Sitting of 26 April 1976

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

EVIDENCE OF IDENTIFICATION IN CRIMINAL CASES
Address for Return,
of the Report to the Secretary of State for the Home Department of the Departmental Committee on Evidence of Identification in Criminal cases.—[Dr. Summerskill.]

ORAL ANSWERS TO QUESTIONS
  TRADE

    Paper Imports
    Mr. Ovendenasked the Secretary of State for Trade when he expects to commence discussions with the Scandinavian Governments on the review of the duty-free quota system for the import of paper products.
    The Under-Secretary of State for Trade (Mr. Michael Meacher): I expect these
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    discussions to commence in May, but no firm dates have yet been arranged.
    Mr. Ovenden: I thank my hon. Friend for that answer. May I have an assurance that these negotiations about the long-term future of quotas will be completed before the 1977 figures are due to be negotiated? Will my hon. Friend also assure me that in these negotiations he will endeavour to produce a system which more closely reflects reductions in home demand and affects imports accordingly?
    Mr. Meacher: I hope that I can give my hon. Friend an assurance on the first matter. On the second, I appreciate that the free trade agreements have the weakness that they are not related to demand and only have implicit in them a growth factor. These matters will be taken fully into account in the review, but any changes in the terms have to be agreed with EEC countries.
    Mr. MoateDo not the present arrangements mean that the United Kingdom bears the full brunt of Scandinavian competition whilst the remainder of the EEC remains highly protected? Will the hon. Gentleman urge his right hon. Friend to examine the whole arrangement closely to see whether he can speed up the phasing out of these protective tariffs?
    Mr. Meacher: The differential between other EEC countries and Britain is relatively marginal until 1977, after which there will be no differential disadvantage

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    to Britain, because the tariffs of other EEC countries and our own will be phased out at the same rate.
    Mr. Sims: Will the hon. Gentleman take into account the fact that the operation of the ratchet clause to which he referred means that there is unused capacity in this country in the paper industry while imports are still coming in and that the removal of this ratchet clause is an essential part of the negotiations to which he referred?
    Mr. Meacher: No, I do not think that that necessarily follows.

    London and Counties Securities Group Limited
    Mr. Skinnerasked the Secretary of State for Trade what further action he is taking arising out of the publication of the London and Counties Securities Group Limited by his Department.
    The Under-Secretary of State for Trade (Mr. Clinton Davis): The Companies (No. 2) Bill contains provisions which are relevant to this report, particularly those designed to strengthen the position of auditors. Other matters dealt with in the report will be considered as part of my general review of company law.
    Mr. Skinner: Does my hon. Friend agree that this rather sordid affair cannot finally be cleared up until one of the chief culprits—namely, Gerald Caplan—is rounded up so that he can be interviewed and asked to explain the actions not only of himself but of his colleagues and the other directors on the board at that time? Is it not worth noting, too, that at the present time, despite the rescue of the secondary banking system, we are once again seeing in the City columns of various newspapers the spawning of further secondary banking with the urging of people here to invest their money, in many cases overseas? Should not there be some legislation to stop this practice once and for all?
    Mr. Davis: The prosecution of Mr. Caplan, or anyone else involved in this unhappy affair, is a matter for the Director of Public Prosecutions and my right hon. and learned Friend the Attorney-General and not for my Department.
    The question of the supervision of secondary banking, to which I thought my
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    hon. Friend was referring, the inspector's comments and recommendations in this respect have been carefully noted and preparations for the amendment of the Protection of Depositors Account Regulations 1963 are in hand. There is a strong case for stricter regulation of this activity.

    Imported Garments
    Mr. Cryerasked the Secretary of State for Trade what are the figures for imported garments in 1975 and to the latest available date.
    Mr. Meacher: The figures are £487 million cif in 1975, and £154 million cif during the first quarter.
    Mr. Cryer: I am most grateful to my hon. Friend for those figures. Does he agree that they represent a considerable effect on the British textile industry? Does he also agree that it is particularly galling for the textile industry to have to face this sort of thing when it is finding the greatest difficulty in obtaining payment from and maintaining exports to Nigeria although Nigeria cannot and does not have the equivalent industry within its own shores? Will my hon. Friend investigate the position?
    Mr. Meacher: Under the Multi-Fibre Arrangement the EEC has so far negotiated nine textile restraint agreements as a result of which existing United Kingdom restrictions on cotton fibres and cloth will be extended to wool and man-made fibres and into new areas of knitwear. When these negotiations are completed the United Kingdom will have control over potentially disruptive imports of textiles and clothing from all major low-price sources. I hope that this provides a measure of protection under the MFA, although I recognise the limitations of that arrangement.
    Mr. Madden: Representing as he does a textile constituency, the Minister will know that there is concern not only about the volume of imported garments but about the prices at which those garments are received. What steps are the Government taking to restrain the volume of imports and to ensure that the prices at which they come into the country are truly competitive with those of the British industry?
    Mr. Meacher: When representations are made to us that textile or any other imports are dumped—that does not mean cheap imports, but dumped imports according to the technical meaning—action will be taken by my Department, as it was taken on the imports of men's and boys' woollen suits from Romania, Czechoslovakia and East Germany. The Clothing Manufacturers' Federation has also applied for anti-dumping action on man-made fibre suits from East Europe, and this is now being discussed. Any other examples will be dealt with quickly by the Department.
    Mr. Fletcher-Cooke: Has the Under-Secretary of State—whom I congratulate on his appointment—any information to give us about the large sum of public money which the former Prime Minister said was to be spent on the garment industry and its modernisation?
    Mr. Meacher: That is primarily a matter for my right hon. Friend the Secretary of State for Industry, but £20 million was to be allocated to the clothing industry, and there have been representations to extend the allocation to knitwear and hosiery. The assistance was designed primarily for the clothing industry, and it is possible for applications under Section 8 of the Industry Act 1972 to be made by other sectors of the textile industry.

    Balance of Trade
    Mr. Canavanasked the Secretary of State for Trade what is the latest available figure for the United Kingdom balance of trade.
    Mr. Neubertasked the Secretary of State for Trade what is the present deficit on the balance of trade ; and if he will make a statement.
    The Secretary of State for Trade (Mr. Edmund Dell): The early part of this year has seen a continuation of the reduction in our visible trade deficit which took place in 1975. In the first quarter, our visible trade deficit was £438 million seasonally adjusted, the lowest quarterly figure since before the quadrupling of oil prices at the end of 1973. Trade in non-oil goods was in surplus by £518 million in the same period, the highest figure recorded since 1970.
    Mr. Canavan: Is it possible to estimate the balance of trade figures for various parts of the United Kingdom? If there any evidence to substantiate the SNP claim that a separate Scotland, even now, would have a healthy balance of trade surplus, or is that another typical example of the lies which the SNP is spreading to try to stir up discontent among the people of Scotland?
    Mr. Dell: I gave some figures in my recent speech during the devolution debate, which I followed up with a Written Answer towards the end of January, from which it can be seen that, so far as the balance of trade of Scotland can be determined, there is at present a very substantial Scottish balance of trade deficit.
    Mr. Neubert: I welcome the encouraging figures for last month, but does the Minister agree that there were freak factors at work, such as exceptionally large re-exports of diamonds? What is the latest forecast of the deficit for the full year?
    Mr. Dell: I agree that the March figures, unfortunately, cannot be expected to be typical as exceptional factors were involved. Nevertheless, with our exports increasing and some expansion of world trade taking place, I hope that this year we shall do better on our balance of trade than we did last year.
    Mr. Higgins: I congratulate the Secretary of State on his promotion and wish him well in his high office. Will he explain why the Government have been playing with interest rates rather like a yo-yo? Is not this bound to have a destabilising effect on the exchange rate, and is it not accordingly likely to produce very uncertain balance of payments figures for the remainder of this year?
    Mr. Dell: I am grateful to the hon. Gentleman for his congratulations. The level of interest rates is a question for my right hon. Friend the Chancellor of the Exchequer. I understand that there is to be a Private Notice Question on the £sterling which will no doubt give the hon. Gentleman an opportunity to ask his supplementary question.
    Mr. loan Evans: I congratulate my right hon. Friend on his new appointment. Will he encourage industry to purchase from British component industries

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    so as to reduce imports, and will he encourage consumers to buy British to secure an improvement in our trade figures?
    Mr. Dell: Several discussions have been going on, for example, between manufacturers and the retail industry, which I hope will lead to the sort of results which my hon. Friend wishes to see. It is important that British industry should be competitive.
    Mr. Pardoe: May I welcome the right hon. Gentleman to his new post by asking him in future not to mention the non-oil deficit? Does he accept that it would be just as reasonable—or unreasonable—to talk about the non-food deficit? Is not the food deficit just as important and as large as the oil deficit, and what is the Department doing to close that gap?
    Mr. Dell: I agree that there is a certain inappropriateness in referring to the non-oil deficit. It has been customary to give that figure, but I shall certainly consider the hon. Gentleman's representation. As to what we are doing about the food deficit, a White Paper was published recently, but these are questions for my right hon. Friend the Minister of Agriculture, Fisheries and Food.
    Mr. Martenasked the Secretary of State for Trade what is now the total trade deficit with the Common Market countries since Great Britain joined in January 1973.
    Mr. Dell: The United Kingdom's visible trade deficit with the EEC, on a balance of payments basis, in 1973, 1974 and 1975 taken together was £5,547 million.
    Mr. Marten: While recognising what a great disappointment these figures must be to those who thought that a wider European Market would be beneficial to our trading position, may I ask how much longer we can go on with this rising trend in our trading deficit with the Community? Can we expect anything to come out of the meeting of Finance Ministers in Luxembourg?
    Mr. Dell: I am glad to say that in the first quarter of this year there was some improvement in the position. We obviously have a long way to go. This
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    is another aspect of the competitiveness of British industry which must improve.
    Mr. Heller: As during the referendum campaign we were informed of the great economic advantages that would flow from our remaining in the Common Market, may I ask my right hon. Friend to tell the House precisely what we have gained economically by remaining in the Common Market?
    Mr. Dell: I certainly do not remember saying at any time during the referendum campaign that there would be as rapid an improvement in our prospects as my hon. Friend seems to have expected. Many of those who opposed British membership did so on the basis of wider free trading policies. Here we have free trade with Europe and now we have the opportunity to benefit from it.
    Mr. Jessel: How do the Government expect the large deficit with the Community to be affected by the drop of one-tenth in the value of the pound in the past two months?
    Mr. Dell: The Government's attitude to the drop in the value of the pound has been made clear by my right hon. Friend the Chancellor of the Exchequer on more than one occasion. Price is only one aspect of competitiveness. In this country we need to compare our record with that of countries with appreciating currencies, countries which, nevertheless, have achieved continuing balance of payments surpluses.
    Mr. Jay: Can my right hon. Friend say how the figure of over £5,000 million compares with this country's total overseas borrowing during the same period?
    Mr. Dell: I cannot do so, without notice. If I add up all the balance of payments deficits of the country as a whole during that period, it is a substantial part of it. Nevertheless, as my right hon. Friend knows, there has been considerable switching of trade since we entered the European Community, and that has affected the situation.
    Mr. Blaker: Does the right hon. Gentleman think that our total trade deficit with the world since the beginning of 1973 would have been any less if we had been outside the Common Market, and, if so, why?
    Mr. Dell: Analyses of this matter by independent organisations have shown that our membership in this respect has, as yet, made no difference to the economic results.

    South Africa
    Mr. Brothertonasked the Secretary of State for Trade, when he expects to meet the South African Minister of Trade.
    Mr. Dell: I have no plans at present to do so.
    Mr. Brotherton: In view of the loss in the value of the pound, will the Secretary of State do all he can to ensure that we export as much as possible to South Africa, as well as to other African States, without regard to ideological considerations?
    Mr. Dell: At the end of 1974 a statement was made by my right hon. Friend the then Foreign and Commonwealth Secretary on trade with South Africa. That represents our policy. We shall certainly do everything we can to encourage civil trade with that country. The British Overseas Trade Board has an exhaustive list of promotional activities in South Africa, and I am glad to say that during 1975 we had considerable trading successes in that country.
    Mr. Anthony Grant: If it is the Government's policy in every way to encourage trade with South Africa, which is one of our biggest customers, will the Minister consider an official ministerial visit to South Africa to explain the Government's policy more clearly to the South African Government?
    Mr. Dell: I have not at this time any plans for such a visit, but my predecessor and my right hon. Friend the Chancellor of the Exchequer have had discussions with South African Ministers during their visits to this country in which I am sure that the Government's policies were fully explained.
    Mr. Goodhew: The right hon. Gentleman is careful to talk about civil trade. Does he not appreciate that the interests of this country and NATO cannot be cut off at the Tropic of Cancer and, therefore, if he is thinking not in terms of the ideas of Labour Members on racial conflict but of the ideological conflict
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    between the Communists and this country, it is in the interests of Great Britain to provide South Africa with the arms she needs to guard the Cape route, upon which we depend for so much? Will he stop—?
    Mr. Speaker: Order. This is not debating time; it is Question Time.
    Mr. Dell: The Government's position on this matter has been fully explained by the former Foreign Secretary, and I have nothing to add to what he said.

    Soviet Union
    Mr. Blakerasked the Secretary of State for Trade what is the value of contracts placed by the Union of Soviet Socialist Republics at the latest convenient date under the £950 million line of credit arranged by the then Prime Minister in February 1975.
    Mr. Dell: The total value of contracts placed under the agreement to date is approximately £25 million and further substantial contracts are under discussion between United Kingdom exporters and Russian buyers.
    Mr. Blaker: If the line of credit is taken up fully, will it not cost the British taxpayer more than £300 million in interest rate subsidy alone? As much of it is intended to strengthen the Russians' capital base and enable the Soviet Union to compete more effectively in our own markets, are the Government considering whether it makes sense for the Western countries to fall over one another to subsidise the Soviet Union? Should not the Government be pressing our Western partners to examine together our attitudes towards credit for the Soviet Union?
    Mr. Dell: The Government consider the interests of this country by extending lines of credit. I have seen the hon. Gentleman's estimate of the cost to the taxpayer of this line of credit. It is impossible to make such estimates without having the details of particular contracts. We are in competition with other countries that operate similarly in their trade with the Soviet Union and if we are to get orders it is necessary to operate on this basis.
    Mr. Higgins: In general will the Secretary of State say what the interest

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    repayments are for the credits extended to the Russians? Secondly, do the figures for exports to Russia appear in the balance of payments figures at the time when the exports are made, or when the payment is received?
    Mr. Dell: It is not customary to publish rates of interest ; they remain confidential. Exports naturally appear in the balance-of-trade figures when they are made ; the balance of payments figures are statements of actual payments.
    Mr. Skinner: Can my right hon. Friend tell me which party was in power at the time when we, along with the rest of the Common Market countries, subsidised the sale of that cheap butter to Russia?
    Mr. Dell: I think that my hon. Friend knows which party was in power.
    Mr. Viggers: If the terms of credit are so favourable, why was Russia chosen in the first place?
    Mr. Dell: It has been customary for a number of our major industrial competitors to operate with the Soviet Union within this type of framework. We are merely trying to make our exports competitive.

    Fishing Industry (Disciplinary Report)
    Mr. James Johnsonasked the Secretary of State for Trade what steps he is taking to implement the disciplinary report upon the fishing industry.
    Mr. Clinton Davis: The report was unanimous and, having considered the views expressed since its publication, I still feel that the recommendations are justified and relevant and I would hope to implement them as soon as legislative time can be found.
    Mr. Johnson: Does my hon. Friend agree with me that the most significant feature of the findings in this report is the unanimity among management—Lord Vestey and others—the unions and the men, which is not usual in this industry? Does he accept that they are also unanimous that alcohol should not be taken aboard ship? Finally, does he expect that those of us who come from ports, especially hon. Members representing fishing constituencies, take the view that this is not enough and that it is time
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    that we had another Merchant Shipping Bill?
    Mr. Davis: When the former Secretary of State for Trade and I set up the working party to investigate this matter, we did not expect it to be unanimous, because this is a very controversial area. The fact that its report has been unanimous must necessarily affect the Government's views about the implementation of the proposals. I endorse what my hon. Friend has said, particularly about the proposals regarding the taking of drink. I also endorse his view that the time is ripe for another Merchant Shipping Bill. I do not think that he can expect me to go beyond that.

    Anti-Dumping Legislation
    Mr. Moateasked the Secretary of State for Trade on what date responsibility for anti-dumping measures will be transferred to the EEC; and what relevant powers will remain with the United Kingdom thereafter.
    Mr. Dell: Our remaining responsibilities for anti-dumping action will be transferred to the EEC Commission as from 1st July 1977. The United Kingdom will then have no power to take independent action in this field and all complaints of dumping will be dealt with by the Commission.
    Mr. Moate: Is it not offensive to the House and to individual Members who might have in their constituencies industries affected by dumping that in future this power will be held in Brussels and that Ministers here will not be answerable for its exercise? Is the right hon. Gentleman satisfied with that arrangement? If not, will he seek to cancel it, change it, or at the very least defer it?
    Mr. Dell: We cannot cancel it or defer it. We can ensure that its operation is adequate to the needs of our idustrial situation. We shall ensure that by continual consultation with the Commission and by our presence on the Anti-Dumping Committee of the European Economic Community.
    Mr. Cryer: Will my right hon. Friend explain how he is to ensure that the Commission will be effective in applying antidumping measures, for many of us fear that the British Government have failed in this regard in the past? What action

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    will he take to ensure that this bureaucratic nightmare at Brussels is brought to account in the United Kingdom Parliament and made to provide effective protection for our industries, which are now so badly protected?
    Mr. Dell: The Commission is already responsible in respect of trade within Europe and there is no reason to think that it should not be effective in respect of trade outside Europe, provided that the British Government use their influence within the Community and in discussions with the Community to ensure that the arrangements work properly.
    Mr. Michael Morris: As the Secretary of State said, the date of transfer of responsibility is still a year away. Is he aware that experience in this country has been far from favourable and that industry after industry—the shoe industry in particular—has proved dumping and that the Department of Trade has sought to impose only quota restrictions? Will he set a precedent as the new Secretary of State during the years to come and show that the British Government mean to act against proven dumping?
    Mr. Dell: I will certainly take action on proven dumping cases where it is in the national interest so to do. That is my determination. We have a considerable number of cases under review at present and action will be taken where appropriate.
    Mr. Jay: Is my right hon. Friend satisfied with a situation in which these crucial decisions can no longer be taken by the British Government?
    Mr. Dell: This was part of the Treaty of Accession, to which this House was party. We have now to make this system work and I am sure that we can make it work. That is the objective to which we must dedicate ourselves.
    Mr. Powell: What will be the attitude of the Government in future in the face of adverse resolutions of the House of Commons on the subject of the antidumping policy of the EEC?
    Mr. Dell: We shall have to consider that when it happens.

    Tourism
    Mr. Adleyasked the Secretary of State for Trade how many bodies, other
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    than State-sponsored organisations, he has consulted about Her Majesty's Government's future tourism policy ; and if he will list the dates of such meetings.
    Mr. Meacher: In the past 12 months direct discussions have been held by my Department with seven such bodies. besides certain local authorities, on various aspects of tourism policy. These meetings were held in July and December, on three occasions in February and more recently on 31st March last, in addition to more informal exchanges. The four statutory boards which are appointed to advise the Department on the development of tourism consult extensively to that end.
    Mr. Adley: I thank the Minister for that reply and declare an interest as a National Council member of the British Hotels, Restaurants and Caterers Association. May I ask the Home Secretary whether as part of his new job he will take an early opportunity to read the report of the BHRCA on tourism and also initiate an early debate on the future of the tourist industry in Britain?
    Mr. Meacher: I have certainly seen the document to which the hon. Gentleman referred and have read carefully through the reply of my right hon. Friend's predecessor in which he declared a close agreement with the objectives of the policy and commented on the three main points which were made therein. The question of debate is for my right hon. Friend the Leader of the House, but I will pass the hon. Gentleman's views to him.
    Mr. McCrindle: As regards attracting tourists to Britain, in view of the recent fall in the value of the pound does not the Minister agree that the best thing that he and the Government could do would be to take a full-page advertisement in American and German newspapers pointing out that for some people at least the cost of living in Britain is falling daily?
    Mr. Meacher: The British Overseas Trade Board and the British Tourist Authority are well aware of all the various ways by which they can attract more tourists to this country. Already earnings from overseas visitors come to £700 million a year.

    small Businesses(Exports)
    Mr.Luceasked the Secretarty of State for Trade if he will review the provision of Government assistance and facilities for small businesses involved in exporting.
    Mr. Meacher: Government services for exporters are designed to cater for n of he needs of all exporters irrespective of size and are widely and successfully used by small businesses. They are kept under review by the British Overseas Trade Board, and if the hon. Member has particular suggestions to make I would be glad to refer these to the board.
    Mr. Luce: Does the Minister realise that many small businesses involved in exporting feel that large business organisations are given more favourable treatment in terms of exports by the Government and the ECGD in such matters as pre-shipment finance and credit facilities? Will he take a fresh look at the situation and do his best to encourage small businesses to export?
    Mr. Meacher: It is true that some services provided by the BOTB and in other ways benefit major projects and large producers. It is right to give particular assistance at the heavy end of the business, but there is advantage to smaller contractors in terms of subcontracting. There are also services available to smaller exporters in terms of the Export Intelligence Scheme and the European Component Service, which are widely taken up by smaller companies, the Group Export Educational Visit Scheme and also facilities for credit insurance cover. The hon. Gentleman also mentioned pre-shipment finance facilities. Performance bond cover at the lower limit has been reduced from £20 million to £2 million and the commercial bonding market is able to look after the problem below that minimum.
    Mr. Ioan Evans: As well as giving Government assistance to small businesses, will the Minister consider giving Government protection to small businesses, involved in takeover bids by financial manipulators and action by asset strippers who have put companies out of business and thereby caused the loss of jobs as well as loss of exports?
    Mr. Meacher: That is a matter we shall have under consideration in future legislation on companies.
    Mr. Goodhew: Is the Minister aware that a successful export business depends on a good home base? Therefore, will he talk to his right hon. Friend the Chancellor of the Exchequer about some of the measures which he has taken against small business in recent years and try to get those measures reversed?
    Mr.Meacher: There has been a considerable improvement in export performance by small businesses. The hon. Gentleman's remarks do not appear to be substantiated by events.
    Mr. James Lamond: Will not the £950 million line of credit negotiated between Her Majesty's Government and the Soviet Union afford considerable facilities to small businesses interested in assisting our exports? If that is the case, will the Minister find out from the Opposition whether they are in favour of assisting small businesses or wish that credit facility to be withdrawn?
    Mr. Meacher: My hon. Friend makes an effective point.

    Airlines
    Mr. Tebbitasked the Secretary of State for Trade if he is satisfied that no obligations are laid upon British airlines which place them under a competitive disability when compared with foreign carriers.
    Mr. Dell: Obligations and costs incurred by airlines frequently differ as between one country and another. I know of no reason to think that British airlines are placed at any significant disadvantage.
    Mr. Tebbit: Will the right hon. Gentleman avoid the temptation to shuffle responsibility on to somebody else? Does he think it fair or unfair that British carriers, and British carriers alone, are to be liable to a penalty for overbooking?
    Mr. Dell: I am not shuffling any of my responsibility on to anybody. I understand that the overbooking system, which is being dealt with in respect of British airlines through the licensing system, will be dealt with voluntarily in the case of foreign airlines. I hope that they

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    will see that to do so is in their own interests. I am prepared to examine the matter further if the hon. Gentleman thinks that appropriate.
    Sir S. McAdden: Has the Minister's attention been drawn to the fact that considerable facilities have been provided to Irish airlines to transport horses and so on, facilities which have not been available to British airlines? Does he not appreciate that British airlines are capable of providing this service if only the Department does not put obstacles in their way?
    Mr. Dell: That fact has not been drawn to my attention, but I shall look at the matter.
    Mr. Russell Kerr: Is my right hon. Friend aware that this example of farsightedness by the British Government will be widely welcomed throughout the country as yet another sign that British aviation leads the way?
    Mr. Dell: I am grateful for that remark.
    Mr. Marten: Is not overbooking a matter of basic contract between carrier and passenger and has not the passenger a right of action against the carrier?
    Mr. Dell: In view of the questions that have been put to me, I am prepared to look at the matter again to see whether there is any further action that it is appropriate for us to take.

    USSR (Freight Shipping)
    Mr. Rathboneasked the Secretary of State for Trade what percentage of imports from the Soviet Union is carried in Russian ships and British ships, respectively.
    Mr. Giles Shawasked the Secretary of State for Trade what percentage of exports to the Soviet Union is carried in Russian ships and British ships, respectively.
    Mr. Clinton Davis: The percentage of the United Kingdom's seaborne exports to the Soviet Union by value, carried in Russian ships in 1975, was 78 per cent., and in British ships 18 per cent. The corresponding figures for the United Kingdom's seaborne imports from the Soviet Union by value in 1975 were 74 per cent. and 10 per cent. respectively.
    Mr. Rathbone: Is the Minister aware that the figures he has given are far from reassuring? Is he sure that hidden subsidies are not being given by the Russian Government to their own merchant fleet so as to make that fleet much more unfairly competitive than it might otherwise be? Is he sure that the line of credit extended to the Russian Government is not making that Government capable of extending the subsidy to the Russian fleet?
    Mr. Davis: I do not accept that the figures I have given are meant to be reassuring. They are not. They are a cause for concern. This is a matter we propose to discuss with the Soviet authorities. Indeed, these figures result from a fairly long-standing practice in regard to these arrangements—arrangements which applied when the Conservatives were in office.
    The topic of hidden subsidies involves the whole question of assessing the problems confronting us in regard to the Eastern European shipping bloc. These matters require the most careful attention and analysis, and require not simply a bilateral approach but, as far as possible, a joint approach by Western shipping interests. It is not an easy problem to resolve.

    European Patent Convention
    Mr. Shersbyasked the Secretary of State for Trade if he proposes to ratify the European Patent Convention before the end of 1976.
    Mr. Dell: I agree that it is important for the United Kingdom to ratify the European Patent Convention before the end of the year. For this purpose legislation is required and I will introduce this as soon as circumstances permit.
    Mr. Shersby: Does not the Secretary of State recognise that the ratification of the European Patent Convention is vital to British interests? There is virtually no opposition to it in this House, so far as I can tell. So, why is there this delay? May we have legislation on this topic in this Session of Parliament?
    Mr. Dell: I note what the hon. Gentleman says about the Opposition's attitude to this matter. I recognise that it is an important question. I shall do what I can to introduce legislation at the earliest

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    possible time so that we can ratify it before any serious disadvantage is caused to this country.
    Mr. Costain: Is the Minister aware that over three years have passed since the Banks report on patents was presented to the House? When will the House discuss this important matter?
    Mr. Dell: I shall draw the hon. Gentleman's remarks to the attention of my right hon. Friend the Leader of the House.

    Japanese Cars
    Mr. Hal Millerasked the Secretary of State for Trade whether he will have further talks with the Japanese Government and motor industry in the light of the number of Japanese cars registered in the United Kingdom in the first quarter of 1976 ; and if he will make a statement on imports of Japanese cars.
    Mr. Dell: I have at present no plans for talks with Japanese Ministers. But the British motor industry is already in contact with its Japanese counterparts about current levels of car imports front Japan, and is also in close touch with my Department.
    Mr. Miller: Is the right hon. Gentleman aware that that answer will hardly reassure people engaged in the motor car industry? Is he also aware that Japanese imports are now running at a level of over one-quarter of total imports and represent a figure of over one-third of the cars registered in this country? Will he reconsider his attitude to the question of possible import controls?
    Mr. Dell: This is a serious matter. I have already met the Japanese Ambassador to discuss trade between our two countries, and in the course of our discussions we considered the question of cars. Discussions are taking place between the SMMT and the Japanese Association. I hope that this will result in understandings regarding the level of imports from Japan. I prefer this matter to be dealt with voluntarily if that is possible.
    Mr. Raphael Tuck: We have heard a lot about possible retaliation which might take place if we impose import controls. Since heavy restrictions have been placed on British goods entering Japan, what pos
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    sible retaliation could we expect from Japan if we imposed import controls on Japanese cars? While my right hon. Friend is about it, will he try to persuade Members of Parliament in this country to buy British cars?
    Mr. Dell: I am sure that hon. Members will have taken note of the last point my hon. Friend has made. This is not just a case of restraints on Japanese imports. It has been pointed out that there was a fall in the percentage of Japanese imports in the first three months of 1976. Unfortunately, it was not the United Kingdom industry that took prime advantage of that. Instead there was an increase in imports from elsewhere. It is of the greatest importance that British industry becomes sufficiently competitive to take advantage of any voluntary restraints that exist.
    Mr. Pardoe: Will the right hon. Gentleman make it clear to those involved in this country's motor industry that rather than belly-ache about Japanese imports they ought to look carefully at the way the Japanese have been able to take over the motor car markets of Africa and South America, areas where, 20 years ago, we had a complete monopoly?
    Mr. Dell: It is important that we should have an understanding with the Japanese motor car industry. Nevertheless, it is of the greatest importance that the British car industry improves its performance.
    Mr. Skinner: Does my right hon. Friend agree that, while it is acknowledged that import controls are no panacea for resolving all the current economic ills facing us, the fact is that in 1975 the ratio of cars coming into this country from Japan as against those going from this country to Japan was about 25:1? Even if that ratio were reduced to 10:1, how on earth could the Japanese become involved in retaliation when they would still be so much in surplus?
    Mr. Dell: I am glad that my hon. Friend agrees that import controls are not a panacea for all situations. I expressed my concern about the level of British car exports to Japan to the Japanese ambassador. I am sure that he took note of that.
    Mr. Shersby: In addition to talking to the Japanese ambassador, will the right hon. Gentleman talk to the Russian and Polish ambassadors about the dumping of the Russian motor car, the Lada, and the Polish Polski-Fiat? Does he realise that the Polski-Fiat sells in this country for £1,400, which is virtually the price of a new 850 Mini?
    Mr. Dell: I am ready to receive any applications from the industry in respect of dumping from these sources. The matter will be examined as rapidly as possible.

    Exports (Promotion)
    Mr. Pattieasked the Secretary of State for Trade whether he is satisfied with the work undertaken by the British Overseas Trade Board's Fairs and Promotions Branch on behalf of British exporters.
    Mr. Meacher: Yes, Sir.
    Mr. Pattie: Is the hon. Gentleman aware that the BOTB does not recognise the Design Council as a sponsoring organisation for overseas trade fairs? Does he think that this is helpful to British exporters?
    Mr. Meacher: I will certainly take up the matter with the BOTB.

    Concorde
    Mr. Hollandasked the Secretary of State for Trade what is the outcome of his negotiations with the Indian Government concerning permission for Concorde to overfly India.
    Mr. Dell: I would refer the hon. Member to the replies my predecessor gave to similar Questions on 9th February 1976.
    Mr. Holland: Whatever may or may not have been the view of the right hon. Gentleman's predecessor, does not the right hon. Gentleman agree that the Government ought to expend at least as much money and effort in the task of opening up the Singapore-Sydney route to Concorde as was applied to the task of opening up the North Atlantic route, particularly as the Singapore-Sydney route is potentially more profitable?
    Mr. Dell: I agree entirely with the hon. Gentleman about the importance of developing this route.
    Mr. Cryer: What success have we had in selling Concorde? Have we yet achieved the 500 models predicted 10 years or so ago? If we are not having significant success in selling Concorde, is it not time that we abandoned the venture and the very heavy subsidy that the taxpayer is making towards this financial disaster?
    Mr. Dell: I do not think that there is any secrecy about the sales figures for Concorde. Now that the aircraft is in service, it is surely in our interests to see that it is as successful as possible.
    Mr. Tebbit: Does not the right hon. Gentleman admit that it is about time we achieved some results in this matter? Does he not agree that, despite the damage done to this country in the past two years, we still ought to have enough muscle to achieve a diplomatic understanding with India that it is in her interests that she should not obstruct our trade to Australia with this aircraft?
    Mr. Dell: I shall certainly consider whether it would be appropriate to recommence discussions with India on this.

    Soviet Union and Eastern Europe
    Mr. Gwilym Robertsasked the Secretary of State for Trade what are the latest figures available for trade with the Union of Soviet Socialist Republics and other Eastern European countries; and what further steps he is taking to encourage this trade.
    Mr. Dell: In the first three months of this year our exports to the Soviet Union and Eastern Europe were £154 million, an increase of 20 per cent. compared with the same period of 1975. We are continuing to promote actively the further expansion in our trade with these countries.
    Mr. Roberts: Does my right hon. Friend accept that the movement in this trade is satisfactory and has been so in recent months? Would he comment on the forecast by many experts that this trade is likely to remain in surplus for some time to come?
    Mr. Dell: I do not know that the trade is in surplus. I certainly wish to encourage it and I hope that we can take

    23
    advantage from the United Kingdom-Soviet Union Joint discussions that will be taking place next May to encourage our exports further.
    Mr. Higgins: Will the right hon. Gentleman accept that this trade is not satisfactory unless this country gets a reasonable return on the sales of its exports? In view of the welcome positive view which he has taken about Common Market affairs during Question Time, may I ask him to carry out negotiations with the Common Market and other OECD countries to ensure that the terms on which we export to the Communist bloc are not unfavourable to us and extremely favourable to the Russians and the others?
    Mr. Dell: As the hon. Gentleman knows, there are discussions among the OECD countries about the terms on which exports are made. Nevertheless, at the moment we are faced with a particular situation in relation to the Soviet Union and my main concern is to take advantage of the framework we have to develop our exports to the Soviet Union.
    Mr. Goodhew: But is the right hon. Gentleman satisfied that it is right to try to build up the economy of the Soviet Union at a time when that country is trying to undermine the interests of the free world in Africa? As the Government believe in sanctions against some other countries, should not the right hon. Gentleman be looking at this matter more carefully?
    Mr. Dell: I have a strong belief that the development of trade with the Soviet Union can be of mutual benefit.

    Washing Machines (Italy)
    Mr. Georgeasked the Secretary of State for Trade how many washing machines have been imported into the United Kingdom from Italy; and if he will investigate charges of dumping.
    Mr. Wigleyasked the Secretary of State for Trade what progress has been made by his Department in considering the allegations of dumping of Italian manufactured washing machines in the United Kingdom home market.
    Mr. Meacher: Some 365,000 domestic washing machines were imported into the
    24
    United Kingdom from Italy during the 12 months ending February 1976.
    Up to now my Department has received no application from the industry for antidumping action. Any case involving Italy would be a matter for the EEC Commission, but my Department will be ready to give the industry any help and advice it can.
    Mr. Georg: The Minister will I believe be aware that constituencies such as mine, Peterborough and Merthyr are considerably affected by the enormous number of washing machines produced by Indesit and Zanussi and sent to this country. I hope that the Government will consider taking very strong action, otherwise a viable industry will be decimated.
    Mr. Meacher: As I have indicated, we should be willing and ready to give assistance in respect of any anti-dumping application, but I point out to my hon. Friend that the situation to which he refers concerns a reciprocal agreement between a British firm and Zanussi whereby the Italian firm buys refrigerators and other domestic appliances in return for the washing machines it supplies. The number of redundancies which are supposed to be associated with these imports certainly cannot be properly attributed to them alone. One must look for causes other than imports which, to a large measure, have not taken place.
    Mr. Marten: In talking about antidumping measures, the hon. Gentleman, in reply to my hon. Friend the Member for Faversham (Mr. Moate), referred to the Commission. Can he say whether after July 1977 the Commission or the Council of Ministers will operate the anti-dumping measures?
    Mr. Meacher: That will remain with the Commission.
    Mr. Atkinson: How does my hon. Friend justify the fact that the General Electric Company imports this equipment rather than manufacturing it itself?
    Mr. Meacher: GEC is entitled to import, but my right hon. Friend the Secretary of State for Industry and ourselves are anxious to assist in any way we can to ensure that GEC manufactures the goods itself.

    Regional Airports
    Mr. Steenasked the Secretary of State for Trade when he expects the Green Paper on the role of regional airports to be published.
    Mr. Clinton Davis: Part 2 of the consultation document on airport strategy for Great Britain, dealing with regional airports, will be published within the next few weeks.
    Mr. Steen: Before publishing the Green Paper, will the hon. Gentleman have a talk with Freddy Laker, who is anxious to increase his business operations from Liverpool provided the Government do not down-grade the status of Speke Airport and thereby wreck any prospects of a commercial operation from there being viable?
    Mr. Davis: Representations about the consultative process can be made by anybody with an interest in this matter. I have repeatedly told the hon. Gentleman, both in the House and in correspondence, that the Government have no intention of downgrading any airport in anticipation of the report. The consultative process which we are undertaking will be very thorough, and I hope that the hon. Gentleman will stimulate those with local authority interests in his area to make their representations felt.
    Mr. Adley: Will the hon. Gentleman declare his acceptance of the planning principle that airports should be sited within or adjacent to the areas they serve?
    Mr. Davis: Environmental and planning matters form part of the considerations which will affect the judgment of the Government when they ultimately determine the national airports strategy for this country.
    Mr. Tebbit: The succession of Green Papers is generally welcome as a means by which the public should discuss these matters, but does the hon. Gentleman agree that before coming to any conclusions about airports policy the House should have an opportunity to discuss the matter, because it affects almost every hon. Member and his constituents?
    Mr. Davis: It would be helpful for the Green Paper on regional strategy to
    26
    be published first. On the question of a debate, the words of the hon. Gentleman may—it is conceivable—have been heard by the Leader of the House.
    Mr. Hal Miller: Is the hon. Gentleman aware that the National Exhibition Centre has opened in Birmingham and that there is no need to wait for a Green Paper to be aware of the necessity for a new terminal at Birmingham Airport to serve the centre?
    Mr. Davis: A new terminal at Birmingham Airport is not immediately a matter for me. If the hon. Gentleman's representation that Birmingham should be given priority over other airports were to be applied, I think that other hon. Members would feel that he was being given unfair preference. There are many other constituency and regional interests in this matter.

    MR. PETER HAIN
    Mr. Roseasked the Attorney-General whether he caused any inquiry to be made into the allegations contained in documents sent to him by the hon. Member for Manchester, Blackley, before permitting the Director of Public Prosecutions to carry on proceedings at the Central Criminal Court against Mr. Peter Hain.
    The Solicitor-General (Mr. Peter Archer): The documents submitted by my hon. Friend, both before and after the commencement of Mr. Hain's trial, were referred to the Director of Public Prosecutions, and passed by him to the police. An investigation was not then considered practicable in view of the fact that the persons named as having made the allegations are concerned as defendants in pending proceedings. It appears from the documents in question that Mr. Hain himself was aware of the allegations, and could have sought an adjournment had he considered it to be in his interests.
    Mr. Rose: As documents, whether authentic or forged, and photographs undoubtedly exist which implicate a large South African corporation in the plot to smear members of the Liberal Party, was it not incumbent on the DPP to ensure that investigations were made in

    27
    relation to the possession of those documents by a named person before proceedings were brought against Mr. Hain? Will my hon. and learned Friend assure the House that inquiries will be made into the allegations against the corporation, namely, the Anglo-American Company?
    The Solicitor-General: I have explained why it was not possible to proceed with the investigations at that stage. It does not follow from that that they will not be proceeded with subsequently.
    Mr. Finsberg: Does the hon. and learned Gentleman agree that, in spite of the smear campaign by certain quarters, the result of the case was a vindication of British justice?
    The Solicitor-General: I do agree.

  ENVIRONMENT

    Elms
    Mr. Dudley Smithasked the Secretary of State for the Environment what action he proposes to take on the report he has received from the Tree Council which recommends that the Government should pay the cost of any additional labour required to secure the felling of dangerous elms.
    The Under-Secretary of State for the Environment (Mr. Guy Barnett): My right hon. Friends are considering in the light of existing financial constraints and other relevant factors both this recommendation and the others made in the Tree Council's report.
    Mr. Smith: Will the hon. Gentleman agree—and here he can make a very good start in his new office—that elderly people and people on fixed incomes who have dead elms on their property need financial help? Sums of £50 to £100 for felling the trees have sometimes been quoted.
    Mr. Barnett: Yes, I do agree. The matter is being considered within my Department.

£ STERLING
Sir G. Howe (by Private Notice)asked the Chancellor of the Exchequer if he will make a statement about the condition of the pound sterling.
The Chief Secretary to the Treasury (Mr. Joel Barnett): Since the House rose, sterling has been under intermittent pressure, mainly because the markets are nervous about the outcome of the discussions about counter-inflation policy, and in part because the uncovered interest rate differential had narrowed over recent weeks. Recent statements by those involved, and the rise in the minimum lending rate on Friday, have apparently had an effect. I am glad to say that the foreign exchange markets have been quieter so far today.
Sir. G. Howe: The House will understand the reason for the Chancellor's absence. I understand that he is in Brussels and realise that he has a number of pressing engagements from which he must choose in present difficult circumstances.
Will the right hon. Gentleman convey to the Chancellor that the whole House, like the whole country, is deeply concerned, as it must be, about the continued decline in the value of our currency? For that reason, we are most anxious that the nervousness to which the Chief Secretary rightly referred, created by the present series of talks with union leaders, should be brought to a speedy, realistic and sensible conclusion at the earliest possible opportunity. Does the right hon. Gentleman recognise that we shall start moving in the right direction only if the Government—and that means the entire Government—are prepared to spell out the whole truth about the gravity of our economic situation and, above all, are prepared to make the necessary fundamental changes in their central economic policy? That must be done by allowing resources to shift back into profitable industry, and, most important of all, as the Chief Secretary knows very well, by the Government themselves ceasing to believe, and behaving as though they believe, that they can for ever go on borrowing £1 out of every £5 that they are spending.
Mr. Barnett: I very much doubt whether the statements or policies of the

29
right hon. and learned Gentleman would have the slightest effect, other than adverse, on the state of the pound. The chance of bringing the negotiations with the trade unions to a speedy, satisfactory and successful conclusion will be better under my right hon. Friend the Chancellor than it would be as a result of any proposals emanating from the right hon. and learned Gentleman. As I have already said, the negotiations are going well and we expect that they will come to a satisfactory conclusion.
Mr. Atkinson: Will my right hon. Friend confirm that it was London dealers who initiated the unloading of sterling, thus reversing the Government's strategy on the minimum lending rate? Does he accept that their purpose was to pressurise the Government into concluding a 3 per cent. agreement with the trade unions and to reverse the policy of reducing lending rates? Will he assure the House that it is not the Government's policy to increase lending rates any more and that it is not their policy to make further cuts in public expenditure?
Mr. Barnett: The Government's economic strategy is precisely the same as it was when my right hon. Friend the Chancellor announced it in his Budget Statement. I do not accept that the London dealers started this run on the pound. The real problem is to get the rate of inflation down. I am happy to say that the figures in that regard are very encouraging. It would be helpful if some people took notice of those figures.
Mr. Powell: Does the right hon. Gentleman agree that this fall in the exchange rate of the pound does not represent a decline in our real terms of trade, and that in itself it cannot be a cause of inflation?
Mr. Barnett: The present decline in the exchange rate of the pound is overdone in our view. But at the end of the day we shall have a strong currency only when we have a strong economy. I believe that the Government's economic policy will bring us to that situation.
Mr. Mark Hughes: Will my right hon. Friend ensure that my right hon. Friend the Chancellor takes due steps to see that regional investment is not adversely affected by an increase in interest rates
30
domestically, even while it may be necessary for international reasons?
Mr. Barnett: I have no reason to expect that the policy that has been carried out by this Government, including what has happened in the past few days, will have any serious effect on regional policy.
Mr. Pardoe: Does the right hon. Gentleman accept that, rather than trying to blame each other for the fall in the value of the pound, it would be rather more helpful if right hon. and hon. Members came to terms seriously with the fact that the pound has continued inexorably to fall under Governments of both Conservative and Labour persuasions ever since the Smithsonian agreement? Does the right hon. Gentleman recognise that chasing economic wills-o'-the-wisp will not restore confidence, that what the world needs is reassurance that this country knows how to govern itself, and that that requires a new political settlement?
Mr. Barnett: I appreciate that the hon. Gentleman has to criticise both sides of the House. I believe that the world recognises that a statisfactory agreement with the trade unions, which I believe we shall achieve, and bringing down the rate of earnings inflation and price inflation, with the sort of helpful statement we have had from trade union leaders in recent days, is the best way for us to get our economy right.
Mr. Heller: What sort of inquiry, if any, is the Treasury making into the ridiculous matter of hot money that comes into the country quickly and flows out equally quickly every time a strike is declared or a conference decides not to support the 3 per cent. proposals of my right hon. Friend the Chancellor? Is it not time for the whole matter to be seriously examined and for steps to be taken to deal with it, in order that this stupid situation does not arise every time there is such a problem?
Mr. Barnett: No, Sir. I do not believe that that is the real issue. It is not the central issue facing the country. It is not hot money or speculators that are the cause of our problem. The real problem we face is the central economic one, and it is no use going off on to side issues.
Mr. Horden: Does the right hon. Gentleman recognise that no statement that he or the Treasury makes will have the slightest effect on the value of the £sterling unless it is accompanied by action, and that that action must incorporate a real reduction in the level of public expenditure? Unless that is done, the state of the pound may well become worse. When does the right hon. Gentleman expect to consult the International Monetary Fund once more?
Mr. Barnett: I entirely disagree with everything the hon. Gentleman said. What he and his right hon. Friends have been saying is that we should cut public expenditure, but they do not say where, or how it would help to enable us to reach a satisfactory outcome to the negotiations with the trade unions. If we pursued the sort of policy that they suggest the outcome would be disastrous.
Several Hon. Members rose—
Mr. Speaker: Order. We cannot pursue this matter now.

STATUTORY INSTRUMENTS, &c.
Ordered,
That the draft Hill Livestock and Young Cattle (Compensatory Allowances) (Scotland) Regulations 1976 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Stallard.]

ORDERS OF THE DAY

  IRON AND STEEL (AMENDMENT) BILL
  Order for Second Reading read.
  3.38 p.m.
  The Secretary of State for Industry (Mr. Eric G. Varley): I beg to move, That the Bill be now read a Second time.
  The main purpose of the Bill is to raise the statutory limit on the amount of external finance which the British Steel Corporation and its wholly-owned subsidiaries can raise by borrowing and by the receipt of public dividend capital.
  My right hon. Friend the Chief Secretary to the Treasury informed the House when the borrowing limit was raised to its present level of £2,000 million that a further increase was likely to be required in the present parliamentary Session. The present borrowing limit, taken together with the corporation's internal cash flow, will be insufficent to provide the cash needed because of the scale of modernisation and expansion and because of low profitability resulting from inadequate past investment and working practices which have fallen behind international standards.
  At the beginning of April, the British Steel Corporation's borrowings and receipts of public divdend capital counted against the borrowing limit were approximately £1,400 million. A margin must be allowed to cover short-term borrowings and day-to-day fluctuations in the corporation's cash balances. When these are taken into account, it appears likely that the corporation will run up against the present borrowing limit by the autumn. The full amount of the increases proposed in the Bill should last the corporation up to three years.
  We have reviewed with BSC its financing requirement for 1976–77 and examined likely requirements up to five years ahead, although there must inevitably be a considerable measure of uncertainty in attempting to forecast far ahead.
  In line with other nationalised industries, BSC is now subject to a cash limit, which has been fixed for the current financial year at £950 million. This allows for a small element of self-financing by

  33
  the corporation in meeting a total financing requirement of approximately £1,000 million. Of this, some £650 million is accounted for by new fixed investment, nearly all in the United Kingdom, and the remainder by working capital.
  A further measure of BSC's forward capital requirements can be seen from the corporation's intention to spend over £2,600 million on new investment between now and 1980. Some of this will come from internally generated funds but a substantial proportion will have to be found by way of loans and PDC advances.
  Clause 2 of the Bill provides for an immediate increase in the borrowing limit from £2,000 million to £3,000 million and allows this to be raised to a maximum of £4,000 million by Statutory Order subject to Affirmative Resolution.
  Mr. Michael Heseltine: Will the Secretary of State tell us how much of the funds will come from external provision and how much will be self-generated by the corporation, along the lines of his discussion with the corporation?
  Mr. Varley: I cannot be any more precise at the moment than I have been. This is something that perhaps we ought to develop at the Committee stage of the Bill, but it depends on the upturn in the economy on steel capacity, on the pricing policy of the British Steel Corporation, and other factors of that sort. I am sure the hon. Gentleman is well aware of that.
  Clauses 4 and 5 provide for technical changes to the borrowing powers of BSC and the publicly-owned companies—in effect, the wholly-owned subsidiaries registered in the United Kingdom. Borrowing between BSC and a publicly-owned company, and between publicly-owned companies, will be freed from any restriction or need for Government consent.
  The Government have accepted representations from BSC that the flexibility of group financing arrangements should be improved by removing unnecessary restrictions. The borrowing concerned will not count against the borrowing limit but borrowing by the publicly-owned companies from outside the group will count against the limit, so there is no loss of overall control.
  The second aim of the changes is to relax restrictions on the financing of
  34
  BSC's wholly-owned subsidiaries. BSC undertakes certain investments in the United Kingdom and overseas through two holding companies, BSC (United Kingdom) and BSC (International).
  The corporation has agreed to negotiate for the purchase of the small shareholdings of well under 1 per cent. which exist in these two companies in order to bring the two companies within the powers of supervision provided by the Iron and Steel Act 1975.
  These two companies need to continue to be able to borrow long-term from sources other than BSC when this is advantageous both to the corporation and the Government, so that the proposed legislation provides for the publicly-owned companies to undertake such borrowing subject to my consent and the approval of the Treasury.
  Finally, the Bill proposes to update the requirements relating to accounts. The consolidated accounts of BSC and its subsidiaries which are used by Government, and provide the main focus of public attention, are in future to become mandatory every year. The preparation of consolidated accounts of BSC and the publicly-owned companies, which appear now to be of very little interest, will cease to be mandatory and will be required only if the Secretary of State so directs.
  The consolidated accounts of BSC and the publicly-owned companies are more restricted in their coverage than those for the corporation and subsidiaries, because not all BSC's subsidiaries fall within the definition of publicly-owned companies as set out in the Iron and Steel Act.
  The accounts of the individual publicly-owned companies must continue to be laid before Parliament.
  In providing BSC with the financial support it needs, the Government have the objective of ensuring the future success of a vital part of our industrial economy. Steel is one of the basic requirements of our engineering industry. Nearly half our total exports contain steel in one form or another. Steel shortages which occurred in 1973 and 1974 demonstrated the dangers of relying on an industry suffering from past under-investment in bulk iron- and steel-making capacity, and in part suffering the effects

  35
  of premature closures, at a time when steel is short world-wide.
  The lack of a relatively small quantity of the right steel can delay a capital project or halt an export order. It is for these reasons that steel is one of the sectors of industry selected for special study in our industrial strategy.
  In bringing forward this Bill we are showing our continuing support for the programme of capital investment which the corporation is undertaking within the framework of its development strategy.
  We consider it vitally important that BSC should press ahead with this programme—important for our balance of payments, for the corporation's own commercial prospects, for the many industrial customers for steel, for employment, regional and social reasons, and not least for the United Kingdom plant and equipment manufacturers who are heavily dependent on orders from BSC.
  The basic aims of the development strategy are to reduce costs and improve productivity, to improve the quality of the products sold to customers, to increase capacity, both to meet new home and export opportunities, and to eliminate bottlenecks.
  In all these areas many opportunities were missed in the 1950s and early 1960s, when our main competitors were re-equipping themselves with modern plant and equipment while the private owners of the United Kingdom industry preferred to go on taking profits from existing and ageing plant. We are still suffering from the legacy of that chronic under-investment. But at least now we can plan ahead on the proper scale, with bulk steelmaking in public ownership. The White Paper of 1973 still provides a basic framework for this but it was never intended to be a rigid schedule of events and priorities, and we do not propose to treat it as such.
  Inflation has, of course, hit BSC as it has hit everyone else, and the £3,000 million estimate for the total cost of the development strategy at 1972 prices would be well over £4.500 million in current terms. But this does not reduce the need for investment, as long as individual projects make sense commercially.
  It would be completely unrealistic to expect to build new productive capacity
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  on the physical scale required by the steel industry without heavy expenditure. We have already faced up to this. In the past two years we have endorsed major BSC investment projects with a total value of over £700 million at September 1975 prices, the largest of them being the new 10,000 tonnes a day blast furnace for Redcar.
  The corporation has embarked on a number of very substantial projects, including a £96 million stainless steel development strategy, £53 million for a direct ore reduction plant at Hunterston. and £78 million for new coke ovens and materials handling installations at Port Talbot.
  As the latest White Paper on Public Expenditure shows, BSC expects its rate of capital expenditure to go on increasing through the rest of the decade—in March 1975 prices from £500 million this financial year to some £600 million in 1979–80.
  But there is another side to the process of modernisation. When the Conservative Government published BSC's 10-year development strategy as a White Paper in February 1973, they endorsed plans not only for investment on a massive scale but also for closures on a massive scale. We came into office a year later with a firm commitment to review those closure plans, because of their damaging effect on communities heavily dependent on steel industry employment.
  We introduced a new and important review procedure with the views of the work forces concerned being considered by the Government in parallel with examination of the management's case. This was a vital necessity if the outcome was to achieve general support and establish a new climate of co-operation between management and workers in achieving the efficient industry we all want.
  The House will know that decisions on most of the plants under review have already been announced, in statements on 4th February and 6th August last year. I know that the House will agree that my noble Friend Lord Beswick's achievement was impressive in arriving at a set of proposals which were not only acceptable to the corporation but were also widely accepted as fair and reasonable by the work forces directly affected.
  We are taking action, in co-operation with BSC and with local authorities, to

  37
  attract new industry to areas where closures have been a particular worry. The deferment agreed in many closures dates will help here, and, of course, in the cases of Shelton, Hallside and Craigneuk, BSC has agreed to invest in new development instead of the initially proposed closures.
  We all have to accept that replacement of out-dated plant by new investment cannot be carried through without establishing internationally competitive manning levels. Unless this happens, the corporation will not be able to compete in world markets. This necessity has been recognised by the trade unions in the agreement on cost-saving and manning levels which they reached with BSC culminating in their meeting on 23rd January. I regard this agreement as being of particular importance because it recognises the problem and provides a framework within which negotiations can take place plant by plant.
  The TUC Steel Committee and BSC are continuing to hold discussions about the implementation of the agreement and to deal with general problems as these arise. This is very necessary, and I intend to give them my full support in their task.
  Mr. Roy Hughes: On the subject of closures, can my right hon. Friend say whether he will be taking the opportunity of today's debate to make a statement about the future of the Shot-ton works?
  Mr. Varley: No, I shall not take this opportunity to make any announcement—[Interruption.] I hope that Opposition Members who are jeering will understand that the issue of Shotton is a very complex one. It involves a whole community. It is probable that it involves the jobs of 6,500 workers, and I think that it is as well that we study the matter closely so that we can take all these factors into account.
  Mr. Michael Marshall: Does not the right hon. Gentleman agree that it also involves the whole future of the tinplate industry in South Wales and whether it is to be competitive? Is not it vital to have an urgent decision about this matter?
  Mr. Varley: It is important that we get a decision. It is a matter of how we interpret "urgency". As the hon. Gentleman knows, the closure of steelmaking
  38
  at Shotton proposed by the Conservative Government would be due to take place in 1980. There have been representations not only from my own side of the House but from the hon. Gentleman's side about the problems in Shotton. I see the hon. Member for Flint, West (Sir A. Meyer) in his place. He has taken a great interest in this matter. We are determined to take all these factors into consideration. It is important to have supplies for the tinplate side of the BSC and that is a factor that we are taking into consideration.
  With early signs of the coming upturn in demand, BSC is now moving into a new phase of its development. With the exception of strip mills activities, where the pick-up in orders has not been so rapid, the corporation is now operating at more than 90 per cent. of avail-able capacity. Restructuring and modernisation are well under way, and progress is being made over the problems of manning levels and improved productivity.
  The need now is to make progress with the initiatives which have been taken, to restore profitability and to realise the potential of the very considerable resources which the corporation has to deploy. BSC must improve its sales volume as the market picks up and reassure customers that delivery dates will he met. For this reason, substantial finance is being provided to increase the physical level of the corporation's ordinary stocks and work in progress needed to provide reliability of supply. Consideration is being given to further counter-cyclical stockbuilding.
  The large increases in working capital involved represent the requirements of a strategy aimed at commercial success. This year, BSC should be able to improve very considerably on the 17 million tonnes of steel produced in 1975–76. There should be a modest increase in home sales, but the big gain should come in exports. The corporation has ground to recover in re-establishing its share of the United Kingdom market by displacing imports, both in relation to sales of finished steel and intermediate products supplied to the private sector steel companies.
  The corporation is now planning to break even in 1976–77, and I welcome the spirit with which it is tackling this

  39
  task. The task is not easy, but there are good prospects that the corporation will be trading profitably before the end of the financial year.
  Government, management and unions alike share the responsibility of seeing that the best possible use is made of the money invested in the corporation. BSC's capital requirement of £950 million is equivalent to 8 per cent. of the total forecast public sector borrowing requirement for 1976–77. It represents a major choice in the allocation of resources which might otherwise be spent on a wide variety of other economically and socially desirable projects. Inefficiency, low productivity and high costs equal a burden on the whole economy which we as a country have to bear.
  Prices must be realistic, too, if the corporation is to function economically. Under the Conservative Administration, steel prices were held substantially below market levels. The prices of other nationalised sectors of industry suffered in the same way with effects which are still being felt in other industries. BSC is not alone in having to overcome the effects of mistaken past policies. Prices must be realistic, and we shall encourage the corporation to price its products realistically.
  The mechanisms of financial discipline lie as much within the corporation as outside. There are strict internal cost control systems, and I know that the management is highly cost-conscious. My Department receives a regular series of monthly financial statements and quarterly progress reports from BSC which are discussed with the corporation to try to identify developing trends, and we are kept informed of the actions being taken to deal with problems.
  The corporation has to modernise many of its iron and steelmaking operations, expand output and improve efficiency and productivity. BSC must retain profitability and must become internationally competitive. The corporation has to pursue policies which are responsible to the wider national interest and to the needs and aspirations of its employees.
  The difficulty of combining these many objectives and making a success of them cannot be under-estimated and it offers a very considerable challenge to manage-
  40
  ment and workers alike. A considerable amount of progress has been made and I am optimistic about the outcome.
  The Government are committed to giving the corporation and the British steel industry as a whole the support they need and it is in that spirit that I commend the Bill to the House.
  4.1 p.m.
  Mr. Michael Heseltine: Anybody who judged the speech of the Secretary of State against the harsh commercial decisions which have to be taken in the management of our nationalised industries would understand why the nationalised sector of British industry is in such an appalling mess.
  The right hon. Gentleman's speech was the prototype of one I have heard in every circumstance which has brought Ministers to the Dispatch Box to ask for more funds for the public sector. We had the same combination of something for everybody, with no harsh decisions expected on the part of any sector. Where there are pressure groups, they are persuaded that their interests have been looked at. We are promised a brighter future tomorrow, and nobody is expected to make any difficult decisions today. In such speeches, the difficult consequences of the implications of investment programmes are not faced, we are not told what the profits will be and we are not told about the rate of return. The Government say that they will do their best and keep us informed. That is the broad paraphrase of such speeches. I have heard the Secretary of State's speech a thousand times from Ministers steering legislation through the House.
  If there is one reason why the results of the public sector are so appalling, it is that Ministers have been prepared to come here with such speeches which contain none of the answers needed to make critical appraisals without which not only the British Steel Corporation but no part of British industry will enjoy the sort of future which is flourishingly described by Ministers but which never turns out as the promises anticipate.
  Dr. Jeremy Bray: The hon. Gentleman is making a powerful point, but would he apply his strictures equally to the behaviour of his

  41
  right hon. Friends when they were in power?
  Mr. Heseltine: Yes. It is a weakness of publicly-owned industry that Governments and Ministers are not able to get the sort of control over them which is necessary if they are to get an adequate rate of return from investment.
  A distinguishing feature of the British economy is that, alone among Western economies, we have tried to run major sections of industry, as no other nation has tried to do, with a suffocating political preoccupation. It is because the political framework within which we run these industries is so deficient that the parliamentary accountability is virtually nonexistent and because the disciplines within which managements are expected to operate are similarly lacking that we have never been able to obtain the right results from nationalised industries.
  Dr. Bray: The hon. Gentleman is making his point effectively, but has he taken into account the fact that the public sector of manufacturing industry is larger in some other European countries than here? Is it the nature of the control which is wrong in this country or are the enterprises themselves deficient?
  Mr. Heseltine: I know that the hon. Member takes a keen interest in these matters, and he will be aware that the more we look at international comparisons the more we realise that there are no complete comparisons between Great Britain and other parts of the world. We all have our own special problems.
  With all the parliamentary privileges that we treasure so highly in this country and the theoretical answerability to Parliament, we have still not devised a system within which the public ownership of industry can flourish commercially. This Government have not even recognised that situation, let alone done anything to put it right.
  The debate provides an opportunity to discuss the publicly-owned British steel industry, which is at the centre of Britain's manufacturing capability. We need to look no further than the record of political treatment of the steel industry over the last 25 years to understand why Great Britain's industrial capacity has been so tragically debilitated. lb/>
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  The post-war recovery was conducted under a threat that the industry would be nationalised. No other major industrial nation sought to achieve additional capacity and modernised facilities in so politically dogmatic a way. Our competitors concerned themselves with the real questions of industrial efficiency and strategy, while the Labour Party started political controversy by seeking to obtain narrow Socialist ends, rather than the industrial development of the industry, by threatening to nationalise it.
  In the 1950s, when the Conservatives came to power, we saw a re-creation of the private sector and by the 1960s high investment in a profitable industry had been re-established. But once again, the Labour Party ignored the facts, not only of our domestic industry, but throughout the world among our major industrial competitors and once again the damaging threat of nationalisation was resurrected.
  An interesting but sad part of the Secretary of State's speech was when he sought to explain how investment had been inadequate under the private sector. I would have been more impressed if he had quoted the figures, because they reveal an exactly opposite story. The investment levels of 1960, 1961 and 1962 were never again reached throughout that decade. At 1972 prices, the annual rates of investment were £276 million in 1960, £370 million in 1961 and £299 million in 1962. Discounting inflationary effects, they had fallen by the end of the decade to £128 million in 1967, £119 million in 1968 and £125 million in 1969. Those figures are a most damaging indictment of the political threat which the Labour Party placed over the steel industry. I know of no other figures which tell the story so clearly.
  No one need look any further for the reasons for our outdated mills, our lack of international competitiveness and the fact that British manufacturers have to import steel because our industry cannot supply it. These were all wholly predictable consequences of nationalising this industry twice in 20 years.
  Does the Secretary of State realise the implication of his statement that the British Steel Corporation is now operating at 90 per cent. of capacity? We are at the bottom of one of the worst industrial recessions in living memory. What

  43
  will happen when the industrial situation recovers in the way assumed by Government strategy? We shall find that the corporation is totally incapable of meeting the demands placed upon it and we shall once again have the bottlenecks and import bills which have been all too familiar in every past upturn.
  The last Conservative Government, faced with the consequences of the political devastation of the industry, tried to remove the element of uncertainty by approving a programme of modernisation to bring the industry back to levels of international competitiveness.
  Let us not ignore the implications of modernisation. Everybody believes in modernisation, calls for investment and recognises that there has to be change. But the moment the Conservative Government sought to introduce an investment programme to bring that about, the Labour Opposition tried to exploit all the human consequences, which will always be associated with industrial change, for their own narrow ends.
  The Labour Opposition had a simple choice in 1972. They could have backed the £3,000 million programme announced by my right hon. Friend the Member for Worcester (Mr. Walker) in the House and helped to introduce, in a publicly-owned industry, the modernisation which was generally agreed to be necessary. Instead, they sought to exploit every local grievance and capitalised on them in every constituency which was affected. They gave a pledge that if they were returned to power the programme would be brought to a standstill so that they could use the same civil servants and managers in the corporation and the same statistics to talk over the whole programme again. When the choice for the Labour Party was the national interest or its own narrow party interest, as always its narrow party interest won.
  Therefore, it is no surprise that the British Steel Corporation's programmes have been carried forward less effectively and less quickly than we would have wanted. It is no surprise to anyone who understands the cynicism with which the Labour Party conducts its industrial and other strategies that, the Government having got into office and the noble Lord who has now been put in charge of the
  44
  debilitation of British aerospace having conducted his "phoney" review, the same decisions, give or take a year or so or give or take an advance programme here or there, as were announced in 1972 were again incorporated in the strategy for investment in the British Steel Corporation. It was cynicism run mad.
  We then come to the Bill which, the Secretary of State has rightly explained, takes the ceiling for the corporation's borrowing requirements up to £4,000 million. The Labour Party is much given to the virtues of planning. Therefore, it is relevant to ask: what kind of corporate plan exists within the BSC upon which the Government have been able to come to a conclusion that the £4,000 million ceiling will now be relevant for a further three years? If they have no such figures, they have simply said "We need another few years. Another £2,000 million should see the thing carried past the next election, and no one will ask questions. If anyone does, we will find ways of fudging the answers"
  If the management of the corporation acted under the disciplines which any commercial management would welcome, it would know that a detailed corporate strategy was necessary to justify an investment programme of this kind. But there is no such strategy. The Government have not insisted upon one, and they would not be able to approve it if they did.
  The answer was given when my hon. Friend the Member for Chingford (Mr. Tebbit) put a Question which was answered by the Minister of State. Personally, I am glad that the hon. Gentleman is still surviving in the Department of Industry. It is not a department where Ministers survive very long. However, I am glad that his long, hard work on the Aircraft and Shipbuilding Industries Bill, which I suspect will be even longer and harder before the Bill comes back to the House, has been rewarded. On 29th January, when asked about the targets set for the British Steel Corporation, the Minister explained that the target which had been set in 1972 for the four-year period 1973 to 1977 was still the target. The British Steel Corporation is expected to operate on a target which was set by the previous Government before the major world inflation and recession. The Government have not changed the target. Have they not changed it because they still

  45
  believe in it or because they have no elementary idea how to deal with the affairs of the BSC? Is it that they would rather allow the matter to drift in the hope that they will never be called to account for such negligence of duty?
  There is not the slightest prospect of the 1972 target—an 8 per cent. return on assets—being met. This year, losses of between £250 million and £300 million will ensure that the target is not met. Therefore, the only clear mandate facing everyone from the top to the bottom of the British Steel Corporation is "Let us know how you get on, and we will do our best to find the money to meet the bills." No one in the BSC knows what is expected of him and the Government have no concept of how to explain the situation. The only inevitable certainty is that the taxpayer or the Government will end up paying the bills.
  In the absence of any agreed corporate plan—we all know that it does not exist—no calculations can be made about the level of funds which will be generated internally by the corporation towards its modernisation programme, on the one hand, and the amount which will have to be provided by the taxpayer in the form of public dividend capital or loan capital, on the other hand.
  I interrupted the Secretary of State in his speech to ask whether he knew or had any idea of the division between loan capital and PDC or self-generated or externally generated funds. The right hon. Gentleman had no idea. But he had a whole range of reasons why it was difficult to calculate these matters. It is very difficult to calculate them. That is why private enterprise is such a difficult and risky business. But public enterprise is immune from these disciplines. That is why, in the last resort, there can never be what might realistically be described as fair competition between the private and public sectors. No board room would be allowed to answer the question which I put to the Secretary of State in the terms in which he answered it. The absence of discipline in the public sector means that the consequences always end up a great deal less desirably than we anticipate.
  On all the evidence, the BSC cannot generate its own funds on anything like the scale which is necessary. Let us con-
  46
  sider the scale of funds which will be needed. The right hon. Gentleman's speech was full of new statistics—large figures in various years' money terms. Therefore, there was no way in which anyone listening could relate them to the overall figures about which this debate should be taking place.
  The Bill asks for another £2,000 million to take the BSC's borrowing limit up to £4,000 million. But the reality is that there is no way in which the corporation's modernisation programme can be carried through by this legislation. It is wholly inadequate. The Secretary of State implied this when he said that his calculations showed that it was enough for another three years. I do not believe the calculations on which he worked to start with. The fact is that he must make clear that three years is the maximum that the extra £2,000 million will cover. This money has to cover the costs not only of the investment programme but of coping with overmanning, the losses on hard currency borrowing —we did not have much reference to that, but I shall come back to it—and to deal with any losses incurred by the corporation from now on.
  The Secretary of State talked about profitability towards the end of the financial year. That means that there will be losses for the bulk of the financial year. The likelihood is that we shall see a loss by the corporation during the current financial year in addition to the year which has just ended.
  Let us consider the latest estimate of the investment programme. It was estimated to cost £3,000 million, in 1972 money terms, of which a significant part could be expected to be generated internally. I thought that the latest figure would be about £4,500 million, but the Secretary of State, in a carefully-worded phrase, referred to a figure substantially over £4,500 million. In reality, the figure is substantially more than £4,500 million, although it has not been announced. Why not? The reason is that it would be acutely embarrassing for the Government to tell the House and the people who are experts in this industry that the £3,000 million in 1972 money terms is about £5,500 million to £6,000 million in 1976 money terms. Therefore, we see that the programme has already virtually doubled.

  47
  If we project forward at rates of inflation which many would regard as optimistic but which would allow for single-figure inflation towards the end of the decade, the original £3,000 million programme will end up costing about £8,000 million to £9,000 million by the time the original decade for this strategy comes to an end.
  I wonder whether the Secretary of State has considered the implications of an investment programme on that scale for the British Steel Corporation. If we are looking for a return of, say, 10 per cent. on the total new investment, it means that every year the BSC will have to show a surplus on trading of about £800 million to £900 million. If we assume that the corporation's turnover towards the beginning of the next decade is about £5 billion, it means that about 20 per cent. of its turnover must be surplus, after meeting all trading expenses, to cover the return on the assets which are to be committed. That must come from a corporation which in five of the last nine years has lost money, after interest.
  At the moment, the corporation is receiving new funds comprised of 45 per cent. loan and 55 per cent. PDC. In practice, its interest charges will rise much less quickly than would be the case if a full charge for the funds employed had to be reflected in the profit and loss account. But the device of PDC means that less than half of the new taxpayers' investment has to show a return. The larger balance may be rewarded with only notional returns, and it could still be shown in the corporation accounts as a profit. Unless there is a realistic target backed by a realistic financial statement, there is no way in which an appropriate return can be expected. The Government, in this industry and in virtually every other industry, have no such target.
  My second question concerns the progress of the overmanning negotiations which dominated the headlines earlier this year. The agreement between unions and management followed five years in which the number of disputes rose consistently. It was interesting to hear the Secretary of State talk about the new sense of partnership which the Beswick review had incorporated as a result of
  48
  the new consultations. He did not say that the period of that review was the worst period of industrial unrest which had come in the last five years. So much for the argument that nationalisation provides a framework of industrial harmony.
  After the tension of an all-night negotion, it was agreed in January that, plant by plant, the unions would be given the facts of international comparison. They were to be shown exactly what was involved in order to make our industry competitive. That was in January 1976. I am at a loss to understand, eight years after public ownership, why this had not happened years before. It is a classic example of why the debate about industrial policy is so artificial. How can one expect to attract any sympathy from the men working on the shop floor in the steel industry, who are expected to bear the brunt of the social and human change, when they are not told the whole story? That is public ownership in practice. The men were never told. Neither Government nor management had spelt out to the British Steel Corporation the full awfulness, plant by plant, of the international comparative figures.
  It is no use talking about the over manning situation as though it were a self-curing disease. As we saw with the CPRS report on the motor industry and a host of other reports, industry in this country uses its manpower inefficiently and pays it less well than do our competitors. To cure that problem, we need additional resources for retraining, information and persuasion. I believe that the British Steel Corporation had a good record in redeploying people in the 1970s. It did it sympathetically. But there is no doubt that there has been a breakdown for which Government, management and the unions bear a responsibility in not examining the problem in those critical plant-by-plant discussions. The figures were not given to the unions until late-January 1976, eight years after the corporation was nationalised.
  May I ask the Secretary of State for a progress report on how the agreement reached on 23rd January is working out? The right hon. Gentleman said that it was important. That is a platitude. Of course it was important. We know it is

  49
  important that there should be agreement. We want to know whether progress is being made and implemented in the agreement. It has massive implications in the cost incurred by the corporation and in the borrowing requirements which will be higher to meet the consequent losses.
  We were told that the Secretary of State would aim at the best European standards. I have with me a chart which was appended to the agreement of 23rd January, showing a whole range of targets which are being reached in Europe. They start with France, which is the nearest to us in the number of men required for a given unit of output, and work down to the Dutch position. At which one is the right hon. Gentleman aiming? There is a massive divergence between the two. Are we aiming at the Dutch, Italian, French or German standards? Until the figures are clearly set out, how can anybody in the unions and management understand the purposes for which they are supposed to be striving?
  I come to my next question. If the unions agree to move towards more realistic manning levels, are they supposed to adopt those manning levels, which will mean fewer men doing the same amount of work, if there is no incentive for the men to accept the situation, when there may be 80 per cent. of the existing work force in the plant and those 80 per cent. are not able to get additional remuneration other than the 3 per cent. or 4 per cent. which may be in the Government's new pay code? This is a classic example of the irony of the Government's industrial programme. On the one hand the Government are saying the right sort of things, while on the other hand they deny the men on the shop floor any incentive to make the modernisation agreements stick.
  Mr. James Tinn: I accept the dilemma of proposing a modernisation programme with higher wages as an incentive to the workers, which would work against a pay policy which would restrict their incomes, but will the right hon. Gentleman say which he would choose? Would he throw aside the modernisation programme, or would he throw aside the incomes policy and accept lower manning?
  Mr. Heseltine: The basis of the present agreement known broadly as the social contract is not calculated to bring about the modernisation of our industry, and, indeed, events in the last two years have made it less likely that we shall modernise our industry. The Government have abdicated any sense of responsibility in their negotiations with the unions. They have said to the unions "Tell us what you want". The unions, handed that negotiating card, have no choice but to take upon themselves terms which seem to be reasonable to the people in the unions. But it would have been better if the Government had appeared to be negotiating with the unions rather than surrendering to them. It would have been better had the Government found a more realistic method of appealing to the people on the shop floor. Anyone who doubts this should have listened to the programme conducted the other day when a large number of union members on the shop floor in a steel plant clearly understood what was needed but there was no incentive to them to co-operate within the framework which the Government devised.
  Mr. Peter Hardy: The right hon. Gentleman is not approaching this matter realistically. He is demanding that we have proper manning levels. Will he say whether he wants those levels to be geared to the production of steel at 17 million tons a year or 30 million tons a year? This is important.
  Mr. Heseltine: If we go on with manning levels for 17 million tons a year, we shall never be able to reach a programme which will sustain it because we shall not be able to afford the public expenditure required. New plant is coming on stream within the steel industry. If we could get the manning levels right in the plant while phasing out the old plant, we should be achieving the sort of redeployment of labour which is essential if we are to achieve an industrial strategy based upon competitiveness. I believe that in their handling of the negotiations with the unions the Government have made it less likely that we shall see the modernisation which Sir Monty Finniston has devoted so much of his career to trying to achieve.
  There is another factor that I should like to draw to the right hon. Gentleman's attention. I was surprised that in

  51
  his speech, in which he asked for thousands of millions of pounds, he made no reference to the needs of the corporation as a result of the depreciation of sterling. The corporation has been a major borrower of the funds in hard currency. There was a time when this was regarded as one of the new fashionable ways of financing the public sector. With the drift of the pound, however, there have been unexpected consequences which are costing a great deal of money. I shall be grateful if the Secretary of State can confirm how much money has been lost on the foreign exchanges as a consequence of the depreciation of sterling against the hard currencies in which the British Steel Corporation's losses took place.
  The House will be familiar with the fact that the British Steel Corporation used to borrow in its own name and carried the risk of the depreciating pound. But the corporation is now wiser than the Government. It began to realise the way in which Government policy was drifting. It was sharp; great management flair was displayed, and it persuaded the Government to insure the sterling debts.
  As I understand it, about £200 million was borrowed recently by the British Steel Corporation with a Government guarantee at a premium of 2 per cent. on the rate of borrowing. This meant that the £200 million cost a premium of £4 million where upon the risks of the loss in foreign exchange were transferred to the Government. Needless to say it was a risk which was a certainty, and with depreciation of the currency, a debt of about £20 million fell on the Government. The British Steel Corporation paid a premium of £4 million. Who is to pick up the tabs for the £20 million? It is the British taxpayer.
  Perhaps the Secretary of State can explain exactly how much of the borrowing requirement which we are discussing is expected to come from the drift of sterling which was in no way anticipated when we arranged the original borrowing under the Bill which is to be replaced by the one we are discussing today.
  This debate has been a typical example of the way in which industrial policy has been debated in this country for too long. None of the real issues has been ventilated by the Secretary of State for Industry. I am afraid the sad conclusion which one reaches is that the
  52
  Secretary of State is so overworked with the minutiae of his task that he has no time to pursue the critical issues which confront this nationalised industry or any of the others for which he is responsible. This Bill is not even a half measure—it is a quarter measure. It will provide about 25 per cent. of the cost of the current investment strategy of £3,000 million, which will escalate to nearer £10,000 million in money terms by the time the programme has been completed.
  The Bill is part of no carefully-considered corporate strategy pursued with Government approval because no carefully-considered strategy has been quantified or approved by the Government. The assumptions upon which the Bill is based embrace a modernisation programme which the Government held up so that they did not have to face the very real and understandable political consequences of taking decisions. We had confirmation today that there is to be no announcement about Port Talbot or Shotton. There will be more delay in that critical matter.
  Parliament is given no information on which an informed judgment about the corporation can be made. What information we have is discouraging rather than encouraging. I must warn the Secretary of State that, if we do not obtain a much more satisfactory set of answers to the questions which I have raised and which my hon. Friends will raise, we shall have to consider carefully whether we can give this Bill an unopposed Second Reading.
  The final irony is that a Government who came to power on the concept of open government have treated the chairman of the industry which took them at their word by showing him the open door.
  4.34 p.m.
  Mr. James Tinn: I agree with the hon. Member for Henley (Mr. Heseltine) in the welcome he gave to the opportunity which this Bill has given us to discuss the steel industry. I cannot help reflecting that it is a little odd that one has to take these too rare opportunities to discuss such an important industry, whereas in our parliamentary year there are built-in requirements for discussion of certain other areas of public interest—sometimes with an obvious

  53
  lack of interest on both sides of the House.
  I also had a certain sympathy with the hon. Gentleman's criticism of political interference in the steel industry and the delays and uncertainties which this occasioned from time to time, but we parted company on the implications of the questions put to him by my hon. Friend the Member for Motherwell and Wishaw (Dr. Bray). The hon. Gentleman seemed to dodge the implication, which was that the responsibility or fault lies equally with both sides. Indeed, bearing in mind the record of the Opposition in interfering with pricing and their deep-seated review, as it was called, of the corporation's development programme which held it up for two years or more, I cannot accept their chiding us unilaterally for political interference.
  When the hon. Gentleman made that general criticism he might have paid tribute to the fact that this Government, for the first time, have grasped the nettle of the cyclical nature of steel by mentioning the counter-cyclical stockpile agreement. This piece of jargon may not sound attractive to those who are unaware that this industry, perhaps more than any other, has suffered necessarily and unavoidably from the cyclical nature of demand. Clearly, in times of depression, demand falls for motor cars and other products manufactured from steel, and so the demand for steel falls. Also, when investment programmes are cut in that phase of a trade cycle, the demand for constructional steel is cut. Demand for steel is volatile and particularly susceptible to these variations in the trade cycle.
  We should provide for the industry to be kept at a reasonable operating capacity so that we can stockpile the steel which we know only too well from past experience, will be needed. The steel industry has suffered continually from a failure to produce the steel needed in one phase of the cycle and then being told that it must cut back and accept a reduction or slowing down in capacity at times when the demand does not exist. This Government have for the first time set up a fund to enable the corporation, which otherwise could not carry the cost, to stockpile steel at such times. I welcomed the Secretary of State's suggestion of an increase in the funds available.
  54
  This debate allows us to discuss the future of the steel industry—which means the modernisation of the industry. I urge upon my right hon. Friend the urgency for a speedy decision on the proposals from the BSC which I believe are now with his Department. What the industry needs is a speedy decision.
  In this connection, I thank my hon. Friend the Minister of State for receiving a deputation from my own constituency in connection with the proposed development at Redcar. I also thank him for the assurance which he then felt able to give us. If I am wrong, I am sure he will correct me, but as I understood him—I noted his words—when we asked for a speedy and favourable decision about the completion of the development of a massive deep-water site at Redcar, he gave us an absolute assurance that the decision, when it was made, would not be based on political expediency, as, I believe, too often in the past such decisions about the steel industry have. The Minister said he could not ignore social considerations, that it would be callous to do so, and that the decision would be based on the needs of the industry. I ask only for a speedy decision, which he also promised.
  It is now for me to say why I believe that any proposal by the British Steel Corporation for the completion of the full development at Redcar should be approved, including the third stage, incorporating the basic oxygen steel-making plant and a plate mill plant. My arguments can be divided into two areas. The first are the technological and marketing arguments, which the corporation is better qualified to advance. Nevertheless, as an ex-worker in the industry and one who has represented a steel constituency for some years, perhaps I could legitimately make one or two points.
  First, the technology of the industry has pointed inescapably to the growing importance of the large-scale, deep-water plant—though not to the exclusion of all others. There will always be a place for the smaller specialised plant catering for the needs of particular markets and customers and more adaptable than any large plants to the changing scale of demand.
  But accepting the qualification that there will still be a place for the smaller

  55
  plant, perhaps fulfilling the rôle of the bespoke tailor in the era of mass-produced clothing, the bulk of the industry's production must be from large plants with ready access to deep water if the industry is to remain internationally competitive. The Redcar development admirably fulfils those conditions, as has been shown by the stages of development already under way. It is also well placed to take advantage of markets in Europe and elsewhere. We should remember the importance of steel to our export prospects. Far from being dependent on imports, the industry has a great rôle here.
  My second point in favour of the completion of the Redcar development relates to the social considerations, the arguments of employment, which from other quarters might be viewed as arguments against the development. A massive development in one area cannot be carried through without consequences elsewhere. I have every sympathy with hon. Members representing constituencies where closures or cuts are envisaged, including my home town of Consett. Therefore, my support of modernisation at Redcar is not glib.
  However, in the 12 years that I have represented Redcar, and in the longer time that I worked in the area, I have seen the dole queues of steel workers lengthening. The point I want to ram home to Ministers is that Teesside has suffered in the past, and is still suffering, from unemployment of steel workers, which was accepted with remarkable acquiescence as the price of modernisation.
  I urge Ministers not to yield too sympathetically to claims from other areas which are facing threats of future unemployment at the expense of an area like mine whose steel workers, through accepting the desirability of modernisation, had to accept the inevitability of massive unemployment. The fuller development of Redcar will do little more than restore to Teesside the employment that it previously enjoyed—making up for jobs lost and taking into account those we shall lose in the very modernisation that I am advocating.
  Turning from the local issues, in an intervention in the speech of the hon. Member for Henley, I raised the problem of encouraging men to accept modernisation and lower manning rates
  56
  in the necessarily restrictive atmosphere of an incomes policy. The hon. Member was not very forthcoming. He would have done better to accept that this is an inescapable dilemma. When present exigencies are eased, a good incentive must be given and a fair reward paid, in return for the jobs lost, to the workers retained in the industry.
  As a trade unionist, I have always been prepared to accept the logic of modernisation and a high technology economy, provided that we have a high wage economy too. We have suffered too much the consequences of unions being pressured, persuaded and even coerced into accepting, far more than they are given credit for, a high technology economy and a cut in labour with insufficient rewards in wages.
  When we are asking unions to accept massive labour cuts, they are entitled to demand that those who remain get commensurate increases in income. Just as the community invests in the industry in return for high productivity, those who are still in the industry have invested the livelihood of their comrades who have departed. They are entitled to a reward for that.
  4.50 p.m.
  Mr. Anthony Nelson: The hon. Member for Redcar (Mr. Tinn) made an admirable speech, not least for its strong constituency interest, which is perfectly understandable in this debate when so much is at stake for his constituency. Many of us are aware of the high level of unemployment in Redcar and the benefits that the plant to which the hon. Member referred will bring to a substantial body of people in that area.
  Some of us on this side of the House also have a greater degree of sympathy for the anti-cyclical stockpiling scheme than we have for some of the other measures of finance which are made available to State industries.
  We are, however, considering a Bill which will potentially allow the British Steel Corporation to increase its borrowings by up to £2,000 million, which on the basis of capital employed on the last figures available in the annual report, is tantamount to doubling the capital employed of the corporation. Yet, amazingly but increasingly, we have no

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  adequate financial information on which to sanction such a facility. We have no up-to-date report and accounts of the British Steel Corporation. It is nothing less than fantastic that we should be considering doubling the size of the capital employed by this major British industry, which will consume 8 per cent. of the prospective public deficit in the next year alone, without an adequate prospectus or the report and accounts, which are at present being compiled.
  Had I been in the Secretary of State's position I would have made sure that up-to-date figures as at 31st December were available before asking the House to consider sanctioning a Bill such as this. It is a public disgrace that we are considering in this nebulous fashion the provision of a massive amount of public finance without the necessary financial information.
  I want to comment on three aspects of the Bill—the composition of the finance to be made available, the justification for it, and a particular aspect of proposed expenditure in the development programme.
  My hon. Friend the Member for Henley (Mr. Heseltine) pointed out to the Government the increasing dangers inherent in incurring large foreign currency borrowings. It is frightening that the public sector has now borrowed over £4,000 million abroad—£3,500 million of it by the nationalised industries and public sector undertakings, and £735 million by local authorities. Out of the former total, £290 million has been borrowed by the BSC in foreign currency—£213 million from the European Coal and Steel Community and £77 million from the European Investment Bank.
  The Government in 1970 encouraged the public sector to borrow abroad under the Treasury exchange rate and guarantee schemes as that was regarded as a suitable alternative to the Government financing the deficit on the balance of payments by direct State borrowing. The estimated losses on these foreign borrowings incurred since that date by the public sector must amount to £1 billion. That is merely the exchange loss. On top, the interest rates have risen by £80 million a year. It is a reflection of the devastating performance of sterling, on which the Chief Secretary to the Treasury
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  answered a Private Notice Question this afternoon, that it has depreciated by 22 per cent. under this Government. I accept that it depreciated under successive Governments, but the depreciation was only 4 per cent. under the Conservatives. It was again substantially more under the previous Labour Government.
  The lesson must be clear to this Government and successive Conservative Governments. Major dangers are involved in borrowing money abroad to finance expenditure in this country. It is one thing to borrow money abroad if the proceeds are applied in foreign assets, but it is quite another thing to use the proceeds for British assets because that gives rise to an uncovered position.
  Therefore the British Steel Corporation, with £290 million of foreign currency borrowing, has a massive liability which may have already taken it over the aggregate borrowing ceiling provided for in the Iron and Steel Act last year. I would welcome some clarification of that in the winding-up speech.
  The foreign loans interest rate is an average of 10·7 per cent. and the major portion of foreign currency borrowing is in United States dollars, most of which have been converted in the last set of report and accounts at the rate applying in March of last year. While these figures and the contents of the annual report may be somewhat dry, they involve thousands of millions of pounds which all of us, whether or not we have a steel plant in our constituencies, are accountable for. It is the taxpayers and the ratepayers who have to finance the deficit and losses.
  I question whether the Government are sincere in their intentions to modernise the steel industry, given their record so far, and whether the British Steel Corporation has shown sufficient progress or performance to justify such massive increases in public money injected into it. The record is well known to us all. Last year losses of about £250 million were incurred, mainly in the Welsh steel division, which is still continuing largely without any decision on the future of some of the major plants there. Losses amounting historically to about £5 million have been increasing to an estimated £8·5 million a week. These are frightening figures when the Government are

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  considering doubling the amount of capital employed by the industry.
  Plans to reduce manning from 214,000 to 175,000 over the two years envisaged in the agreement are considerably less than the 210,000 reduction in manning needed over the longer period. Will even the lower figure be achieved? So far there is little indication that it will. Last year the industry made 17 million tons of liquid steel as against a capacity of 26 million tons, yet it needs to work at 95 per cent. capacity before it can make a profit.
  We are told that the investment programme will go ahead and that by 1980 £2,000 million will have been spent under the provisions of the Bill before the Secretary of State returns to the House with his begging bowl for more money. But the financing cost of this capital is immense. I believe that the average rate for loan funds is approaching 14 per cent. a year. Therefore, in sanctioning these loans we must ask whether there is the slightest chance of making the surplus which is held out to us.
  We are lagging behind other countries in our basic oxygen steelmaking process capacity. In 1974 half our production was from the BOS system, whereas in Japan—an extreme example, I admit—it was 81 per cent. In all other major industrialised steel-producing countries it was substantially more than our 50 per cent., which displays the inadequacy of successive British Governments in recognising the need for long-term capital investment in the industry, and the need not just for good intentions but actually to undertake surgical reorganisation programmes.
  We have been waiting since January 1975 for a decision on the Port Talbot expansion which would provide 6 million tons extra capacity. I recognise that 6,000 employees will lose their jobs at Shotton if the steelworks there are closed down, but we must be more progressive in our outlook and consider the substantial number of jobs which will be created by the necessary capital input at Port Talbot. There may be a short-term cost in relocating people, but that will have to be met.
  The Government appear to be delaying modernisation of steel rather than
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  encouraging it, and the lack of co-operation from the unions over cost savings, the 400 unofficial stoppages last year and the high level of absenteeism are no way to persuade Parliament to sanction the Bill.
  Finally, I should like to draw the attention of the Secretary of State to one aspect of the prospective expenditure under the facility of the Bill, and that is the importance of an adequate research and development programme for the BSC. In 1974–75, £14½ million was spent on research and development by the corporation. I should like an assurance that the Government will ensure that an adequate proportion of the prospective development programme is spent on research and development. The achievements of the corporation in research and development are a matter for which it should be given credit, and continued expenditure would be a great investment for this country and for the industry.
  The BSC has been involved in research and development on systems for monitoring operational plant conditions, energy-saving systems, reclamation and recycling, and also steel recovery from refuse, where the corporation joined the Metal Box Company and Batchelor Robinson Limited to form Material Recovery Limited. That one small example resulted in the formation of a company which will recover more than £14 million worth of scrap metal and thus save millions of pounds on imported iron ores and coking coal. The investment can easily be recovered in the profits from one such venture.
  I hope that the results of the research on corrosion and the human factor in steelmaking done by the corporation and financed by the European Coal and Steel Community in conjunction with a number of other steel companies in other European countries will have similar successes and will spur the Government to give a proper financial allocation not only to applied research in the corporation but also to fundamental research, which in many of these companies can be the springboard for tremendous innovations which will be the saving grace for future generations and, I hope, for this industry as well.
  I hope that we may have assurances on the points I have raised, because,

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  while there are many matters into which the Standing Committee will wish to delve, it is not adequate to come to the House with inadequate financial information and ask for £2,000 million at a time when the pound is diving, when we do not know how much of that money will be borrowed abroad, when the record of BSC over the last year or two has been looking worse and worse, and when there are still inadequate assurances from the unions in the agreement reached that the necessary level of wage restraint and redundancies will be encouraged in order to put the industry on a better footing for the future.
  5.3 p.m.
  Mr. Peter Hardy: The hon. Member for Chichester (Mr. Nelson) knows a little about steel, and from that standpoint part of his speech is to be welcomed. I can understand his anxiety about overseas borrowing. He is frightened of borrowing abroad, even though if it is from European sources. I am more afraid of high unemployment, of economic devastation, of the retention of old plant, and of the failure to modernise, which are the consequences of reacting to the fear that he mentioned.
  I was surprised to hear the hon. Gentleman say that he would not mind so much if we were borrowing abroad to invest abroad rather than to invest at home. It seems to me that it would be more desirable to borrow money abroad to build a factory in Britain rather than to build one in any other area. I may be doing the hon. Gentleman a disservice in saying that, but I hope not, because I welcomed the latter part of his speech when he referred to the achievements of the corporation acting either on its own or in partnership with other organisations. I have seen some of these results in and around my constituency.
  The hon. Gentleman's speech was a more balanced contribution to the debate than that of the hon. Member for Henley (Mr. Heseltine), who appeared to enjoy his vigorous, if utterly illogical, attack on my right hon. Friend. The hon. Gentleman emphasised his view that we ought to indulge in manning in the steel industry at a level geared to the lowest possible production—that which applies at the bottom of a deep recession. He apparently fails to understand that when
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  there is a recovery from a recession, an industry manned to a production of 17 million tons will not find it easy to produce 30 million tons, which is what the corporation will have to produce during 1977. The hon. Member for Henley appears to be familiar with the less significant boardrooms of Britain. He does not seem to be particularly knowledgeable about the steel industry or its history, not even during the past 20 years.
  I see that on the Opposition Front Bench we have today the hon. Member for Arundel (Mr. Marshall). He is yet another denizen from the comfortable fastnesses of rural Sussex who is interested in the steel industry and in our older urban areas. This is an interesting development, and I welcome it. I am sure that my constituents in South Yorkshire and those in the North-East will be fascinated to hear the interventions in the debate of Members from the rural South and will note the absence, with the exception of the hon. Member for Flint, West (Sir A. Meyer), of those who ought to be a little more interested in the debate.
  Mr. Michael Marshall: The hon. Gentleman is trying to tweak our tails a little early in the debate. He ought to get the matter straight. He knows that many of us have worked in industry for many years, even from Sheffield, his home town, but we do not advertise it on a regular basis. We do not dispute the ability of all hon. Members to contribute to the debate, irrespective of the area which, because of electoral uncertainties, they happen to represent.
  Mr. Hardy: The hon. Gentleman should not be over-sensitive. I was going on to say that I hoped he enjoyed his recent return to South Yorkshire to address the Conservative Party in my constituency. The hon. Gentleman might recall that Conservatives in South Yorkshire were somewhat annoyed a few weeks ago when I drew second place in the ballot for Private Members' motions and thereby had a chance of debating the steel industry, but the House was unable to do so, largely—not entirely—because of the procession of Conservative Members who seemed to want to talk about all kinds of things, none of which was in any way as significant or important as steel.

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  In opening the debate the hon. Member for Henley referred to the failure of the public sector adequately to invest in the steel industry following nationalisation in the sixties. He referred to investment in the industry in the years immediately preceding that nationalisation. A good proportion of that investment was made in my constituency, and it illustrates the fact that those who look at investment purely as global totals are sometimes in error because they may be misguided about the quality or appropriateness of the investment.
  The substantial investment that incurred in my constituency in the early sixties was, to a large extent, useless as the hon. Gentleman knows. For example, a good deal of money, even by the standards of those days, was spent on the Kaldo plant. I think the hon. Gentleman will agree that that was a real mistake. The plant no longer operates, but we still have plants that are 40 and 50 years older than that in operation. A good part of the investment of the early sixties was mistaken. It was probably done with a good will, but it was carried out on an inaccurate basis.
  The Kaldo decision, like so many other investment decisions in British industry, not least in many areas of the private sector, was not particularly well thought through. Adequate vision was not applied to the decision to make that investment. The hon. Member for Arundel was engaged in the steel industry before he came to this House. I hope that he will realise that I am not blaming him for that mistake, but mistakes there were, and they contributed to the large amount of the foolish investment which preceded nationalisation in the sixties and which was a justification for the Labour Government at that time taking a large part of the industry back into public ownership so that better-considered decisions would be made.
  The great pity, as the hon. Member for Henley fails to perceive it, is that we started playing party political football with the steel industry after it was nationalised by the post-war Labour Government. I believe that the industry would be in a more robust and vigorous position today if it had not entered into the period of uncertainty that followed
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  denationalisation. We can see the deleterious effect of denationalisation from the decline in the share of the world's steel trade which Britain experienced during the 1950s. Britain's share fell by at least 30 per cent. during the 1950s, largely as a result of the jockeyings and manipulation which followed denationalisation.
  The hon. Member for Henley perhaps knows more about steel than I do. He will appreciate that, despite massive investment, we entered the 1970s with inadequacies in certain kinds of mill and a surfeit of other kinds of mill. That seems to suggest that the global effect of the operation of the private sector of the steel industry before 1967–68 was not altogether wise or sensible.
  I hope that we shall not return to playing political football with steel. We need an expanding, vigorous and modern steel industry. They must be the criteria which the Government are pursuing, and I regret that the undertones of the Opposition spokesmen's contributions to the debate suggests that if the Opposition were back in power, we should return to the uncertainty of the recent past. The hon. Member for Henley failed to take a sufficiently long view. He appeared to be demanding that the British Steel Corporation must be yielding a high rate of return before the 1970s are over. I suggest that our decisions today should be based on a longer-term view.
  It is right that the House should debate steel at this time, and I am glad that we have the Bill. If the Bill had not been forthcoming, some of my hon. Friends and I would have pressed the Government to provide time to debate steel. There is just cause for anxiety. It is clear that shortly the worst recession will be over. Orders are already coming in. We need to be sure that the BSC is poised to react to the improvement in world trade and to get a greater share in world markets in the next recovery.
  I see the prospect of a reduction in the number of jobs in South Yorkshire. The area I represent is one of the most profitable and effective in the activities of the BSC. I am anxious that South Yorkshire, which has the capacity to contribute to a greater share of the world market for British steel, should have the ability to benefit from improved economic conditions.

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  The hon. Member for Chichester said that research was proceeding in the BSC. That there is development of interest and importance taking place can be illustrated by the work which is going on in and near my constituency. Although we have had low production and there is great anxiety in the industry, the electric are furnaces at Templeborough and Aldwarke have been crashing production records week by week since January this year. That suggests that, despite the anxiety and uncertainty, the Rotherham area has a capacity to make a vigorous contribution to a greater drive for production and sale.
  While we have been smashing production records, we have also been carrying out tests and trials which have relevance to scrap. We have been carrying out trials for continuous charging in furnaces using directly reduced pellets and granulated iron, and trials for the mixing, weighing and blending of those pellets and granules. Trials are also going on at Aldwarke in the use of the submerged injection of oxygen and in the improvement of furnaces by the use of water cooling panels. These trials are of great importance, not least those concerning the direct reduction feeding of furnaces, because the scrap problem can be acute.
  According to the latest assessment of Britain's future steel capacity, electric steel-making is likely to increase from 6 million tons to 9 million tons by the end of 1978. Unless we can have adequate capacity to make iron to give us a cushioning against excessive dependence on scrap, the BSC may not be able to fulfil its targets, because the demand for scrap will either cause the price to escalate or will result in an overall shortage.
  My hon. Friend the Member for Brigg and Scunthorpe (Mr. Ellis) will agree that so long as we have scrap problems in Rotherham the need for an adequate iron-making capacity to support the magnificent Anchor project in Scunthorpe is vital. I am reminded of the time when my hon. Friend the Member for Brigg and Scunthorpe and I visited steel works in Japan. We went to a works near Tokyo—by no means the largest in Japan—which is very successful and from which some of our North Sea pipelines came. The Japanese are able not only to produce steel but to sell it.
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  That is the area we should tackle first as the world recovers from recession. We should make sure not only that Britain can produce the goods—which we can in many sectors with matchless efficiency, although it is fashionable to denigrate British economic activity—but that we can sell the goods. Japan is far more effective than we are in selling steel.
  The Rotherham and Scunthorpe areas and the proposed developments in Redcar can compete with the Japanese, the Germans, the Americans and anyone else, but where we have recently failed to compete successfully is in our ability to sell what we produce. The BSC is to be congratulated on having come to realise this. I note from the Press in the last day or two that the BSC is to devote more of its resources to promoting salesmanship and improving its selling record.
  Mr. Tinn: I am interested in my hon. Friend's visit to Japan. It is commonly alleged that there is overmanning in the British industry in comparison with other countries. But international comparisons are often invalidated because we do not compare like with like. Will my hon. Friend tell us something about that?
  Mr. Hardy: My hon. Friend is correct. In certain sectors of British steel there is overmanning in comparison with other countries. Comparing the old traditional bar mills with the new bar mill in Thrybergh in my constituency, the new mill is much more capital intensive and much less labour intensive. Many of our international competitors are not operating out-of-date plant. Where we have modern plant, as in Scunthorpe and Redcar and parts of the Rotherham works, we can operate with an efficiency and an economy of labour at least comparable with the examples that are often quoted.
  The Chiba works which we saw in Japan were very efficient. The coking plant there was the cleanest coking plant I have ever seen. The sintering plant was probably as good as anything we have in Britain, if not better. Indeed, it was as good as any such plant which can be found anywhere in the world. The plant was lawned and trees were growing around the works. Old steel workers of the days before the new bar mill and Anchor would probably have found it unbelievable.

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  This came about because the Japanese were able to invest and, having invested, they had the drive to sell. We must now do the same and, as the investment begins to take effect, we have a capacity to rival almost across the board the achievements of other countries. In our best plants we are matching them today.
  As I have said, we have a number of problems. A serious one in my area is that of the lack of guarantee of scrap supply. If we are not to have an adequate guarantee in this regard, my hon. Friend and his colleagues in the Department should do their utmost to ensure that the direct reduction alternative is rapidly expanded, otherwise there will be a repetition of the short-time working we have had in the Rotherham area and many other areas during the period of the recession—not because of lack of demand for the product, but because of lack of supply of one essential raw material.
  I must mention one point on which I agreed with the hon. Member for Chichester, who expressed support for ingot stocking for stockpiling. About four or five years ago with my late right hon. Friend the Member for Rotherham, who would have been very interested in this debate, I went to see the corporation and pleaded with it during a relatively minor recession that it should seek to smooth out the ebbs and flows of economic fortune by engaging in ingot stocking. The corporation did not seem particularly well disposed to the suggestion. I believe that the late Mr. O'Malley had actually floated the idea in the late 1960s before I came to the House. However, we repeatedly pressed the corporation on this point and were delighted that it became more receptive to the idea.
  Given the fact that recovery from this dreadful recession is beginning, the corporation should be encouraged by the Department to engage in the maximum possible level of production, even though it may involve certain economic costs, so that we can immediately begin to deliver the goods when the orders come in. To do that it is essential to have an adequate capacity to engage in anti-cyclical stockpiling.
  I should like to have said a great deal more, but I have already taken rather longer than I intended, largely because
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  I felt it essential to respond first to what the hon. Member for Chichester said and then to the regrettably short-sighted speech of the hon. Member for Henley. I believe that the Government are to be congratulated on bringing in the Bill. The moneys involved are essential. We need also to ensure not only that the Government give the financial green light to the corporation, but instruct it to get on with producing steel in the greatest possible quantity and in the most efficient manner. Further, for areas like mine, which were not really covered by the Beswick review, nor in detail by any previous reviews, the Government should spell out the reasons for the confidence which the men in the industry are entitled to possess.
  As I have said already, we in the Rotherham area have in the last few weeks been breaking production records. That increase in production, that use of common sense, and the ingenuity which is to be associated with the trials and tests which are proceeding in my constituency, deserve not merely the Minister's commendation today but the provision of real evidence that steel in South Yorkshire, particularly in the Rotherham area, has a very important future before it.
  5.25 p.m.
  Mr. Richard Wainwright (Colne Valey): In the interests of underlining areas of agreement between the two sides of the House, I should like to endorse immediately two major points in the speech of my fellow Yorkshire Member, the hon. Member for Rother Valley (Mr. Hardy), in his admirable debating contribution.
  With a very apt illustration, the hon. Gentleman rebuked us—I think that he intended to rebuke many outside the House also—for the regrettable trend to seek to measure investment by its cost rather than by its efficiency. The illustration he gave from his constituency of investment thrown away through bad judgment was an apt reminder which I hope will be taken to heart very widely at Lime Grove, Broadcasting House, Printing House Square and all the other institutions which have fallen into the absurd error of measuring investment and other policies by the mere expenditure involved rather than by the value received. I endorse also the point which the hon.

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  Gentleman made very forcefully about the appalling fate which has befallen the steel industry as a result of its having been a political football for so long.
  It seems to Liberal Members quite lamentable that, especially at a time when the financial world overseas is looking very askance at the British economy, in a House of Commons debate so little reason should have been given for appropriating to one industry, albeit an important one, a vast share of national resources. I hope that it is not too much to plead with the Minister of State that in winding up he tries to sketch in some context of industrial strategy within which the House is being asked to open the door to this enormous expenditure.
  Hon. Members need no persuading of the importance of the steel industry, but those of us who represent areas with a great variety of successful exporting manufacturing industries are bound to be worried that time and again the Government have asked the House—without any suggestion of general strategy, without any approach to an overall industrial budget —to appropriate vast resources to particular industries all of which during the past 18 months have had very strong political overtones: they have been industries to which votes are directly attached.
  One of the unfortunate aspects of the steel industry is that, because of the vast numbers of people it employs in concentrated areas, it is closely associated with vote-getting. That has been illustrated by Governments of both parties in recent years.
  It is the misfortune of some things in this country under our present deplorably primitive political system to become political totems. It is peculiarly unfortunate when a great manufacturing industry which is fundamental to so much of our economic activity becomes one of these totems. As the hon. Member for Rother Valley said so forcefully, it is plain that steel is a political totem and, as a result, investment and confidence in British steel have from time to time withered seriously during the past 30 years.
  The hon. Member for Henley (Mr. Heseltine) suggested that the blame for this arose during recent years when Lord Beswick held up the development plan
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  of the corporation. It suits hon. Members on the Government Front Bench to suggest that the hold up in investment is of much earlier origin when the industry was in private hands. I believe that blame arose during both periods, but it must be traced not to the frailty of Ministers or of boards in private enterprise, but to the absurd nature of our political system which is utterly incapable of assuming control of vast and fundamental manufacturing industries.
  The hon. Member for Henley said that there was no political framework capable of controlling industries in public ownership. He did not choose to develop his theme, but certainly Liberal Members agree that we do not have a political framework to deal with these matters. We have a framework that virtually ensures that industries associated with public ownership will have a political cushion every two or three years when political propaganda hots up and when rival factions of extremists are urged either to demonstrate for public control or industry or, in an equally misplaced way, for a return of publicly-controlled industries to private enterprise. Either way there is a concentration on the mere fact of ownership, which is miles away from the question of operating efficiency and marketing success.
  Mr. Heseltine: I follow the hon. Gentleman's argument, but does he not appreciate that that was exactly what the Conservatives did not do in the early 1970s when we sought to carry our development within the public sector? The consequence was that the Labour Party then sought to exploit that in a new way, and it has had the effects which we have described.
  Mr. Wainwright: Yes, I am happy to give the hon. Gentleman that point straight away. It was one small mark of success. But the then Conservative Administration was so busy being abrasive and seeking confrontation on other issues that it did not take time to seek a confrontation with the nationalised steel industry.
  In earlier years we had the disastrous attempt to unscramble the steel omelette which seriously set back investment. We are now being asked to open the door to the appropriation of vast sums of public money. We are dealing with a situation

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  in which at least half of the extra borrowing power being sought in the Bill is due simply to political delay. I am confident that if in recent years this matter had been handled wisely and with a reasonable degree of political courage, the cost of the British Steel Corporation's development plan would be considerably less than it now faces.
  Before the House gives this Bill a Second Reading—and no doubt it will do so reluctantly when facing these grim facts—it should be on record that so vast an appropriation of public resources would have been avoided if the corporation had been allowed to go ahead on a reasonably commercial basis in years which have been wasted both by former Conservative Governments and now by a Labour Government. It is in that reluctant and disappointed spirit that Liberal Members feel obliged in the circumstances not to divide the House against the Bill.
  5.34 p.m.
  Mr. Roy Hughes: The hon. Member for Colne Valley (Mr. Wainwright) has, as usual, made a thoughtful speech, but I am concerned about the regrettable fact that it is now over two years since the House last debated the steel industry.
  I listened carefully to the principal Conservative spokesman on steel, the hon. Member for Henley (Mr. Heseltine), but he did not protest about the fact that this subject had not been debated for so long. There have been protests on this score from the Steel Group of the Parliamentary Labour Party, of which my hon. Friend the Member for Redcar (Mr. Tinn) and I are joint chairmen. Numerous Labour Members have questioned the Leader of the House when we have discussed forthcoming business on Thursday afternoons, but he has always pleaded lack of parliamentary time. Nevertheless, we must face the fact that steel is a basic part of the British economy and comprises a vital industry.
  We cannot expect too much support from the Opposition on these matters. As my hon. Friend the Member for Rother Valley (Mr. Hardy) said, they represent the most salubrious parts of England—sunny Sussex and all the rest of it. They are not particularly con-
  72
  cerned about the steel industry, and they certainly do not represent steel workers.
  However, I am concerned about the fact that the Labour Government appear not to want interference in the industry by Members of Parliament. Yet the fact is that if Sir Monty Finniston, the Chairman of BSC, and Sir Richard Marsh, the Chairman of British Rail, are to be believed, the Government are intervening in nationalised industries in a big way. We have heard squeals of anguish from time to time and it appears that the heads of nationalised industries have now established some kind of trade union committee to protect their position. It is no good Ministers talking about open government if they do not practice it.
  I have taken a close interest in the steel industry over many years and I believe that it needs more parliamentary oversight—certainly far more than it is now receiving. The industry requires a good deal more worker participation in terms of overall management control. Government without proper scrutiny can develop into authoritarianism, and that is the last thing Labour Members want.
  This Bill is almost an excuse for a debate on the steel industry since the Bill relates essentially to financial matters. We see from the Title that the Bill seeks to
  "make provision with respect to the limit on the sums borrowed by, or paid by the Secretary of State to, the British Steel Corporation…".
  As a result many hon. Members have strayed a long way from the basic concept set out in that Title.
  My criticisms are directed at three fronts. The Government are asking Parliament to authorise vast sums of expenditure in the public sector of the steel industry. In turn, there must be far more parliamentary scrutiny of this vital industry. It is no use making the excuse that all these matters are investigated by the Select Committee on Nationalised Industries. I appreciate that such bodies have a vital part to play, but they often turn into mere talking shops. More parliamentary accountability is required, and if it is denied, that will be a negation of democracy.
  I have some mild criticism to make of the chairmen of publicly owned industries

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  generally and the chairman of the British Steel Corporation in particular. Such chairmen are for ever protesting about interference by politicians in the affairs of the industries which they have been appointed to run. They must realise that they are essentially heads of publicly owned industries and as such they are publicly accountable. What is more, Members of Parliament are the representatives of the public. I agree that organising things in this way tends sometimes to make the job of the head of the nationalised industry a bit more difficult. It means, too, that Ministers must be more careful when appointing heads of these vital concerns.
  It is fair to say that the British Steel Corporation is not exactly a success story. I speak as a fervent believer in the public control of this vital industry. We must face the fact that it has been bedevilled by industrial disputes and it has had management that has not particularly excelled itself. We have had needless disputes in my area. I have felt that many have been due to mismanagement of the plant. To be fair, the plant managers are subordinate and are waiting for directives from corporation headquarters. There is too much bureaucracy in the corporation. I can only hope that the appointment of the new chairman, Sir Charles Villiers, will mark a new era in the history of the corporation. I wish Sir Charles well in his formidable task.
  I wish next to refer to Clause 2(2) which relates to the £3,000 million limit on borrowing or up to £4,000 million with the consent of the Treasury. It is worth pointing out that these sums are not peanuts. The Bill illustrates the Government's financial commitment to this basic enterprise. This public money must be safeguarded. We must bear in mind that at a time when the Government are asking Parliament to authorise vast sums of money there is a great influx of steel imports. I noted this afternoon that the Secretary of State for Trade offered no positive action to halt imports.
  A week ago Mr. Bill Sirs, General Secretary of the Iron and Steel Trades Confederation, made a strong protest about this at the Scottish TUC. He is absolutely right. Eventually the Government will be forced to tackle import control. As I said clearly in the Budget debate, the theory put forward by the
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  group of Cambridge economists is an essentially correct analysis of our present difficulties. I join with the TUC in calling for selective import controls. The future success of the British economy primarily depends upon action here.
  I received in today's post a letter from the motor manufacturers saying that over the past three months EEC car manufacturers had boosted their sales from 18·9 per cent. of the British market to 22·4 per cent. The manufacturers point out that the Japanese have over 9 per cent. of the British car market, which means that about one-third of the total British car market is now the prerogative of overseas suppliers.
  The state of the steel industry can be related to that of the motorcar industry. If we could have a boom in the motor industry, it would do an immense amount of good for the steel industry. I want to see the jobs of the thousands of people employed in the steel industry in my constituency made more secure. I should like to see these imports of cars stopped.
  How much longer can we allow our basic industries to be undermined in this way? The cornerstone of the economy of Newport is the great plant at Llanwern. It is a works of fantastic potential, being one of the most modern and up to date in the whole of Western Europe. At present it is going well, particularly now that the third blast furnace is fully operational. I hope that morale there will build up.
  I still feel that there is room for considerable change in the management of the industry in Wales. Iron and steel have been made in South Wales since the early days of the Industrial Revolution. In the past few years it has been as if we were receiving divine revelations from the former United Steel management from the North of England, telling us how things should be done in South Wales. It is fair to say that chaos was created in the South Wales industry and that there were a host of industrial disputes. We have never before had such a state of affairs. I believe that the whole managerial set-up in South Wales needs to be examined.
  This great works at Llanwem certainly needs its own iron ore terminal. Previously the ore was brought in by small ships to Newport docks. That was

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  not a particularly efficient way of transporting vast quantities of the ore. In 1967 parliamentary approval was given for a terminal to be known as Uskmouth, to serve the works.
  Unfortunately when the corporation took over, it pigeon-holed this project and now the ore for Llanwern is brought overland by rail from Port Talbot. This operation is fraught with all sorts of difficulties. I hope that the new chairman will take this project out of the pigeon hole and will give the go-ahead for the iron ore terminal for the great Llanwern works, which it needs to make itself the success it should be.
  5.50 p.m.
  Sir Anthony Meyer: I assure the hon. Member for Newport (Mr. Hughes) that I care passionately about the steel industry and, furthermore, that I represent thousands of steel workers, many of whom voted for me at the last election and a lot more of whom, I suspect, after what has happened in the past few years, will vote for me at the next election.
  I do not intend to speak solely or even primarily about the future of the Shotton works, but I must say a few words in view of some remarks made by my hon. Friend the Member for Chichester (Mr. Nelson). If we accept the logic of the strategy of the British Steel Corporation, which ties Port Talbot and Shotton indissolubly together and decrees that the expansion of Port Talbot depends on the phasing out of steelmaking at Shotton, clearly it becomes difficult to argue that Shotton should continue steelmaking. It is a case I shall continue to argue, but it becomes more difficult.
  However, I see no reason, other than the obstinacy of Sir Monty Finniston, why the two plants should be so inseparably tied together. I shall be querying the whole strategy of the corporation, but even within that questioning I accept that the expansion of Port Talbot should go ahead. I do not accept that expansion necessarily implies the phasing out of steelmaking at Shotton.
  The Bill, increasing as it does the capacity of the BSC to call on the very limited supplies of investment capital, provides the House with the first oppor-
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  tunity for a long time to consider the achievements and prospects of the nationalised steel industry. The tone underlying the speeches of hon. Members on both sides has been one of anxiety. It must be said that nationalisation has fulfilled few of the hopes and most of the fears which were expressed at the outset and which were so ably set out by my hon. Friend the Member for Henley (Mr. Heseltine). There were, of course, valid theoretical arguments for nationalisation: there was the need for rationalisation; there was the low output of pre-nationalisation steel; there was the lack of investment. They were all perfectly sound arguments in favour of nationalisation.
  But what has been the result? Output, whether in terms of output per man or in terms of output per £1,000 of capital invested, has continued to grow more slowly in the British steel industry than it has in the competing steel industries of other countries; and the gap is still widening. The result has been that the long-delayed plan for investment—delayed for seven years—has come under fire from every pressure group, of which I am unashamedly a part, and it is still not in operation.
  In any case, the argument that the poor performance of the British steel industry is caused by the lack of investment—the Minister made much of this argument today—is not borne out by the experience of Llanwern, which, as the hon. Member for Newport said, is one of the best equipped steel plants in the country, but it has one of the worst records of production. It is tempting and probably correct to assume that nationalisation and efficiency are incompatible—at any rate, under the British system of parliamentary democracy. Certainly they seem to have been so in the steel industry. If anybody wants to know why they are incompatible. he should study carefully the speech of the hon. Member for Newport.
  The contrast is not only with steel industries in other countries but with other non-nationalised heavy industries in Britain. In The Times of 1st March there was an article by Mr. E. G. Wood, of Sheffield University, which made some comparisons particularly between the steel and chemical industries in 1973, the last year for which figures are available. In

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  that year both industries were investing £700 per man employed, three times the national average, but output in the steel industry was 7 per cent. below the national average whereas output in the chemical industry was 70 per cent. above the national average. Mr. Wood wrote:
  "If the steel industry in 1972 had achieved the same net output per head as the chemical industry, it would have needed 110,000 fewer workers, not the 20,000 quoted by Sir Monty."
  There are many other figures to show that the performance of the nationalised steel industry is deteriorating in relation both to foreign steel producers and to other sections of heavy industry in the United Kingdom; and the gap is getting wider all the time. Therefore, it is not safe to assume that massive investment, as in the 10-year development plan and as still further increased by this Bill, is money well spent. That same amount of money might bring more jobs and better living standards if it were invested in some other industry.
  Even if we could ignore all these considerations, even if the British steel industry were achieving production per man and per £1,000 invested at a level comparable with foreign steel industries, even if it made as good use of capital and manpower as, for example, the chemical industry, would it be right to allot such a massive share of investment capital to this one industry? Are the assumptions underlying the 10-year strategy right now even if they were right at the time?
  It is notorious that the steel industry particularly is affected by the ups and downs of the trade cycle. It would be the height of foolishness to argue that, because there is now recession where in 1973 there was expansion, the whole development programme of the steel industry should be drastically cut back. Boom times will return and, with them, increased demand for steel. But underlying the waves of boom and slump there are deeper currents. It now seems unlikely in the highest degree that the growth rates of the 1960s and early 1970s, either in Britain or in the rest of the developed world, will resume at the same pace. Indeed, there are purely physical constraints on growth at such a pace. If growth resumes, it will be much more evenly spread round the world.
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  Whether we like it or not—and we had better like it—the next decade will see a massive transfer of industrial potential from the developed to the developing world. If we mean the pious platitudes that we mouth about the importance of assisting the under-developed countries to make progress, we must not stand in the way of that development. It would be the height of foolishness to try to do so.
  It is already becoming only too painfully apparent that the assembly of motor vehicles on a very large scale is ceasing to be an appropriate activity for a fully industrialised country. It is an activity which will transfer more and more to less developed countries. On the same basis, I suggest that over the next 20 years the same kind of thing will happen to bulk steelmaking. In this context, is it right to assume that Europe, the United States and even Japan will maintain their completely dominant position in steelmaking?
  The targets set in the 10-year strategy, which were derided by the Labour Party and the unions as being far too low, now look absurdly over-ambitious, especially in view of what is being produced by the British steel industry. They are also extremely ill-defined. There is much talk of total tonnages and almost no talk of product mix. However, it is notorious that it is precisely in the matter of product mix that the British Steel Corporation has fallen down most grievously.
  The air has been thick with complaints of massive imports of steel products at a time when some of the closures planned under the strategy were taking place. There are repeated demands for import controls, when it is obvious to all that without massive imports of certain types of steel products large sections of British industry would have ground to a halt long before now.
  There is every indication that this trend of over-production of certain steel products—notably sheet steel—and underproduction of others—mainly large-diameter pipes—will continue for some time, although the motor and domestic appliance industries are unlikely ever to grow and step up their demands for sheet steel at the rhythm of the early 1970s, and although the growth industries of the future, including deep-sea oil exploration, will demand different types

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  of steel. But one thing is reasonably certain—that there will be a continuing demand for the kind of special steels of which the hon. Member for Rother Valley (Mr. Hardy) spoke.
  Mr. Roy Hughes: I was interested in what the hon. Gentleman said about the motor industry. Does he agree that whereas the British motor industry previously largely supplied the British market, more than a third of the British market is now being supplied from overseas? I gave figures showing that that is so.
  Sir A. Meyer: I know that the hon. Gentleman thinks that import controls are the answer to all our problems, but if he were unfortunately to have his demand granted, he would find that the protected British motor industry rapidly became so expensive and inefficient that the demand for motor cars would drop as dramatically as if imports were totally banned. There is no answer along that road. I foresee that in a few years' time the hon. Gentleman will complain as loudly about imports of motor cars from India as he now complains about imports of motor cars from Japan.
  There is now very little left intact in the 10-year strategy. In any case, it was not even consistent with its own principles. The strategy was allegedly based on large-scale, integrated steelworks close to harbours deep enough to take giant ore carriers. But of the five plants selected to fulfil that rôle only two—Port Talbot and Redcar—meet the stated requirements of the strategy. Ravenscraig, Scunthorpe and strike-torn Llanwern, all of which are to be expanded, are further from a deep-water port than is Shotton, with its strike-free record, which is to be phased out as a steel producer. It makes no sense and cannot he justified on its own merits, or even within the twisted logic of the strategy.
  The whole strategy should now be drastically revised before still more capital is squandered on a white elephant more voracious and less productive than Maplin Airport, the Channel Tunnel or—very relevant in the present water shortage—the Dee Barrage scheme. We should stop thinking in terms of an unrealistically high total tonnage produced by huge, integrated steel works on the Japanese
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  model. We should stop thinking of an expanding steel industry as an efficient method of keeping the unemployment figures down.
  Instead, we should be thinking of the steel products that a more slowly expanding world economy and a nearly static British economy will need over the next 10 to 20 years. We should think of what is the optimum size of a British steel industry to meet that need.
  I suspect that what the British steel industry achieves will be achieved by methods which smack rather more of make do and mend and rather less of science fiction, by patching up and keeping going steel plants of small and medium size which have a good track record—and of which Shotton is an obvious example—rather than by trying to carry out grandiose schemes based on the theory that if one takes a plant with an unproven record, or a proven bad record, and doubles its size, one will land up with anything worth having.
  6.7 p.m.
  Dr. Jeremy Bray: The hon. Member for Flint. West (Sir A. Meyer) is rightly concerned with the future work and well-being of his constituents in the steel industry, but I was not entirely persuaded that he had reconciled their interests with his political position and political doctrine and some of the views about world development which he put forward. I do not believe that the prospects for world growth, and particularly growth in the demand for steel, are anything like as dismal as the hon. Gentleman suggested. He does not make sufficient allowance for the myopic view that we take because of our balance-of-payments position.
  I have just returned from a week in the United States. There is there, and in Eastern Asia, where I was a few weeks before that, every confidence in an expanding world economy, expanding markets and expanding demand for steel, for motor cars—for all that we can produce and all that the developing countries can invest in and produce for themselves.
  I agree that there are major questions about the broad strategy of the British Steel Corporation, but I also agree with the hon. Member for Henley (Mr. Heseltine) that we do not yet seem to have a proper framework in which to evaluate

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  that wider strategy. What we need is undoubtedly an industry-by-industry, sectoral and firm-by-firm analysis of our overall national economic problems. The steel industry suffers more than any other from stop-go. Until we have a sensible approach to the overall management of the economy, the steel industry will take the rap. However, this is a debate about the steel industry in particular, and I shall confine my remarks to that.
  The corrigendum to the Bill nicely sums up our problems about steel when it says:
  "Clause 2, page 1, line 16, after '£2,000' insert 'million'."
  The sheer scale of the industry with which we are dealing, the scale of the investment, never mind that most important aspect with which we are concerned as constituency Members—employment—are so huge that we need to give much closer attention to the affairs of the industry than we have given. I find it a matter of some concern that, were one able to look beyond the confines of the Floor of the House, it would be apparent that nobody from the corporation seems to have thought it worth while to come here to listen to the debate.
  Concerning industrial relations, we are at a very delicate stage of developments in the British Steel Corporation. The industry and the unions were engaged in a constructive course of negotiation on the introduction of WMIS, which is the industry jargon for work measured incentive schemes. This was brought to a complete stop by the £6 pay limit, and will now be held up for a further year, in all probability, by the agreement that necessarily has to be reached on the incomes policy for the next year.
  There is a development with which the industry could proceed, and from which, I am sure, both the unions and the industry would benefit a great deal. I refer to the setting up of works joint trade union committees, by means of which all the trade union representatives in a works, within the official negotiating framework of their own unions, can meet together to discuss common works problems.
  It is the policy of the ISTC as I understand it, and of the National Craft Coordinating Committee that these joint works committees should be set up within
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  the union hierarchies. They are not now part of the union hierarchy. The only works in which one has been set up, where the greatest priority was given, is, I understand, at Llanwern. But the basis of it exists in the action committees at Shotton, at all the works in my own constituency and at the other works in Scotland. They have been extremely effective within the limited objective of perpetuating the life of a particular works.
  These action committees have shown that a powerful works interest exists, which ought to be accommodated within the structure of each trade union, which the trade unions nationally wish to achieve and which the people on the shop floor wish to achieve. I wonder what is holding up the proper setting up of these committees.
  Outside the area of industrial relations there is a continuing war for modernisation in the industry. It is a war not between management and unions but a war in which they both fight on the same side. It is becoming rather confused in those works which have faced major redundancies and the threat of closures in recent weeks and months, because, frankly, the operation of the redundancy payments scheme has totally obscured the industry's economic problems, both in the shorter and longer-term future.
  I wonder whether the current figures on profitability quoted by the British Steel Corporation charge redundancy payments fully to the profit and loss account, or whether they are written off against some kind of capital reserve. Enormous sums are being paid out in redundancy payments, admittedly not to all workers, because not all of them have very long service, but in some instances one or two years' wages are being paid in advance in a lump sum, and this must be a heavy blow to profitability. I wonder whether even yet, in considering the relative loading of different works and the manning of those works, this is fully taken into account.
  But, despite those difficulties, the timetable laid down in the Beswick Report seems to be being implemented. Some rough passages are being experienced in particular works, but on the whole the unions and the management locally seem to have found a way through, and I pay tribute to the useful work done by Bill

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  Sirs and the national and Scottish level organisation of the ISTC in pressing the interests of particular works. I refer particularly to the Lanarkshire works and to the Craigneuk works in my own constituency. At the national level, Bill Sirs has made sure that the interests of these works are protected.
  In the battle for modernisation, I wonder what is happening about the investment programme. I have repeatedly written to my right hon. Friend and to the Chairman of the BSC to ask what specific capital development proposals are being held up by lack of decision by Government. None is being held up except Port Talbot. For the rest, it is an internal matter within the corporation as to why investments are not going ahead faster.
  The Craigneuk works, the biggest single development in the Chancellor of the Exchequer's scheme for funding the development of the steel foundry industry, has been held up for months and months by the internal appraisal and design studies. This appraisal should have been completed a long time ago, but it seems to have been bandied about from the board to the lower level of management and back again to the board. I hope that the internal management appraisal of schemes like this will in future be conducted a great deal more expeditiously and effectively than has been the case so far.
  Another major current operating question is why BSC has not made better use of the attempt to build up counter-cyclical stocks. There were complaints over many months by BSC about the slowness of Government Departments in agreeing the details and financial arrangements required to finance these stocks. The BSC has failed to take full advantage of the facility to expand output. It has been using only two-thirds of the funds available. Furthermore, the building up of those stocks has gone solely into the lowest cost plants, such as Scunthorpe, where the BSC felt, for its own internal reasons, that the stock could be most cheaply produced.
  For whatever reason, maintenance or operational, we read in this month's steel statistics that there have been plant maintenance problems at Scunthorpe. Having failed to achieve the output there, the
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  stockbuilding was not switched to the smaller works where output could perfectly well have been increased and advantage taken of the financing facilities the Government were prepared to offer. The corporation owes the unions, the public and this House an explanation of why the stockbuilding facilities that we have provided have not been better used.
  Finally, there is the question of the appointment of the new chairman. I have found it necessary in the procedures of this House to criticise the present Chairman of the British Steel Corporation, Sir Monty Finniston, but I also have respect for the contribution he has made to the corporation. I am sure that his influence will be felt for many years to come in the strategic development and the technological shape of the corporation. No one could ever doubt his own devotion to what he believed to be the well-being of his industry, and I am sure the House would wish him well in whatever he does in future years.
  I also welcomed the appointment of Sir Charles Villiers as the new chairman. I had some personal dealings with him when he was managing director of the Industrial Reorganisation Corporation. I have a great respect for his relaxed and effective methods of working, and in particular his approach to industrial relations. I am sure that the unions will find him a good man to deal with. He is nearing the end of his career, and his years with the corporation will, therefore, necessarily be limited. It is no disrespect to him and no disapproval of his appointment when I express the hope that his successor will be found from within the ranks of the steel industry.
  We have in the past had much discussion of the problems encountered in appointing the heads of nationalised industries, and I have contributed to that discussion in recent weeks. Part of the reason is that we have not had a proper policy in the public sector for the development of people to fill the top levels of posts. This applies not only to the industries themselves but to the civil servants at deputy-secretary and undersecretary level who will be called upon to handle the affairs of the industry.
  We have within the public sector a very great deal of experience of top level staff college work in the Armed Services. The staff colleges, from what I have seen

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  of them, work very effectively and play a very important rôle in training the top level of officer in the Armed Services. The problem in the nationalised industries is totally different, and a different pattern of training would be required. But it justifies no less time than that given to it in the Armed Services.
  In order that the people concerned are able to gain experience of the problems that they will face at the top level, it should bring together the industry's management, the national trade union officers, the civil servants dealing with it and, I venture to suggest, even some Ministers and hon. Members. It need not be a very expensive operation. There are ample management training facilities at the moment which are under-used both in the public sector of industry and in the university sector, and those people there who are training already could well lift their sights to the strategic issues with which we have been concerned in this House and which are not as well handled as we should wish to see.
  I find it an unsatisfactory parliamentary proceeding to deal with financial authorisations for such major increases in borrowing powers in this way, and I agree with a great deal of what the hon. Member for Henley said about the treatment by this House of the investment programmes and pricing policies of the nationalised industries. It is possible without unduly interfering in the management of the industries to conduct our proceedings in a way which would help the discipline that is undoubtedly needed in the management of the nationalised industries and to which I am sure hon. Members of this House are well equipped to contribute.
  6.21 p.m.
  Mr. Michael Marshall: This has been a constructive and useful debate, and it is in that spirit that I join the hon. Member for Motherwell and Wishaw (Dr. Bray) immediately in paying tribute to Sir Monty Finniston. With the retirement of the Chairman of the British Steel Corporation in a few months, we are seeing many of the problems in embryo as a result of which this House, in its relationship with the Government, with Government Departments and with the corporation, has been going through a very difficult and testing time. It is in
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  that spirit that we welcome the appointment of Sir Charles Villiers as chairmandesignate of the corporation. But the view which has been expressed on all sides of the House has reflected many of the worries and much of the concern and unease which hon. Members feel about the state of the corporation.
  It was in that context that we listened to the Secretary of State today, and all of us who heard him will perhaps agree that there is a great deal more that we need to have answered if we are to give the Bill a fair wind. He gave us what my hon. Friend the Member for Henley (Mr. Heseltine) described as the classical presentation now by Ministers of the present Government in asking for more money. It is one which is long on basic general assertion and very short on facts. When the Minister of State winds up the debate, I hope that he will fill some of those gaps. It is right to put the Government on notice that when the Bill goes into Standing Committee the Opposition will seek to probe a great deal. I shall return to some of those matters presently.
  At the outset, I wish to take up some of the points raised by hon. Members on both sides of the House. As I say, this has been a constructive debate, and a number of the contributions to it deserve comment.
  The hon. Member for Redcar (Mr. Tinn) was perhaps putting forward a view typical of many of the views we have heard today in advancing an unashamedly constituency argument. That reflects one of the views which we are bound to have on these occasions. Whenever we get the chance to debate steel, inevitably we must expect to hear constituency points of view such as those put forward by the hon. Member for Redcar and by my hon. Friend the Member for Flint, West (Sir A. Meyer). There is no shame in that. But perhaps I should nail fairly quickly the rather loose assertion which the hon. Member for Newport (Mr. Hughes) made, perhaps supported by the hon. Member for Rother Valley (Mr. Hardy) in a more lighthearted vein, that an hon. Member has to represent a steel constituency to be able to speak about steel. That is such a self-evident ridiculous proposition that I almost blush to pursue the argument today.

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  However, it is right to put on record that those of us who take a keen interest in these matters have to reflect the views of the widest possible perspective. Therefore, it is right to have hon. Members representing steel constituencies putting forward their views, but equally it is of value to the House to hear from hon. Members who take an interest in steel and who are able to take a broad view given that they have no constituency commitment.
  It is only right to say too that, if Government supporters wish to argue that only those representing steel constituencies should speak about steel, some of us who have worked in the industry might just as well argue that only those who have worked in the industry should speak about it. However, I hope that we are all sufficiently well aware of the problems to be clear about our joint interest in trying to resolve many of them, because they are problems which all of us face.
  Listening to the Secretary of State today, I found it a little ironic to hear him using words that he used to advance when he was in Opposition about the need for urgency, the need to get on with things, and about unparalleled intervention. I could quote many of his earlier speeches which in the post-Easter glow of this amiable atmosphere I shall spare him. But he will appreciate that intervention in the steel industry goes back to the very birth of the BSC, and it is for us to do a job of work in trying to improve the present situation.
  If it does nothing else, the Bill gives us an opportunity to debate these issues and, as I said just now, it will give us an opportunity in Committee to get down to a great deal more detail than we are able to do today.
  To Government supporters who say that we do not have enough opportunity to debate steel, let me say that the Opposition share their view entirely. On a number of occasions we have put down Adjournment debates on steel. We had an opportunity to debate steel on 2nd April under the general heading of British industry. We shall continue to call for these opportunities.
  The Minister of State will recall the matters that we discussed on 2nd April.
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  The problem of how and when we look at the difficulties of the BSC is one which exercises us greatly, because we are well aware that under present arrangements it is entirely a matter of chance whether we are fortunate enough in Ballots and on other occasions to get the kind of scrutiny that we would like in many of the affairs of the corporation.
  It is perhaps worth making clear that at present there are studies going on which we hope will have a definite effect and be of considerable value for the House. There is the NEDO study of the relationship between the Government and the nationalised industries. We regard that as extremely important. Starting at the moment, we have the study by the Select Committee on Nationalised Industries of the BSC and the problems of technological change. These are important studies, and we hope to see from them answers to some of the crux questions which many hon. Members have raised today. Those which are not answered will, we hope, at least be developed in a way which will assist our thinking in the House. But they are essentially longer-term studies. Therefore, the Bill is of significance in providing us with an immediate opportunity to review the problems of the corporation.
  When we look at what the Secretary of State said on this subject, we see that he made it plain that he was once more pressing for an urgent review, because he rightly brought out that the corporation will, in effect, have exceeded its borrowing limits by the autumn. It is in that sense, because we wish to adopt a constructive attitude, that we have not taken a fractious view of opposition today. We realise the cash difficulties that face the corporation, and these will affect our judgment when we come to the question of a vote at the end of this debate.
  Having said that, however, it is not good enough for the Government to come here with another "We need £2,000 million"—yet another instalment—argument. As the hon. Member for Motherwell and Wishaw said, the Government's approach is to come forward in such a casual manner that we have to have a corrigendum tidying up the £2,000 to £2,000 million. It is this attitude of a few million pounds here or there which makes many of us so worried about the way

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  in which the Government approach their industrial strategy.
  The Secretary of State referred to the special study for steel in relation to industrial strategy. Many of us feel that if he were willing to accept the Chequers strategy and say that the Government would hack winners in relation to the corporation we would at least be making constructive progress.
  At present, as the hon. Member for Colne Valley (Mr. Wainwright) said, we get a totally confused picture and a feeling of ad hockery. Time and again, voting patterns seem to determine where the money goes, whether to steel or to the motor industry. The Government cannot square this approach with the Chequers strategy.
  We cannot allow the Secretary of State to get off the hook again on the question of Port Talbot. This is not just a handy battle cry. It is a worry which has been expressed by hon. Members on all sides. As my hon. Friend the Member for Flint, West fairly indicated, it is a matter of crucial importance. Despite his own obvious problems with his constituents in relation to Shotton, my hon. Friend was among those urging an early decision.
  Sixteen months have gone by since the closure review was started. The matter has been so drawn out that the Minister of State, who is to reply to the debate, must be turning over in his mind some way of breaking out of this situation.
  What is the Government's attitude to giving the go-ahead to Port Talbot and leaving Shotton in abeyance? After all, under the original proposals Shotton is not due to close until 1980. My hon. Friend the Member for Flint, West made a powerful case which deserves examination. Hon. Members from both sides who have recently been to Velindre and Llanwern are fully aware of the tremendous loss of morale in the tinplate division in South Wales. The workers feel that they are losing out in the international tinplate market, in which not many years ago Wales was preeminent.
  To see this happening causes the greatest regret and concern on all sides. The Government know that I try to take a serious view on these matters,
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  and I believe that a decision on Port Talbot is now absolutely crucial. It is long overdue and must be given the go-ahead if the tinplate industry is to be saved.
  I am trying to make constructive points, but I must nail some canards put out by the Secretary of State in the faster passages of his speech and which I know the Minister of State will find it difficult not to repeat. The Secretary of State used the argument about the lack of investment in the independent days and referred to the joint steering committee and delays in previous investment programmes. If the House wishes to be taken seriously in these matters, we cannot accept that kind of naive view when it is thrown across the Chamber by the Secretary of State or the Minister of State, who did so on 2nd April.
  As my hon. Friend the Member for Henley pointed out, investment in the years immediately before nationalisation was good. The figures of the 1960s before and after nationalisation show in the most logical way that investment dries up when there is the prospect of nationalisation.
  Is it not time that we laid aside the tired old charges about how we got where we are and tried instead to decide where we are going from here? If one takes the view that investment is a major problem for the corporation, it has now existed for so long that it does not help to seek to apportion blame to one Government or another or to elsewhere. We have to deal with the problem as it exists.
  The Secretary of State spoke about the delay when the Conservative Government set up the joint steering committee. We were trying to sort out the problems of the industry, and in doing so we had to work within the rules laid down by the previous Labour Government. I am urging the House to have a fresh look at steel and to change the rules.
  We welcome the basic views of many hon. Members, and I urge the Minister of State to give us some fresh thinking. I urged him to do precisely that on 2nd April, but with little success. This approach of ad hoc-ery to the industry is worrying many hon. Members who seem capable of taking a more considered

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  and balanced view about the problems of the industry than do the Government. I wonder why this is.
  One of the major difficulties in assessing the Bill is that we do not have a proper financial picture of the corporation's affairs. My hon. Friend the Member for Chichester (Mr. Nelson) was absolutely right. It is nothing short of scandalous that we should be asked to consider a further borrowing requirement of £2,000 million when the only report and accounts we have are almost exactly 12 months old. The Government and Ministers must know that, with the end of the financial year having just passed, the corporation must have struck some tentative balances and that its reports must be in preparation. There is an autumn deadline on the borrowing requirement and this smacks, if not of fraud, certainly of something which is very difficult for hon. Members to understand. Why are the Government pushing the Bill forward at this moment? This is a matter to which we shall return in Committee.
  If we say that this is not sharp practice but bureaucratic nonsense, we must assume from the whole history of the Government's attitude to the corporation that this measure is once again a stopgap and that, despite the Secretary of State's talk of three years, we can have no confidence in his estimates of the time scale required or of the effectiveness of the money to which he referred.
  It is incredible that in 1972 the corporation's borrowing requirement was only £300 million and that in the profitable years which followed it was at one time covering up to 70 per cent. of capital investment from internally generated funds.
  Capital expenditure is obviously the largest part of the borrowing requirement, which was increased from £1,250 million to £2,000 million in the Statutory Corporations Bill last June. Hon. Members who served on that Committee will recall that we tried to establish what was in the Government's mind. Referring to the increased borrowing requirement, the Financial Secretary to the Treasury said:
  "This is a short-term measure, and I accept the point made by the hon. Member for Arundel, and by my hon. Friends as well, that in discussing even a short-term measure it is right to ask the fundamental questions as to
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  how this breathing space is to be used—I do not shirk from it—in order to bring about the important and vital changes that are needed." —[Official Report, Standing Committee E, 26th June 1975;c. 117.]
  In a nutshell, that sums up the problem we face. On the evidence put before us, we do not know how the breathing space has been used or how the additional £2,000 million is to be used.
  The Secretary of State swept aside, with a skilful deflection to leg, the whole notion of how the money was to be made up. He talked about future pricing policies and about not being clear on foreign exchange requirements and so on. He would have been totally unable to carry anybody with him in a board room of a major company. Hon. Members on both sides, as the taxpayers' representatives in looking at the corporation, must regard the Secretary of State as a board member of the British Steel Corporation in this kind of discussion.
  That is the kind of problem that we see again and again. It is a problem which must be resolved if we are to monitor public expenditure effectively in the widest context apart from trying to get the BSC into an effective working position.
  That brings me to the reasons for the increased borrowing requirement. This requires a certain amount of assumption on our part because, as I have explained, without proper up-to-date accounts we have to make certain assessments, guesses and judgments.
  Assuming that the £3,000 million capital expenditure programme of 1972 now stands in excess of £5,000 million—I think that is right; many experts put it nearer £5,500 million—the question which comes to mind is whether the Government are being honest with the House in implying that the level of borrowing requirement put forward today will be adequate and, indeed, whether they believe that they can find the money when the BSC decides to draw upon that borrowing requirement.
  The Government are in many ways the guarantors for the British Steel Corporation. Unless we have a more precise view about the interplay between the Treasury, the BSC and the Department of Industry, many of us will feel that we are again being asked to vote for, or, at any rate, to receive a Bill which is improperly prepared and does not bring together all the elements which will have a vital say in

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  the matter. Indeed, we do not know who is the master of the situation.
  That brings me to the point to which I referred earlier—that the Statutory Corporations Bill, which gave another £750 million to the British Steel Corporation, was a Treasury Bill. The Financial Secretary to the Treasury was in charge of the Committee stage. On that occasion, whenever we raised questions on industrial policy the classic reply was "That is a matter for the Department of Industry. I shall pass it on to my hon. Friends."
  As today's Bill is sponsored by the Department of Industry, no doubt the Minister of State will say that he will pass our views on to the Treasury. Therefore, we get this round-the-houses, passing-the-buck approach to legislation of a massive kind. The Minister of State mutters in his constructive way. Surely it would make more sense to the working of the Bill if both the Department of Industry and the Treasury were represented on it. Will the hon. Gentleman, in winding-up, give us a categorical view whether we can expect to have his Department and the Treasury represented on the Bill in Committee? In my view, such a course is essential if we are to begin to tackle many of the difficult problems which have been mentioned today.
  One of those difficulties is the massive delay which has been caused by the Government's closure review. We have tried to take a fairly friendly line about it. We are trying to see how to get out of the difficulty. To understand the difficulty, however, we must be clear about the cost of that delay. I have quoted the £3,000 million and the £5,500 million, as many people now believe it is, for the overall cost. But within that total cost we need to break down the constituent elements. For example, I understand that the £400 million originally projected for Port Talbot is now £600 million. We must look at all the constituent parts in more detail to understand their commercial validity in the present perhaps more difficult overall economic circumstances than in 1972.
  Regarding Port Talbot and Shotton, if the Government are unable to give a decision they ought at least to try to end the uncertainty by putting some deadline on that decision. The arguments regarding Shotton, which we recognise, are no
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  different from those which applied years ago. Therefore, the Government's silence on the subject is difficult to accept as being based on anything like proper analytical grounds. We on this side suspect that political expediency rules the day again.
  I turn now to capital and operating costs, because it is not only the question of capital but the hidden additional operating costs which come from delays in expenditure of which the BSC complains most bitterly. There are the costs not only of the many BSC staff and shop-floor operatives who have to take a make-do-and-mend approach to life while major expenditure is held back, but of the planning staff, draughtsmen, designers and others who put schemes together at considerable cost. These must go into cold storage. These are hidden costs which we are unable to quantify in considering the Bill but which we recognise are a substantial part of the current operating loss of the BSC.
  Leaving those costs aside and looking at the direct increases in capital costs which I mentioned at the outset, we come back to the need for the Government to make clear who is responsible for doing what in this matter as between the Treasury, the Department of Industry and the BSC. I have already mentioned the way in which the last increase in borrowing powers was handled. It is not enough for the Government to assure us that the points we have brought up today will be looked at. We shall again get into the situation where in Committee we will be told "These are matters of commercial judgment, and the British Steel Corporation must be given a free hand." We have reached the stage where, if we are to make sense of this matter, we must look carefully at the proper feasible relationship which might end some of these problems.
  I trust that in Committee we shall have opportunities of going into these matters in more detail, but I should like to give one example now. In the Bill, a distinction is drawn between the borrowing limit to be raised in two stages from £3,000 million to £4,000 million and the borrowing powers within that limit.
  That distinction is most important, because under the present system the overall limit of the BSC's finances is the

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  only decision which effectively belongs to Parliament. Once the limit has been set, all other financial decisions relating to the BSC are taken by one or other part of the unholy triangle which I have just described. For example, no Act is required to approve either the BSC's investment programme or any specific investment, however large. Surely that makes the point that we in this House should be entitled to take a view upon some of the largest investment decisions within the overall strategy. I agree with the hon. Member for Motherwell and Wishaw on a number of points made by him, not only now but when we discussed these matters on the Statutory Corporations Bill. I think the hon. Gentleman may agree that we have not had an answer to the repeated cry for us to be given the benefit of considerably more detail, which we would use with responsibility.
  Apart from this one aspect of the parliamentary decision-making power, Parliament approves the methods whereby the take-up of funds—the borrowing—is implemented, even though it does not deliberate on the sums or on their application. We need a better idea of what the take-up means in terms of borrowing requirement in relation to particular plants, regions and parts of the corporation's commercial strategy. My hon. Friend the Member for Flint, West was right to bring out the point that the market mix is a crucial ingredient in trying to reach a proper judgment on the overall investment programme of the BSC.
  One of the alternatives before us is to try to increase the range of decisions which come before the House, and this I am reluctant to urge because many of the problems of intervention in a direct sense would not be faced only by the House overall. They are matters which could be looked at in Committee and, indeed, they are matters to which Select Committees are increasingly turning their attention.
  But if Parliament should not itself look at matters in great detail on a day-to-day basis, it still remains a charge upon the Government to ensure that Parliament is given a proper opportunity to see that methods of control which it delegates to non-parliamentary bodies are being
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  effectively and properly carried out. I am not thinking only of the provision of accurate and timely information. There is the question of foreign exchange depreciation. It is matters of this kind which the House ought to know about. They are matters which affect the whole credibility of the British Steel Corporation, and we have a right to know what is at stake here.
  Broader matters such as the qualifications and numbers of personnel and how effectively they are being used in relation to particular investment decisions are also issues about which, at least in Committee, we shall hope to hear a great deal more. I believe that there are many detailed questions which at that stage must be considered, but the Government should certainly understand that, if we accept the need for urgency in looking at the overall borrowing situation because of the autumn problems which will arise when the limit is exceeded, this does not mean that we can agree in principle that the whole way in which the British Steel Corporation is to continue is one that we can accept on the basis put before us by the Government, and certainly not on the basis of the Secretary of State's speech. Not only do we look to the Government but we look also to the corporation to show what it is doing to reduce its borrowing requirements.
  Concern has been expressed about problems such as scrap and the question of availability of scrap, which I agree is a matter of concern. These matters could have a crucial effect on the cash flow situation for the corporation. There is also the question whether direct reduction should replace scrap. These are matters with which we should deal in a sophisticated way if we are properly to understand what is at stake.
  Similarly, when the corporation has certain loss-making activities, such as Redpath Dorman Long, and other parts of its activities are showing a continual high-loss record, we should have a good idea what it proposes to do to put the situation right.
  I give my answer to the hon. Member for Rother Valley, who was perhaps inclined to make the perfect case for backing the winners once again. I subscribe to that general philosophy and I urge the Government to do the same. The hon. Gentleman spoke from the

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  luxury of one of the profit sectors of the corporation. I thought that his basic argument was valid. Indeed, I would take it further. I would ask the corporation to look beyond its traditional and perhaps politically-influenced view about capital expenditure and to look to joint ventures—joint ventures perhaps within the EEC—which will assure it of markets as well as of productive capacity. It should look at more opportunities of joint ventures with the independent sector.
  There is the example of Round Oak, a fifty-fifty company with the British Steel Corporation and Tube Investments, a company with excellent labour relations and an excellent profit record. I cannot believe that with all this wholesale catastrophe going on in the steel industry the idea of a joint venture is irrelevant to the argument. Within the context of BP and other activities, this approach must be considered by the corporation if it is to break out of many of the strangleholds which surround it. These are a few of the detailed questions which we shall expect to pursue in Committee.
  I urge the Minister of State to give us some idea of his thinking, because I feel that he failed to do this when we invited him on 2nd April to comment in reply to the debate on British industry. While we on this side of the House may have criticisms, if we thought that there was some new thinking by the Government we would be willing to support them, particularly if we thought that it would bring to an end many of the previous injuries from which the steel industry is now suffering.
  On the question of industrial relations, we welcome the fact that the hon. Gentleman took a more constructive line than his predecessor, and we believe that the art of self-restraint and letting the trade unions and management get on with it was right. But if restraint is advisable from time to time, so also is urgent and prompt action. The British Steel Corporation certainly needs the prompt action of the Government in bringing out into the open the whole argument which has been advanced today. If the House is left with the feeling that the Government are once more buying time while failing to grasp the nettle of the difficult decision which has to be faced, I can only say that we on this side of the House not only reserve our position but
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  shall have to do once more what we can to preserve the taxpayer from unnecessary loss.
  6.56 p.m.
  The Minister of State, Department of Industry (Mr. Gerald Kaufman): The hon. Member for Henley (Mr. Heseltine) was good enough to make some kind personal remarks about myself, and I greatly appreciate the spirit in which he did so. He also described the debate as being a typical debate on these matters. Certainly his own speech was typical and characteristic, and I look forward to hearing it again tomorrow in Standing Committee on the Aircraft and Shipbuilding Industries Bill. I have heard the speech a number of times during the last 49 sittings on that Bill, and I like it the better the more I hear it.
  Hon. Members opposite certainly have made this a typical debate from their point of view. What they have done, as they generally do in debates of this kind, are three things. First, they have attacked very vigorously the Labour Government's record between 1964 and 1970. Secondly, they have dissociated themselves from the record of their own Government between 1970 and 1974. Then, having covered the years between 1964 and 1974, they have gravely warned our Front Bench spokesmen not in any circumstances to rake up the past but instead to look to the future, because the past is behind us.
  The hon. Member for Arundel (Mr. Marshall), who is always extremely courteous to me, once again asked for new thinking in dealing with these matters. The hon. Member referred a number of times to industrial strategy and asked where the Government's policy for the steel industry fitted into that industrial strategy in the years between 1970 and 1974, when the hon. Member for Henley was at the Department of Trade and Industry, was a document on which the present Government heavily rely, namely, the Industry Act 1972, the "John Davies Blank Cheque" Act.
  The industrial strategy which the Conservative Party had, in so far as it had one at all, was to bring before Parliament the Industry Act 1972, which the

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  hon. Member for Oswestry (Mr. Biffen), Mr. Jock Bruce-Gardyne and the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) attacked day in and day out up to one Friday night, the purpose of the Act being to dole out money to failed industries without a test as to whether that money should be doled out. Hon. Members opposite have certainly been typical not only in dissociating themselves from the activities of their Government in the years between 1970 and 1974, but in asking for things which their Government never thought of providing.
  The hon. Member for Arundel asked for a categorical statement by me that there would be a Treasury Minister on the Standing Committee. Bills of this kind came up repeatedly during the years between 1970 and 1974 and we were never offered a Treasury Minister on Standing Committees during that period. It was felt that Ministers from the relevant Department would be appropriate and helpful. We shall not have a Treasury Minister on the Standing Committee on this Bill, but we shall have the inestimable advantage of the presence of my hon. Friend the Member for Nuneaton (Mr. Huckfield), who is now a welcome recruit to the Department of Industry. He will be able to bring a breath of industrial fresh air to the proceedings of our Committee since he represents a steel-consuming constituency, just as I used to represent steelworkers before the Conservative Government so wantonly closed down the Irlam steel plant without doing anything to help the social position there.
  The hon. Member for Chichester (Mr. Nelson), who has always been deeply interested in financial practice, asked for all kinds of financial information which might, I am sure, be extremely interesting if we were to provide it. But that kind of information was never provided by his party. It never issued instant reports in order to coincide with legislation of this kind which it brought forward a great deal.
  I assure the hon. Member and the House that the British Steel Corporation will be publishing its report and accounts in July in the normal way and we shall abide by the normal practice in these matters. It may well be that the normal practice is satisfactory for a Con-
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  servative Government, but more is expected of a Labour Government. It is quite right that more should be expected of a Labour Government. During the 49 sittings on the Aircraft and Shipbuilding Industries Bill I have gone out of my way to provide information of a kind never provided by previous Governments. I realise that 1 cannot rely on briefer Standing Committee proceedings on this Bill, because at some time towards the end of each sitting "Heseltine time" will arrive, when we shall have a rodomontade from the hon. Member for Henley. I hope that during the necessarily briefer Committee proceedings on this Bill we shall be able to provide a great deal of information for hon. Members.
  The hon. Member for Flint, West (Sir A. Meyer) was one of the hon. Members —I think the only one from the Conservative Benches—who took a consistent interest in steel during the period when his own party was in office. He spoke in pretty well every debate—and he spoke for all his constituents in Shotton—between 1970 and 1974. I shall not embarrass the hon. Gentleman by reminding him that he voted for the White Paper under which Shotton would now have been closing down had it not been for the Beswick review ; I would not dream of reminding him about that.
  However, hon. Members opposite cannot have it both ways. They cannot on the one hand say that it is wrong for the Government to interfere in the internal workings of the British Steel Corporation and, on the other hand, rest upon the record of their own Government as against ours. One remembers that well-known serial story in which somebody was chained up with poison pouring down him and the sea about to drown him and all kinds of other things happening at the end of one episode and everyone was left wondering how the chap was going to get out of it all. The next episode of this serial story revealed how he did it. "With a bound he was free", said the first sentence of the next episode.
  With a bound the Opposition are free from their record of interference in the internal affairs of the British Steel Corporation simply by describing it. There was a joint steering group which interfered as no Government did either before

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  or since in the internal workings of a publicly owned industry. "A constitutional monstrosity" was how my right hon. Friend the Secretary of State described it, with his customary moderation.
  Compared with that period of delay and interference this Government have gone ahead with a massive investment programme. In the first three years of this Government—the two years which have elapsed and the year just about to come —there will have been£1,400 million of investment in the British steel industry. The British steel industry's investment programme is at present the motor of investment in the British economy. This year it is something like 12 per cent of all industrial investment.
  While I agree with the hon. Member for Colne Valley (Mr. Wainwright) that the citing of large sums is no excuse for the expenditure of large sums, at the same time we cannot on the one hand be chided for holding up investment programmes and on the other be blamed—as I know the hon. Gentleman was not blaming us—for allowing such vast investment programmes to go on.
  It is all very well for hon. Gentlemen opposite somehow to imply that if only we had not had the closure review—which was an election pledge and therefore had to be carried through—there would have been no inflationary factor in expenditure under the 10-year development programme. The 10-year development programme was not one in which £3.000 million would be spent all at one time. The inflation which has taken place in the period in which this Government have been in office is inflation which was let loose by the Barber measures of late 1973, and we cannot be blamed for that inflation.
  However, even if that inflation had not taken place at that level, even at some moderate inflation rate there would have been an increase in the cost of that programme simply through the lapse of time. It is absurd to imply that the closure review alone has been responsible for the inflationary increase in the cost.
  In any case, it was made clear in the White Paper published by the right hon. Member for Knutsford (Mr. Davies) in February 1973 that that document was
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  not holy writ, and no one ever expected it to be holy writ. I presume that hon. Members have not dissociated themselves from that document, because they have quoted it. They did not say that it was nonsense and I assume that they still accept its contents. Paragraph 27 said:
  "…to aim too high, or decide on a fixed target of capacity to be achieved by a particular date, irrespective of the way the market might develop, would be foolhardy."
  Those are wise words. Hon. Members must not chide us for not having carried out to the letter a White Paper which they themselves never said should be carried out to the letter.
  Indeed, as the hon. Member for Colne Valley aptly pointed out, to cite investment levels is not necessarily to prove that that investment was the right kind of investment. My hon. Friend the Member for Rother Valley (Mr. Hardy) emphasised this in some of the information he provided for the House. The hon. Member for Henley was somewhat angry that we had not, immediately after public ownership, achieved the kind of investment which was taking place under private ownership in the early 1960s. But a lot of that investment was highly ill-conceived.
  For example, during that period in the early 1960s a steel industry under private ownership was building new open-hearth steel plants when our competitors were building BOS plants. That is one of the reasons why the British steel programme has been handicapped by having plant which, although fairly modern, is obsolescent. It is all very well for the hon. Member for Chichester to compare our BOS plants with those which are operated abroad, but we were still installing them when others were realising that there was no point in doing so.
  Mr. Michael Marshall: Would not the Minister agree that, if he wants to pursue this argument, he should try to strike a fair balance and that the hindsight judgment is not always good value because, clearly, investment practices change? Would he not accept that Anchor, which was one of the main residual investment decisions at Scunthorpe, is now the only plant in Great Britain which is competitive by international standards, with 350 tons per man year?
  Mr. Kaufman: I shall get a copy of tomorrow's Hansard, turn to the appropriate column, get out my green Pentel pen and underline the words that the hon. Gentleman has just spoken—that hindsight is not always the best way of judging investment decisions. He is absolutely right, but hindsight is hindsight, whoever exercises it. I accept what the hon. Gentleman says about Anchor. It is a model of productivity under the aegis of the British Steel Corporation—but it is under the aegis of the corporation. We cannot have it every way.
  Several hon. Members have mentioned the major problem facing the Government today—the outstanding problem following the closure review—that of Shotton. I am not ashamed that we have taken the time we have taken over the Shotton decision. Since I took over my responsibilities, I have spent a great deal of time personally studying the Shotton issue—as has the Secretary of State. This is a crucial decision, of great importance not only for steel investment but for communities like those represented by the hon. Member for Flint, West and other communities much more widely on Merseyside.
  When I went to speak in the Wirral by-election—with signal success, as the result showed—I was accosted in some small town on the Wirral peninsula by the Shotton Action Committee which had made its way there to discuss these matters with me. I do not apologise for the fact that we have not yet reached this decision, because it is an important one which we are weighing carefully.
  I recognise of course the implications for Port Talbot. I recognise all the options open to us and I assure the hon. Member for Arundel that they are being studied with great care and that we shall reach a conclusion as quickly as possible.
  I shall not pretend that this decision has not taken a long time or not caused a great deal of anxiety. Of course it has. But I want to make sure that we get it right. The hon. Member for Flint, West said that Shotton was to be phased out of steel production. That decision has not yet been made one way or another, but if the Conservative Party had remained in power, it would at this moment be being phased out of steel production. If the closure had gone
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  ahead on the time scale laid down in the Conservative Government's White Paper, it would considerably have worsened the supply position during the next upturn, because the replacement capacity could not possibly have been ready in time.
  Sir Anthony Meyer: I am grateful and I take some reassurance from the Minister's last words. But is he aware that, although there is certainly gratitude in the Deeside area for the reprieve, there is not only anxiety but, now, the beginnings of a rundown at the plant, precisely because of the uncertainty, with the loss of key personnel? One of the main problems facing Shotton now is the difficulty of keeping production going because skilled men are being lost as a result of this uncertainty.
  Mr. Kaufman: I recognise all those factors. The hon. Gentleman has always taken a very fair approach to this matter. He has a strong constituency interest which he has never concealed, but he has also placed that interest in the wider context of his concern for the future of the steel industry. It is possible that we may quarrel on this matter at some time, but it has not happened yet.
  My right hon. Friend said that steel was one of the most basic requirements of our industrial economy and that the corporation must be successful if our steel-using industries were to prosper. Otherwise, there will be a worsening balance of trade in manufactured goods as well as steel. The dependence of the motor industry on steel was emphasised by my hon. Friend the Member for Newport (Mr. Hughes). Higher imports ultimately lead to a loss of job security, not only in steel production but right across manufacturing industry, with lower living standards for all.
  In an industry as capital-intensive as this, it is people above all who count. No organisation can be any better than the people in it and probably the British Steel Corporation's greatest strength lies in a dedicated work force and management. As the corporation has recognised, it is essential that it establishes internationally competitive manning scales, which involve a process of change, in which social factors such as exist on Deeside and Merseyside have to be weighed with economic factors. This is not a question of looking to the corporation to carry

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  part of the costs of change but a matter of recognising both that social hardship must be mitigated and that the corporation will never prosper on a legacy of bitterness and mistrust.
  The hon. Member for Arundel defended his party against a possible absence from the debate of Conservative Members from steel-making constituencies by saying that it was open to any hon. Member with an interest in the subject to seek to speak in a debate like this. That is true, of course, but it is interesting to compare this debate with the steel debates between 1970 and 1974, every one of which I attended, when the House was much fuller than it is today, when hon. Members on both sides, not just members of the then Opposition, were consumed with anxiety about the implications for the steel industry and its workers of the plans which were being considered by the Conservative Government.
  Although certainly this Front Bench, let alone our Back Benchers, would be the last to claim that there is any room for complacency about the British steel industry today, it is interesting that when we are debating a Bill which seeks to provide vast sums for the BSC and under which it has been possible to debate any aspect whatever of the corporation's activities, hon. Members for steel constituencies and others have not felt it necessary to stream into the Chamber and make the kind of speeches which were made on both sides of the House during the period 1970–74.
  With all the misgivings which exist, the mistrust has gone. The feeling that this Government are committed to the future of a firmly-based steel industry is such that, although we get some criticisms—those criticisms should be made, even when they can be rebutted—at the same time there is not the anxiety, bitterness and mistrust of the recent past. One of the reasons is the kind of relationship which is growing up, gradually of course, between the corporation and the unions under the first-rate leadership of Mr. Bill Sirs, to whom the workers owe a great deal for the statesmanlike attitude with which he approaches the industry's proposals.
  The tripartite consideration of major closures has helped to create a new atmosphere, which has been followed by the 23rd January agreement on cost saving and de-manning, which my right hon.
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  Friend has welcomed. Hon. Members may be interested to know that in the first two months after the 23rd January agreement about 6,000 applications for voluntary redundancy were received. Negotiations are continuing at local level on reduced manning, but this is essentially a matter for management and unions. There has been considerable retrenchment of weekend work, which was one of the most bitter matters of contention prior to the 23rd January agreement, and there has been increased co-operation in tackling unofficial disputes. There has been a meeting at national level this month following the agreement which is an extremely important landmark in progress towards the kind of relationship that the British Steel Corporation requires, and that will be advanced a great deal more by the extension of industrial democracy in the corporation. I look forward to the work force playing an increasingly important part in shaping the corporation's policy and in the decisions needed to give effect to those policies.
  Hon. Members have referred to the financial aspects of the Bill and the condition of the corporation. Finance is a vitally important area in which strength needs to be built up. The corporation entered the recession in steel demand which developed at the end of 1974 financially weaker than many of its major competitors because of its inability to take advantage of the high levels of world demand in 1973 and in most of 1974. Many of the reasons for this can be traced back to the policies of our predecessors.
  Despite its difficulties, BSC made pretax profits of£56 million and£89 million in 1973–74 and 1974–75 respectively, and dividends were paid on public dividend capital. Final results for 1975–76 are not yet available, but it seems likely that the loss will be between£250 million and£300 million. Results for the year which has just started depend largely on the way in which demand develops over the coming months. With the trend in world steel markets which has emerged since the beginning of 1976, the corporation's prospects for breaking even in 1976–77, on which it is now basing its plans, appear appreciably better than they did a few months ago.
  Hon. Members have shown their interest in the Government's policy in

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  advancing public dividend capital to the BSC. Here we echo the words of the right hon. Member for Wanstead and Woodford (Mr. Jenkin) when he was a Treasury Minister. We regard public dividend capital as the most apt way of financing the corporation, and the corporation as the most apt example for investing public dividend capital. We, too, regard this form of finance as appropriate because of the cyclical fluctuation of the world market in which the corporation has to compete.
  Taking one year with another we expect the corporation to earn an adequate return on the equity capital invested in it. We encountered a problem in the financial year just ended stemming from the financial arrangements our predecessors entered into with the corporation in 1972. I do not know whether they thought that they had solved the BSC's financial problems at a stroke, but they certainly did not provide for the situation in which the corporation makes a substantial loss.
  Mr. Heseltine: In order that we may understand what the Minister is talking about through all the meaningless generalisations will he tell us what will be an adequate return over the three years before the£2,000 million runs out?
  Mr. Kaufman: We have on many occasions defined an adequate rate of return. My right hon. Friend has explained why it is not possible to respond to that kind of question. The hon. Member could not answer it when he was in office.
  Mr. Heseltine: How did we manage then to fix a target of 8 per cent. on net assets for the corporation for the four years 1973–77?
  Mr. Kaufman: The Conservatives fixed all kinds of targets. They were great target fixers. But fixing a target is not the same as achieving it, and the electorate relieved them of that responsibility after 1974. The hon. Member for Henley was good enough to accuse me of indulging in meaningless generalisations. Meaningful generalisations are his own stock-in-trade. We are constantly treated to meaningful generalisations and no doubt tomorrow I shall get another instalment of them.
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  I was trying to explain to the House, not in a generalisation but in a "specific-ation", our approach to the proportion of public dividend capital.
  Dr. Bray: I am sure that the Minister would not wish to treat this merely as a matter for party badinage. The Chancellor is trying to fix with the unions a target for wage increases. That kind of target of a percentage increase is something as important as wages for all workers cannot conceivably be fixed unless in separate parts of the economy the Government are prepared to take an equally serious attitude in spending public money and controlling taxation. I warn my hon. Friend that I will press this matter very hard in Committee. We should write into this Bill financial targets and approval schemes for investment by Ministers and, if necessary, by the House.
  Mr. Kaufman: My hon. Friend approaches this matter with great seriousness. Sometimes, in order to embarrass the Government, the Opposition climb aboard his band wagon and vote for his amendments in which they not believe in order to try to defeat the Government—and they sometimes do. Of course we have to approach these matters responsibly and to have appropriate financial targets. One target which is a requirement is the imposition of cash limits on publicly owned industries. That did not happen during the profligate years of the Conservative Government. There is a cash limit on the corporation which is a great deal more stringent than anything done by the Conservatives.
  The Conservative arrangement was to maintain the ratio of shareholders' funds in the corporation—in effect PDC plus reserves—to long-term borrowings at 55:45. The effect of this in any year in which the corporation made a loss would be to require that the whole of such a loss was offset by a further injection of PDC. With the likelihood of a loss of the order of£300 million in 197576 the Government felt it necessary to review the arrangement.
  After careful examination of future prospects, which suggested a return to profitable trading by 1977–78 with dividends to follow, we decided that further advances of PDC were justified but that the profits forecast for any business several years ahead must involve a

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  measure of uncertainty and judgment so that until the prospects became more certain the provision of PDC should be limited to 55 per cent. of the corporation's further financing requirements. In the light of progress towards regained profitability we are ready to review the financing arrangements. In the meantime it will be necessary for the corporation to meet more of its financial needs by means of medium and long-term loans giving rise to a further interest burden of about£30 million in the current financial year.
  The imposition of such a burden was not undertaken lightly. There would be no advantage in driving the corporation into a situation from which it could not escape by its own efforts. We have sought to avoid this. But we could not ignore the situation which was developing. We could not maintain a financing arrangement which was clearly defective and we could not continue to advance unrestricted quantities of PDC without thought of the justification for such investment or the prospects for remunerating it.
  The hon. Member for Chichester made welcome remarks about the corporation's capabilities for research and development, and the strength of the technological base is another aspect of the corporation that is frequently underestimated. Great progress has been made in the past few years, and 75 per cent. of the corporation's steel-making capacity now uses modern processes—basic oxygen or electric arc—compared with 33 per cent. on vesting day in 1967 That is a considerable achievement. The position is that 8 per cent. of steel is now continuously cast, against 2 per cent., and there are major developments on this front at Ravenscraig, Lackenby and in the Sheffield area. My hon. Friend the Member for Rother Valley referred to the great concern felt in this area and I hope that some reassurance will be felt, as a result of those developments.
  My hon. Friend mentioned our late right hon. Friend Brian O'Malley. I think that it is fitting that we should recall his constant interventions in steel debates before he became a member of the Government, and his imaginative approach and ideas which were adopted. It is some satisfaction that the area which my late right hon. Friend and my hon.
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  Friend jointly represented, and which my hon. Friend still represents, is one of the profit centres for the corporation.
  The hon. Member for Chichester referred to the research and development expenditure of the corporation. This is currently about£14 million a year and it is paying dividends in the form of greater efficiency, improved products and new plant developments, such as the opposed zone reheating furnace and the new twinstand installation for rolling bars. These and other developments have excited interest across the world. The corporation is well to the front in steelmaking technology and has taken the lead in the European steelmaking club.
  My right hon. Friend in his opening speech dealt at some length with the corporation's investment programme and I do not propose to go over this ground again. I have dealt with Shotton, which a number of hon. Members mentioned.
  My hon. Friend the Member for Redcar (Mr. Tinn) also dealt with the controversy and the concern felt in his area about the new investment there, because the other major issue from the development plan which remains from the review is the future of the plate mills at Consett and Hartlepool. In December 1974 the corporation agreed to our suggestion that it should discuss with the Hartlepool and Consett work forces its plans for plate mil investment at Redcar to see whether alternative schemes might preserve the future of the existing mills. We have very recently received the corporation's formal proposals made in the light of those talks. We have begun our consideration of the proposals and aim to complete it as expeditiously as possible, bearing in mind the magnitude of the project and the social issues involved.
  If hon. Members wish to hear about the massive developments in the corporation's investment in Scotland, I shall be happy to help them in Committee. I put this into my speech in the expectation of a massive attendance by the Scottish National Party, but the situation being what it is, I think that the House will not complain about being deprived of those remarks now.
  Dr. Bray: Perhaps my hon. Friend will send me a copy of his remarks, and

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  I shall see that they receive adequate publicity in Scotland.
  Mr. Kaufman: I shall be glad to do so. If the SNP had its way, Scotland would be an overseas country, with the deficit that it would then incur as a result of such a separation.
  As the House is to be deprived of my lucubrations on Scotland, hon. Members may wish to hear something of the corporation's commercial strength and standing in general in overseas countries. It has considerable commercial strength both in its position as the largest steel business in Western Europe and in its market development and sales activities both home and abroad.
  The corporation's new organisation, which came into effect at the beginning of this month, has strengthened the commercial function and is designed to improve relationships with the customer and to meet his needs more speedily and efficiently. We are supporting the corporation's efforts to add to its sales outlets abroad, which have recently included the acquisition of a majority shareholding in a leading German stockholder.
  It is perhaps a sympton of our national problem that we are always ready to criticise those institutions and activities on which our prosperity depends. So it may come as a surprise to some hon. Members to know that the corporation has a high reputation abroad for its expertise. The corporation is undertaking work on steel projects in Mexico and Iran and is working with United Kingdom plant makers to secure major overseas contracts for new steelworks developments. As far as direct exports of steel are concerned, there is ground to be covered which was lost in the last period of high demand when the corporation gave priority to the needs of United Kingdom users at the expense of customers abroad. The uninterrupted use of present capacity, together with the new investment, will enable the corporation to increase both the quantity and the quality of its exports, and is making firm plans for this.
  As I have said, it is vital for the corporation to build on its strengths. To do this the House must be prepared to give the corporation the financial backing that it needs. I do not believe that there is
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  any disagreement between us and Opposition Members about the objectives or the resources needed. I ask the House, there. fore to give the Bill a Second Reading.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills.)

  IRON AND STEEL (AMENDMENT) [MONEY]
  Queen's Recommendation having been signified—
  Resolved,
  That it is expendient to authorise all such increased payments—

  (a) out of the National Loans Fund, the Consolidated Fund and money provided by Parliament, and

  (b) into the National Loans Fund and the Consolidated Fund,

  as may result from any Act of the present Session increasing from£2,000 million to£3,000 million, or such greater sum not exceeding£4,000 million as the Secretary of State may by order specify, the sum specified in section 19 of the Iron and Steel Act 1975 as the aggregate of the amount which the British Steel Corporation and the publicly-owned companies may borrow and the amount which the Secretary of State may under section 18 of the latter Act pay to the Corporation.—[Mr. Kaufman.]

  STATUTE LAW (REPEALS) BILL [Lords]
  Order for Second Reading read.
  7.36 p.m.
  Mr. David Stoddart (Lord Commissioner of the Treasury): I beg to move, that the Bill be now read a Second time.
  This Bill is the result of the work of the Law Commission on removing obsolete or spent Bills from the statute book. It covers a wide variety of subjects. The Bill is purely technical and contains nothing of substance. I should like to pay tribute to the work of the Joint Committee chaired by Lord Simon of Glaisdale in examining the Bill. I commend the measure to the House.
  7.37 p.m.
  Mr. Edward Gardner: The Bill implements the proposals of the Law Commission by sweeping away legal

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  deadwood of the past, and it is a measure which we warmly welcome. I join the Minister in congratulating Lord Simon and others on his Committee who were responsible for the joint report.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the whole House.—[Mr. Dormant.]
  Bill immediately considered in Committee; reported, without amendment.
  Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
  Bill accordingly read the Third time and passed, without amendment.

  PREVENTION OF TERRORISM
  7.40 p.m.
  Mr. Michael Alison: I beg to move,
  That an humble Address be presented to Her Majesty, praying that the Prevention of Terrorism (Supplemental Temporary Provisions) Order 1976 (S.I., 1976, No. 465), dated 25th March 1976, a copy of which was laid before this House on 26th March, be annulled.
  It is not my intention to do more than ask the Under-Secretary of State to explain and clarify the Order. Unless serious matters of obscurity or dissension arise, I do not intend to press the Prayer to a Division. Will the hon. Lady be kind enough to allow me to run through the articles of the Order so that I may ask one or two questions and receive her clarification upon them?
  Article 5(1) (a) relats to the examination of persons arriving in or leaving Great Britain and reads as follows:
  " whether any such person appears to be a person who is or has been concerned in the commission, preparation or instigation of acts of terrorism ".
  Why does the Order place upon the examining officer the task of deciding whether an individual "appears" to be such a person? It is a curious phrase, particularly in the light of the provision in the parent Act which governs the Order. Section 4 of the Prevention of Terrorism (Temporary Provisions) Act 1976 reads as follows:
  " If the Secretary of State is satisfied that any person—

  (a) is or has been concerned (whether in Great Britain or elsewhere) in the commission, preparation or instigation of acts
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  of terrorism…the Secretary of State may make an order against that person prohibiting him from being in, or entering, Great Britain."

  Whatever is the appearance, whatever the arguments for or against the contention that an individual may be concerned with the commission, preparation or instigation of acts of terrorism, the governing sentence here is that if the Home Secretary is satisfied that any such person is likely to be so engaged he may make an order on that basis.
  What happens if the examining officer comes to the conclusion that the person whom he is examining under Article 5 of the Order "appears" to be such a person? What is the legal, juridical or penal condition of appearing to be someone who is or has been concerned in the commission, preparation or instigation of acts of terrorism? Is the "appearance" of being a person the same as actually being that person? Is it a culpable condition to appear to be someone who is engaged in nefarious activities, and is that person distinguishable from a person who is actually engaged in those activities?
  This may be a quibble, but we are concerned with the form of words in the Order and I am interested to know why the phrase
  " appears to be a person "
  is included in the article.
  The last sentence of Article 5(1) reads as follows:
  " The reference in this paragraph to persons who have arrived in Great Britain shall include a reference to transit passengers, members of the crew of the ship or aircraft and others not seeking to enter Great Britain."
  For the purpose of the operation of the Order, the fact that a person happens to be calling as a transit passenger at a port referred to in the Order is tantamount to that person's arriving in Great Britain. For the purpose of the examination procedures, a transit passenger is subject to examination and is treated as having arrived in Great Britain. I hope the hon. Lady will assure us that the fact that being in transit is tantamount to arriving will not make a person liable to prosecution under the exclusion order procedures of the parent Act.
  A person excluded from the United Kingdom may in duty bound be returning to the port of origin, let us say in the United States. That person may embark in a Northern Ireland port and call

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  en route at Liverpool. Under Article 5, that person is held to have arrived at Liverpool for the purposes of examination and may become guilty of having broken an exclusion order in the strict legal sense. I hope the hon. Lady will reassure us that persons in transit who have no intention of entering Britain will not, by accident, fall into the category of legally having contravened an exclusion order.
  Article 6 is an important article which has to be considered in conjunction with Article 8. Article 6 gives details of the documentation which will be required under the Order for travellers between Great Britain and Northern Ireland, and to some extent between the Republic and Northern Ireland.
  In passing, it is worth referring to the substantial amount of documentation that can be called for from travellers between parts of the United Kingdom. Passengers between Northern Ireland and Great Britain will have to produce a valid passport with photograph. It is curious that the Order should specify a photograph. Most passports automatically carry photographs. The fact that photographs are specified suggests that the other documents referred to in Article 6(2) (a) —
  "some other document satisfactorily establishing his identity and nationality or citizenship"—
  must be at least as good as a passport photograph. Otherwise, why is it necessary to mention a passport with a photograph or some other document? Perhaps the hon. Lady will specify what she has in view in the phrase:
  "some other document satisfactorily establishing his identity and nationality or citizenship".
  Has the "other document" to have a photographic embellishment? Is a driving licence adequate? What other documentation is considered to be apt?
  I link this particularly with Article 8, although I shall have queries to raise on points occurring between Articles 6 and 8. Article 8 carries forward the theme of the necessary documentation by importing the concept of an embarkation or disembarkation card. I should be glad if the hon. Lady would spell out the embarkation card aspect. The terms of Article 8 relate to embarkation cards,
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  although the article is permissive rather than mandatory. The words are:
  "if so required by an examining officer".
  Those conditional words imply that the examining officer can insist on the production of an embarkation card. It is not plain whether henceforward this will be a requirement which will ordinarily be imposed upon all those travelling by ship or by aircraft between Great Britain and the Republic of Ireland or Northern Ireland.
  I should be glad if the hon. Lady would say something about the relationship between the identity documents called for by Article 6 and the embarkation cards which may or may not be called for regularly under Article 8. I link this query with yet another general query, which I shall elaborate under Article 8. It relates to the time lapse which may occur pending the decision to carry out an examination. Article 10 provides that pending examination there may be a period of detention, which can be for as long as seven days.
  If a period of detention of seven days is authorised by the Order before any examination under Article 5 takes place, and if embarkation cards are to be a regular feature of the traffic between these places, the time lapse of seven days will enable the validity of embarkation card details to be verified and will make some sense of the practice of calling regularly for embarkation cards as a means of obtaining details about travellers.
  If that is to be so, the fine sieve which we are establishing of passport, other equivalent documents or embarkation card regularly required for all travellers, and subject to searching scrutiny while the holder of the card may be in detention pending examination, suggests that this is a very effective and powerful sieve and method of scrutinising people travelling between Great Britain and Northern Ireland. It is as rigorous and as complete a watertight system of checks as can be devised if the Order means what it appears to mean.
  I stress that the system of examination and scrutiny between these two parts of the United Kingdom appears to be immeasurably more powerful, more watertight and more comprehensive than any system of checks that we impose on the

  117
  entry of visitors—whether as immigrants or otherwise—from other parts of the world into the United Kingdom as a whole. It is a paradox that between these two parts of the United Kingdom we appear to have provided for a system of sieving and examination which is immeasurably more watertight, comprehensive and rigorous than the system operating at the external frontiers of the United Kingdom as a whole.
  I hope that the hon. Lady will be able to explain the relationship between the identification documents referred to in Article 6 and the embarkation or disembarkation cards and the apparent provision for a time lapse of up to seven days before an examination has to be carried out under Article 5. If the system operates effectively, it will do much to enable a check to be made on suspicious characters.
  I should particularly like to know why in Article 7(5) the hon. Lady has omitted in the Great Britain version of the Order the reference to "force" which is contained in the Northern Ireland equivalent. The Great Britain Order says:
  "An examining officer may board any ship or aircraft for the purpose of exercising any of his functions under the Act or this Order."
  The Northern Ireland equivalent is:
  " An examining officer may board any ship or aircraft or enter any vehicle, if need be by force, for the purpose of exercising any of his functions under the Act or this Order."
  The reference to "vehicle" in the Northern Ireland Order is obviously because of the possibility of using the land frontier between Northern Ireland and the Republic, but why should it be held as necessary to use force to enter any ship, aircraft or vehicle in the context of entry into Northern Ireland but apparently not in the context of entry into Great Britain?
  This is not a trivial point. There may well be small private ships plying an illegal immigrant trade between Great Britain and the Republic or Northern Ireland, and, therefore, forceful entry on to the ship would be at least as necessary in that context as is apparently the case in the Northern Ireland context.
  Article 7(6) states:
  "Where an examining officer has power to search under this Article, he may, instead, authorise the search to be carried out on his behalf by a person who is not an examining officer."
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  What nominated or delegated individual have the Government in mind as being likely to be deputised—pressed into service as a deputy-sheriff, as it were—under this very far-reaching and substantial paragraph granting powers of search of ships and individuals? What sort of person is likely to be pressed into service by an examining officer to act as a deputy? Do the Government have in mind crew members, or perhaps the captain of the ship, any police officer or any honest citizen whom the examining officer may decide to press into service on the spot?
  I turn to Article 10 in the context of the lapse of time to be provided before the examination referred to in Article 5 has to be carried out. Article 10 uses the word "pending" three times, and it is a word that implies a measurable, identifiable period of time.
  The first use of the word "pending" is in the context of an examination. It is said that a person can be detained "pending his examination". Then, presumably after an examination has been carried out under Article 5, this is to be undertaken "pending consideration" of whether that examination merits the making of an exclusion order. The third use of the word "pending" is seen in Article 10(2):
  "pending the giving of such directions "—
  in other words, pending the giving of a direction for an exclusion order to be carried out. In view of the three uses of the word "pending", it is not clear whether the period in Article 10(1) (a) —that is to say the period during which an individual may be detained—is cumulative or comprehensive.
  As I read the Order, detention could last for as long as three weeks. Each use of the word "pending" carries with it the notional time of up to seven days. There could be a period of seven days during which a person is detained pending which the examining officer decides whether to carry out an examination. At the end of seven days he carries out his examination and possibly checks and verifies the material provided on the embarkation card. Following the examination, he is allowed a further period of seven days during which he decides whether the examination warrants the making of an exclusion order. At

  119
  the end of the second seven days—in other words, at the end of a fortnight—there is apparently to be yet a third period of seven days' detention between the decision that there should be an exclusion order and the giving of directions as to the place to which the person concerned should be removed. I hope that the Minister will be able to tell the House whether the period "not exceeding seven days" will be cumulative or inclusive.
  I have spelt out those points somewhat exhaustively, and I hope that the hon. Lady has had time to note those queries. I am sorry that I was unable to give her more notice. However, I think that they are relatively simple queries, but they are certainly relevant and important. We need clarity concerning the Order since it will affect many travellers, a great many of whom will be innocent but who may well, as a result of the Order, be subject to some quite arbitrary hazards, not least the possibility of extended detention. We want to be certain that the Government have thought through the matter in detail and that the Order will have the intended effect.
  8.6 p.m.
  Mr. John Page: I was rather hoping that I should hear the Minister's speech before I launched into my brief speech. I intend to ask a number of somewhat philosophical questions.
  My hon. Friend the Member for Esher (Mr. Mather) and I, over a period of about four years, have been asking for provision to be made for the examination of people travelling between this country and Northern Ireland and the Republic. We were told time and again that any extension of the powers were considered to be unnecessary, secondly, that they would be ineffective, and, thirdly, that they were not desired by the police or the immigration services. Will the hon. Lady say what has suddenly given rise to the view that what we have felt to be sensible for a long time is now considered by the Home Department to be sensible at this time?
  My hon. Friend the Member for Barkston Ash (Mr. Alison) said that a large percentage of travellers affected by the Order are perfectly innocent. They will now have to submit themselves to
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  new checks and examinations and face the possibility of being detained during examination. I believe that it is the wish of the people of this country that every step should be taken to prevent terrorism. Provided that the procedures arc carried out with care and dignity, I do not believe any of my constituents will refuse to submit themselves for examination. I have undertaken a good deal of travelling over the Easter period and I have not heard one word of complaint from travellers about searches made, X-ray examination of articles, packages and all the rest of it. Indeed, I believe that a proper search procedure is welcome.
  In regard to Article 7(4) it appears that we have a case of sex discrimination. It reads:
  "A woman shall not be searched under this Article except by a woman."
  Why is it not stipulated that a man should not be searched except by a man —unless it is considered to be an extra privilege to be searched by a woman, as happened to me the day before yesterday? Perhaps we may be given some explanation on that matter.
  Is the use of landing and embarkation cards to be brought into operation in all cases, or is it only an occasional procedure to be instituted by an examining officer at a particular time? I accept that this might be clear to me if I had had more time to study the matter. I and my constituents welcome any steps that can be taken to reduce the dangers of terrorism.
  8.10 p.m.
  The Under-Secretary of State for the Home Department (Dr. Shirley Summerskill): In view of the number of detailed questions that I have been asked, I was hoping to speak at the end of the debate so that I could deal with all the queries at one time. If there is another hon. Member who wishes to speak, perhaps he would so indicate, because I should find it much better to go through each article in turn. I have been asked 15 or 16 different questions. I shall now proceed to answer as many as possible.
  Mr. Alison: If the hon. Lady would like me to make my speech again, I shall be happy to do so, if that is in order. That would give her a chance

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  to reflect on the questions. I have no doubt that my hon. Friends could make interjections if she wants time to ponder. If she really feels that she is not able to deal with these queries here and now, we must find some other means of having the points dealt with, because this is our only opportunity.
  Dr. Summerskill: It was not time for which I was asking. It was to do with convenience, so that I could deal with everyone's points at the same time.
  I will proceed to the questions asked by the hon. Member for Barkston Ash (Mr. Alison) and I hope that in doing so I shall be able to refer to the points raised by the hon. Member for Harrow, West (Mr. Page). I shall try to deal with the questions in the order that they were raised as far as I can.
  The Order provides the basis of powers for the selective control at ports which is already operated. The control could be more or less selectively worked and it remains the position of the police that the application of control measures to all travellers is not necessary or desirable for the purpose of preventing terrorism. I shall enlarge on that when I deal with embarkation cards.
  The hon. Member for Barkston Ash dealt with Article 5(1) (a). He was worried about the words:
  " appears to be a person "
  He admitted that this was a quibble but I shall attempt to deal with it.
  When a person arrives at a port, an examining officer may have grounds for suspicion. He is empowered to detain a person for seven days. The discretion is entirely with the examining officer. He must check his suspicions. The Secretary of State needs to be satisfied of the involvement in terrorism before an exclusion order may be signed, after the inquiries and at a much later stage in the process.
  This article is about the powers of the examining officer. It is not for him to determine whether someone is a person concerned in terrorism. It is for him to determine whether there are sufficient grounds for thinking that he should be detained so that others may make inquiries as to whether he is such a person.
  Mr. Ivan Lawrence: in those circumstances why not use the phrase:
  "reasonable grounds for suspecting that the person has been concerned in "?
  That makes it absolutely clear. There is no ambiguity as occurs with these words "appears to be" which are little, if ever, used in legislation. The words I suggest put the matter beyond argument while accommodating the point the hon. Lady is making.
  Dr. Summerskill: I know that there is a case for always using the same words in legislation. The words used here may be different, but as I read them they express the required meaning perfectly satisfactorily.
  Mr. Alison: The problem about the form of words used here is that the conclusion as to whether a person
  "appears to be…a person"
  is subsequent to the examination. The phrase is:
  "an examining officer may examine any persons…for the purpose of determining"
  whether they appear to be such a person. It cannot be the purpose of an examination to discover whether there are grounds for suspicion alone when the subsequent part of the article makes it clear that there is a substantive power to reach a definitive conclusion about exclusion orders and so on. It seems curious that the officer should be examining a person, not detaining him pending examination, which is what I think the hon. Lady said, to discover whether that person is a suspicious person. Surely persons are detained on suspicion and then examined to reach a definitive conclusion. This is why I thought it a curious phrase.
  Dr. Summerskill: Perhaps the expression "examining officer" is not the one which the hon. Gentleman would choose. It is the duty of the officer, if he has grounds for suspicion, to detain a person for seven days. It is within his discretion and he must check his suspicions. As I read it, the meaning of the phrase is clear even if the exact wording is not the same as in all other legislation.
  I was asked about the phrase "in transit". That means what we generally mean by "transit", that is, not seeking

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  to enter Great Britain permanently. It is stated at the end of the article:
  "members of the crew of the ship or aircraft and others not seeking to enter Great Britain."
  I am sure that, as this is worded, people in transit cannot be included in the category of those who have illegally broken an exclusion order.
  Article 6(2) (a) relates to documents. The choice of documents is left to the discretion of the examining officer who has to be satisfied about identity. It depends on the officer whether he is satisfied if a passport is produced or some other document which would satisfactorily establish identity. There are examples—a driving licence would do—of different forms of identification. There are no hard and fast rules.
  The hon. Member asked why the words:
  "if need be by force "
  are in Article 7(6) of the Northern Ireland Order and not in this one. The Great Britain Order does not refer to a vehicle, only to a ship or aircraft. It was felt that there was no need to contemplate the use of force to enter a ship or aircraft. The need resides only in respect of vehicles and that arises only as between Northern Ireland and the Republic over the land border. On the border it might be necessary for security forces to be able to use force to enter a car.
  The next point which was raised related to Article 7(6). Where an examining officer has power to search under this article, he may instead authorise the search to be carried out on his behalf by a person who is not an examining officer. The people chosen for delegated powers of search will very much depend on the staff available, but they will be given only specific tasks by the examining officer and will always be subject to his supervision and control, except in Scotland where people may be appointed for the purpose.
  Article 10(1) concerns the periods involved. The two periods are alternatives, with a maximum of seven days. But Article 10(2) enables another period to elapse in which directions for removal may be given, but this is after an exclusion order has been made. It is there-
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  fore in addition to the period of seven days under Article 10(1) (a), and Article 10(1) (a) arises at a much earlier stage in the process.
  Mr. Alison: I am much obliged to the hon. Lady for the information which she has given. Although, as she has said, the periods are alternatives, will she confirm that under paragraphs (a) and (b) of Article 10(1) it is envisaged that seven days will elapse before a formal examination under Article 5 is carried out? It seems that there can be a period of detention before a formal examination is carried out under Article 5. If seven days can elapse in which a person is kept in limbo before an examination is carried out, what does the hon. Lady envisage happening in the seven days up to the point when the examination is carried out?
  Dr. Summerskill: In Article 10(1) detention for seven days pending examination means detention while examination proceeds. The person would not be left for seven days with nothing happening.
  The hon. Member for Harrow, West referred to Article 7(4). Under this Article, a woman shall not be searched except by a woman. It does not contravene the spirit of the sex discrimination Act. It is well precedented that women are not searched except by women, and plainly that is sensible and desirable. We cannot change the wording to provide that "A person shall not be searched under this article except by a person", but I shall have another look at this problem. I do not know whether the hon. Gentleman's complaint was that he was searched by a woman.
  Mr. John Page: I should not like the hon. Lady to spend too much time over the matter.
  Dr. Summerskill: Article 8 plainly is important. There is no requirement to complete landing and embarkation cards. Some ports find them useful, others find them not so useful. No form of card has yet been prescribed by the Secretary of State. He will examine this power if necessary. Again, this is a discretionary power depending upon the methods most appropriate at each port.
  The hon. Members for Harrow, West and Barkston Ash referred to the general

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  principle of embarkation cards. My right hon. Friend the Home Secretary pointed out that the control powers at ports already available in the Act were deliberately designed to be selective. Their object, and the object of the corresponding controls under the 1976 Act, is to facilitate the detection of terrorists, not to institute extensive regulatory checks on the travelling public as a whole. Provisions of the kind sought by the advocates of the amendments which were proposed to the Bill could well have hindered efforts to identify terrorists by diverting scarce and specialised resources from the real purpose of the controls towards a different, regulatory function which was not appropriate to the police, and was intended for quite a different purpose from the controls on persons travelling from outside the common travel area, where the immigration function is the main control, the police acting selectively in addition to that.
  The House will recall the Home Secretary saying:
  "If I believed that full passport control would make a significant contribution to defeating terrorism without having a number of disadvantages, I would be prepared to set aside all those considerations to introduce it. However, I am not prepared to introduce it as a gesture to demonstrate toughness when those in positions of responsibility"
  —that is, the police—
  "advise me that it would not help."—[Official Report, 28th January 1976 ; Vol. 904, c. 570.]
  Of course, the Home Secretary was aware that the advice he received might change. He went on to say that if it did he would take careful notice of it. But it may be of interest to the House if I take this opportunity to say that the advice has not changed since the last time the House discussed these matters, and the Home Secretary sees no reason to change his views.
  Mr. John Page: Will the examining officer say to a person, or group of persons, "Before passing through, would you be good enough to fill in this card?", or will all the members of a party or group of people on an aircraft or ship or coach leaving a ship be expected to fill in a card? I do not see the point of a card being used selectively after the decision to examine has been made because clearly when a decision to examine has been made an appropriate form will be filled
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  out. I was wondering how much of a colander the card system will be and how it will be instituted.
  Dr. Summerskill: I shall write to the hon. Gentleman to give him the details. My right hon. Friend has not yet prescribed a card. The question of the form of card, collective or otherwise, has not yet arisen, but one would presumably not use a card selectively.
  I think that I have covered the points that have been raised. If further points arise in subsequent discussion, I shall be pleased to try to reply.
  Mr. John Page: How the card will be used is a matter of great importance. I shall greatly appreciate receiving a letter, which I am sure will receive wider publicity, but can the hon. Lady tell me now at what stage and under whose direction the card will be put into use? Am I right in saying that the Home Secretary must approve the form of the card? Will it then be up to the examining officer to decide where, why and at what stage the card shall be used?
  I see the point, although I do not necessarily agree with it, that we do not want the kind of general card so often used for aliens and others entering this country and have it as a general form, but the House should know soon at what stage the card will be introduced and how it will be used.
  Dr. Summerskill: I shall let the hon. Gentleman know as soon as we have more details. The Order says that the card can be required by an examining officer and that it must be completed and produced to that officer. The officer has discretion, but the card will be
  "in such form as the Secretary of State may direct".
  If a card were to be prescribed, it would be in standard form, but it would still be up to the examining officer whether to use it.
  Mr. Deputy Speaker (Mr. Oscar Murton): The Question is,
  That an humble Address he presented to Her Majesty, praying that the Prevention of Terrorism (Supplemental Temporary Provisions) Order, 1976 (S.I. 1976, No. 465), dated 25th March 1976, a copy of which was laid before this House on 26th March, be annulled.
  Dr. Summerskill: Aye. [Interruption.]
  Mr. Deputy Speaker: As there appears to be some misunderstanding, I shall put the Question again.
  Question put and negatived.

  PREVENTION OF TERRORISM (NORTHERN IRELAND)
  8.34 p.m.
  Mr. J. Enoch Powell: Following the narrow squeak that we have just had—and I recall occasions when it has been necessary, as a result of something of that kind, for the Vice-Chamberlain of Her Majesty's Household to make a ceremonial entrance here—I beg to move,
  That an humble Address be presented to Her Majesty, praying that the Pevention of Terrorism (Supplemental Temporary Provisions) (Northern Ireland) Order 1976 (S.I., 1976, No. 466), dated 25th March 1976, a copy of which was laid before this House on 26th March, be annulled.
  We now move from provisions for the prevention of terrorists entering or remaining in Great Britain, as against the rest of the world, to similar provisions designed to prevent terrorists from entering or remaining in Northern Ireland, as against the rest of the world, whether from Great Britain or from the Irish Republic.
  The background is substantially altered by the fact that Northern Ireland has the one land frontier of the United Kingdom. That accounts for many of the verbal differences between this Order and the one which we have just been considering. Also, of course, one's view of the Order is necessarily affected by conditions as they actually are on the ground in Northern Ireland compared with those at the ports in Great Britain. Therefore, I ask hon. Members to realise that they are now, as it were, in Northern Ireland and looking at these provisions from that point of view.
  I deal first—as the hon. Lady, as it happens, was dealing last—with the question of identification and documents, that is to say, with Articles 6 and 8 of the Order. I wish to ask questions on both those articles.
  First, Article 6(2) says that, if so required by an examining officer, a person being examined under Article 5 shall
  "produce either a valid passport with photograph"—
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  I have no query on that—
  "or some other document satisfactorily establishing his identity and nationality or citizenship".
  It is to those words that I should like to direct the attention of the Minister of State.
  This article does not say that the person must produce a document satisfactorily establishing his identity, though actually that is the form in which the request is commonly addressed to passengers entering Great Britain. It describes the document, if it is not a passport, in a particular way—as a document which satisfactorily establishes the traveller's nationality or citizenship as well as his identity, and it would appear that unless it is such a document the requirement embodied in Article 6 is not effective.
  What worries me is that most of the documents which are produced and treated as satisfactory by examining officers, or those acting on their behalf, do not comply with the foregoing description. Passports, of course, do comply with it; and many travellers between Northern Ireland and Great Britain carry passports—they may in many cases be needing them for further journeys. But all kinds of documents are, at the request of the examining officers, produced to establish identity.
  I ask the Minister of State to recognise that that is not in fact what the article says. It insists upon the production, should the examining officer so require, of documents which establish identity and nationality or citizenship. In other words, they must be documents which show whether a person is a British subject, a citizen of the United Kingdom and Colonies or a citizen of the Irish Republic.
  It may be said that this does not prevent the examining officer, under more general provisions such as Article 6(1), from asking for the production of a letter or some other document not falling within this description ; but it would be an extraordinarily slovenly form of legislation, albeit subordinate legislation, if, in the very paragraph which made provision for enforcing the requirement to produce a document, it carefully described the document as identifying nationality or citizenship when in fact that kind of document was not being required and not

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  being sought. Therefore, I ask the Minister of State to attend to the wording of this article and to compare or contrast it with what actually happens on the ground in practice.
  Now I pass to Article 8 of the Order, which provides that,
  "if so required by an examining officer",
  a person disembarking or embarking shall
  "complete and produce to that officer a landing or…an embarkation card in such form as the Secretary of State may direct".
  I want to know what is going on here. First, I want to know whether examination on embarkation in Great Britain is regarded by the Secretary of State as satisfactory for his purposes for the control of disembarkation or entry into Northern Ireland. It will be within the knowledge of the Minister of State that there is little or nothing which corresponds on arrival in Northern Ireland by air or sea to that which happens on arrival in Great Britain by air or sea. Since these are reciprocal provisions, and since it is now the purpose of the Act to give Northern Ireland the same protection against would-be terrorists entering from Great Britain as Great Britain has had hitherto against would-be terrorists entering from Northern Ireland, we ought to hear why, if it be the case, the examination which occurs on landing in Great Britain has no counterpart, so far as I have observed, in Northern Ireland. It may be that the answer is in part connected with embarkation procedures at Heathrow or at Gatwick. If so, it would be helpful if the Minister could tell us.
  Now I come to the embarkation card. Why are embarkation cards issued to and requested from passengers at Gatwick but not at Heathrow? Is it because it is inconvenient to do so at Heathrow? That cannot be the excuse. If embarkation cards are useful for the prevention of terrorists moving backwards and forwards between different parts of the United Kingdom, they cannot only be useful for that purpose at Gatwick. It cannot be that the sort of terrorist who is caught out by the embarkation card uses only British Midland Airways. The people who use British Midland Airways are those who have got wise to the inconveniences of the TriStar and the arrangements at Heathrow. I do not think it
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  would only be the terrorists liable to be caught—I suppose through describing the purpose of their visit as terrorism—by an embarkation card who frequent Gatwick. So I want to know, as many other passengers want to know, why it is that only at Gatwick are embarkation cards issued and requested.
  But we were told by the Under-Secretary of State for the Home Department that the Secretary of State—in that case, her Secretary of State—had not yet directed what was to be the form of the embarkation cards. Embarkation cards have been issued, filled in and collected by examining officers for the past 18 months at Gatwick. Who has authorised the form of embarkation card which is in use? Since this has been going on for 18 months, surely it is time that the Secretary of State got round either to scrapping this procedure altogether or to giving directions. Yet we were told by the hon. Lady that a form had not yet been prescribed.
  We therefore have the anomalous situation that an unprescribed form not directed by the Secretary of State is being required at one of the airports of embarkation for Northern Ireland in Great Britain but not at others. This cannot be a satisfactory situation. It ought to be explained, or it ought to he remedied.
  Mr. John Mendelson: The right hon. Gentleman's question is directed to my hon. Friend the Minister of State, and obviously he will reply to it. However, other hon. Members, myself among them, have not heard about this before, and therefore I wish to be quite clear about it. I have never yet arrived back from Northern Ireland at Gatwick. I have always come in to Heathrow. Is the right hon. Gentleman saying that anyone travelling back to Gatwick has to fill in a disembarkation card as if he were coming back from the Republic of France but that if he returns by Heathrow he does not have to fill in such a card, and that this difference has existed for the past 18 months? If I understand the right hon. Gentleman correctly, that is what he is saying.
  Mr. Powell: That is what I am saying, though with one slight amendment. The hon. Member referred to passengers having to fill in cards, and that brings me to my next point. Broadly speaking,

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  embarkation cards are in regular use at Gatwick and are believed by the passengers in both directions who complete them to be required. In my experience, this never, or very rarely, happens at Heathrow.
  When I first read this article, I was somewhat shaken. I have made a habit of carrying around a well-worn, faded extract of Hansard in which the Under-Secretary of State for the Home Department says in a Written Answer:
  "Although there is power under the Prevention of Terrorism (Supplemental Temporary Provisions) Order 1974 to require landing and embarkation cards to be produced by all travellers between Great Britain and Ireland, completion of such cards is at present on a voluntary basis.">
  That must mean that, although there are powers to require the completion of cards, they had not been implemented in June last year. The hon. Lady went on to say:
  "It is for the chief officer of police concerned to decide whether travellers should be asked to complete cards "—
  I assume that the word "asked" was deliberately chosen instead of "required"—
  "having regard to the particular circumstances of each port."—[Official Report, 12th June 1975 ; Vol. 893, c. 231.]
  It is difficult to reconcile that answer with the wording of Article 8, which says that anybody travelling to Northern Ireland shall, if required by an examining officer, complete and produce to him a landing card. I cannot see that this is consistent with completion being on a voluntary basis. So I take it that, at least in relation to Northern Ireland, there is now a binding requirement to fill up the card, although, of course, that requirement depends upon the exercise of an act of judgment by an examining officer.
  In the light of that wording, it surely cannot still be a voluntary matter. It will in future be impossible for travellers like my hon. Friend the Member for Belfast. South (Mr. Bradford) and myself, who carry copies of this Hansard extract, to point out with the utmost politeness to the examining officer that in her reply the Under-Secretary said that completion of the cards was at present on a voluntary basis.
  It cannot now be on a voluntary basis if, according to the wording of Article 8,
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  a traveller may be required to fill in a card by the examining officer. I hope that the Minister of State will make clear that it has now become compulsory, though at the discretion of the examining officer. Formerly it was voluntary, whether or not discretion was exercised.
  That leaves him with the task of explaining why examining officers at Gatwick find it almost invariably necessary for passengers to complete cards—perhaps it is in the light of "the particular circumstances" of the airport—and why this is not thought necessary at Heathrow.
  I turn now to Article 5, which is of graver and more substantial character. It includes references to arrival by ship or aircraft but also includes arrival by crossing of the land frontier. That is why, as the Under-Secretary explained, the word "vehicle" and the power compulsorily to remove a person from a vehicle appears in the Northern Ireland Order but not in the Great Britain Order.
  Article 5 of the Northern Ireland Order enables an examining officer to examine any person
  "entering or seeking to enter or leave Northern Ireland by land from, or to go to, the Republic of Ireland for the purpose of determining whether any such person"
  looks like a terrorist, is subject to an exclusion order, or may have committed other offences under the Act.
  Moreover, paragraph (3) enables the examining officer, even though such a person is not actually
  "entering or seeking to enter or leave"
  to pick up, as it were, anybody whom he finds within the one-mile zone from the border in order to ascertain
  "whether he is in the course of entering or leaving Northern Ireland by land"
  I do not wish to make anything appear in the slightest degree humorous, because this is no humorous matter that the House is considering; but there is something grotesque, when we envisage the land frontier between Northern Ireland and the Irish Republic, in this notion of empowering examining officers to examine those actually entering or leaving by land or those within one mile of the frontier who they think might have the intention of entering or leaving. I presume that means the intention of leaving or the recent experience of entering.

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  This does not correspond with reality. We are enactng law which is remote from the facts of the situation. Here is a law for the purpose of protecting, as best we can, the lives and property of citizens in Northern Ireland and the rest of the United Kingdom. For that purpose, we are giving examining officers power to do things in circumstances in which they are not taking place today and in which at present they are difficult to envisage taking place.
  I ask the Minister of State seriously to confront what he is doing. It is not sufficient to say "As the Act applies to Northern Ireland, we must have a Supplemental Temporary Provisions Order for Northern Ireland and put something in it about the land frontier, since there is a land frontier, but whether what we put in has any practical effect or is being implemented does not matter, because it is just for the sake of form"
  I am sure that the hon. Gentleman will not say that. I do not think that in his office he could stand up and say that. He must say that measures are in fact being taken. I am not asking him to specify aspects of such measures which it might not be in the public interest to make known. I am asking him to say that the duty to exercise surveillance over entry and departure across the land frontier is being taken as seriously as any of the other obligations to examine which are contained in these Orders and that the land frontier, which is the principal access of terrorism to the whole of the United Kingdom, is not, as it were, being written off. I ask the Minister to respond to that request, which is seriously addressed to him.
  In doing so I return to Article 5(3), which is the power to examine any person found within a one-mile zone—no 200. mile fishing limit here—of the frontier. Realistically speaking, as with any other country which has an open land frontier, the only way in which entry or departure can be effectively controlled is by establishment of identity inside the country. That is nothing peculiar to Northern Ireland. It applies to all such countries in the world, except perhaps the Soviet Union with its Berlin Wall and its Iron Curtain. They all have methods of doing as a permanent feature what is here required urgently as a temporary provision. I am saying to the Minister of
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  State that it is really a pretence to say that in Northern Ireland this can be achieved by establishing the identity of would-be travellers either crossing the border or within a zone one mile from the border. It can only be carried out if establishment of identity is, in fact, enforced and enforceable anywhere in the Province. I should like the Minister of State to give an assurance that, under whatever powers—I imagine that they are not the powers in this legislation, but under effective powers—that is being done.
  This applies also to persons entering Northern Ireland by train. I have not had the privilege of entering Northern Ireland by train. I have often thought that it would be an exciting novelty to attempt to do so, although in recent weeks those who have made the journey have more frequently experienced frustration than enjoyment. Nevertheless, it still happens that from time to time persons from the Irish Republic undoubtedly do get through to the constituency of my hon. Friend the Member for Armagh (Mr. McCusker) by train and end up at the terminus in. Belfast.
  Article 5(4) of the Prevention of Terrorism (Supplemental Temporary Provisions) (Northern Ireland) Order states:
  "A person entering Northern Ireland by train may be examined when he arrives at the first place where the train is scheduled to stop for the purpose of allowing passengers to alight."
  This House is approving legislation. It is conferring a power—indeed, it is restricting a power—to examine travellers arriving by train, because they must be examined when they arrive at the first place where the train is scheduled to stop for the purpose of allowing passengers to alight. Even if a person is coming to Belfast, he cannot be examined at Belfast on his arrival if the train is scheduled to stop at Portadown. Is there any system of examination at Portadown?
  Mr. McCusker indicated assent.
  Mr. Powell: I am told that there is. No doubt we shall get confirmation from the Minister of State.
  Is there any system for express passengers—if that be not too ironical a description in present circumstances—to be

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  examined on arrival in Belfast? Is this, in other words, a mere paper provision which we are putting in for the sake of apparent completeness, or is it something which is effectively carried through? Those whom we represent in Northern Ireland wished us to support, as we did support, these provisions, even when they were one way only, in the 1974 Act, and they have been gratified by the decision of the Government that the provisions should be amended so as to afford Northern Ireland as far as possible equal protection with Great Britain. But they will expect that legislation and Orders of this sort actually mean that an endeavour will be made as seriously and intensively to prevent terrorists entering the kingdom in Northern Ireland as is made to prevent them from entering it in Great Britain.
  For those reasons, I hope that the Minister will take the opportunity of speaking, if he will, at some length and giving a general picture covering entry by land into Northern Ireland as well as answering the particular points.
  9.1 p.m.
  Mr. Wm. Ross: This Order says that it is for the prevention of terrorism. The first thing one should realise about terrorism is its absolute speed and ferocity. It can arise at any time and place suddenly, and apparently out of the blue, although perhaps it was carefully planned long beforehand, and then the person who commits the act of terrorism vanishes instantly.
  When I looked at this Order and compared it with the Order for the rest of the United Kingdom, I was immediately struck by the fact that in Article 4, as far as Northern Ireland is concerned, the third paragraph says:
  "Any functions conferred by the Act or this Order on an examining officer may be performed also by a member of Her Majesty's forces on duty"
  That is not contained in the Order for the rest of the United Kingdom. It is all very well to say that it is not needed in the rest of the United Kingdom, but we do not know what terrorist act may be planned or what force may be necessary to deal with it. The forces of the 'Crown might be needed. The power
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  would then not be in the hands of these forces to deal with it and act as agents of the police. If terrorism should ever spring up on a large scale, the time to nip it is when it is in the bud and not whenever it has come to its full evil flower.
  My right hon. Friend the Member for Down, South (Mr. Powell) referred at some length to Article 6, to the whole question of identity and to the question of passports and other documents whereby one might identify oneself. I came through Gatwick this afternoon and I noticed that most of the people who came through did not produce a passport. They produced a Northern Ireland driving licence, which has a photograph, but there is no reason why evil-intentioned persons should not get their hands on a driving licence that is totally false. All they have to do is apply in the name of someone who is dead.
  If the family happens to be a Republican family or if it is connected with any terrorist organisation and wishes to cooperate, a licence is forthcoming. There is no great detailed investigation into who has applied for such a document and who may get it. A false name could be produced and the person concerned travel through. I ask for some serious efforts to improve the whole process of identification in Northern Ireland.
  Mr. Powell: In any case a driving licence does not establish nationality or citizenship.
  Mr. Ross: My right hon. Friend once more draws attention to the point he has already made, and it is very true. A driving licence at best, even when it is truthful, can only establish that it was given to a person of such-and-such a name who lives in such-and-such a place. That person may have been born in any country of the world and still have a Northern Ireland driving licence if he has lived there for a few years.
  We come back once more to the whole problem of identity cards. This suggestion has been put up time after time and knocked down time after time, but I have never been convinced of the validity of the arguments against identity cards. I believe that the law-abiding citizens of Northern Ireland would have

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  no objection to carrying and producing them on request.
  I shall not attempt to follow my right hon. Friend the Member for Down, South in everything he said about Article 8, because he put it much better than I could. The embarkation or departure card is a regular feature of travel in and out of Gatwick. As usual, today, I did not fill it in and the officer on duty accepted my parliamentary card. I suppose that he recognised it for what it was, but there does not seem any good reason why the rest of the citizens of Northern Ireland or the United Kingdom as a whole should be asked to fill in a card that a Member of Parliament does not have to fill in.
  I repeat my right hon. Friend's question. Is the filling in of these cards a statutory requirement now? If it is, since the Order came into operation on 27th March, why was I able to pass through today without filling it in? If this is now law, have the officers in question not been told? This article suggests that the filling in will be done at the request of the individual officer. Is that the sole criterion? Is it a question of the state of an individual officer's temper, whether he has had a dust-up with his wife, or has a cold and wants to make everyone else feel as bad as he feels, or is this a requirement laid down by the Secretary of State?
  Article 10 talks about the driver or owner of a vehicle in which someone crosses the land frontier being required to remove the passenger from Northern Ireland if the passenger should not be entering Northern Ireland. That is all very well in the case of a private car or a taxi, but what about a bus in which many other legitimate citizens may be going about their normal business? Will the driver be compelled to turn around and take his unwelcome visitor back to the last stop down the road or the previous village or town—or even, in the case of the Londonderry-Dublin express, all the way back to Dublin? This is not a reasonable provision and we should have a clearer explanation of the law.
  What happens if the unwelcome visitor is found on a train? How is he to be removed then? Is the train to go back down the line and drop him off, or is he to be put in a taxi at public expense in Northern Ireland and sent back?
  Article 11(3) refers to the responsibilities laid upon the captain of a ship or an
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  aircraft. The captain of a ship crossing from Liverpool has some time to investigate his passengers, but the captain of an aircraft has not. Yet that captain will be absolutely responsible for seeing that such people do not disembark. He alone is the responsible person.
  Article 13(4) and (5) provide that when the ship comes into a harbour in a control area, the owners or agents shall only take "all reasonable steps". Why is it that people on dry land, with the forces of law and order behind them, are required only to take reasonable steps whereas the captain of a ship on the high seas, who might have to deal with a bunch of armed and dangerous men, will be absolutely responsible for their behaviour—a responsibility which he will be in no position to enforce, if the previous history of the IRA and its fellow travellers is anything to go by?
  Paragraph 14 provides that the captain of a vehicle, ship or aircraft is responsible, for the examination of those people whenever they are being lined up like sheep to answer questions. Why are the forces of law and order not responsible? The captain is also responsible for the lists of passengers and crew. What happens if someone tells him lies? Is he responsible for the lives of his passengers or crew?
  These points have not been looked at seriously. They seem to place upon the officer concerned a great responsibility which he is incapable of fulfilling with the knowledge at his disposal.
  Has anyone been removed from Northern Ireland under these provisions? I raised the question of a couple in my constituency suspected of certain violent acts and stone throwing. They went to prison some months ago and all at once the "rent-a-riot" business seemed to suffer a disastrous setback. I hope that the Minister will take a long hard look at this couple when they reappear in the streets.
  The whole question of control of terrorism in Northern Ireland is related to control of the border. We are told repeatedly that the border cannot be controlled, but that is an admission of failure by successive Governments. The House is supposed to be responsible for the territorial integrity of the United Kingdom. Yet it apparently cannot control 200 to 300 miles of border sufficiently

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  closely to stop terrorists from coming across. That is a serious admission of failure and I hope that the Government will correct it.
  Law-abiding people would be perfectly prepared to accept any steps taken to control the exit and inflow of terrorists and terrorist materials to and from Northern Ireland. People might grumble when steps were taken to prevent them from running across the border or causing them to go a couple of miles out of their way, but they would be more than content if the result was adequate control of the border. The border must be controlled if the problem of terrorism is to be solved.
  In previous debates on this subject we have been told that this measure would strike at the root of terrorism. But the root of terrorism in Northern Ireland is the Provisional IRA, and the root of the IRA is its finance and its ability to raise money for its evil deeds. While this Order is primarily concerned with the movement of people, the Government should look at the situation on the ground, particularly in Belfast. They should look at the widespread use of legitimate front businesses set up by terror organisations, because this use makes the IRA's financial base much stronger. If the IRA is to be defeated, we must destroy its hope of victory for once and for all. That hope is still present.
  The Order is a little like giving an aspirin to a man with cancer. I do not believe that a measure such as this can cut it out. It is at best a help if properly and rigorously applied and that application is perfectly acceptable to the law abiding.
  If one thinks back to the declared programme of the IRA on the first day that it appeared on the streets and in the villages of Northern Ireland, one must agree that many of the things which it demanded have been won. Perhaps the Minister does not go along with that, but if he were to ask people in Northern Ireland he would find that they would not agree with him and unless the position is reversed and the IRA is seen to be losing, it will maintain its hope of victory and continue with its wickedness and evil.
  We must consider persons who are believed to be members of the IRA, such
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  as Martin McGuinness who was arrested and had to be released. In fact, he almost begged to be arrested. Surely there can be a categorical statement about their status in the eyes of the law. This should be done, because it does the law no good for it to be brought into disrepute in such instances.
  We must also consider the law of sedition and take account of speeches such as those made in Londonderry some months ago by Kevin Agnew and Mairi Drumm. We must bear in mind the anger that such speeches create among political opponents.
  I now come to consider the removal of persons from Northern Ireland. What is the position of persons who enjoy dual citizenship which, in the eyes of the Dublin Government, every person born in Northern Ireland can claim? They can claim citizenship of the Irish Republic. They can hold, and I believe that a Member of this House does hold, an Irish passport.
  If a document has to be produced at a point of embarkation, is an Irish passport considered to be good and sufficient proof of a person's nationality? Is it considered good and sufficient proof of his identity? Is it acceptable that this system of dual citizenship should continue in the present situation in Ireland?
  During the previous debate, when the Minister was talking about embarkation cards, it was said that as soon as the Government had more details action would be taken. If this Order is an indication of the seriousness with which the Government treat the prevention of terrorism in the United Kingdom, if this is an indication of the determination with which they are fighting terrorism in Northern Ireland, God help the people of Ulster.
  9.18 p.m.
  Mr. James Molyneaux: At the risk of engaging in some repetition, I want to cover the three main points which have been dealt with so far in the debate. In doing so, one might be able to illustrate the different experiences of hon. Members sitting on the same Bench. Those different experiences reflect different procedures, and those different procedures imply, and in practice mean, a weakness in the system.

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  I want, first, to deal with the problem of documentation. When we are approaching a British airport, particularly Heathrow, airline hostesses and stewardesses invariably warn us that we shall be expected to produce some form of identity card or proof of identity. On occasions I have even heard it suggested that we might produce bank cheque cards. How that can be regarded as any kind of satisfactory proof of identity within the meaning of this Order, I fail to understand.
  Let me relate my recent experience when coming through Heathrow Airport. I was following two of my colleagues who are perhaps more widely known and more highly respected than I am. They were passed through without any request for proof of identity. I was detained with the usual little tap on the elbow and "Excuse me, sir. Can you produce any proof of your identity'?" I thought that I could not do better than produce the pass that authorises me, as a suspect, to gain access to this House.
  The examining officer asked whether I had an airline ticket. I said "No, there was only a carbon copy left—a utility model which had come apart—and I threw it away". He was not asking for the airline ticket as confirmation of the House of Commons pass which I had submitted to him. He regarded the House of Commons pass as being of little account. The British Airways voucher—and a faint copy it would be at that stage—seemed to be a superior proof of identity.
  The examining officer wanted to know whether I could go back to look for my ticket. I told him that it was on the other side of the Irish Sea and I had not enough time to engage in that sort of operation. He asked me whether I had a ticket. I said "I listened to the proceedings before the House of the Act which governs your procedure, when I heard reference to authority being given to examining officers to delegate authority. Would it be impertinent to ask whether the reverse has occurred and British Airways have delegated to you the authority to check whether I paid for my airline ticket?" At that point he said "You had better go on".
  That story illustrates the problems which arise and the discrepancy which
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  exists between the cast-iron system at Gatwick and the walk-through system at Heathrow. I understand that for 18 months it has been standard practice at Gatwick for passengers to complete and produce embarkation and disembarkation cards. That kind of card of itself is not accepted as proof. It is also necessary to produce a document of identity, just as at Heathrow. Why are those two proofs of identity necessary at one airport and not at the other?
  At Glasgow Airport the position is different. Passengers waiting to board the flight for Belfast are asked to complete a card similar to the one used at Gatwick. It is collected from the passengers before they are allowed to board the aircraft. At those three airports there are three entirely different systems.
  Difficulties are experienced at Stranraer. I have had occasion to write to the former Secretary of State for Scotland about that matter. The examining officers are often inexperienced and not very tactful, and frequently friction and misunderstandings arise. On the last occasion I tactfully suggested that someone should take a look at the system and the personnel at Stranraer to see whether the procedures could be made to work more smoothly, as I received more complaints from passengers using Stranraer than from those using other points of embarkation. I was told, perhaps not quite so politely, that there was nothing strange about that as practically all passengers went by Stranraer anyway. I cannot imagine that Stranraer can compete with Heathrow in the numbers game, and I do not receive streams of complaints from Heathrow. The complaints I receive are not from passengers from Northern Ireland but from citizens of Great Britain who have not been told of the proofs which will be required. Very little understanding of their problem is shown.
  I come to the main weakness in the system, which is the lack of control at the frontier. At the weekend there was a demonstration of some consequence in Dublin. I imagine that one-third of those who participated in it probably came from Northern Ireland. As the Order was in force long before the weekend, were those people checked when they were leaving the United Kingdom—namely, when they were crossing the

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  Northern Ireland border—and, even more important, will they be checked as they return to the United Kingdom across the land frontier of the United Kingdom? I would imagine that the security forces would have a very deep interest in these people.
  Mr. Wm. Ross: Following up the matter raised by my hon. Friend regarding the identification of those who crossed into the Republic over the weekend, can the Minister confirm or deny a report which I have received that at the time of Frank Stagg's funeral the Royal Ulster Constabulary was not allowed to check the identity of persons in buses who travelled to that funeral, contrary to former practice?
  Mr. Molyneaux: I am grateful for that contribution by my hon. Friend. Indeed, it was the reports of that incident and other such happenings that led me to make my simple request to the Minister of State to which I hope he will be able to give a satisfactory answer.
  Article 5(3) of the Order provides for examination within one mile of the border. I think that my right hon. Friend the Member for Down, South (Mr. Powell) and my hon. Friend the Member for Armagh (Mr. McCusker) will agree readily that examination by any form of official or examining officer in that zone in certain parts of their constituencies would be a hazardous occupation, to say the very least. In many cases the examining officer himself would have to be protected if he were to carry out his duties, and even his protectors would be putting themselves at considerable risk, security being what it is in certain parts of those constituencies.
  If that is the case, does it make sense to say "We cannot have people in that bit of the border zone, so we will shift them over and deal with them in a rather more comfortable part. We will let the suspects go free"? As my right hon. Friend said, it is ludicrous that once they are free from this zone they can apparently go scot-free: they cannot be checked up on when they get to their intended area of operations deep inside Northern Ireland.
  Surely the very existence of this so-called frontier zone is an incentive to terrorists to increase their domination of
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  that area and thereby move the frontier of the United Kingdom back. I join my hon. Friend in pleading with the Government to renew and redouble their determination to extend the control of the security forces to all parts of the United Kingdom—in this area right up to the frontier itself. It is there that effective checks should be made.
  The Minister of State can be assured that my colleagues and I will do everything we can to assist Her Majesty's Government in all their efforts to combat terrorism in all parts of the United Kingdom. Our contributions tonight and in earlier debates when we have discussed the related legislation have been and are designed to make the legislation much more effective.
  9.30 p.m.
  Mr. Ivan Lawrence: I hope that if I merely seek to raise a point of drafting, it will not be thought that I wish to diminish in any way the powerful matters raised by hon. Members from Northern Ireland.
  I apologise also for repeating a point raised by my hon. Friend the Member for Barkston Ash (Mr. Alison) on Order No. 465, which I feel was not adequately dealt with by the hon. Lady the Under-Secretary of State for the Home Department in that earlier debate. I hope that the Minister of State, Northern Ireland Office, will be more receptive, bearing in mind the differences between Order No. 466 and Order No. 465. I know that the people concerned in drafting these matters are normally the most astute in considering the accuracy and effect of language.
  I wish to refer to Article 5 of the Order, and in particular to what can fairly be described as a shoddy piece of drafting. Article 5(1) requires an examining officer to examine any persons who have
  "arrived in or are seeking to leave Northern Ireland by ship or aircraft for the purpose of determining—
  (a) whether any such person appears to be a person who is or has been concerned in the commission, preparation or instigation of acts of terrorism".
  The object of using words in similar circumstances in other items of legislation is to eliminate confusion. Therefore, it is most important that the words used in this Order can be easily understood

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  by the persons against whom they are to be used and also that they should be easily understood by those who will have to enforce the regulations. The words should be such as to protect the citizen against frivolous or unjustified use of the power of detention, because that is what is involved in giving an examining officer power to examine.
  When the Under-Secretary of State for the Home Department was asked on Order No. 465 what "appears to be" meant, she said that it meant reasonable grounds for suspecting that such a person was a terrorist or was concerned with acts of terrorism. But if that is what it means, that is what it should say. When somebody who has to administer this legislation examines those words, he cannot look to see what explanation was given by a Minister in this place. He has to interpret the words as they appear on the face of the document. The words
  "appears to be a person"
  are much too wide for the protection of the citizen against frivolous detention. The phrase is much too wide for the simple appreciation of its meaning by those who have to enforce the law. What is the normally accepted meaning of such words in this situation relates to whether there are reasonable grounds for suspicion.
  I wish to suggest a better way of drafting the provision. I suggest that the provision should read:
  "An examining officer may examine any person who have arrived in or are seeking to leave Northern Ireland by ship or air-craft—

  (a) if there are reasonable grounds for suspecting that such persons have been concerned in the commission, preparation or instigation of acts of terrorism; or

  (b) to determine whether any such person is subject to an exclusion order;

  (c) if there are reasonable grounds"—

  and I insert the word "reasonable" because it is absent but is normally there and ought to be there:
  "for suspecting that any such person has committed an offence under section 9 or 11 of the Act."
  If legislation is properly worded, it causes less trouble for those who administer it and for those who have to decide what it means in the courts. I ask the Minister to bear that in mind so that drafting is
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  properly considered when legislation as important as this is before the House.
  9.35 p.m.
  Mr. Philip Goodhart: We welcome this Order but I share some of the doubts about Article 5 that have been so clearly expressed by the right hon. Member for Down, South (Mr. Powell). If we are serious about the control of the land frontier, and I hope that we are, I warn the Minister of State that Article 5(3) will not work. I ask the Minister whether it is seriously intended that in South Armagh examining officers will soon be on regular duty within one mile of the border. If not, yet another blow will have been struck at the prestige and authority of the Government in Northern Ireland.
  I suspect that the hon. Member for Londonderry (Mr. Ross) may well be right when he suggests that the difficulties over the implementation of this part of the Order will strengthen the hand of those who are pressing for the introduction of more general identity cards in Northern Ireland. When I first read Article 8 I had assumed that we were about to see, at least for a period, the general introduction of embarkation and landing cards for all sea and air travellers between Great Britain and Northern Ireland. After listening to the exchange between my hon. Friend the Member for Harrow, West (Mr. Page) and the Under-Secretary during the debate on the last Order, I am totally baffled about the Government's intentions.
  The security forces have been enormously helped in recent years by the accumulation and recording of quantities of low-level information about the movement of individuals in certain parts of Northern Ireland. It is not impossible to imagine that the wholesale collection and scrutiny of landing and embarkation cards could be of substantial benefit to the security forces. There is only one way to see whether the widespread use of such cards is worth the effort and that is to try them over a period of months and evaluate the results.
  It would be interesting to know whether the landing cards that have been handed in at Gatwick in the course of the past 18 months have produced any information of value to the security forces. I hope that the Government have plans in this

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  area which are more sensible and precise than those so far unveiled.
  9.40 p.m.
  The Minister of State, Northern Ireland Office (Mr. Roland Moyle): We have had a lengthy debate on the Northern Ireland Order to which a number of hon. Members have contributed. I drew great comfort from the fact that a number of hon. Members opposite said that they would fully support any Government measures which were necessary to defeat terrorism. Therefore, it should be assumed that the motion was purely a technicality for the purposes of debate and that broadly the House supported the provisions which the Government were making to control the movement into and out of Northern Ireland and, in the case of the other Order, Great Britain.
  The hon. Member for Burton (Mr. Lawrence) raised the drafting point which had been raised earlier by the hon. Member for Barkston Ash (Mr. Alison) with my hon. Friend the Under-Secretary of State for the Home Department. I was brought up never to draft in Committee. I am sure that drafting in Committee. whatever its dangers, is not half as dangerous as drafting in the House. Therefore, I shall not commit myself to making any specific changes in the Order.
  However, I have studied the article to which the hon. Member for Burton drew attention. As far as I can see, Article 5(1) (a) is crystal clear. If an examining officer wants to question someone to ascertain whether he
  "appears to be a person who is or has been concerned in the commission, preparation or instigation of acts of terrorism"
  he may do so. Whether that is the best basis for conducting an examination is another matter.
  Therefore, after the debate I shall go to a quiet place and think more deeply about the hon. Gentleman's words and the concept which the Order appears to convey and consider whether it is necessary to make alterations. I am sensible that there may be a point here for consideration, and I promise that it will be considered.
  Mr. Lawrence: In particular, will the hon. Gentleman consider whether it is
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  necessary for there to be reasonable grounds for examining?
  Mr. Moyle: It is clear that the wording in the Order does not convey the idea of reasonable grounds. It is to that point that I should like to turn my attention. There may bra fully justified reasons for questioning people to secure an appearance.
  I should like to be slightly critical of the hon. Member for Beckenham (Mr. Goodhart), who is normally a responsible contributor to our debates on Northern Ireland. To say, in view of the wording of Article 5(3), that if an examining officer is not on duty within one mile of the South Armagh border following the passage of the Order it will be a blow struck at the prestige of the British Government is a very irresponsible statement, because, as he knows, the control of terrorism is a Province-wide business.
  How the security forces are deployed within the Province to deal with terrorism is an operational matter, but the problem of controlling terrorism on the border is a matter not only for South Armagh but for the whole border. Indeed, it is a matter of the deployment of forces throughout the Province. This power is exercised under the Emergency Powers Act not only by constables, immigration officers and Customs and Excise officials, but by the Armed Forces of the Crown who are permanently deployed throughout the Province in aid of the civil power. I hope that on reflection the hon. Gentleman will agree that he was perhaps slightly extravagant in his use of language.
  Article 5(3) does not say that examining officers will
  "examine any person found in Northern Ireland within a distance of one mile from the border".
  It says that they may do so. It is a question of exercising all these controls on a selective basis. If we tried to control everybody crossing the border, coming into a port or using an airport, the whole system would choke. I hope that hon. Members accept that the whole basis of the operation is to select the area and the person, in order that the flow of persons and goods, wherever they may be, may carry on at the same time as a reasonably rigorous effort is made to ensure that

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  people intending to engage in terrorist activity do not do so.
  Mr. Goodhart: We recognise that there are difficulties in South Armagh in getting within one mile of the border. But in choosing the wording of Article 5(3) the Government have made the task of the security forces that much more difficult, in that the area in which the security forces have to operate is precisely defined. I fully accept that the article says that people may be questioned, not that they will be, but if people are never questioned within one mile of the frontier in South Armagh the blow to the Government's authority will be severe.
  Mr. Moyle: That considerably limits the statement that the hon. Gentleman made, but he and the House must remember that it is only the powers in the Order which are exercisable within one mile of the frontier. Thereafter, apart from the special case of the railways, if people process beyond the one-mile zone other powers can be exercised by other persons on much the same lines throughout the whole Province. One has only to recall the substantial finds of explosives which have taken place in the Province well beyond the one-mile zone to realise that no one can conclude that, as a result of the Order, once he gets beyond the one-mile zone he may heave a sigh of relief and act with total freedom. That is not so.
  I want to conclude this part of my remarks by making the point that the right hon. Member for Down, South (Mr. Powell) asked me to make. The Government are determined to exercise the most rigorous practical control of the border that we can. All the resources and planning of many men and women are devoted to that purpose. We intend to maintain the integrity of the border to the maximum degree from the security point of view. There are many thousands of people involved in this operation in the Province. Whereas we cannot claim perfection, although it is our aim to achieve it if possible, we are putting in a substantial effort to control security, and not only on our side of the border. I am happy to say that as time goes by we are receiving better and better co-operation from the other side of the border in the interests also of the security of the Irish Republic. This has improved matters considerably.
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  The right hon. Member for Down, South raised many problems. It is true that Article 6 speaks of a person being required by an examining officer to
  "produce either a valid passport with photograph or some other document satisfactorily establishing his identity and nationality or citizenship".
  My attention was drawn to the fact that people at the various ports require documents to be produced which show identity but do not in practice, in most cases, establish nationality or citizenship. There are two points to be made here. First, the person entering Northern Ireland will only have to produce this document if required to do so by the examining officer. He does not have to have it with him. Second, it is all based on the concept of what the reasonable man in the court would accept as the proper evidence and what was proper in the circumstances.
  Obviously, if a specific document requiring nationality or citizenship as well as identity to be proved is not made mandatory, the whole standard becomes much less rigorous, and it is assumed that the examining officer will deduce, from such evidence as is available, sufficient evidence in most cases to make an assessment of the identity of the citizenship or the nationality of the person with whom he is dealing. If the officer is unreasonable in that respect, the citizen may seek protection through the normal course of the law.
  Here we immediately come to the whole question of identity cards, raised by several Members during the course of the debate. As hon. Members have already heard from my hon. Friend the Under-Secretary of State for the Home Department, the Home Secretary, following advice on the Prevention of Terrorism Act and the Emergency Powers Act—especially the former—undertook once again to seek the advice of the Metropolitan Police in particular on whether identity cards were a reasonable way of controlling this sort of movement. The advice given to him by the police is that a system of identity cards would not be generally helpful. That is also the advice independently given to my right hon. Friend the Secretary of State for Northern Ireland by the Royal Ulster Constabulary.

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  It seems to me, therefore, that we should have to be very sure indeed of our ground as a Government in overthrowing two separate sets of independent police advice and introducing identity cards, because the police argument is that identity cards, if introduced on a standard basis for everyone, could be very easily forged and would therefore be less of a protection than the present system now adopted.
  Mr. Powell: I quite accept the distinction between an immigration control function and the function implied by the Order, but, after listening carefully to the Minister of State, I am even less able to understand the reason why the words "and nationality or citizenship" appear at all. I can understand the purpose of a document, which may be a passport, which establishes the identity of a person. After all, one has a list of people against whom there are exclusion orders, and one wants to know whether this fellow is one of them, and who he is. But it seems to me that these very words confuse the distinction between immigration control and the purposes of the Order —that very distinction which the hon. Member is making. I am still puzzled why a document which establishes nationality as well as identity is specifically indicated as one of the two kinds on which the examining officer can, at his discretion, insist.
  Mr. Moyle: I am afraid that I must apologise to the right hon. Gentleman, because I misunderstood his point. I thought that his point was the practical one that there are documents which in many cases can establish identity but which do not necessarily establish nationality and that people might be put to embarrassment by the rather vague indication about nationality. I did not realise that the right hon. Gentleman was seeking to discover the purpose of the introduction of nationality or citizenship. I shall have to undertake to look into that and to clarify it later.
  Mr. Powell: The hon. Gentleman has shown a great desire to take every item in this Order seriously. If he will undertake to do that, may I draw his attention to the fact that in Article 4(4) (a) the pasenger list is also supposed to include
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  the nationality or citizenship of every passenger. It seems that we are writing into this Order several requirements which are to be what Shakespeare did not mean by saying
  "More honour'd in the breach than the observance"
  Mr. Moyle: This is part of the same point. I shall deal with that at the same time.
  Mr. William Craig: Meantime, may I ask the Minister to give some positive guidance to members of the public travelling tomorrow from Belfast to London? Under these powers, an examining officer may ask for a document establishing nationality. Are the Government saying to the travelling public "Carry this document with you"?
  Mr. Moyle: I do not think that the Government would want specifically to advise any single document to be carried by travellers. The argument of the examining officers is that if they have the power to request the production of documents which give an indication to them of who a person is or what his nationality or citizenship is, rather than a specific official document, they are more likely to get at the truth of the matter. Therefore, the more documents of identity that a person carries with him, the more likely he is to be able to establish the validity of his position. I should not like to go into more specific advice to travellers between London and Belfast than that.
  This is a matter which I myself come across quite often as I enter Government offices. I find that the security guards at Government offices switch from day to day, and I am frequently asked to produce identification. Sometimes I can wave my bag which has on it
  "Minister of State, Northern Ireland"
  At other times I produce my official pass. At other times I show my driving licence. Sometimes I show my House of Commons identification card, which I still have although it indicates a different constituency from the one which I represent now. I think that the position is similar for ordinary members of the public travelling between Northern Ireland and Great Britain.
  The right hon. Member for Down, South also asked about landing cards at

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  Gatwick and Heathrow and the different practices which prevailed. As I understand it, the position at the moment is that there is no legal requirement to fill in a landing card at any airport at which passengers may arrive in the United Kingdom. The requirement at Gatwick can only be because the person responsible in the area thinks that it would be a good idea and has therefore requested that landing cards be filled in by people landing at Gatwick. But there is no legal requirement on hon. Members or members of the travelling public to fill in these landing cards.
  As a result of the passage of this Order, which became effective on 27th March, the Secretary of State now has the power to require people to fill in landing cards in the form which he wants them to take. But that will not operate until the Secretary of State actually puts his requirement into operation, when there will have to be publicity. Until the Secretary of State exercises his powers under Article 8, there is no legal power to require anybody to fill in a landing or embarkation card.
  Mr. Powell: I am grateful to the Minister for resolving at least part of the conundrum. It appears that compulsion turns upon the word "direct" as applied to the Secretary of State. But I hope he will explain why 100 per cent. of examining officers have this bright idea at Gatwick while the officers at Heathrow do not have it.
  I understand that some officers may take a different view in different circumstances, but it appears irrational to my hon. Friends and myself and to members of the public that something should be thought essential, if only as a request, at Gatwick but not at all necessary at Heathrow.
  Mr. Moyle: For obvious reasons, I am not sure that it would be in the general interest to go into a detailed explanation of why these considerations apply at Gatwick but not at Heathrow. However, I shall look into the matter to see whether there is an explanation which may be made public.
  The right hon. Member for Down, South also asked who authorised the type of embarkation card used at Gatwick. This is not a matter for me. I shall draw it to the attention of my right hon. Friend
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  the Home Secretary in case there is an official position which needs explaining.
  I have dealt with the right hon. Member's views on the question of the frontier, the border zone and the enforcement of security throughout the Province. I have also given an undertaking that we shall exercise the maximum force in our power to control the border.
  I cannot give the right hon. Member the specific details for which he asked on the question of the railways. I shall find out what provision is made for examination and control at Belfast and Portadown. There are, of course, the full powers of the Order which may be exercised in respect of any train within one mile of the border. This is an extension of existing specific powers.
  The hon. Member for Londonderry (Mr. Ross) asked why the Armed Forces of the Crown did not have the same powers of policing this sort of movement in Great Britain as they had in Northern Ireland. The reason is that in Northern Ireland they arc specifically committed to the support of the civil power under the emergency powers legislation.
  I think I have dealt with the points raised by the hon. Member in relation to identity cards in my reply to general points. My view will not be new to him. He has put the same case on several occasions and has had the same reply. I understand the feelings he expresses about identity cards, but we are continually given technical advice that the idea is not the best way of controlling movements.
  The hon. Member for Londonderry also raised the question of people coming across the border in buses and trains and how they should be returned over the border. An examining officer has the power to return a vehicle across the border. But there is power for the Secretary of State for Northern Ireland to make specific arrangements for returning people across the border.
  It is not our intention wilfully to put to considerable inconvenience perhaps 40 or 50 people because one person is a source of suspicion. Arrangements can be made to transfer such a person to another vehicle or to a train going in the other direction. Many such arrangements could be made to return people across the border.

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  The hon. Gentleman also drew attention to the obligations laid on captains of aircraft and of ships as opposed to owners. I agree that a greater onus appears to be laid on captains than on owners. The legal powers of captains in control of ships and aircraft are, under the general law of the land, somewhat greater than those of the owners once those ships are tied up in port or those aircraft are at an airfield.
  The hon. Member for Antrim, South (Mr. Molyneaux) in his effective way concentrated on the general theme of the whole debate. I think that I have probably answered the points that he made in dealing with the points made by other hon. Members, apart from the activities of examining officers at Stranraer. I promise to draw the attention of my right hon. Friend the Secretary of State for Scotland to that matter.
  The hon. Member for Londonderry referred specifically to the evidence of a Republic of Ireland passport in the administration of the Order. The use of an Irish passport is just as good to estab-
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  lish identity as the use of any other passport, including a Russian or Chinese passport, as well as a British passport. I think that someone producing a Republic of Ireland passport would be in a strong position to prove his identity and citizenship. However, it must not be assumed that, because a passport is in order, that is the end of the matter.
  The right hon. Member for Down, South referred to nationality and citizenship. I am advised that that is relevant to the question of exclusion since United Kingdom citizens may not be excluded in certain circumstances where non-United Kingdom citizens may. Since the examination may lead to exclusion under Article 5, it is reasonable to allow that such documents may be required.
  I think that I have covered all the points made in the debate. I hope that the House will be satisfied, except in so far as I have promised to write to hon. Members, with the explanations which I have given and that the motion to annul the Order will be withdrawn.
  Question put and negatived

  THE ARTS
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Coleman.]
  10.9 p.m.
  Mr. Ted Fletcher: I am very pleased to have this opportunity to draw attention to the allocation of money for the arts.
  First, I should say how sorry I am that my hon. Friend the Member for Putney (Mr. Jenkins), the former Minister responsible for the arts, is not in his usual seat on the Front Bench. He was a first-class Minister and I can asure him that the news of his departure from office was received with a good deal of sadness by many hon. Members on this side of the House who recognise the value of the work that he did. We shall now have to face the frustration that will inevitably arise from the fact that the new Minister responsible for the arts is in another place and is not answerable to Questions or criticisms in this House, although I presume that my remarks will be conveyed to him in due course.
  Last year the Arts Council received£26 million from public funds and it is estimated that this year it will spend about£34 million. The British Council spends a considerable sum of money to subsidise artistic tours abroad, although it is difficult to get the exact figure of this expenditure. Other ad hoc Government-sponsored organisations such as the United States Bicentennial Celebration spend money on the arts. I estimate that we are probably spending about£40 million of public money on the arts each year in this country. That is equivalent to£2 per head in every family in Britain.
  Let me hasten to add that I do not resent spending money on the arts. My objection is to the way in which it is allocated. In fact, I have always advocated that we should spend some money on the arts because it enhances the quality of life and enriches the community.
  It is known to hon. Members that I was responsible in 1960, when I was Chairman of the Finance Committee of Newcastle City Council, for convening the first meeting of the Northern Arts
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  Association. We got all the local authorities in Northumberland and Durham to agree to a levy on the rates to form the first Arts Association. Before that, Newcastle was spending about£3,000 a year on inviting prestige orchestras to the city, and today the Northern Arts Association is spending well over£700,000 each year on the arts.
  It is true to say that the local sinfonia orchestra would have ceased its activities and many theatres would have closed their doors had the association not been brought into being. Indeed, the Arts Council said that the Northern Arts Association was the prototype for the organisation of the arts in the country in the future. This was originated by Labour councillors of Newcastle City Council in the 1960s. Now there are a dozen or more of these associations in the country.
  The first point I wish to make is that the amount of money allocated to the provinces, which is £1¾ million distributed to 12 arts associations, is minuscule compared, for example, with the£5¾ million spent by the Royal Opera House, the English National Opera, the National Theatre and the Royal Shakespeare Theatre. The bulk of the Arts Council money is spent in London or within easy reach of London.
  I do not wish to make too much of this as I understand that the Gulbenkian Trust has financed an inquiry into the arts in the regions, under the distinguished chairmanship of Lord RedcliffeMaud, and those of us from the provinces look forward with a good deal of interest to what that committee will have to say about the allocation of financial assistance to the regional arts associations.
  I want to turn to a problem in my own constituency of Darlington and to expand on it as seen through the eyes of 71 talented young musicians who have been trying through me to interest various public authorities, without any success, to sponsor a visit of the Darlington Youth Band to the United States. The Darlington Youth Band incorporates three—a brass band, a military band and a dance band. It is not just another youth band. It is a band with an international reputation. The Darlington Youth Band was national champion, a title it has won for two years in succession at the National

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  Federation of Music for Youth held annually in London. The national acclaim has brought the band invitations to the national youth jazz band and an appearance at the first ever schools promenade concert at the Royal Albert Hall in November last year under the direction of Johnny Dankworth.
  What I am trying to impress on the House is that it is not just an ordinary school band. The Darlington music centre attracts youngsters from a 30-mile radius, and these are the cream of the school musicians. Let me point out what the Press has said about the prestige of this band. In fact, The Sunday Times said:
  "If further testimony were needed, you should have heard the 5,000-voiced reception for John Dankworth at the Schools Prom in the Albert Hall last Tuesday. He played with the splendid Darlington Youth Big Band…in a memorable performance greeted with thunder fit for a winning goal at Wembley"
  In addition, The Times Educational Supplement says:
  "Later, discovering his alto saxophone in a convenient pocket, John Dankworth took the stage to lead the splendid Darlington Youth Big Band in a rousing performance"
  It goes on:
  "Darlington Youth Big Band are an example, and they were indeed the best with continual dynamics, genuine swing and impeccable section work".
  Our local newspaper, the Northern Echo, writes in a leading article:
  "Do you ever shake your head and wonder what kids are coming to these days?…Well, cheer up, I've got news for you that should swell your old chest with pride. Right now there are 22 youngsters…who are currently putting Darlington and the old country itself well and truly on the international music map. All in their own spare time too. No perks or special rates for the job. They just do it for the sheer love of the thing, and you don't find too many folk like that around these days."
  This is a special band and it has been invited to tour the United States of America. It has been invited to play in New York, Washington, Columbus, Cleveland, Buffalo, Rochester, and so on in a tour beginning 10th September to 2nd October this year. The cost for these musicians—there are 71 of them and in addition there will be seven or eight teachers who will also go on the tour—will be about£250 per head. It is very cheap because in the main they will
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  receive free hospitality from the cities which they visit. The parents themselves have agreed to pay half the cost—£125 each.
  I should explain that these are mostly working-class children. Their parents work as engineers or textile workers. Yet they are prepared to sacrifice£125 to meet half the cost. This has left £10,000 to be raised locally. The parents' association has organised garden fetes, sponsored walks, sponsored swims, and jumble sales. Four or five members of the orchestra set up a shoe shine stand in the High Street in Darlington to collect£50 to contribute to this fund of£10,000. To date, by its own efforts, the association has raised£3,700.
  When we are spending£34 million on the arts, surely it is possible for public funds to subsidise such a tour of the United States by a distinguished band. But I have written to the Minister responsible for the arts, to the British Council, to the Northern Association for the Arts and to the Bicentenary Committee which is financing visits to the United States by prestige orchestras. But there has been no offer of assistance. It is outrageous that we should subsidise the seats at Covent Garden to the extent of£2 each for every performance, which is attended mainly by the well-heeled and the wealthy or by American tourists, yet we cannot afford to subsidise a genuine effort by people in Darlington, a town which has nurtured such an outstanding band.
  I should like to know what the Minister can do to assist this tour. It is all very well to put public money at the disposal of prestige orchestras, whose conductors get£5,000 or£10,000 for every performance, and to send them to the United States on this 200th anniversary of its independence. But those orchestras can tour at any time. Is it not more sensible to send ordinary citizens who will receive hospitality in American homes? Is not that a better way of furthering international understanding?
  The new Minister for the arts was reported in the Sunday Press as saying that art is outside politics. I disagree with him. As a politician, I shall fight hard for working-class people with an interest in the arts to be encouraged to develop it. Such people are being neglected. The further one goes from

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  London, the harder it is to get the ear of anyone who has the disposal of money to further artistic activities.
  What does the Minister intend to do to help this worthwhile project? It will encourage the mixing of American youth and British youth. I am certain that these young people will be our ambassadors in America. It is time to consider how these vast sums are allocated. It is preposterous that working-class people should, like everyone else, contribute£2 per family to the arts yet be fobbed off with excuses in a case like this. We are told that the British Council has allocated all its funds, someone else will put them on a waiting list, money is not available for a tour of this kind.
  I hope that what I have said will induce the Minister of State to approach the Minister for the arts to state a case, as I have done, for assisting this band. We are proud of these talented youngsters, who have twice won national competitions. I am certain that the United States will be delighted to receive them. I hope that the Department will think again and that I shall soon receive an assurance that it is Prepared to help to finance this tour.
  10.25 p.m.
  Mr. Robert Cooke: 1 should like to commend the action of the hon. Member for Darlington (Mr. Fletcher) in raising an important local matter which none the less has national significance. He made certain remarks about the subsidy to the Royal Opera. Some of the attacks on the Royal Opera could best be met by widening the audience, and if some of the problems with the unions could be overcome we could see national opera on the television. I hope that the good beginning which was made during the Easter Recess will be maintained.
  I hope that the Minister will say who will answer in this House for the arts now that the Minister directly responsible sits in another place. Will he confirm that there is no problem of privilege over the Bill to establish a public lending right, and that we shall in due course receive the Bill here with full Government backing after, as seems possible, the other place has approved it? Will he confirm that the administrative costs of the public lending right are to be taken out of the£1 million a year provided for
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  in the Bill, and that therefore not much more than £500,000 a year will be left for the authors? It would prepare this House for the Bill if the Government could state their position in that respect now.
  If I may return to the question of arts finance, will the Minister bear in mind that however well the Arts Council has managed on an annual ad hoc basis—and in difficult times there have been some successes—this approach can be wasteful? Will the Government endeavour to aim at a triennial budget to allow for continued and satisfactory forward planning?
  10.27 p.m.
  The Minister of State, Department of Education and Science (Mr. Gerry Fowler): I know of the passionate interest of my hon. Friend the Member for Darlington (Mr. Fletcher) in the affairs of his constituency and I commend him for the duty he has fulfilled in raising this subject tonight. His speech was mainly concerned with the possibility of financial assistance for about 70 school pupils aged 11 to 16 in their endeavour to visit the United States as selected members of three youth bands from Darlington as part of the bicentennial year celebrations. But he set that in a wider context and he referred to the sponsorship from public funds of the arts in the regions as opposed to London, and of amateur bodies as opposed to professional organisations. I can set his mind at rest on the first point. Over the last 10 years the proportion spent through Government sponsorship of the arts and the Arts Council in London has declined from a half to about one third of the total. That spent in the provinces has increased to about two thirds of the total.
  On his latter point, we have to take the judgment of those bodies which have been established to disburse public funds through regional associations for the arts and so forth in sponsorship of the arts. I shall draw to the attention of the Secretary of State and my noble Friend the Minister in the other place the view that my hon. Friend has expressed.
  The hon. Member for Bristol, West (Mr. Cooke) asked who would answer on arts questions in this House now that the Minister is in another place. The Secretary of State retains his overall responsibilities for the arts as a part of the

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  Department of Education and Science. 1 am sure that he and I, as another Minister of State in the Department, will be able to answer the hon. Gentleman's Questions and those put down by other hon. Members in this House. The hon. Gentleman will remember that when his party was in Government the noble Lord, Lord Eccles was for a time responsible for the arts, so there is a precedent here.
  The hon. Gentleman asked two specific questions about the Public Lending Right Bill. On the question of privilege, I understand that a Bill which entails public expenditure and begins in the other place always has the privilege clause attached to it which is normally deleted when the Bill reaches this House, and that that safeguards the question of Commons privilege. I think, therefore, that the normal rules apply. There is no special question of privilege in this case.
  The hon. Gentleman also asked a detailed question about the administrative costs of the provision made in that Bill. As I understand the situation, he is right. The administrative costs will be born out of the sum total that is provided by that Bill for public lending right. On the question of what proportion that will form of the total, I suggest that the hon. Gentleman puts down a Question or waits until the Bill reaches this House. Perhaps we can debate the matter then, but on the basic principle he is right.
  The hon. Gentleman suggested that in future the Arts Council should be supported by a triennial grant rather than by an annual one. I am not entirely clear about the advantage of such a system, granted that all this has to be seen in the context of the annual review that the Government—and here I am speaking for the Governments of both parties—undertake of public expenditure, and that is undertaken on a five-year rolling programme. If the hon. Gentleman is talking about a fixed triennium, he will know that in the case of universities where there was a fixed quinquennium we have, in the present difficult circumstances, had to suspend that arrangement, and that at the moment we are operating an annual arrangement and are looking for the future for a substitute for what we have—and perhaps for what we have had in the past. I should want to con-
  164
  sider the hon. Gentleman's question in some detail before giving a final answer, and I am sure that on this my noble Friend's view would be the same.
  Perhaps I may now turn to the specific question raised by my hon. Friend the Member for Darlington. Government assistance towards the bicentennial celebrations is the responsibility of my right hon. Friend the Foreign Secretary. It is not possible for these funds to be used for the cause that my hon. Friend is advocating, not least because all the money has already been allocated. Perhaps I can explain that in more detail so that my hon. Friend is clear about what has happened.
  The British Bicentennial Liaison Committee was set up in 1972 under the chairmanship of the Marquess of Lothian to plan the British contribution to the celebrations. The Foreign Secretary gave details in a Written Answer to the House on 19th January last, but in summary these were that£500,000 should be made available by the Government on a centrepiece gift from Parliament to Congress, a programme of Fellowships in the Arts, assistance to British artistic groups to visit the United States—which is the only part that is relevant to my hon. Friend's question—and the gift of a special bicentennial bell.
  My hon. Friend is particularly interested in the activities of the arts sub-committee, under the chairmanship of Sir Jack Lyons, which has been assisting British orchestras, ballet, theatre and other artistic groups to tour the United States during this calendar year. The visits of these groups cover the period from February to November and include a number of the leading orchestras and ballet companies. I shall not detail them, but they include the King's College Cambridge Choir, the Northumbrian Traditional Group and the Scottish National Orchestra Chorus. Some of these are professional and some are amateur groups.
  My hon. Friend believes that more of that money should have been disbursed to amateur groups. I will relay that point to my noble Friend the Minister responsible for the arts who I am sure will write to my hon. Friend on that matter. I stress that this sub-committee under its distinguished chairmanship determined

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  the precise breakdown of the available funds.
  Apart from money specifically provided for the bicentennial celebrations by the Government, another possible source of assistance is the local authority, in this case the Durham County Council. For instance, local education authorities are able, at their discretion, to provide assistance for a wide range of activities with an educational content. I am sure that this activity falls within that remit.
  My hon. Friend is, however, well aware that all authorities' resources are under severe pressure at present, and the Government issued a circular as long ago as December 1974 to local authorities on rate fund expenditure and rate calls in 1975–76, accepting that there would be no scope for any general improvement in standards of material provision in schools and colleges. That very much affects the matter raised by my hon. Friend. I will not go through the history of the Government circulars issued since then because it will be familiar to the House.
  Worthy though the cause of the Darlington children might be, therefore, it must be left to the Durham County Council to decide what assistance it can give in today's difficult circumstances.
  Mr. Fletcher: An application has been made to Durham County Council and rejected. Durham County Council makes a contribution to the Northern Arts Association. In addition, it has given seven or eight teachers leave with pay to conduct the students to the United States. Each family in the county makes a contribution of£2 towards the£40 million we spend on the arts. So the county council and the Durham families are making a contribution and getting nothing in return.
  Mr. Fowler: I am sure my hon. Friend accepts that every family in the country contributes in the same way. Therefore, he cannot fairly argue that families in County Durham alone are contributing specifically. I am a Durham man by ancestry and, much as I should like to believe that Durham has a special entitlement, I cannot accept that assumption.
  Expenditure on the arts by the Arts Council is not generally or directly aimed at children still in school. It is basically for the promotion of the professional arts and cultural activities in the wider community in Great Britain. This means that help for these youngsters from Darlington would come, if at all, from local authority rather than Arts Council or regional arts association sources. But the points raised by my hon. Friend require me to say something in general about resources for the arts and how decisions in this area are taken.
  Decisions on the detailed application of those resources are taken by the Arts Council, and the Arts Council clients in turn make their own decisions within their own budgets. Amongst those clients are the regional arts associations, which are independent bodies which grew out of their localities. They have strong local authority and other arts interest representation. The Northern Arts Association has a distinguished record of achievements and fund-raising—
  The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House, without Question put. pursuant to the Standing Order.
  Adjourned at twenty-one minutes to Eleven o'clock.

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