. They are always desperately eager to deal with them, having the feeling that there is there a greater measure of security. I repeat that there is no difficulty experienced in countries abroad in this regard. What is proposed operates abroad, and so all the points mentioned have no validity.
My third and last point is that I do not think this new clause would adversely affect the operation of the liquidator. It would not interfere in any way with his powers and responsibilities. All it would do, through the process of the indemnity, would be to ensure that the group of persons who are seeking to benefit are not involved in the long term waiting that is usually associated with liquidation and the operation of the liquidator. That, my Lords, is the point of view of my noble friends and myself. This is not a revolutionary Amendment. It is directly in line with the practice on the Continent today, and presumably something along these lines will be urged in the very near future. Therefore, we suggest that it would be as well to take the necessary action now, because we are dealing with this matter of the protection of policyholders.
Lord MATS: My Lords, I wish to raise a point for clarification. I am not opposing the Amendment. May I ask the noble Lord, Lord Peddie, whether he is satisfied that by giving this indemnity, and the liquidator thereby paying out the policyholder, one would not be placing the policyholder in the position of a preferential creditor? Secondly, what would be the position if the liquidator had sufficient funds to meet these claims but was left without sufficient funds to carry out the basis of the liquidation? One just cannot switch off, as I am sure the noble Lord realises. The liquidator must have certain funds in order to proceed with the winding down of a company. But I am rather bothered about this point regarding the preferential creditor.
Lord PEDDIE: My Lords, with regard to preferential creditors, this matter is already laid down in other legislation, and therefore what are recognised in law as the rights of preferential creditors will not be superseded. I am quite sure that the noble Lord, Lord Mais, appreciates the nature of this point. With regard to the liquidator, obviously he will have to decide at the beginning whether the assets of a failed company are adequate to pay the amounts we have in mind. I have argued on previous occasions that in many cases the assets of a failed company are fairly substantial but are just short of being sufficient for the company to be solvent. Without the indemnity the liquidator could not, and would not, act. In answering the noble Lord, Lord Mais, I point out that we must have indemnity. I agree, and entirely accept, that one could not operate this unless the Board were empowered in law to grant an indemnity to the liquidator. It is only with the use of the indemnity that the liquidator will be able to do what is required under this Amendment.
Lord BESWICK: My Lords, I think that my noble friend has made out a case for revision of the law of liquidation. What he has not made out is a case for revising in this way. There is a meeting next week between the Department of Trade and the insurance industry for this purpose, to consider what changes might be made. I think it would be advisable if we were to listen to all those in the industry to see if we could come to some
734
agreed decision. On that behalf I can invite my noble friend to withdraw his Amendment.
Lord PEDDIE: My Lords, in view of the statement made by my noble friend that a meeting on this matter is to take place within the next fortnight, I have no hesitation in withdrawing my Amendment and thanking my noble friend for the comments he has made.
Amendment, by leave, withdrawn.
Clause 13 [General provisions with respect to the performance by the Board of their duties]:
Lord BESWICK: My Lords, I beg to move Amendment No. 49. This was dealt with when we discussed Amendment No. 13.
Amendment moved—
Page 9, line 36, leave out from beginning to end of line 42 and insert—
"(1) Where it appears to the Board, in the case of any policy of a company in liquidation—

(a) that payment in respect of any sums falling due under the policy could have been made in accordance with the policy to a person other than the policyholder; or

(b) that any sums paid under the policy would have been subject to any trust, charge or other agreement binding on the policyholder;

the Board may secure the payment of any sum payable to the policyholder in accordance with any of the provisions of sections 6 to 10 or in accordance with section 11(5) above or pay any sum so payable in accordance with section 11(6) or (7) above (in whole or in part) to that other person or (as the case may be) to the person appearing to the Board to be entitled under the trust, charge or agreement in question, instead of to the policyholder.
Any payment made by virtue of this subsection to a person other than the policyholder shall be treated for the purposes of the provision in question as a payment to the policyholder and may be made on such conditions (with respect to the total or partial assignment to the Board of any rights of the recipient against the policyholder or any other person, or otherwise) as the Board think fit.
(1A) The Board may secure the payment of any sum payable to a policyholder in accordance with any of the provisions of sections 6 to 10 or in accordance with section 11(5) above, or payable under section 7 above to a person entitled to the benefit of a judgment, and of any sum they are authorised to secure for a person other than the policyholder by virtue of subsection (1) above, by either or both the following methods, that is to say—
(a) by themselves making payments in respect of the sum in question; or".—(Lord Beswick.)
Lord BESWICK: My Lords, I formally beg to move Amendment No. 50.
Amendment moved—
Page 10, leave out subsections (2), (3), (4) and (5).—(Lord Beswick.)
6.12 p.m.
Lord BESWICK Lord BESWICK moved Amendments Nos. 51, 52, 53 and 54:
Page 11, line 45, at end insert:
"(7A) Any duty of the Board to secure the payment of any sum payable under section 7 above to a person entitled to the benefit of a judgment shall be subject to compliance on his part with any conditions imposed by the Board with respect to the total or partial assignment to the Board of any rights he may have against any other persons in respect of any event giving rise to the liability of the company in liquidation by reference to which that sum is so payable.
(7B) In connection with imposing any conditions under any of the preceding provisions of this section with respect to the assignment to them of any rights the Board may make any arrangement which appears to them to be appropriate with any person on whom the conditions are imposed with respect to the manner in which they are to apply any sums they may receive by virtue of the rights in question."
Page 12, line 3, leave out ("(a)").
Page 12, line 5, after ("therein") insert ("(a)").
Page 12, line 8, leave out ("and (b)")
and insert—

"(b) of any such rights of a person for whom the Board has secured any payment in accordance with section 7 above as are mentioned in subsection (7A) above; and

(c) of any rights which a person to whom any payment has been made by virtue of subsection (1) above may have against the policyholder in respect of the policy or any sums falling due thereunder or against any other person in respect of any event giving rise to any liability of the policyholder by virtue of which the payment in question was made;

and any regulations so made may also provide".
The noble Lord said: My Lords, I beg to move Amendments Nos. 51, 52, 53 and 54 and at the same time to talk to Amendments Nos. 80 and 81. The purpose of these Amendments is to spell out more fully the Board's ability—whether through their own actions or through regulations
736
made by the Secretary of State under subsection (8)—to recover some of the money they pay out through obtaining assignment of certain legal rights of those in receipt of their assistance. They also make more explicit and effective the Board's power to return to policyholders or others whose rights are assigned to the Board some of the money they recover in this way. The Amendments are basically drafting improvements: no change of policy is involved.
In Amendment No. 51 to line 45 of page 11, two new subsections are proposed. Subsection 7(A) is intended to make clear that any assistance by the Board under Clause 7 to a person en-tiled to the benefit of a judgment shall be subject to compliance on his part with any conditions imposed by the Board with respect to the assignment of his rights; that is, conditions comparable to those which may be imposed by the Board under subsection (7) of Clause 13 in connection with payments to policyholders and others in the exercise of their duties under Clauses 6, 8, 10 and 11. The new subsection is necessary because subsection (7) refers only to policyholders and covers only rights under or in respect of a policy, rights in respect of payments under a policy, and rights in respect of any event giving rise to a liability of the company under a policy. In the case of Clause 7, provision is required for the assignment of the rights of the person entitled to the benefit of the judgment in respect of any event giving rise to the liability of the company resulting from the judgment. These rights do not arise under the Bill, but by virtue of a judgment.
The new subsection (7B), together with the two Amendments to Clause 18, enables the Board to make arrangements with persons on whom conditions as to the assignment of rights are imposed under Clause 13 concerning the repayment by the Board to the assignor of some of the money they may receive by virtue of the rights in question. It is felt that without these provisions the Board might have been prevented by Clause 18—application of general receipts by the Board—from returning to policyholders and others any of the money they may receive by virtue of the rights assigned to them under subsections (1), (7) or (7A). The Board will normally, for

737
example, wish to repay to the policyholder anything they may receive in the liquidation in excess of the 90 per cent. protection they will already have afforded the policyholder under Clauses 8, 10 or 11.
The changes to subsection (8) in Amendments Nos. 52 to 54 are consequential partly on the amplification to subsection (7) provided by the new subsection (7A) and partly on the new subsection (1) of this clause proposed in Amendment No. 49. As noble Lords know, this Amendment introduces another reference to the assignment to the Board of the rights of recipients of the Board's assistance. Their purpose is to ensure that any regulations made by the Secretary of State under subsection (8) may provide for the vesting in the Board of rights not only of policyholders but of all persons who may, by virtue of Clause 7 or the new subsection (1) of Clause 13, be in receipt of the Board's assistance.
Lord BESWICK: My Lords, I beg to move Amendment No. 55 which was dealt with in the discussion on Amendment No. 12.
Amendment moved—
After Clause 13 insert the following new clause:
Exclusion and modification of duties of the Board where payments are made by other persons, etc.
(".—(1) Any payment made by any person other than the Board to the policyholder, to a person entitled to the benefit of a judgment, or to any other person, being a payment which is referable to any such liability of a company in liquidation as is mentioned in section 6, 7 or 8 above, shall be treated as reducing any sum payable to the policyholder or to the person entitled to the benefit of the judgment, in accordance with any provision of those sections, by reference to that liability.
(2) This subsection applies in any case where it appears to the Board, in respect of a long term policy of a company in liquidation—

(a) that any other person has made a payment to the policyholder or to any other person which is referable to any liability of the company under the policy which was outstanding at the beginning of the liquidation or which is otherwise required in accordance with subsection (3) below to be taken into account in relation to the policy; or

(b) that any other person has taken any other measures for assisting or protecting
738
the policyholder (whether measures of a like description to those open to the Board under subsection (2) or (3) of section 11 above or otherwise) which ought to be taken into account for the purpose of excluding or modifying any of their duties towards the policyholder under sections 10 and 11 above.

(3) Any payment made—

(a) by reference to any valuation of a long term policy of a company in liquidation or of any of the benefits provided for under any such policy; or

(b) by reference to any future benefits under a long term policy of a company in liquidation within the meaning of section 12 above;

shall be taken into account in relation to that policy for the purposes of subsection (2)(a) above (whether it was made to the policyholder or to any other person).
(4) Nothing in sections 10 and 11 above shall require the Board in a case to which subsection (2) above applies, to take any measures for assisting the policyholder in respect of the long term policy in question where it appears to the Board to be inappropriate to do so in view of any such payment or other measures of assistance or protection as are mentioned in that subsection.
(5) In any case to which subsection (2) above applies, other than one falling within subsection (4) above, the Board may treat any sum payable to the policyholder in accordance with section 10 or section 11(5), (6) or (7) above and any sum to be secured for the policyholder in accordance with section 11(1) to (4) above as reduced to any extent appearing to them to be appropriate in the circumstances of the case.
(6) Any sums secured by the Board under subsection (5) of section 11 above for a policyholder of a company in liquidation or for any other person by reference to any relevant future benefits under a long term policy within the meaning of that section shall be treated as reducing any sum payable to the policyholder in respect of that policy in accordance with subsection (6) or (7) of that section.
(7) The Board may postpone taking any of the measures provided for by sections 6 to 11 above in any case where it appears to the Board that, independently of any measures they may take, any other person (not being the liquidator) may make any payment or take any measures which would, by virtue of subsection (1), (4) or (5) above, affect any of their duties under those sections in relation to the case in question.
(8) A payment is referable to a liability of a company in liquidation for the purposes of this section if it has the effect of reducing or discharging, or is otherwise made by reference to, that liability or any liability of the policyholder or any other person from which that liability arises.")
Clause 14 [Power of the Secretary of State to vary the duties of the Board]:
Lord BESWICK Lord BESWICK moved Amendment No. 56:
Leave out Clause 14.
The noble Lord said: My Lords, I beg to move Amendment No. 56 and with it to discuss Amendments Nos. 89, 90, 91 and 97. There were a number of comments made by noble Lords in Committee. We took note of them, and I hope that they will all welcome the Government's proposal to dispense with Clause 14. We had felt there was virtue in a provision of this sort, bearing in mind that with complex legislation in a new field such as this it might be desirable to have a power to make adjustments in the light of experience and of changing circumstances, without the need for a new Act of Parliament. In view of the opposition which the clause has aroused —and I will not detail the roll of honour of all those who opposed it—we are prepared to drop it.
This leaves us with the problem of extending the protection provided by the Board from 90 per cent. to 100 per cent. in the case of new types of compulsory insurance. The Government now propose to deal with this in the legislation under which the type of insurance concerned is made compulsory. This may not be possible, however, in the case of insured occupational pension schemes approved for contracting out of the State scheme under legislation now before Parliament. We may therefore need at a later stage to propose a Government Amendment to this Bill to cover this point. Amendments Nos. 89, 90, 91 and 97 are consequential on the elimination of this the last of the Secretary of State's order-making powers, except for that in Clause 19. I hope it will meet with the approval of the House.
Lord ABERDARE: My Lords, we are grateful to the noble Lord for this large concession. This clause stuck in our gullets at the Committee stage. We are happy that our throats are once again clear now that this clause is omitted. It would have permitted the Secretary of State to extend the scope of the Bill by Statutory Instrument; it could have gone far beyond what we thought was the
740
limited objective of the Bill, to protect the private policyholder, and could extend to cover corporate bodies or compensate more than 90 per cent. or include marine, aviation and transport insurance or even Lloyd's. We felt that this clause invalidated a lot of the rest of the clauses in the Bill. The fact that it is now to be dropped gives us great satisfaction and we are indeed grateful.
Lord BALFOUR of INCHRYE: In a sentence, my Lords, as one of the main objectors to the original clause, I should like to thank the Minister for what he has done. There will be very few mourners for the old Clause 14 from anyone on any side of the House who has great respect for Parliamentary rights over the Executive.
Clause 15 [Interim payments to protected policyholders of companies in financial difficulties]:
6.20 p.m.
Lord BESWICK: My Lords, I beg to move Amendments Nos. 57 to 61.
Amendments moved—
Page 12, line 40, leave out ("is a company in financial difficulties") and insert ("not being a company in liquidation, is a company in provisional liquidation")
Page 12, line 42, leave out paragraph (a).
Page 12, line 46, at end insert ("provided that the petition for the winding up of the company which led to his appointment was presented after 29th October 1974.
(1A) A policyholder is eligible for assistance under this section—

(a) if he is a policyholder in respect of a general policy or a long term policy of a company in liquidation which was a United Kingdom policy at the beginning of the liquidation; or

(b) if he is a policyholder in respect of a general policy or a long term policy of a company in provisional liquidation which was a United Kingdom policy at the time when the provisional liquidator was appointed.")

Page 13, line 3, leave out from ("of") to ("on") in line 4 and insert ("policyholders who are eligible for assistance under this section")
Page 13, line 7, at end insert ("or").—(Lord Beswick.)
Lord BESWICK Lord BESWICK: My Lords, I beg to move Amendment No. 62.
Amendment moved—
After Clause 15 insert the following new clause:
Companies in financial difficulties: transfers of business etc.
(".—(1) An authorised insurance company, not being a company in liquidation, is a company in financial difficulties for the purposes of this section if—

(a) it is a company in provisional liquidation within the meaning of section 15 above;

(b) it has been proved, in any proceedings on a petition for the winding up of the company under the Companies Act 1948 or (as the case may be) the Companies Act (Northern Ireland) 1960, to be unable to pay its debts; or

(c) an application has been made to the court under section 206 of the Companies Act 1948 or section 197 Companies Act (Northern Ireland) 1960 for the sanctioning of a compromise or arrangement proposed between the company and its creditors or any class of them (whether or not any of its members are also parties thereto) and the terms of the compromise or arrangement provide for reducing the liabilities or the benefits provided for under any of the company's policies;

provided that, in a case falling within paragraph (b) above, the petition was presented after 29th October 1974, and in a case falling within paragraph (c) above, the application was made after that date.
(2) Subject to the following provisions of this section, the Board may exercise any power conferred on them by subsection (3) or (4) below for the purpose of safeguarding policyholders of a company in financial difficulties who are eligible for protection under this section, or any class or description of such policyholders, to any extent appearing to the Board to be appropriate in any case or in any class or description of case, against loss arising from the financial difficulties of the company.
(3) Subject to the following provisions of this section, the Board may take any measures appearing to them to be appropriate for securing or facilitating the transfer of all or any part of the insurance business carried on by a company in financial difficulties to another authorised insurance company, on terms (including terms reducing the liabilities or the benefits provided for under any policies) appearing to the Board to be appropriate in any case or in any class or description of case.
(4) Subject to the following provisions of this section, in any case where it appears to the Board that it would be practicable to secure the purpose mentioned in subsection (2) above by giving assistance to the company in financial difficulties to enable it to continue to carry
742
on insurance business, the Board may take such measures as appear to them to be appropriate for giving such assistance.
(5) Without prejudice to the generality of subsection (4) above, the Board may make the giving of any assistance to a company in financial difficulties under subsection (4) above conditional on the reduction of any liabilities or benefits provided for under any policies of the company to any extent appearing to them to be appropriate in any case or in any class or description of case.
(6) The Board shall not exercise any power conferred on them by subsection (3) or (4) above for the purpose of safeguarding any policyholders of a company in financial difficulties in any case where it appears to the Board that—

(a) persons who were members of the company at the relevant time; or

(b) persons who had any responsibility for or who may have profited from the circumstances giving rise to the company's financial difficulties;

would benefit to any material extent as a result of any measures the Board may take under either of those subsections.
In this subsection and in the following provisions of this section "the relevant time" means—

(a) in a case falling within subsection (1)(a) above, the time when the provisional liquidator was appointed;

(b) in a case falling within subsection (1)(b) above, the time when the winding up petition was presented; and

(c) in a case falling within subsection (1)(c) above, the time when the application was made under section 206 of the Companies Act 1948 or (as the case may be) under section 197 of the Companies Act (Northern Ireland) 1960.

(7) The Board shall disregard for the purposes of subsection (6) above any benefit which may accrue to any such persons as are there mentioned who are policyholders of the company in financial difficulties eligible for protection under this section in their capacity as such.
(8) The Board shall not take any measures in pursuance of subsection (3) or (4) above for the purpose of safeguarding any policyholders of a company in financial difficulties who are eligible for protection under this section in any case where it appears to the Board that it would cost them less to take whatever measures may be required for the assistance of the policyholders in question under sections 6 to 11 above in the event of the company's going into liquidation.
(9) A policyholder of a company in financial difficulties is eligible for protection under this section if he is a policyholder in respect of a general policy or a long term policy of the company which was a United Kingdom policy at the relevant time.")—(Lord Beswick.)
Clause 16. [The insurance industry levies]:
Lord BESWICK: My Lords, I beg to move Amendment No. 65.
Amendment moved—
Page 13, line 31, leave out from ("of") to ("and") in line 32 and insert ("general policies which were United Kingdom policies at the relevant time")—(Lord Beswick.)
Lord Beswick: My Lords, I beg to move Amendment No. 67.
Amendment moved—
Page 13, line 41, after ("1974") insert ("which were United Kingdom policies at the relevant time")—(Lord Beswick.)
Lord Beswick: My Lords, I beg to move Amendment No. 70.
Amendment moved—
Page 14, line 3, after ("description") insert (" which were United Kingdom policies at the relevant time ")—(Lord Beswick.)
Lord Beswick: My Lords, I beg to move Amendment No. 71.
Amendment moved—
Page 14, line 5, after (" description") insert (" which were United Kingdom policies at the time when the amounts in question were so recorded ")—(Lord Beswick.)
Lord BESWICK Lord BESWICK moved Amendments Nos. 72 and 74:
Page 14, line 7, after (" (6)") insert (" or (6A)").
Page 14, line 8, leave out subsection (6) and insert—
(" (6) In calculating a company's net premium income for any year in respect of policies of any description, any rebates or refunds recorded in the company's accounts during that year as allowed or given in respect of any amounts so recorded during that or any previous year as paid or due to the company by way of premiums under policies of that description which were United Kingdom policies at the time when the rebates or refunds were so recorded shall be deductible.
(6A) In calculating a company's net premium income for any year in respect of general policies, any sums recorded in the company's accounts during that year as paid by or due from the company by way of premiums for reinsuring its liabilities towards policyholders under general policies which were United
744
Kingdom policies at the time when the sums in question were so recorded shall be deductible.")
The noble Lord said: My Lords, in moving this Amendment I should also like to move Amendment No. 74. These two Amendments follow from an undertaking which we gave in Committee. Clause 16(6) deals with the deductions that may be made from a company's gross premium income year by year in order to arrive at that company's annual net premium income on which the insurance industry levies are to be calculated. In Committee the Opposition put down three Amendments of a technical nature to this subsection, to the effect that (i) refunds deductible under paragraph (b) should be refunds recorded in the company's accounts and not "refunds given" during the year in question; (ii) similarly, reinsurance premiums deductible under paragraph (c) should be those recorded rather than those paid during the year; and (iii) reinsurance premiums should be deductible only in respect of premium income from general busness; leviable premium income from long-term business should be gross of reinsurance ceded. The Government undertook in Committee to consider these three points further in consultation with the industry.
The Government have now discussed these points with the industry, and there is no disagreement about objectives. The drafting of the original Amendments was not entirely satisfactory, however, and the Government are proposing that the old subsection (6) of Clause 16 should be replaced with two new subsections to achieve the desired result. The new subsection (6) is to deal with rebates and refunds "recorded in the company's accounts"; and new subsection (6A) is to deal with the deduction, in the case of general business only, of relevant reinsurance premiums "recorded in the company's accounts as paid by or due from" the company. Amendment No. 72 to subsection (5), in line 7 of page 14, is simply a consequential of the division of old subsection (6) into two new subsections. I hope these Amendments will be acceptable, as they were intended to meet the points made. I beg to move.
Lord ABERDARE: My Lords, I am grateful for these Amendments.
Lord BESWICK: My Lords, I beg to move Amendment No. 75.
Amendment moved—
Page 14, line 37, at end insert ("section (Companies in financial difficulties: transfers of business, etc.)")—(Lord Beswick.)
Clause 17 [Treatment of business as, or as not being, long term business for the purposes of section 18]:
Lord WINTERBOTTOM Lord WINTERBOTTOM moved Amendments Nos. 76 to 79:
Page 15, line 14, after first ("of") insert ("and Schedule 2 to")
Page 15, line 16, at end insert ("and Schedule 2 to that Act")
Page 15, line 20, after ("of") insert ("and Schedule 2 to")
Page 15, line 23, at end insert ("and Schedule 2 to that Act")
The noble Lord said: My Lords, I should like to move Amendments Nos. 76, 77, 78 and 79 en bloc. These are simply drafting Amendments in order to make it clear that references in Clause 17 to Clause 16—the insurance industry levies—should include references to Schedule 2 which is called up in Clause 16(11) and contains additional provisions with respect to the insurance industry levies. I hope that your Lordships will agree to these drafting Amendments.
Clause 18 [Application of general receipts by the Board]:
Lord BESWICK: My Lords, I beg to move Amendments Nos. 80 and 81.
Amendments moved—
Page 15, line 25, after ("any") insert ("arrangement made by the Board under subsection (7B) of section 13 above and to any")
Page 15, line 26, leave out ("section 13(8) above") and insert ("subsection (8) of that section").—(Lord Beswick.)
Clause 19 [Application of surplus funds by the Board]:
Lord BESWICK Lord BESWICK moved Amendments Nos. 82, 83 and 84:
Page 16, line 1, at end insert ("by order made by statutory instrument")
Page 16, line 5, leave out from ("subject") to end of line 9 and insert ("to such conditions as may be prescribed by the order")
Page 16, line 9, at end insert—
("(2) An order made under this section may make different provision for different circumstances and may be varied or revoked by a subsequent order so made.
(3) Any statutory instrument containing an order made under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.")
The noble Lord said: My Lords, I suggest we take Amendments No. 83 and 84 with Amendment 82. These Amendments are the Government's response to an Amendment proposed in Committee by the noble Lord, Lord Lyell, and provide that the Secretary of State's powers under this clause to require the Board to distribute their surplus funds should be exercised only by order, the order to be subject to Negative Resolution procedure. Amendment No. 83 provides that the Secretary of State may in the Order prescribe the manner and conditions of the distribution. I hope that will allay some of Lord Drumalbyn's fears which he expressed some time ago. This has the effect of subjecting to Parliamentary scrutiny and control not only the Secretary of State's power to require a distribution but also his power under the old wording to give directions about the manner and conditions of it. The Secretary of State will need to give the Board instructions about the formula for distribution, which might be the same as the formula for raising a levy in the same year or might have regard to the levy formula that was in operation in the year, or years, when the funds in question were originally raised. As an Order is legislation, albeit subordinate, the provision that the Board must act in accordance with the Secretary of State's directions is no longer necessary.
The new subsection (2) in Amendment No. 84 has been added to this clause as a result of the proposed deletion of references to Orders in Clause 23. The power for the Secretary of State "to make different provision for different circumstances" in Orders under Clause 19 is necessary as he may wish to require different distributions of general and long-term business funds. The standard provision to the effect that orders may be varied or revoked by subsequent orders

747
has also been included here as a consequence of the proposed deletion of Clause 23(2). I beg to move.
Lord LYELL: My Lords, these three Amendments were specifically laid down in reply to queries which we raised at Committee stage. Our queries have been more than adequately answered, and we are grateful to the noble Lord.
Clause 20 [Overseas companies]:
Lord BESWICK: My Lords, I beg to move Amendments Nos. 85 to 88.
Amendments moved—
Page 16, line 17, leave out ("or in section 15(1)(b)") and insert ("section 15(1) or subsection (1) of section (Companies in financial difficulties; transfers of business, etc.)")
Page 16, line 17, leave out line 21 and insert ("provisional liquidation within the meaning of section 15 above or (as the case may be) as a company in financial difficulties for the purposes of section (Companies in financial difficulties: transfers of business, etc.) above")
Page 16, line 23, after ("15") insert ("or section (Companies in financial difficulties: transfers of business, etc.)")
Page 16, line 26, at end insert ("or section (Companies in financial difficulties: transfers of business, etc.)").—(Lord Beswick.)
Clause 23 [Orders and regulations]:
Lord BESWICK: My Lords, I beg to move Amendments Nos. 89, 90 and 91.
Amendments moved—
Page 17, line 10, leave out subsection (1).
Page 17, line 14, leave out subsection (2).
Page 17, line 20, leave out ("to make an order or").—(Lord Beswick.)
6.32 p.m.
Lord BESWICK Lord BESWICK moved Amendment No. 92:
Page 17, leave out lines 24 to 27 and insert ("but shall only be exercisable after consultation with the Board")
The noble Lord said: My Lords, again this Amendment is intended to meet the criticisms or suggestions that were made at Committee stage. In Committee there was a query about the need for the wide powers apparently conferred by subsection (4) of this clause, and one purpose of this Amendment is to attempt to meet more than half way the criticisms that were made.
The power to include in orders or regulations under the Bill the "incidental, supplementary or consequential provisions" referred to in paragraph (b) of this subsection was included in the Bill mainly with regard to the power originally contained in Clause 3—but dropped in Committee—to bring members of Lloyd's within the scope of the Bill. Now that this power has been dropped, the Government feel that it would be unnecessary to retain the wide powers given in subsection (4)(b), and the Amendment accordingly proposes the deletion of this paragraph.
We are satisfied, however, that the power under paragraph (a) of the subsection to "make different provision for different circumstances" in regulations is both necessary and unexceptionable. The regulations under Clause 13(8) may, for example, need to contain different provisions for general business and long-term business policyholders, or for policyholders who receive assistance under different provisions of the Bill. For this reason, the Government feel it would be unwise to remove paragraph (a) of subsection (4) as well as paragraph (b). The inclusion in order-making or regulation-making powers of a power to "make different provision for different circumstances" is a common one; there are precedents—for instance, in Section 63(4) of the Civil Aviation Act 1971, and in Section 78(3) of the Insurance Companies Act 1974.
The other purpose of this Amendment relates to a point made by the noble Lord, Lord Aberdare, when discussing at Committee stage the Secretary of State's regulation-making power in Clause 11(7). On that occasion, before withdrawing his Amendment to delete subsection (7) of Clause 11, the noble Lord suggested that the power be made subject to prior consultation with the Board. I hope he will agree that this Amendment gives effect to just that request.
It seemed to the Government right at the same time to make the Secretary of State's other regulation-making power in the Bill—that in Clause 13(8)—also subject to prior consultation with the Board, and the Amendment has been drafted to achieve this. I hope that noble Lords will consider this a helpful suggestion, and I hope they will even go so far as

749
to say that it is a very good Amendment that I now beg to move.
Lord DAVIES of LEEK: My Lords, I think it is good that the Secretary of State should limit the power of individuals. Nevertheless, if the phrase included in this Amendment—"only after consultation"—is inserted in the subsection, I understand that if he so wishes the Secretary of State need not take any notice of the consultation. The fact that one consults does not mean that one accepts the result of consultation. Therefore, the Opposition ought to be clear about the meaning of their Amendment. We went gratefully to their aid. Nevertheless, if you have a strong Secretary of State it leaves the position of the Secretary of State as it was—except, perhaps, that he serves democracy in so far as he has to take into account the whole gamut of affairs from the knowledge and expertise of the Board.
Lord ABERDARE: My Lords, despite the warnings of the noble Lord, Lord Davies of Leek, we are quite satisfied that this Amendment meets the points that were made by us. Once again, I should like to thank the noble Lord, Lord Beswick. My recollection is that one of these Amendments was moved by the noble Lord, Lord Balfour of Inchrye, and I am sure that he would like to be associated with me in thanking the noble Lord.
Clause 24 [Interpretation]:
Lord BESWICK: My Lords, I beg to move Amendments Nos. 93, 94, 95 and 96.
Amendments moved—
Page 17, line 43, at end insert—
(""general policy" has the meaning given by section 8(4) above;")
Page 18, line 6, leave out from ("above") to end of line 8.
Page 18, line 9, leave out ("protected") and insert ("United Kingdom")
Page 18, line 10, leave out ("4") and insert
("(Protection confined to United Kingdom policies)")—(Lord Beswick.)
The LORD CHANCELLOR: My Lords, Amendment No. 97 was discussed with Amendment No. 56. I beg to move.
Amendment moved—
Page 18, line 38, leave out subsection (6).—(The Lord Chancellor.)
Clause 25 [Short title and extent]:
6.28 p.m.
Lord REIGATE Lord REIGATE moved Amendment No. 98:
Page 18, line 45, at end insert—
("( ) This Act shall cease to have effect on 1st January 1981 unless the Secretary of State has, by order, substituted the date of 1st January 1986.")
The noble Lord said: My Lords, I can assure your Lordships that at this late hour I shall not detain you for very long. I do not think that those of your Lordships who have read the proposed Amendment will need much of an explanation. The Minister was so helpful at Committee stage, and has continued to be so helpful today, that I am hoping that I shall repeat the success I had on an earlier occasion and that he may find it possible to accept this Amendment.
I do not think that any Bill has ever reached the Statute Book which has been subjected to quite so much criticism as this one. Certainly it is a better Bill than it was when it first came before your Lordships. However, it is still a bad Bill, and I think one can say that it is not acceptable as a permanent feature of the Statute Book. I cannot refrain from expressing my regret that we did not accept the advice of the chairman of the Co-operative Insurance Society and vote against it on Second Reading, but for the reasons that were given at the time we found it impossible to do so. Equally, I regret that we did not refer it to a Select Committee, in which case I think that a Bill perhaps even better than this might have come before us for Third Reading.
In effect, I gave notice of this new subsection when I spoke on Second Reading. If I may quote my words to your Lordships, I said:
"If the Government, in bringing forward the Bill, had suggested that it was a stopgap measure until the 1974 Act could become fully operative, it would have had a not unsympathetic reception from your Lordships. It would have meant putting a time limit on its operation and the House would, rightly I think, have demanded more expedition in making the regulations under the very comprehensive 1974 Act".—[Official Report, 6/5/76: col. 257.]

751
In effect, the new clause assumes that the insurance Act 1974 will be fully, operative and effective by 1981. If it is not, then the Minister will have to come before Parliament, explain why and ask for five more years in which to make it effective. During the Recess I took some trouble to take advice on, and to study, the 1974 Act, and I find it hard to believe that when that Act is fully effective the disasters, the reaction to which provoked this legislation, will not happen again. If I am wrong, then a new Insurance Act is necessary. I beg to move.
Lord WINTERBOTTOM: My Lords, the noble Lord, Lord Reigate, damns this Bill with faint thanks, but faint thanks are better than no thanks. This Amendment, as he has said, is similar in principle to that moved in Committee by my noble friend Lord Peddie. It is designed to make the protection scheme a purely temporary measure by placing a time limit on the operation of the protection scheme. I am afraid we still feel that the Amendment is unacceptable, for the reasons I gave when we discussed this matter at the Committee stage of the Bill.
The Amendment gives a slightly longer life to the Bill but the difference is only marginal. We believe that a cut-off date of this sort could cause serious practical problems and inequitable treatment to policyholders, if on the relevant date the Board were in the process of carrying out their duties in a particular case. We are reasonably confident that when tighter supervision arrangements are fully in force the Board will only rarely need to impose a levy, if at all. To this extent, therefore, we share the thinking lying behind this Amendment. However, I should like to repeat what I said in Committee, that no system of supervision, however strict, can be foolproof. Insurance is the business of taking risks and bad fortune and difficult economic circumstances may still unhappily cause an occasional failure. In these circumstances, I am convinced that the continuing protection scheme is necessary to carry out supervision. May I stress that the scheme is complementary to the supervision arrangements, and I am sure it is quite wrong to accept the proposal to abandon the scheme after a relatively
752
short time. I hope I have convinced your Lordships.
Lord DAVIES of LEEK: I should like to take up about a minute of the time of the House. Although I know what is in the mind of the noble Lord, Lord Reigate, and I know that he has a depth of knowledge and a constructive approach to this matter, may I suggest that those of us who now have some notification of what is happening to patent law, company law and insurance law, know that all these things are in a state of flux in the Common Market. I voted "No" in the referendum; nevertheless, the nation having given such a majority we shall be forced to try to make a success of what is happening. Therefore, company law, patent law—particularly in the pharmaceutical world, of which I know a little—and insurance law are in a state of flux. Therefore, would not that be a warning or caveat in regard to our own laws, making it unnecessary to put down in black and white in the Bill the phraseology suggested by the noble Lord opposite.
Lord WINTERBOTTOM: My Lords, once again my noble friend Lord Davies of Leek has come to my aid. May I ask the noble Lord, Lord Reigate, whether he is willing to withdraw his Amendment?
Lord REIGATE: My Lords, I have not heard any arguments that really convince me that my Amendment is not an extremely good one. The noble Lord, Lord Winterbottom, said it was too short a term but that it was longer than that proposed by the noble Lord, Lord Peddie. He did not give an alternative term. I should have preferred his reaction to have been to accept my Amendment and, bearing in mind that this Bill has to go to another place, to leave it to them to fix a more suitable term.
Coming to the arguments of the noble Lord, Lord Davies of Leek, I thought if there was one thing which could not possibly be dragged into this debate in regard to this Amendment it was the issue of the Common Market. However, although the referendum is over, I can see that we shall still have it dragged in on every possible occasion. I rather regret it because I think this is going to be the kind of Act which will clutter up the Statute Book and will ultimately have to be removed by the Law Commission

753
or by a consolidation Act, perhaps not for some time to come.
During the Second Reading debate my noble friend Lord Aberdare said it was an unnecessary Bill, and when it is through all stages I think he will probably continue to say that it will be an unnecessary Act. I had hoped that I might have his support in limiting the life of this unnecessary Act, but in the absence of any support I beg leave to withdraw my Amendment.
Lord DAVIES of LEEK: My Lords, in defence of myself, I meant no scornful representation at all about the Common Market. The fact is that all these things—
Lord BESWICK: My Lords, I wonder whether I might call the attention of my noble friend to the fact that this is the Report stage and he can speak only on one occasion.
Amendment, by leave, withdrawn.
6.45 p.m.
Lord BESWICK Lord BESWICK moved Amendments Nos. 99, 100 and 101:
Page 19, line 10, after ("directors") insert ("chief executives")
Page 19, line 22, after ("director") insert ("chief executive")
Page 19, line 23, after ("director") insert ("chief executive")
The noble Lord said: My Lords, with this Amendment I suggest that we should take also Amendments Nos. 100 and 101. The purpose of these Amendments is to include chief executives within the categories of insurance company officers from whom three of the Board's members will be appointed. This change has been requested by the industry; without it an important section of senior insurance company management would have been ineligible for appointment to the three company seats on the Board. The term "manager", as defined in Section 7 of the Insurance Companies Act 1974, excludes a chief executive; and many chief executives are not directors of their companies. On the other hand, in our view, the category of "controllers", as originally suggested by the noble Lord, Lord Aberdare, would have been too broad; a controller could, for example, be a managing director or chief executive of a holding company who had no direct managerial responsibility in an insurance
754
company. Without going quite so wide as the noble Lord, Lord Aberdare, suggested, I hope he will agree that this is an improvement. I beg to move.
Lord ABERDARE: I am very grateful, my Lords.
Lord WINTERBOTTOM Lord WINTERBOTTOM moved Amendment No. 102:
Page 19, line 27, at end insert—
("(5) The Secretary of State shall consult persons appearing to him to be representative of the interests of authorised insurance companies before appointing a person who is a director, chief executive or manager of an authorised insurance company to be a member or alternate member of the Board.")
The noble Lord said: My Lords, the purpose of this Amendment is to require the Secretary of State to consult persons appearing to him to be representative of the interests of authorised insurance companies before appointing the company members of the Board. The Government undertook in Committee that an Amendment would be tabled to this effect. When the Secretary of State consults such persons, it goes without saying that he will have regard to their opinions that "consultation" means something more than just listening. There is therefore no need for this point to be specified in the new sub-paragraph. I beg to move.
Lord ABERDARE: My Lords, this was a point which we made at the Committee stage and I am grateful to the noble Lord, Lord Winterbottom, for having included it in this Amendment to the Bill. It is a very important paragraph. The fact that the majority of the members of the Board will be drawn from the insurance industry and will be people whose names have come forward as a result of consultation by the Secretary of State, in my view gives a tremendous reassurance to the insurance industry that the Board will act highly responsibly. I think this is most important, particularly in connection with the new clause which was moved in under Amendment No. 62, by which the members of the Board will be in a majority from the insurance industry. I am very grateful for this Amendment.
The LORD CHANCELLOR: My Lords, Amendments 103 and 104 were discussed with Amendment No. 4. I beg to move.
Amendments moved—
Page 21, line 34, leave out ("at risk") and insert ("in financial difficulties")
Page 21, line 35, leave out ("16") and insert ("(Companies in financial difficulties: transfers of business, etc.)").—(The Lord Chancellor.)
6.50 p.m.
Lord BESWICK Lord BESWICK moved Amendment No. 105:
Page 22, line 29, leave out from ("audited") to end of line 30 and insert ("by auditors appointed by the Board.
(2A) A person shall not be qualified to be appointed as auditor by the Board under subparagraph (2) above unless he is a member of one or more of the following bodies

the Institute of Chartered Accountants in England and Wales;

the Institute of Chartered Accountants of Scotland;

the Association of Certified Accountants;

the Institute of Chartered Accountants in Ireland;

any other body of accountants established in the United Kingdom and for the time being recognised for the purposes of section 161(1)(a) of the Companies Act 1948 by the Secretary of State;

but a Scottish firm may be so appointed if each of the partners therein is qualified to be so appointed.")
The noble Lord said: My Lords, the purpose of this Amendment is to specify in the Bill those persons who are qualified to be appointed as auditors by the Board, instead of leaving the matter to the direction of the Secretary of State. The change will not, of course, have any effect in practice on the persons likely to be appointed as auditors, but an Amendment along these lines was requested by the Consultative Committee of Accountancy Bodies and we are happy to comply with their wishes. The drafting of the new subsection follows recent precedents, for example Section 53(2) of the Civil Aviation Act 1971. There is another precedent, which I hesitate to mention, in Section 19(2) of the Maplin Development Act 1973. I hope that despite that noble Lords will accept this Amendment. I beg to move.
Lord LYELL: My Lords, as a member of one of the bodies referred to here, I
756
am sure I speak for the Consultative Committee of Accountants when I say we are very grateful that the noble Lord has brought this Bill into line with the Companies Act.
Schedule 2 [Additional provisions with respect to the insurance industry levies]:
Lord BESWICK Lord BESWICK moved Amendment No. 107:
Page 23, line 26, leave out ("31st January") and insert ("1st March").
The noble Lord said: My Lords, with this Amendment I should like to speak to Amendments Nos. 108 and 109. The purpose of these Amendments is to extend the time allowed to companies for submitting their statements of income liable to levy. When this point was raised in Committee, my noble friend Lord Winter-bottom explained that the Government were sympathetic to the idea of an extension, but that the end of March would be too long and be liable to delay the Board's ability to raise a levy. The industry have agreed that 1st March will give companies adequate time to prepare their returns, and these Amendments are moved accordingly. I beg to move.
Lord BESWICK: My Lords, I beg to move Amendments Nos. 108 and 109.
Amendments moved—
Page 23, line 27, leave out ("31st January") and insert ("1st March").
Page 23, Line 31, leave out ("31st January") in both places and insert ("1st March").—[Lord Beswick.)
Lord BESWICK: My Lords, I beg to move Amendment No. 110. As noble Lords will appreciate, this is purely a drafting Amendment. The words "that Act" occur twice in sub-paragraph (3) of paragraph 5, and it must therefore be made clear that the definition in subparagraph (5)(b) of the paragraph applies to both references.
Amendment moved—
Page 24, line 28, after ("Act") insert ("in both places where they occur").—(Lord Beswick.)
Lord BESWICK Lord BESWICK moved Amendment No. 111:
Page 25, line 3, leave out ("and").
The noble Lord said: My Lords, with this Amendment may I speak to Amendment No. 112. In Committee I accepted the principle that the Board should be required to specify the purpose for which any levy is being raised. The new subparagraph (c) gives effect to that principle. If the levy is being imposed in respect of a particular company, it will of course be necessary for the Board to name the company in order to comply with this provision. But it may be that a levy will not relate to a particular company—it may be raised to meet the Board's administrative expenditure—hence the general terms in which the Amendment is drafted. Nevertheless, I hope that this will be acceptable. I beg to move.
Lord DRUMALBYN: My Lords, without appearing to be unduly pessimistic, may I suggest that it would be better "for all purposes for which the levy is being imposed."? There might easily be more than one purpose, and as the noble Lord has suggested they might come at the same time.
Lord BESWICK: My Lords, maybe I will end this stage as I began the Committee stage, by saying that I have listened to all constructive suggestions but that is not one and there are others for the next stage.
Lord ABERDARE: My Lords, I should like to thank the noble Lord for this Amendment which will be welcome. May I say once again, at the end of this long series of Amendments, that this has been a very happy birthday for me. The noble Lord has given me many acceptable gifts. We thank him and the noble Lord, Lord Winterbottom. We were extremely critical of the Bill when it appeared at Second Reading, but thanks to the discussions that have gone on meantime it has been enormously improved and has come very much closer to the kind of scheme that the industry had in mind as a possible voluntary scheme. Therefore, it is now a Bill that has many worthwhile aspects to it. We have managed to improve it very greatly. Although I should like to thank those
758
people who have contributed to the constructive amendments of the Bill, I should also like to thank the noble Lord for the flexibility he has shown in accepting Amendments and bringing forward a great many which have met a number of the points we raised in Committee.
Lord BESWICK Lord BESWICK: My Lords, I beg to move Amendment No. 112.
Amendment moved—
Page 25, line 5, at end insert ("and
(c) the purpose for which the levy is being imposed.")—(Lord Beswick.)

  "BABIES FOR BURNING": POLICE INQUIRIES
  "BABIES FOR BURNING": POLICE INQUIRIES
  ROYAL COMMISSIONS: MEMBERS' SALARIES
  ROYAL COMMISSIONS: MEMBERS' SALARIES