Sitting of 5 November 1976

Preamble
The House met at Eleven o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PETITION

  Staffordshire (County Plan)
  Mr. Patrick Cormack: With your permission, Mr. Speaker, and that of the House, I beg to present a petition from my constituents in Great Wyrley, which just so happens to be that part of my constituency adjacent to Walsall, North.
  The petition is designed to make the Secretary of State think again about his modification to the county structure plan. It is supported by people of all parties and of none and has been signed by over one-third of the electorate.
  The petition states:
  "Your petitioners therefore have urged the Parish Council of the said Parish to make known to your honourable House by every means in its power their strong and resolute opposition to this proposal."
  Wherefore your petitioners pray that your honourable House takes such steps as it thinks fit to ensure that these grievances are given sympathetic consideration.
  And your petitioners, as in duty bound, will ever pray.
  I beg leave to present the petition.
  To lie upon the Table.

  WELSH AFFAIRS
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Coleman.]
  Mr. Victor Goodhew (St. Albans): On a point of order, Mr. Speaker. Is it possible to arrange for the Lord President of the Council to give us a new Business Statement for next week in view of the utter rejection at the polls yesterday of the policies he is putting before the House?
  Mr. Speaker: I am not surprised by that question, but, even so, it is still not a point of order.
  11.8 a.m.
  The Secretary of State for Wales (Mr. John Morris): This is the third Welsh Day in two and a half years that I have had the honour of opening, and one problem confronts me, as with all my predecessors: given the whole range of my responsibilities, what subjects I should concentrate on in my speech today. My hon. Friend the Under-Secretary of State, if he catches your eye, Mr. Speaker, will deal with some of those I am unable to cover. There will be ample opportunity in the coming months to talk on devolution, and it will be no surprise, given the seriousness of the problems facing us, if I concentrate on the economy of Wales.
  Industrial and agricultural problems take up the lion's share of my time as Secretary of State. I welcome the recent fall in unemployment, from 84,750 in August to 79,456 in October. There are now about 6,500 fewer school leavers on the unemployment register than in August, though some will have gone back to school. Nevertheless, to all of us born and bred in Wales, steeped in the fear of unemployment flowing from the experience of the 1930's, these figures are to me and to my hon. Friends wholly unacceptable.
  Our future prosperity lies in conquering the problems of inflation, and more than halving the rate of inflation is an important step in the right direction. Our emphasis on regeneration of manufacturing industry has meant action to limit the growth in public expenditure. The latter is of course unwelcome to those of us who wish to improve our social fabric, but the recent limitations must be put in their right perspective.
  The limitation on the growth of Welsh Office expenditure in fields other than housing in 1977–78 is £12 million. An increased allocation for housing—a recognition of our needs in Wales—will come to £20 million in the same period. But both these figures are dwarfed by the £350 million the Government have offered to the British Steel Corporation to invest at Port Talbot. This is the scale of our endeavours and this is the perspective.

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  The BSC is now carrying out its reappraisal at the request of the Government of the problems of further development at Shotton and Port Talbot. But it is my earnest wish that they take full advantage as rapidly as possible of what the Government have offered at Port Talbot.
  On unemployment we have sought to mitigate the worst effects of the recession The full complex of measures has in United Kingdom terms created or saved half a million jobs. In Wales the measures have saved 14,000 jobs through the recruitment subsidy for school leavers which has been paid in respect of 2,500 people at a negligible cost of less than £200,000 and the temporary employment subsidy, now £20 per full-time worker per week, has been approved for over 100 schemes involving some 7,500 workers in Wales by the end of September. The job creation programme in Wales has created over 4,000 jobs amounting to 140,000 man weeks of employment—again by the end of September.
  In addition my right hon. Friend the Secretary of State for Employment has since given details of the work experience scheme for young people and the job swap scheme. Wales can be expected to benefit substantially from them. I am proud to be associated with these measures, difficult as they are to devise, and limited in their application, but they are the human face of the Government in a very personal problem to each and every one who is unemployed.
  The most important single factor in ensuring a firm economic base to South Wales will be the completion of the M4, to which in all our public expenditure reviews I have attached particular importance. By the end of next year a further 31 miles at a total cost of £117 million will have been completed, and it is not without significance that it is estimated that the construction work involved the creation of some 5,000 jobs both directly and in the various associated service industries.
  I said in the earliest period of my office that I believed that things would get worse before they got better, and we have recently had pieces of very bad news from Courtaulds, for example; nevertheless I believe the tide is turning. Provided we do not relax our zeal to
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  fight inflation I beleve we are beginning to see signs of the dividends ahead. There may be some way to go to the end of the tunnel, but I do see, at least, some light.
  This is the information I have—I will buttress it with the details—from my officials who maintain close contact with manufacturing firms through Wales. There are reports of companies expecting to increase recruitment, and suggestions that under-used capacity is being more fully used than hitherto. This is true for automobile component manufacturers. for firms supplying equipment to meet the increased investment by the National Coal Board; in Pharmaceuticals and in the toy industry. There are also multi-million pound investment projects nearing completion now in both the ferrous and non-ferrous sectors. The picture is not all gloomy.
  There has also been an increase in the inquiries and visits made by representatives of Welsh-based firms to factories and sites with a view to expansion. Already this year the level of inquiries is equal to that for the whole of the previous two years and the number of visits made exceeds that for each of the past three years. Although at present this involves mainly smaller projects I take it as a good indication of the underlying strengths we have in Wales. On the other hand, though, I must tell the House that the number of visits and inquiries by firms outside Wales unhappily continues at a low level. That is the balance sheet. The steel industry is crucial to the Welsh economy. Production has improved recently in response to increased requirements for stock building and the demands of the car industry.
  It is, in a sense, unfortunate that while every closure and every redundancy announcement hits the headlines, much of the improvement which is taking place in industrial investment is not public knowledge, largely because the information is commercially confidential and is given to my officials only on that strict basis. But hon. Members will know that last week I announced an important development in the Heads of the Valleys area—a 45,000 sq. ft. factory at Hirwaun to be expanded by 50,000 sq, ft. to provide over 200 new jobs. In Cardiff the Radiochemical Centre development is well under way; that is another 500 jobs

  1703
  in the pipeline. Also the GKN scheme is nearing completion.
  At Newport the Alphasteel project is making very rapid progress. There will be over 200 jobs there next year. At Waunarlwydd the massive investment by Alcoa on new hot and cold rolling mills—the largest single investment by the private sector in Wales at present—will be completed next year, and provide several hundred new jobs. Sony at Bridgend has announced plans to increase its labour force; Matsushita in Cardiff announced two weeks ago a speeding up of its recruitment programme; Girlings at Cwmbran and Pontypool have announced a major investment programme. Those are just some of the schemes which are public knowledge but it is as well to put them in the forefront of our minds.
  But there are a host of other encouraging signs—mainly of existing firms taking on more labour within their existing capacity, that is. taking up under-used capacity. Details are confidential, but let me give the House if I may a flavour of what I have in mind, without breaching confidentiality. This is what I am told of a firm in the Rhondda,
  "After a very slack, period earlier this year the order book is now very healthy ";
  of a large firm in Gwent,
  "Not materially affected by the economic situation in the past two years ";
  of a firm in the Rhymney Valley,
  "Employment has continued to expand since 1975. Sales have increased dramatically. The order book is lengthening, and now adds up to 10 months work ";
  of a large firm in Swansea,
  "An increase in the labour force is likely ";
  of another Swansea firm,
  "The long term demand for products is seen as excellent. Management are hopeful of increasing employment before the end of the year ";
  of a Gwent firm,
  "There has been a small increase in labour in the past three months, and a further increase of 100 is expected in the next six months";
  of a mid-Glamorgan firm in September,
  "The labour force expected to increase by over 100 by the end of the year";
  of a Dyfed firm,
  "Now recruiting 40, 20 per cent growth in output in the last year, 30 per cent, growth expected this year ";
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  of a Swansea firm,
  "£1 million investment approved ";
  of a mid-Glamorgan firm,
  "The labour force is 50 more than at the beginning of the year ";
  of a Gwynedd firm,
  "The last few months have seen a significant increase in demand ";
  of a Clwyd firm,
  "A steady increase in employment is in prospect"—
  and so on.
  That is the picture and it is right for us, against the background of the redundancies of the last few months, to bear it in mind. Those are the encouraging signs which I see in the reports from my officers.
  Since July 1975 I have been responsible for the provision of selective financial assistance under Section 7 of the Industry Act. The powers are flexible and are administered in ways that meet the particular circumstances and needs of applicants. Loans can be provided on favourable terms, including interest-free periods; alternatively interest relief grants can be paid to subvent commercial borrowings; and for undertakings moving into Wales we can meet a substantial part of removal costs. Those forms of assistance, coupled with regional development grants, make up a very powerful package of incentives to encourage the establishment or expansion of manufacturing enterprises in Wales.
  But selective assistance applies not only to manufacturing industries but also in certain circumstances to service industries. Indeed, I recently announced revised and much more generous grants to encourage the growth of employment in service industries in the assisted areas. This was greatly welcomed.
  There has been a decline in the number of applications for assistance in comparison with earlier years, and the average size of projects covered by the applications is smaller than a year ago. This reflects the general economic situation. An encouraging feature, however, is that, whereas there were 27 applications in 1975–76 for rescue assistance—involving nearly £17 million to safeguard about 6,800 jobs—there are no rescue cases currently under consideration. Although the number and average size of applications has declined, there is still

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  a steady stream being processed. At present there are 60 applications under consideration or for which offers of assistance have been made but not yet accepted by the applicants. The value of the assistance involved in terms of loans or of their equivalent is some £24 million and the number of jobs about 4,500. Even in these difficult days, therefore, there is a good deal happening on this front.
  As I indicated, these industrial matters take up a great deal of my time. But I am convinced that far too many firms are not fully aware of the range of incentives that is available. This is a view which is shared by the Welsh Industrial Development Advisory Board. It is my intention, therefore, to mount a publicity campaign, in which WIDAB will participate, to spread the selective assistance gospel. I am sure that there are firms which are now sitting on the fence not knowing whether to go ahead with a project. I believe that the assistance we may be able to make available to them could convince them that they ought to press ahead and, in so doing, create the jobs we need.
  Mr. Ian Grist: Would the Secretary of State agree that the best incentive that any industry can have is the right to make after-tax and after-inflation profits of the size of which his party disapproves and always has disapproved?
  Mr. Morris: That observation is quite incorrect, as my right hon. Friends the Prime Minister and the Chancellor of the Exchequer have made quite clear. In recent times, the Chancellor has given enormous assistance to industry in his taxation proposals, and I know that this is appreciated by industry. I am anxious that the whole range of these incentives—many of which, as the hon. Gentleman should know, flow from an Act brought into being by the Tory Government—should be made better known to industry and that those who have the decision making in their power should know what is available so that we can create the jobs we need.
  I turn to exports. I am also glad to be able to say that while home demand in many sectors is slack our Welsh exporters are continuing to do well. More and more firms are joining the growing
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  number of export missions from Wales, and I have asked my industry department to give very high priority to helping firms to boost exports. This is of crucial importance, of course, in the national interest. But it is also of vital importance to the firms themselves, in that increased exports at profitable prices will enable them to keep going in otherwise difficult times, and the more they export the greater is the likelihood that they can increase employment. Indeed, I believe that when as at present, there is not a great deal of movement of industry into the assisted areas one of the quickest ways of creating extra jobs in these areas is via increased exports.
  Firms which are to the fore in the export business are found in every part of Wales. They include the following firms. Aluminium Wire and Cable Company of Swansea, which my right hon. Friend the Prime Minister in company with my hon. Friend the Member for Gower (Mr. Davies) visited earlier this year, has through sheer persistence and resourcefulness secured an order worth £5½ million for 1·4 million metres of cable for Abu Dhabi which will provide the company with work for two years.
  Wallace Evans, consulting engineers of Penarth, will lead a team of four British firms, including the Cardiff-based quantity surveyors, I. E. Symonds, on a Saudi-Arabian programme for building 97 hospitals worth £2,000 million. Thomas Hoskins, a small Cardiff manufacturer of specialised vehicles, has won a contract in Iran for mobile veterinary clinics. Doncasters of Blaeavon, which makes highly technical forgings for gas turbine engines, has secured German and French business against very strong international and local competition. BICC at Wrexham has recently won orders for power cables worth £5 million from Qatar and £4£ million from Saudi Arabia. There are many more which are equally successful.
  On 25th November there will be a major conference on exports—the Exports Dynamics Conference—held in Barry with Sir Frederick Catherwood, Chairman of the British Overseas Trade Board, in the chair, supported by other members of the Board, including His Royal Highness the Duke of Kent. The basis of the conference—the first of its kind ever held in Wales—will be the case

  1707
  studies of four leading Welsh exporters of varying size and different industrial sectors which have agreed to present their export experiences, warts and all, for debate and questioning in front of representatives of 300 companies who have been invited along. The object of the conference is to provide an opportunity for firms to learn from each other and to help each other. I am confident that many participants will benefit a great deal from the occasion; and as the firms benefit so, too, will Wales. This year, of course, has seen the Welsh Development Agency swing into action. On 1st January the Agency took over the ongoing responsibilities and work in hand of the Welsh Industrial Estates Corporation and the Welsh Office's own Derelict Land Unit. This is ongoing.
  Since then, the Agency has more and more put its own stamp on these activities.
  The Agency also has now responsibilities. It can make grants to improve the environment and with my consent has made such a grant, in association with the Job Creation Programme, to the Blaenau Gwent Borough Council. It also has a duty in the field of promotion on behalf of the Principality, and here it is working in close consultation with the Development Corporation for Wales. But its most important new function, however, is the support, whether financially or otherwise of new industrial development. Roughly 100 inquiries have been received in the first 10-month period and, as a result, 20 schemes are or will shortly be under active consideration. This is an interesting commentary on the view which private industry takes of the Agency, and it is a view quite opposite to that forecast by some hon. Members opposite.
  The Agency has been concerned to build up its resources of staff with expertise in investment matters, and with experience of industry and commerce. This will enable it increasingly to seek out new opportunities for investment.
  This week the Agency announced that it will develop an area at Rassau which will provide up to 100 acres for industrial purposes. The development will be phased according to the rate at which space is taken up, and it is intended that factory building should commence
  1708
  as soon as the first 30 acres have been prepared. Eventually the area to be developed will provide about 500,000 square feet of factory space which could accommodate about 1,000 jobs
  Mr. Nicholas Edwards: At Welsh Question Time on Monday the Secretary of State sought to give the impression that 1,000 jobs had been created by this action and that the figure would rise from 1,000 to 3,000–4,000. Will he confirm that what has happened is an administrative change in planning arrangements at the site and that not one single job has been created?
  Mr. Morris: The hon. Gentleman must do his homework and follow what is happening at Blaenau Gwent. Perhaps he has never visited that place.
  Mr. Nicholas Edwards: Answer the question.
  Mr. Morris: I do not know whether the hon. Gentleman is aware or understands what is happening. Perhaps he should visit Blaenau Gwent and find out for himself.
  Mr. Nicholas Edwards: Answer the question. The Secretary of State is being totally irrelevant.
  Mr. Morris: The hon. Gentleman must not behave in this unseemly way. He must now behave himself.
  Mr. Nicholas Edwards: Answer the question.
  Mr. Speaker: Order.
  Mr. Morris: I wish that the hon. Gentleman would behave himself as if he were a Member of the House of Commons and not on the barrack square. If he did behave himself he would know that on Monday I said that the Welsh Development Agency had taken an important decision. The planning aspect has been resolved. The Development Agency has said that it will go along with a partial development of the site. There is a great deal of work to be done and it will mean the investment of millions of pounds so that in due course the factories can be built. The hon. Member for Pembroke (Mr. Edwards) knows that an announcement on Monday cannot create a single job within a matter of days. That was not the impression that

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  I gave the House and if the hon. Gentleman did not live in cloud-cuckoo land he would know that to be the case. The hon. Gentleman must behave himself.
  Mr. Nicholas Edwards: It is Mr. Speaker's job to keep order.
  Mr. Morris: This is an important decision by the Welsh Development Agency. I hope that the hon. Member for Pembroke will do some homework and that he will realise the importance that the people of Blaenau Gwent attach to the development. The decision has been welcomed by the people there. They need the jobs and the tragedy is that his Government made no serious proposals to ensure that jobs were brought to the area. Under them the area would have been allowed to die. I shall certainly not allow that to happen.
  The decision will help to bring new hope to the area and it will show other areas which have to suffer the problems of industrial rationalisation in a practical way the force of my comment on 21st March 1974, that the Llantrisant decision should not be seen as a negative one, but that there must be
  "a renewal of our commitment to enhance and develop the existing communities which have shown a remarkable resilience and a greater potential for industrial development than was thought possible some years ago."
  Mr. Jeffrey Thomas: Does my right hon. Friend realise that the people of Gwent and of North Gwent in particular are extremely grateful for his announcement on Monday? It will in due time provide much-needed jobs in the area.
  Mr. Morris: I am grateful to my hon. and learned Friend, who has followed this matter with interest and has added his advocacy, as have my hon. Friend the Member for Brecon and Radnor (Mr. Roderick) and my right hon. Friend the Member for Ebbw Vale (Mr. Foot).
  I return to the remarks made by the hon. Member for Pembroke a few minutes ago. He claimed that I said that the decision has created new jobs. The Hansard report has now been brought to my attention and I find that I said:
  "That is a significant development that will allow for more than 1,000 jobs in the first
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  phase and eventually 3,000 lo 4,000 jobs."— [Official Report. 1st November, 1976; Vol. 918, c. 944.]
  The hon. Gentleman is misleading the House.
  Mr. Nicholas Edwards: The Secretary of State accused me of having drafted my question before I had heard the announcement which gave a clear implication that these jobs were already on the line. He was attempting to mislead the House because those jobs are over the horizon and we do not know when they will appear.
  Mr. Morris: The hon. Member should read Hansard and when he has done that I hope that he will apologise to the House. I invite him to familiarise himself with the problems of Blaenau Gwent and compare what we are seeking to do to bring new life and new hope to the area with what his hon. Friends did and would have done if they had been in power.
  Turning from the town to the country we have seen this week the Development of Rural Wales Bill further on its way to the statute book. It is a matter of pride to me that in my short period of office two important and unique pieces of economic and social legislation for Wales have been brought to the House. It has never happened before and I want to thank my two Under-Secretaries of State—my hon. Friend the Member for Flint, East (Mr. Barry Jones) for guiding this last Bill through Committee, and my hon. Friend the Member for Rhondda (Mr. Alec Jones), who did a great deal of the preparatory work and consultations. I regret, as I am sure he does, that he was not able to play a part in the Bill.
  It is no good the Opposition pouring cold water over this Bill as they did to parts of the Welsh Development Agency Bill. Their record in office, having killed the Rural Development Board, was sterile and barren, and all mid-Wales knows it. As I am sure every person in mid-Wales knows nothing was done between 1970 and 1974. Everyone who knows and understands the area, who lives in mid-Wales and knows the problems realise that we have done something. We are putting on the statute book an important measure which will in time bring new hope to mid-Wales.

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  I turn to another of our major industries—agriculture. The prolonged drought came as a severe blow to Welsh farmers, and everywhere it was a grim picture to witness our sunbaked fields for endless weeks. Fortunately with the coming of the rains earlier fears of a grave shortage of fodder this winter, such as the industry suffered two years ago, were abated. The House will know the measures announced by my right hon. Friend the Minister of Agriculture, at the beginning of last month to assist those sectors of the farming industry most severely affected.
  The measures should be of particular benefit to Welsh farmers, because they are concentrated in the livestock sector which is the mainstay of our agricultural production. The increase in the milk guarantee will be of direct assistance to our dairy farmers; and the increase in the guarantee for fat sheep is a realistic recognition of current market prices and will further strengthen confidence in that sector. We have also relaxed the rules relating to beef cow subsidy to assist those who because of the drought, temporarily reduced the size of their herds. We also propose to increase—by an additional 20 per cent, of the cost for a 12-month period—the grants under the Farm Capital Grant Scheme and the Farm and Horticulture Development Scheme to encourage the installation of on-farm water storage.
  I hope that this doubling of the rate of grant under the Farm Capital Grant Scheme and the lifting of the Farm and Horticulture Development Scheme rate from 25 per cent, to 45 per cent., will be accepted as a genuine—indeed, generous—effort by the Government to help those farmers who this year were sorely hit by failing water supplies. I hope that, in the affected areas, our farmers will take full advantage of this very substantial increase in the aid available.
  We have to acknowledge, of course, that the drought caused a serious setback on our road to recovery. But it was a temporary setback only and there are clear indications that the industry has recognised it as such. The milk industry is climbing back and preliminary reports for the beginning of October suggest that, in comparison with the corresponding period last year, production has almost caught up again.
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  There are other clear signs that, despite its recent difficulties, the industry is not lacking in confidence. Market prices for store as well as fat cattle at Welsh markets are being very firmly sustained, and the suckled calf sales have so far been very good. In the sheep sector there is a growing interest, which I welcome, in the benefits to be obtained from fat lamb production. This is very encouraging. More than 60 per cent, of all lambs produced in Wales are now being fattened and are attracting prices well above the guarantee. Firm prices are also being returned at the autumn sales of breeding ewes and lambs and this should give encouragement to our sheep farmers.
  If further evidence of the industry's underlying confidence were needed, it can be seen in the increasing recognition of the benefits to be gained through investment associated with the Farm and Horticultural Development Scheme, the conditions of which were simplified this summer, when the range of eligible items was extended. The agricultural advisory services have made a special effort to advise farmers about the scheme, and this has led to over 800 applications being submitted in the six months ended 30th September 1976.
  Generally, therefore, the picture on the agricultural front now is much brighter than we had expected a few weeks ago. Difficulties remain, of course. But I am convinced that the broad outlines for selective expansion which were set out in our White Paper "Food From Our Own Resources" are as realistic today as when they were published, and it will continue to be our aim to bring about conditions in which that expansion can be achieved.
  Lastly, it is as part of my concern for employment that I briefly turn to education. That there is more to education than in this context I would be the first to claim. But I am concerned—and I share this concern with my right hon. Friend the Prime Minister—that education, which accounts for 70 per cent, of the current expenditure of county councils hi Wales, should provide all the children of Wales with the means of sharpening then- talents, and drawing out the resources that were given to each of them, mitigating whatever inherent disadvantages they may have, not only so that their lives will be richer but so that

  1713
  they are equipped to play a full part in society.
  Local authorities throughout Wales are carrying out their reappraisals of expenditure in this field. The Government have quite properly set out guidelines for local authorities in relation to current spending on the various services they provide, but it is not for us to determine their priorities. Local education authorities have wide discretion, and this gives them considerable scope for assessing and meeting local needs within the limits of their resources, bearing in mind certain minimum standards prescribed in statute or in regulations. But side by side with this freedom goes the responsibility indeed the painful duty—of determining priorities at times of pressure upon resources. The decisions that have to be taken by local education authorities this year are difficult. Account will have to be taken of statutory obligations, of the already difficult teacher employment situation, of the legitimate interests of parents, but above all of the educational needs of our children.
  The teachers of Wales have given, and continue to give, devoted and inspiring service to our communities. But, however great the devotion or the improvements in buildings or facilities, it is right to question from time to time our standards and achievements. Our aim is to ensure that our children become both literate and numerate, that they acquire the basic skills, knowledge and reasoning power needed in today's world so that all their lives may be fuller.
  There is room for discussion about how we should seek to achieve this. My right hon. Friend the Prime Minister has lanched a national debate on this vital issue, and it will be my aim in the coming months to try to ensure that the debate in Wales is constructive and purposeful. One aspect of this is the need to link the activities of our schools as closely as possible to the realities of present-day life. Surely no one can be content with a situation in which—I take this only as an example—the numbers of young people in Wales offering mathematics and French at O level have actually fallen sharply since 1970. Our economic future as a country depends on our ability to make and sell the products needed by the world. Without scientists, technologists and engineers we
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  shall be unable to design and manufacture those products. Without a knowledge of modern languages it will be more difficult to sell them abroad.
  It is entirely right indeed, essential—for the school curriculum to be drawn up with a proper appreciation of these facts. That is why I have arranged for every head teacher in Wales to receive a copy of the remarks on this subject which I delivered at the official opening of Bryn Elian School, Colwyn Bay, last month. We are not advocating centralised State control of the curriculum or diminished freedom for constructive developments in teaching methods. But teachers will, I think, recognise that though their own contribution to the debate will be of major importance the views of our universities and colleges, of both sides of industry, of professional and learned bodies, of the Government, and, not least, of parents have also to be taken into account. It is my hope and belief that out of this debate there will emerge a clear consensus on the role which the schools in Wales should be performing in the last quarter of the twentieth century.
  I began by indicating that I would be selective in my themes. I am sure that I shall be criticised for that. Hon. Members on both sides of the House will, I know, raise a whole host of issues which concern their constituents, and my hon. Friend the Under-Secretary hopes to deal with them in due course, but I thought it right on this occasion to try to bring together the various strands to try to weave a picture of the economy of Wales as a whole.
  There are so many in all walks of life, and in the public service in particular, who serve Wales. I am grateful for the co-operation that I receive in the performance of my office. Whatever our differences, we all seek to serve the nation of Wales.
  11.49 a.m.
  Mr. Nicholas Edwards: I, too, intend to bring together strands to weave what I suspect may be a rather different picture. First, hon. Members throughout the House will wish to join me in congratulating those who were elected to this place last night and in thanking them for giving us such clear guidance on the people's views about the performance of this Government.
  Mr. If or Davies: I should be obliged if the hon. Gentleman would include in his congratulations the winning of a county seat by a Labour candidate in my constituency.
  Mr. Edwards: I am sure that the election of any person is a matter for congratulation. I am glad that the hon. Gentleman can find a small crumb of comfort in that.
  I should like to welcome back to health and to his place in our discussions on Welsh affairs the hon. Member for Rhondda (Mr. Jones). We do not always agree with the Under-Secretary, but we respect him and we are grateful for his courtesy and for the agreeable way in which he and his fellow Under-Secretary always seek to respond to discussions in Committee. The Secretary of State is fortunate to have two such colleagues to sort out the difficulties that he so often creates for himself.
  I take this opportunity of paying tribute to those who have given great public service in Wales. Lord Brecon made an immense contribution to Welsh public life and was untiring to the end in the most difficult of jobs, in spite of the grave ill-health which beset him. We mourn his passing. Fortunately, the other Welshman I wish to praise is still with us, and I would first say this of Mervyn Jones. If his successors do half as much with half the enthusiasm, good humour and success as he has achieved for tourism in Wales we shall be very fortunate.
  I turn now from people to procedure, to protest, as we are entitled to do, at the shabby way in which Welsh Members, and therefore Wales itself, have been treated for the second year running. The suggestion that our debates might again be divided was intolerable. The uncertainty about the starting time caused hon. Members inconvenience, and to have the debate on a Friday has added to that inconvenience as is clearly evidenced by the fact that fewer than half the Welsh Members are in their places today.
  When I first came into the House our Welsh day debate was usually held on about 1st March. I cannot understand why it is now always slipped in at the tail end of the Session in this shabby way, so that we are very lucky if it gets slipped in at all.
  1716
  Listening to the Secretary of State describing the task he inherited, the difficulties that he faces and the immense problems which lie ahead, it is hard to remember that his Government have been in power and he has been in office for two years and eight months. Yet I suppose that it would be unfair to blame him too much for the tragic condition of the Welsh people. One does not blame the cabin boy when the ship goes on the rocks. The responsibility rightly lies primarily with those who matter—the captain and the mate. We blame the Prime Minister—I was going to say first and foremost, but I suppose that we blame his predecessor even more. We blame the Chancellor. We blame first those who carry weight and influence in drawing up Labour Party policy.
  The Secretary of State cannot escape unscathed, however. He is pleased enough to accept the glory of his office and he must accept the responsibilites that go with it. Let us make no mistake, the responsibility for the present disastrous state of the Welsh economy is that of the Government. It was they who put party before country in 1974, and it was they who abandoned the public expenditure cuts introduced by Mr. Barber, as he then was, in the wake of the oil crisis. It was they who let public expenditure rip in the wake of the election and it was they, not while in Opposition but with the knowledge of eight months in government, who talked of inflation at 8·4 per cent, after they had served eight months in office. It was they who, in their Welsh manifesto in October 1974, boasted of "strong action to strengthen the Welsh economy" and said that "the Labour Government would continue to build on the firm foundations which it has already laid". "Firm foundations, not a bleak inheritance was what they offered the electorate. They told us that they had" pressed ahead vigorously in attracting new manufacturing industry to Wales". They talked of giving "further impetus to the task of developing the valleys and improving the quality of life for those living in them. This would mean providing even more jobs and a wider range of jobs", they said. That was the promise and the expectation in October 1974.

  1717
  The reality, two years later, is that male unemployment in the valleys is almost 10 per cent. Is that what the people of Wales were led to expect? Did Mr. Gordon Parry, as he was then, tell the electorate in Pembrokeshire in October 1974 that two years later, under a Labour Government, 4,213 people would be thrown out of work—more than double the figure in any previous October between the outbreak of war and the October election? Not even I imagined that a Labour Government would put 20 per cent, of the population of Milford out of work, or leave nearly 17 per cent, of those in Pembroke Dock unemployed. It is the same sad story elsewhere in Wales. The facts and the figures are a shocking condemnation of the Government. They said that we would do it, but it is they who have done it.
  The tragedy is that the sacrifice has has been entirely wasted. The immediate impact of the measures needed to solve our economic crisis may well be to increase unemployment for a time. But once it is realised that a Government mean business, the firm expectation that inflation will be beaten is likely to restore investment and modify wage demands, so that instead of the nightmare we now face we would have—sooner than many people realise—rising production, increasing job opportunities and expanding pay packets.
  I said that the sacrifices had been entirely wasted and I referred to a nightmare. The nightmare is that we have rising unemployment and no prospect of inflation being defeated. The nightmare is that action will have to be taken when unemployment in Wales is almost 80,000. It could have been taken a year ago, when the figure was 9,000 fewer. It could have been taken in October 1974, when it was 39,000 fewer. A less irresponsible Opposition than Labour then was would have supported and maintained the corrective measures taken in October 1973, when unemployment was only 32,000. Now the operation has to be performed with the patient already gravely weakened. Let the cancer go unchecked and avoid what needs to be done and the job is made much more difficult, with much less chance of success.
  Certainly the recent fall in total unemployment gives no grounds for complacency for the future. It has come
  1718
  about largely as last year, because school leavers have found jobs, but the underlying trend is still rising. Industry in Wales deserves our congratulations and thanks for the way in which it has taken on the school leavers, but the fact that it has done so cannot disguise the gloomy prospects we still face.
  During Question Time on Monday I referred to coming redundancies in West Wales. There is the certainty of Courtauld's closures. There is the sad fact, described by the Welsh Industrial Development Advisory Board, that the initial impetus to secure new projects for the areas hit by steel closures has not been maintained. There is the fact that the impact of the pay-roll tax, which was imposed in July, and which will cost Welsh business about £60 million, has not yet been felt. Now there are the devastating consequences of the penal unprecedented interest rates imposed by the Government. All this takes place against a background that the present upturn in the world economy may well reach its conclusion by the end of next year and that before then we shall face an increase of at least 10 per cent, in the price of oil.
  To have thrown so many out of work is a shocking failure of government. To have done so without achieving the necessary restructuring of the economy makes the failure doubly reprehensible and doubly tragic. The Government argue that to cut Government expenditure will endanger the social fabric. Surely nothing is more likely to endanger the social fabric than a double failure of this kind, coupled with a growing realisation that the situation will get worse. The Government used to argue that the sacrifice was worth it because the inflation rate had been halved. The Secretary of State fell back on that argument this morning.
  The reality is that the inflation rate is still much higher than it was when the Government came into power. It is still 50 per cent, higher than the 8·4 per cent, boasted of by the Chancellor. The rate is still double that of our main competitors and is now likely to go on running at 15 per cent, or more throughout the next year. The Government have recently taken some comfort—the Secretary of State was able to see a glimmer

  1719
  of light at the end of a long tunnel—from the fact that industrial production in Wales has shown an upturn from the dismal figures of 1975, but the index is still substantially below its lowest point during the previous three years and prospects are varied.
  The Secretary of State gave us the highlights. Building and construction is in a dreadful state with nothing on the horizon. Transport is doing very badly and sub-contracting engineering very poorly. Although firms concentrating on exports have done significantly better, there is no sign of any upturn in the home market generally. For every good bit of news listed by the Secretary of State it would be equally possible to list bad news. Most worrying, the steel industry, after a slight recovery, seems to be on the downturn again. Certainly the order book for the first part of 1977 is disappointing.
  The steel industry is operating in a world market that is in surplus but there is reason to think that the home market is being affected more directly as a result of destocking due to the high interest rates imposed by the Government. Against this background it is no surprise to discover that investment is at an unprecedentedly low level. The number of expansion projects in Wales in the year ending 31st March 1976 was lower than in the previous year by 40 per cent. The Welsh Industrial Development Advisory Board reports a low level of applications in respect of expansion projects and states that the number of applications received during the period January to March 1976 was below that of any earlier three-month period. It was significant that the Secretary of State had to fall back rather desperately on inquiries from firms inside Wales. The number of inquiries from firms outside Wales seeking industrial locations there is 221 so far this year. Compare that with 855 in 1973, 635 in 1974 and 315 in 1975 and the story is all too clear.
  The same pattern is to be seen in the number of official visits—again sharply down over previous years. The Secretary of State spent little time telling us today what he was doing about that. He talked of meetings with industrialists to encourage exports, but the right lion, and learned Gentleman told us remarkably little about what the
  1720
  Government are doing. He fell back on talking about the development agency and the Rural Development Board and advance factories. All these things are totally irrelevant while the economic ship is being steered with such irresponsibility.
  All these things may be good in themselves but they are completely worthless while the economy is being mismanaged. This is the first speech that I can recall the Secretary of State making in which he has not boasted about advance factory building. The reason may become clear in a moment. Advance factory building has been proceeding rapidly. But it is easy to understand why members of the development agency speak rather bitterly about the obligations they have inherited to build even more of these factories regardless of whether they are of the right kind, in the right place or whether there is the slightest prospect of their occupation in the foreseeable future.
  The Secretary of State boasts that he has authorised 960,000 sq. ft. of new advance factory space since February 1974. The significant fact is that only 185,00 sq. ft, have been formally allocated. Even more staggering is the fact that out of the total number of 132 advance factories completed since 1965, 44 are currently vacant. That represents one-third of all those advance factories built. That is not the whole story. A total of 53 Government factories are now vacant in Wales—14 of them having been empty for a year or more.
  Perhaps it was a little unkind of me last week against a background of 27,000 redundancies in Wales this year, to ask the Secretary of State how many jobs had been provided in Wales by firms occupying Government premises for the first time during the year. If it was unkind it was nothing like as unkind as the right hon. and learned Gentleman's answer was for the unemployed in Wales. The Secretary of State said that 701 jobs have so far been produced in 1976. Worse, only 1,150 new jobs have been provided by manufacturing firms opening in Wales since March 1974. It is a story of financial irresponsibility, declining investment and economic decay.
  Before I turn from economic affairs and the gross mismanagement of the Welsh

  1721
  economy by this disastrous Government, I shall deal with a suggestion made in the Western Mail Economic Review that Wales should be spared the cuts in public expenditure which I believe are necessary for the economic recovery of the nation. 1 am sure that it is wrong to base the argument simply on the fact that the percentage of people employed in the public sector in Wales is higher than in Great Britain as a whole. That is to a considerable extent due to the importance in Wales of the steel and mining industries. When we talk about cutting public expenditure we should be thinking primarily of cutting the unproductive sector. The CBI is absolutely right to emphasise in "The Road to Recovery" that cuts on commercially justifiable capital expenditure in national industries must be avoided. The theory that Wales cannot switch its public sector employment into an expanding private sector is particularly dangerous because such a large part of Wales is economically dependent on small businesses.
  It is the small businesses that are being so gravely damaged by the irresponsible spending policies of the Government. It is this sector that is being forced to lay off so many people. This is clearly borne out by the unemployment figures for Wales outside the industrial valleys which run at levels of 15 per cent., 16 per cent. and 17 per cent, in constituencies like that of the hon. Member for Cardigan (Mr. Howells). The small business sector has a vital interest in seeing the burden of Government expenditure and administration eased. Wales has at least as important an interest as Britain as a whole in seeing that the country lives within its means.
  We must not elude people into thinking that we can be spared the impact of necessary measures. These measures are necessary to avoid the prospect of 3 million unemployed and the collapse of social institutions proffered to us by the Chancellor. What is true is that Wales has certain needs and problems that in any allocation of priorities must be taken into account. Welsh industry would regard the maintenance, and indeed the improvement, of an adequate transport system as a hight priority to be kept even in a period of austerity.
  Equally, we cannot ignore the changing structure of industry and the need to cushion the impact of all these changes.
  1722
  We share the Secretary of State's views on this point and it is utterly misleading for him to pretend otherwise, as he did earlier today. It was we who established the task forces in Blaenau Gwent and set on the road the work that is now going on. If our object is to reduce the numbers employed in the public sector—something that can be achieved substantially through natural wastage—we must actively be seeking to stimulate the conditions in which industry can take on people as it grows, in confidence that inflation will be halted and that it can look forward to a period when profits can be made and maintained.
  My argument about capital expenditure for the nationalised industries has particular relevance to the investment strategy of the British Steel Corporation. A year ago in this debate the hon. Member for Gower (Mr. Davies), whom I am glad to see in his place today, pointed out that
  "Indecision and delay in revitalising the British steel industry has already given our overseas competitors a huge lead in the international race."—[Official Report, 12th November, 1976, Vol. 899, c. 1565–6.]
  He urged the Government to give Port Talbot the tools to get on with the job by implementing the BSC strategy. He pointed out that failure to do so could be disastrous to the South-West generally and to the tin-plate industry in particular. On Monday when pressed by me on this matter the Secretary of State was characteristically less than frank, as he was again today. He knows perfectly well that the go-ahead has not been given for extra steel-making capacity, and that without that extra steel-making capacity the expenditure of £250 million for a new strip mill makes very little sense.
  Mr. John Morris: Rubbish
  Mr. Edwards: The Secretary of State says "Rubbish". I hope that those who know the industry and the BSC will take note of his assessment of the situation; I am sure that the hon. Member for Gower knows that it is not their view.
  At a time when the Government castigate the private sector for a failure to invest, it is extraordinary that they should take two years and 8 months without taking the vital investment decision about Port Talbot and Shotton.
  Mr. John Morris: The hon. Gentleman should know, or should find out, that there is unanimity in West Glamorgan—among the trade unions, the local authorities, everyone I talk to—that the Government's firm offer of £350 million for investment should be taken up by the BSC. Despite the protestations to the contrary by the hon. Member, we are concerned with employment generally and with the social consequences of unemployment, as I am sure the hon. Member for Flint, West (Sir A. Meyer) would be the first to agree. We have given the go-ahead to the BSC for that part of the investment which does not prejudice the reappraisal of development and increased steel-making capacity, wherever it may take place. We want that to go ahead, and I hope that very soon we shall have the results of the inquiry by the BSC.
  Mr. Edwards: The right hon. Gentleman talks about there being unanimity in West Wales. I have the report prepared by the West Glamorgan County Council giving the views of the West Wales Development Steel Committee, which states that
  "£250 million for a new strip mill is seen by BSC as being inextricably linked with the expansion to 6 million tons optional on BSC. Without the extra steel-making capacity an expenditure of £250 million on a new mill would only serve to increase the price of hoi rolled coil".
  So much for unanimity.
  Mr. Ifor Davies: I am a member of the West Wales Development Steel Committee, and at a recent meeting the unanimous view was expressed that the BSC should be pressed to accept the offer made in the House last July by the Secretary of State for Industry of an investment of £250 million, which the hon. Gentleman has criticised, for the new mill at Port Talbot.
  Mr. Edwards: It is characteristic of the Government that they should press the BSC to continue with half an investment decision regardless of the cost impact on the Corporation at a time when it faces additional costs of £30 million as a consequence of the devaluation of the pound sterling, as stated in the Press this morning.
  During the debate on 12th November last year, the Under-Secretary of State gave hope of a decision on Shotton before
  1724
  the end of 1975. Here we are, a year later, with uncertainty as great as ever. What a way to run a country.
  The Secretary of State referred to agriculture—another industry vital to Wales. What he failed to say was that nothing has been done to translate the White Paper into reality, though surely at a time when world food surpluses are disappearing and we as a country are virtually bankrupt, with our credit exhausted, it should be a central objective of Government policy to do so. To reduce the import bill is at least as important in the fight against inflation as to hold down consumer prices.
  The March 1976 sample survey showed declines in important sectors of Welsh agriculture. The cattle breeding sector and the dairy herd showed continuing decline, and the beef herd decreased by 7 per cent. over the year a fall that is having its impact now. It is clear that without a long-term strategy, operating under the handicap of a penal tax structure, faced with the 45 per cent, distortion of the green pound and with a situation in which, as we approach the end of the transitional period, fair competition does not exist, Welsh farmers cannot make the contribution that they should to the national economy.
  The Secretary of State should be concerned about a situation in which farmers are getting high prices in the markets this autumn, as he rightly said, but largely because of the decline in stocks due to the policy of the Government last year. That is not a healthy position for the future.
  The present distortion of the market is the direct responsibility of the Government. It has destroyed the value of the pound sterling. No one imagines that the present grotesque misalignment of the green pound can continue indefinitely. Our European allies will see to that if we do not. But if we go on putting off the evil day the eventual correction will be much more painful. A start will have to be made at some time, and it is as much in the interests of the British housewife as of the farmer that the process should not be too long delayed. I find it hard to see why the Government have been so obdurate about what could have been the first phase of a step-by-step realignment, because the impact in terms of prices would have been minuscule.

  1725
  I turn to the Government's housing policy in Wales, which lies in ruins. In the housing debate in the Grand Committee in March I suggested that the strategic approach had in any case been wrong, that the policy followed in this country for so long of colossal expenditure, indiscriminate subsidies, huge local authority building programmes and the destruction of the private rented sector had failed to solve our fundamental housing problems, had produced limitless queues of people waiting for subsidised housing, an overall surplus in the United Kingdom as a whole, combined with pockets of acute shortage, a degrading system of house allocation and massive numbers of houses still judged unfit. I urged an alternative strategy.
  It is clear from recent statements by Ministers that at least part of the analysis is now accepted by Government and we are to see major changes of policy, a reduction of expenditure, and sharp increases in rents. My criticism today is concentrated on the reckless and ill-judged manner in which the Government have implemented their past policy and of their accounting of it to Parliament, which, to put it mildly has been less than frank.
  In 1974, the Government, through the mouth of the lion. Member for Merthyr Tydfil (Mr. Rowlands)—now Minister of State, Foreign and Commonwealth Affairs—told the local authorities
  "to spend, spend, spend and break the Bank".
  They did so to such effect that the Government had to dole out an extra £30 million within two weeks of the publication of their White Paper on Public Expenditure and a further £20 million for 1977–78. The Secretary of State reveals his financial irresponsibility by saying "Jolly good".
  So much for the White Paper, so much for the control of public expenditure, so much for the suggestion that the whole think was part of an intelligent, planned programme. The local authorities were told to formulate long-term programmes. The Secretary of State said on 10th March that
  "there will be no cut in the council house building programme".
  He said that the local authorities were to have the greatest flexibility in planning their programmes and that they should
  1726
  "decide for themselves what to do".
  Repeatedly warned in the debate that there would be a massive cut-back in the housing programme in Wales in the years ahead, the Under-Secretary of State, in replying, stated categorically that
  "'… no reduction is planned in house building.' That is a statement of Government policy".—[Official Report, Welsh Grand Committee, 10th March 1976; c 8–49.]
  On 23rd July Welsh local authorities were told that for the time being no new contracts were to be let. They were warned that
  "if new building remains unchecked, the Welsh provision would be significantly overspent".
  On 11th August the suspension of letting was eased but local authorities were asked to seek specific Welsh Office approval for tender acceptances. It was estimated that only £5 million remained for allocation and local authorities were asked to submit bids.
  On 27th September they were told:
  "It has been necessary, therefore, to limit severely the schemes allowed to proceed".
  On 30th September they were told of a new block grant system and new freedom to allocate priorities within totals to be kept rigidly within the White Paper—that is, the White Paper plus the extra £20 million and £30 million which had been doled out a few weeks after its publication.
  At present there is total uncertainty about the way in which the new formula will work. The general expectation among Welsh local authorities is that they will be able to complete about 60 per cent, to 70 per cent, of what they had planned to do next year. So that even if the Government can claim that at present there has been no cut-back in overall expenditure on house building, in the last six months local authorities have had to face detailed control and a substantial reduction of their previous plans. That was not the picture given by the Minister in the last debate in March.
  But worse is clearly still to come. This is where I charge the Government with lack of frankness. On Monday the Undersecretary was still talking about maintenance of the building programme, and he took refuge in the £30 million that has been added to the programme in 1976–77 and the £20 million added for 1977–78. I shall have more to say about that in a

  1727
  moment. What I say now is that the repeated statements that there will be no cut-back in local authority house building is palpably untrue. Either that, or the public expenditure White Paper is untrue. The Government cannot have it both ways.
  The PESC total for local authority capital expenditure on housing in 1976–77 is £104·9 million. For 1977–78 the figure is £88 million, including the additional £20 million which has been announced. For 1978–79 the figure is £65 million and for 1979–80 it is £63 million, which, incidentally, is lower than any figure in the last six years. Only a charlatan or a fool could pretend that whatever use is made of block budgeting one can get as many houses for £63 million as one can get for £104 million. It is, in fact, a cut-back of 40 per cent.
  The realities are that Wales is faced with a considerable fall in local authority building, an even more drastic cut in local authority improvements, and a catastrophic reduction in local authority lending. In March, I pointed out that the cuts in Wales would be more severe than those in England. The Secretary of State replied that he would not expect them so to be. Yet the facts are as I explained them during the debate in Welsh Grand Committee in March. Welsh housing expenditure will fall by 15 per cent, whereas United Kingdom expenditure will rise overall by 1 per cent. By 1978–79 local authority lending in Wales will be down by 67 per cent, while in England it will fall by only 14^ per cent, compared with 1975–76. Investment in new local authority dwellings will be cut sharply in Wales while in England it will remain unchanged. Subsidies will be down by 7 per cent, in Wales. In England they will be 2 per cent. up.
  We are as entitled today as we were last March to an explanation why Wales should be treated so much worse than England, particularly as per capita expenditure on housing is already below the British average.
  The Welsh Office's administration of its housing policy takes us back to where we began. It is directly linked with and helps to explain the economic disaster we are facing. It is a story of economic folly, incompetence and deceit. The
  1728
  Government started with bland promises and reckless undertakings. For example, in October 1974 they said they would "establish a new sound basis for financing mortgages and assisting home buyers". That looks pretty sick now. They also urged local authorities to spend, spend, spend and to break the bank while hitting private housebuilding and improvements on the head. They encouraged recklessness and imposed no control. Despite the warnings they received, they accelerated violently down the road and then they sharply applied the brakes when they saw the bend which they had always known was there. That is a crazy way to drive a car and an equally crazy way to run a country.
  The financial irresponsibility revealed is shocking. The results of breaking a bank are unpleasant for all concerned. That is literally what the Government have almost done—they have almost broken the national bank. The Secretary of State boasts of the extra £50 million allocated to Welsh housing after the publication of the public expenditure White Paper. It should be a matter for shame, not pride, that the Government have lost control of public expenditure in this way. They did not produce the money as part of a planned allocation of priorities, but because they had to stand behind the commitments which they encouraged local authorities to undertake, regardless of the availability of resources.
  The best comparison I can make is to compare the performance of the Welsh Office with that of the Crown Agents. In both cases the Government were forced to bail out an organisation because of commitments entered into during a period of total financial irresponsibility. It is because of that kind of financial irresponsibility that we have 15 per cent. inflation, a devastated currency, and 80,000 people out of work in Wales. A Treasury Bench was once compared with a row of extinct South American volcanoes. At least those volcanoes were comparatively harmless. A better comparison for the present administration would be a row of South Wales coal tips—wet, slippery, and dangerous. The trouble with coal tips is that when they collapse they destroy not just themselves but the people round about as well.

  1729
  For too long the present Administration have damaged and endangered the Welsh environment. Now they should be swept away, before the Welsh people suffer the final political and economic catastrophe.
  Mr. Speaker: There are 11 hon. Members who wish to speak in this debate and there are only 140 minutes left for them. I have been working it out. I hope that hon. Members will keep their speeches short.
  12.27 p.m.
  Mr. Ifor Davies: The hon. Member for Pembroke (Mr. Edwards) will not be surprised to hear that I disagree with a great deal of his speech, but he may be surprised that I agree with his opening remarks about the timing of this debate. This is the first time that Welsh affairs have been debated on a Friday. I hope that it will be the last. This is the day when Welsh Members have an opportunity to clear up constituents' problems with local authorities. It is not good enough to set aside a Friday for Welsh affairs. It was a far happier arrangement when Welsh affairs were debated in March—preferably on St. David's Day.
  My right hon. Friend the Secretary of State emphasised that the economic situation in Wales must be given considerable attention. The Prime Minister has repeatedly emphasised that the regeneration of British industry is a central feature of Government policy. This has a vital bearing on South Wales as our future is closely bound up with basic manufacturing industries, particularly steel, tin plate and coal. These industries are interdependent and the success of our policies of regeneration of manufacturing industry will depend on the efficiency of these industries.
  The British Steel Corporation after a very detailed and protracted study produced its investment strategy a few years ago. This accepted on economic, technological and sociological grounds that the right place to expand was at Port Talbot, if Britain was to keep its competitiveness in the steel and tin plate markets of the world. A further review of the situation was called for by the Secretary of State for Industry in his statement to the House on 19th July. At the same time, he made an important
  1730
  announcement that the go-ahead would be given for £100 million investment in steel making modifications and new coke ovens, together with a further £250 million for the proposed new hot strip mill. It is rather amazing that today—four months after that statement—the offer has still not been accepted by the British Steel Corporation. I do not accept the excuses of the hon. Member. I believe in the old maxim that a bird in the hand is worth two in the bush. I urge the Corporation to give immediate attention to this matter.
  As for the workpeople, I attended a recent meeting of the West Wales Joint Development Committee at which it was unanimously decided that, despite the difficulties, the Government's offer should be accepted. This view is also strongly supported by Mr. Bill Sirs, the General Secretary of the Iron and Steel Trades Confederation, who stated in a recent speech in Cardiff, as reported in the Western Mail on 24th September:
  "This investment will give improved quality—and it is quality that sells steel."
  He gave his blessing to the proposal. 1 deplore the fact that we are now no further forward than when the Government made the announcement last July.
  The industry is now approaching a critical position. I intervene in this debate to draw attention to the repercussions on the tinplate industry in particular which has not been mentioned so far in this debate, and which is facing a disastrous situation. It is essential to emphasise that when we speak of development at Port Talbot we are dealing with an issue that affects the whole of industry in South Wales—industry which in one form or another is interdependent on steel. The tinplate industry, above all, is vitally dependent on steel, West Wales having been the home of the tinplate industry for more than 200 years. The Velindre plant in my constituency and the Trostre plant in West Wales stand as proud reminders of our great tinplate tradition. The key factor is that Port Talbot supplies the hot-rolled coil for the tinplate industry. In the plans for development perhaps more important than the increased tonnage capacity is the absolute necessity to improve the quality of the coil to meet customers' demands. If this

  1731
  is not carried out, it will be no exaggeration to say that this state of affairs will condemn the tinplate industry in West Wales to a slow death.
  As the new expertise has progressed in the tinplate industry, satisfying the customers' requirements has become a vital matter and the important issue is that of quality. The fact is that the quality demands of customers are increasing all the time, and in consequence a modern mill designed for the production of hot-rolled coil specifically for tinplate products has become an absolute necessity. Failing this, it is inevitable that the tinplate industry will have to seek coil of the required quality overseas or that tinplate customers will themselves seek new suppliers. In the event of this happening the 5,000 jobs at Velindre and Trostre will be seriously at risk.
  In addition, one of the major factories in the area is that of Metal Box in Neath, which is one of the biggest packaging factories in the world, employing over 2,000 people and using large quantities of tinplate from West Wales plants. If tinplate production were to cease or run down for any reason, the fact that Metal Box would have to be kept in production by importing tinplate would be a damaging blow, and the future of many other firms related to the industry would be seriously at risk.
  In addition to the local situation, the importance to the national economy needs to be considered, since the approximate value of tinplate production is £260 million per annum. Direct employment in steel and tinplate amounts to over 20,000 jobs with an equivalent dependent number in rail and road haulage, docks, service industries, packaging and construction. Any changes in these basic industries would, therefore, have a multiplier effect on other areas of employment.
  It has been estimated by the British Steel Corporation that the construction stages of the proposed development programme at Port Talbot would provide, at peak, 6,000 jobs. A large pool of local construction skills has been established through the initial development of the Abbey Works at Port Talbot and in the development of the BP Petro Chemical complex at Baglan. New development at Port Talbot would provide
  1732
  welcome employment for a large construction work force experienced in large-scale development projects. Without this development it is not possible to foresee any future projects getting under way which would take up such a large pool of labour.
  To say that there is concern among the steel and tinplate workers in South Wales is a serious understatement. There is growing fear—so much so that a mass Lobby of Parliament will take place at the end of the month. I submit that in considering the regeneration of our industries priority must be given to our basic industries. Time is not on our side, and I urge the Government to proceed as a matter of urgency to implement the BSC strategy for steel and tinplate.
  I am conscious of the social consequences of development at Shotton, and I see the hon. Member for Flint, West (Sir A. Meyer) present in the Chamber. He will know that the Beswick Report made it clear that Shotton has been saved until 1981, and I believe that, in the meantime, we should proceed with maximum investment at Port Talbot and then perhaps in a year or two the Shotton problem may have righted itself. There is no justification for any delay at this stage just becaue we are looking over our shoulders at Shotton.
  In view of Mr. Speaker's call for brief speeches, I turn briefly to another matter which has been in the news this week namely, the need to develop and rebuild Morriston Hospital. I understand that on Tuesday a petition was delivered to the Welsh Office in Cardiff signed by a very large number of people from within and outside the medical profession. I personally have received a very large number of letters from constituents. In addition, this morning I received an important message to the effect that this hospital also covers the whole of the Swansea Valley. I am glad to be able to say that the people of the area have demonstrated their steadfast support for the Government by winning yesterday's county council elections for Labour. I am sure that following the Secretary of State's recent visit to the Morriston Hospital he will recognise that its needs are paramount.
  The major problem, as the Secretary of State saw for himself, is the general

  1733
  condition of the fabric and services—almost all of which were provided in 1942 as part of the emergency medical services. In addition to the unacceptable conditions of the buildings and services, the accommodation provided is grossly deficient. On the other hand, the hospital is a centre for the School of Radiography and plays a prominent part in the nurses' training programme. It has a proud record of teaching and research and houses the postgraduate centre which has established for itself a high reputation.
  I emphasise that Morriston also provides important sub-regional services for the whole of West Wales—for example, neurosurgery, neurology, oral surgery, thoracic surgery, neuro-radiology, and spina bifida. The requisite surgery in some of these specialities is undertaken in operating theatres with no modern means of ventilation or air conditioning. Patients from the theatres have to be transported down steep ramps and corridors, and in some cases through an open covered way.
  Despite all the difficulties and shortcomings, this hospital has rendered a service to the community which is second to none. It would have closed long ago but for the great dedication of the staff, and I pay a warm tribute to the nurses and doctors, and particularly to the leadership of Dr. Daley, who is known to my hon. Friend the Under-Secretary.
  In the language of priorities and on the essential basis of need, there is an unanswerable case for a greater share of the capital allocation to be granted to the West Glamorgan Health Authority in whose area the hospital is situated. I hope that my appeal will not be in vain.
  Mr. Geraint Howells: I believe that very little can be achieved for the people of Wales by debating their problems in this Chamber. The people of Wales are looking for action, not promises, and the sooner we have a power-based Assembly in Wales, the better. I hope we shall then be able to solve many of our economic and social problems with Welsh Members who care for our nation.
  In common with the rest of the United Kingdom, we in Wales are worried about the steadily worsening state of the eco-
  1734
  nomy. On many counts we are a great deal worse off than are many other parts of the country.
  It is horrifying to see the unemployment figures creeping up year by year. They have more than doubled in the last three years—from 32,043 to 79,456. This represents 7·6 per cent, of the working population in Wales, compared with the national average of 5·7 per cent. In my constituency the figures show the same alarming trend, and in Cardigan they have reached 15 per cent.
  We have all been shocked and saddened by Courtauld's decision to close two major factories in Wales. I hope that the firm will reconsider its decision, because it would be a major blow to as all.
  There is a depressing picture in our industrial areas. The latest figures—to the end of 1975—show that finished steel production in Wales has fallen by one-third since 1973. Coal production has improved slowly, but at the expense of increased unemployment, with all the consequent social distress in mining areas, where there is little alternative employment. Welsh Office statistics show that total industrial production in Wales in the first quarter of this year does not match the figure for the first quarter of 1975, which was not particularly good in any case.
  As another reflection of the general economic trends, we have seen a steady decline in house building, from a peak of 20,000 completed houses achieved by the Labour Administration in 1967 to an estimated 13,748 completions this year. No wonder many young people turn up at our surgeries, week after week, desperately looking for a house. The priority of any Government should be to make sure that our young people are housed and then, if possible that work is found for them.
  The only ray of hope in this gloom so far has been the setting up of a Development Board for Rural Wales, which, as the hon. Member for an important part of mid-Wales, I welcome. The Board offers some hope for the eventual recovery of this region. I congratulate Mr. Emrys Roberts on his appointment as chairman. He has been associated with the area for a long time, knows its problems well, and1 has worked towards their solution for

  1735
  many years. The Government are also to be congratulated on this enlightened appointment.
  I trust that the Board will now be able to go about its business of improving the fortunes of mid-Wales and will encourage the much-needed investment in the area. I hope that it will also be able to halt the depopulation which has been taking place in my area for many decades. Since I was at school, I have seen many friends leave rural Wales. I hope that the day will come when they will stay and live happily among us.
  I am also greatly relieved that this measure does not seek to interfere with the pattern of agricultural life in rural Wales and that independent small farmers will not be forced out of their farms where they earn their living.
  I am grateful for the Minister's assurance that some road improvements are to be brought forward in mid-Wales, but there should be a determined effort to improve the communications, which have been lacking for many years, so that the area can be more accessible to potential investors. As soon as the financial climate improves, new road building and improvements should be quickly implemented.
  The rail services in mid-Wales have been mentioned in this House many times. In Wales, we have examples of the two extremes in British Rail. We see the very fast, efficient and splendid new service, with excellent facilities from Paddington to Swansea and, on the other hand, services in mid-Wales with poor rolling stock and minimal facilities. We deserve better treatment than this. Have the Government any plans for the long overdue improvement of rail communications in mid-Wales?
  12.40 p.m.
  I have referred briefly to some of our problems, including high unemployment and low productivity, but the greatest problem is the disillusionment felt by people in Wales and throughout the United Kingdom towards politicians and Government. They are tired of promises made and never kept, and tired, also, of the constant blaming of all ills on their opponents.
  We are talking at great length about Welsh affairs, covering the same ground that we have covered many times before.
  1736
  I am doubtful whether, after all these discussions, there will be any meaningful action taken. It is no wonder that the man in the street is disillusioned with Parliament.
  Now is the time to encourage involvement in our affairs, to bring government closer to the people. It is important for our economic recovery to achieve this involvement, because without it we cannot hope to get the improved production that we need. That is why I am such a firm believer in devolution. With the right kind of devolution, we should have involvement right down to community level and we could bridge the great gap which now exists between Parliament and people. I want the Government to produce a separate devolution Bill for Wales—a Bill that gives far more to our people than is indicated in the White Paper.
  The Government have underestimated the resentment felt at the discrimination between Scotland and Wales, and our people will reject the half-hearted measures outlined so far.
  Turning to my own constituency and to the problems that we have in Aberystwyth, I should like the Minister's assurance, if possible, that every effort will be made to bring the medical staff at Bronglais Hospital up to full strength and to make sure that not all the resources are concentrated at Carmarthen, to the detriment of the very large area in mid-Wales served by the Aberystwyth Hospital. I should be glad also to learn whether there has been any further development in the carrying out of phase two of the extension at the hospital.
  I wish to comment briefly on agriculture. I wonder whether the Secretary of State is in agreement with the Minister of Agriculture about the green pound, or whether he feels, as I do, that unless steps are taken to devalue it gradually, the farming industry in Wales will eventually suffer and this, in turn, will adversely affect the consumer. I am sure that the Minister is aware that at present our feed and food import bill has increased by more than 400 per cent, in the past 15 years and that production from the land will decrease. I am wondering what plans the Secretary of State has to increase production from the land and to stop this trend continuing in our part of the country.

  1737
  As for the methods needed, although I accept that in recent months the Government have brought forward proposals which were acceptable to the agriculture industry, I ask the Minister to reconsider the promises given by the former Minister of Agriculture, who deserves our thanks for his services to British agriculture. During the Committee stage of the Agriculture (Miscellaneous Provisions) Bill, he promised that he would look at the possibility of setting up a land bank. Has the Secretary of State any views on the setting up of such a bank which might be able to persuade many of our young farmers to go for risk capital in order to produce more from the land of Wales? Their counterparts in France and Belgium can get financial aid or loans from the banks at a reasonable and moderate rate. I hope that the Minister will look at this.
  I want now to spend a brief minute or two discussing the position of the self-employed. They play a major role in the social life of rural Wales. They are the backbone of the rural community. I am wondering whether the Welsh Office will consider publishing an interim report. In 1971, following the Bolton Report, the promise was made that in five years an interim report would be published on the plight of the self-employed and small businesses in Britain. I hope that the Government will reconsider and also give all possible aid to small businesses and the self-employed, who play a major role. Once we have lost them from the rural areas, the backbone of community life will be broken.
  12.55 p.m.
  Mr. Jeffrey Thomas: I begin with a comment on the speech of the hon. Member for Pembroke (Mr. Edwards). No one could fail to hear it. He assailed our ears, if not our minds. It was the usual barn-storming speech of the kind that we have come to expect from him. When he was not being offensive, he was being hysterical, and, when he was being neither offensive nor hysterical, he was inaccurate and full of sound and fury.
  I remind the hon. Gentleman that Wales is not an island unto itself. It is not cocooned, cushioned and buttressed from national and international economic affairs—[Interruption.] That inter-
  1738
  ruption from the Strangers Gallery is no doubt the kind of behaviour that we should have if we had home rule in Cardiff. However, I shall not be deterred by behaviour of that kind.
  The hon. Member for Pembroke quoted part of the economic review in the Western Mail. However, he was very careful about what he singled out to mention in that speech. What was said was that without the past years' deluge of Government help for the unemployed, there might be 100,000 people on the dole in Wales alone. The level of assistance sounds impressive, and in human terms it is. More than 450,000 people in Britain, 30,000 of them in Wales, will have their jobs protected and are being helped into work at a cost of several hundred million pounds by measures which the Government have already taken. We have to look at the measures which the Government have taken in Wales. That is what is important.
  What is worrying, however, is that in the course of one of the most destructive speeches that I have ever heard, even from the hon. Member for Pembroke, there was not one word about what a Conservative Government would do if they were in office today. Extraordinary though that may seem, there was not one reference to what Conservative policy would be and what they would do to meet the kind of difficulties which not only Wales but Great Britain and most other industrialised countries face today.
  I welcome enthusiastically the announcement earlier this week that the Welsh Development Agency will develop an industrial estate at Rassau, which, although in the Ebbw Vale constituency, will provide jobs for hundreds of people from my own constituency. The complete estate as now planned will allow for 1·5 million square feet of space and eventually—eventually—will provide between 3,000 and 4,000 jobs. We shall need every one of them and more. This represents a major step forward and is the best news that we have heard in North Gwent for many a long year.
  We are grateful, too, for the assistance which the Welsh Development Agency has given in terms of the job creation scheme—[Interruption.] The Government are keeping faith with the people of Blaenau Gwent, and it must be

  1739
  spelled out that, had it not been for the setting up of the WDA, this development which gives us new hope for the future could not have come about. I pay sincere tribute to my right hon. and learned Friend and his ministerial colleagues who have always put Blaenau Gwent, because of its special problems, at the top of their priority list.
  I turn now to another aspect of the Ebbw Vale problem. Because the life of the slabbing mill at Ebbw Vale has been extended to 1978, the timing of the closure of Abercarn works has been extended to coincide with that date. After the contribution which Abercarn has made to the steel industry over 75 years, I very much hope that the British Steel Corporation will appreciate that it has a clear obligation to assist in finding alternative jobs there. The present works is on a 10-acre site which has the unique advantage of rail link facilities. In these circumstances, the BSC must lose no time in working out a strategy for the development of the site.
  Our problems in Gwent are so intense and so concentrated that special measures are called for to deal with them. In my view, we need more co-operation, too, between our local authorities and better co-ordination of their efforts. The situation is so grave that I believe that we need a job supremo for Wales and a development corporation for the Heads of the Valleys.
  The unemployment figures speak for themselves: in Abertillery 840 unemployed; in Brynmawr 438; in Ebbw Vale 1,010; in Tredegar 700—representing an average of 9·8 per cent. In Newbridge there are 499 people out of work—[Interruption.] There are 13,000 out of work in Gwent, representing a county average of 7·4 per cent. We have had our misfortunes locally this year. The Abertillery factory of J. Compton, Sons and Webb Limited was closed, with a loss of 73 jobs. George Hensher and Co. of Newbridge reduced its work force by 60.
  Of course, the picture is not all black. There has been a drop in the number of those out of work in Abertillery and Newbridge during the last 12 months. The Welsh Development Agency has obtained approval recently for a 1,000 sq. metre advance factory to be construc-
  1740
  ted at the Penyfan industrial estate, which will bring a total of three advance units on that estate.
  In terms of coal production, Gwent has achieved two productivity records in the last financial year. Miners at Oakdale, Markham, Bargoed, Britannia and North Celynen collieries produced a combined total of 1·2 million tons, the highest group total in the South Wales coalfield.
  No one underestimates the difficulties facing us in Gwent, and no one, save, unhappily, so it seems, the hon. Member for Pembroke, believes that these problems can be overcome overnight. [Interruption.] It is clear that, without the measures taken by this Government, the situation would be far more grave, and we should always bear that in the front of our minds. We are moving in the right direction, and finally, I believe, we shall succeed.
  1.3 p.m.
  Mr. Dafydd Wigley: I add our welcome to the hon. Member for Rhondda (Mr. Jones), the Undersecretary of State, on his return to the Government Front Bench. We are all pleased to see him in his place and we are only sorry that he comes back to a situation as dismal as has been outlined in the debate so far. Indeed, it has been a dismal story, typified, perhaps, by the bad temper seen in the exchanges between the two Front Benches at the opening of the debate, with Peter blaming Paul and Paul blaming Peter for the present state of affairs. It is clear that Governments of every colour have failed to meet the economic and social problems of Wales. The situation that we have had outlined so far is almost as dismal as the picture presented in the Welsh Digest of Statistics recently published, which itself is a chronicle of the failure of a system of government.
  I do not apologise for concentrating my remarks on the circumstances relevant to economic development and job provision in Wales, since I and my party believe them to be fundamental to the future of Wales.
  Mr. Jeffrey Thomas: In view of the astonishing scenes taking place in the Strangers Gallery and the behaviour of people speaking the Welsh language, will

  1741
  the hon. Gentleman take this opportunity to condemn behaviour of that kind?
  Mr. Wigley: I was not aware that the Strangers Gallery was part of this Chamber, or that reference was normally made to it.
  Mr. Deputy Speaker (Mr. Oscar Murton): Order. What occurs in the Strangers Gallery ought not to be referred to in debate.
  Mr. Wigley: I shall therefore continue on the vital question of providing jobs and economic development in Wales, which we on the Plaid Cymru Bench believe to be fundamental. What has been done so far is inadequate. As a party, we believe that there is need to answer that question because on the answer depends the future of our communities in all parts of Wales. The future of our language and of our culture depends on the availability of work and the ability of people of Welsh and non-Welsh speaking parts of Wales to remain in their communities and to develop and propagate the culture which they have inherited. The key to the future of so many things that we hold to be of value in Wales lies in securing an answer to our economic problems, and Government after Government, of all parties, have failed to produce it.
  The Secretary of State's speech was a pathetic chronicle of failure. He could do no more than catalogue anonymous possibilities of future growth, of a tenuous and totally unconvincing nature. He made virtually no reference to North Wales, mid-Wales or West Wales, and when he did produce one instance in respect of Gwynedd, that was merely an instance of possible future development against the number of instances already publicly known of companies closing down or running down and making people unemployed.
  The situation is, indeed, pathetic, and it is ironic that the last straw at which the Secretary of State clutches is possible vague promises from the private sector. That is, surely, ironic against the background of the debate today and of our debates on the Welsh Development Agency last year.
  The Secretary of State said that there were no rescue cases now under consideration. I find that extremely disturb-
  1742
  ing when we know of so many companies in Wales now in a difficult position and needing to be considered for rescue. I have one in my constituency which has been approaching the WDA. Presumably, it has been turned down if there are none under consideration. That will be greeted with dismay by people in my constituency and elsewhere in Wales who know that there are no industrial rescue proposals going forward.
  The Secretary of State spoke of the WDA swinging into action and putting its stamp on to ongoing activities. We need more than a "stamp on ongoing activities". We must ensure that there are developments and new initiatives but these have not taken place. What are the new contributions which the WDA has made? I realise that it is early days yet for the WDA, but we are still looking for positive advance in this direction, not just the putting of a new stamp on ongoing activities. We understand that there are 100 inquiries "shortly to have active consideration". We are glad that they are to have active rather than passive consideration, but what we want to see is jobs coming out of these efforts to all parts of Wales, and they have not been forthcoming so far.
  This is against the background of 80,000 unemployed in Wales, and a drop in the index of industrial production which is staggering. There has been reference to the figures for the first quarter of 1976 compared to the situation in 1974, the year of the three-day working week. In the first quarter of 1976, of the 21 sectors in Wales 16 had a lower production rate than in the year of the three-day working week. This is a reflection of our failure so far. Only five sectors were higher than they were in 1974.
  Those figures underline the magnitude of the problem facing the WDA. What is the Agency doing about it? We have seen very little direct initiative in setting up public industry or joint enterprises, and this compares sadly with the situation in Northern Ireland, where a similar agency is setting up factories by public initiative. I hope that we shall see much more in that direction from the Welsh Development Agency. Many people saw this as one of the strong arguments for

  1743
  the Agency when it was first contemplated, but so far we have seen nothing. Do the Government intend to take such initiatives? I hope that the Minister will tell us when he winds up.
  At a time when 60 per cent. of the gross national product is in the public sector, why is it not possible to divert work in the public sector to areas that so badly need it? We have heard of areas in all parts of Wales, in Gwynedd, in Dyfed and in Gwent, which need such initiatives, but the Agency, which was projected as a body which would fill the avenues of empty advance factories throughout Wales, has done nothing, and we have even more empty advance factories now as companies have closed.
  The tragic state of affairs in Courtaulds underlines what I am saying. I want an assurance from the Government that they are not now contemplating on a United Kingdom level assisting Courtaulds with one new centralised factory to take work from the factories which are being closed in Merthyr Tydfil and Hirwaun. If that were to happen it would be an indictment of Government policy and would underline the uncertainty that in the Courtaulds situation, for example, it is the Welsh Development Agency or the NEB that has responsibility. That is what we were saying last year when the Agency was being set up. I hope that we shall have some clarification.
  What are the guidelines that the Government have given the Agency? Apparently no economic plan is forthcoming for Wales. There appears to be no plan of action to which the Agency can work. How much longer can the Agency go ahead without such a plan? I shall quote from the guidelines that have been issued to the Agency. Paragraph 2 states that
  "the Agency will be expected to build up a capacity to assess priorities over the whole range of its activities and to relate these, where appropriate, to a coherent strategy for the fulfilment of its statutory purposes."
  I should like to hear more about the coherent strategy that the Government have evolved in association with the Agency. If there is a strategy, it does not appear to have worked so far. If there is no
  1744
  strategy, how can the Agency be expected to do its work in the centre of a total vacuum?
  Paragraph 3 states that the Agency
  "must play a major part in the framing of its policies and initiatives; and these will have to be closely co-ordinated with those of the Government".
  That underlines the need for a framework for the Agency that has not been forthcoming.
  Apart from the need for a framework, I must ask the Government what machinery has been set up so far for monitoring the Agency's activities and progress. That is an important function, to which much reference was made in the debates that took place last year. Will a report be presented to Parliament on the activities of the Agency?
  I suggest that it would be a good idea to set up a Select Committee so that Members could ask questions directly to those who head the Agency, [n that way Members could determine whether the Agency is taking the necessary initiatives.
  Mr. Nicholas Edwards: I welcome the hon. Gentleman's support for what has been Conservative Policy for a long time.
  Mr. Wigley: I appreciate that there is Conservative policy on all sorts of matters and that there has been for a long time. However, it is unfortunate that when the Conservative Party was in government there were not too many Select Committees set up to undertake the work that I suggest a Select Committee could carry out. That is an initiative that is needed. It would be a good thing for people in all parties to have an opportunity to follow up such matters.
  There is a need for very close monitoring. Paragraph 6 of the guidelines states that
  "The need for operating freedom must be met within a framework of arrangements for accountability to Parliament".
  What accountability is there to be for this Chamber in relation to these matters?
  I believe that there is a requirement for the Agency to set up its own investment budget. Has an investment budget been drawn up for next year? If so, what are the priorities within it and what is the strategy? What is the long-term strategy that is required to be set

  1745
  up according to paragraph 9, which states that
  "Discussion on the Agency's plans each year will provide the Secretary of State with an opportunity to consider the Agency's long-term investment programme and annual operating plans."
  These are matters on which Members should have information, because they are very important to development in Wales.
  In the nine or 10 months of the Agency's existence, how many instances have there been of acquisition of share capital? This is information which no doubt the Secretary of State has, because he is required to be kept informed of the acquisition of share capital, certainly over a threshhold level. What guidelines has he given the Agency in relation to the adequate return on capital employed—a matter that is referred to in paragraph 24? If there is a need for an adequate return on capital employed, does that mean that the return will have gone up with the increase in the base rate of lending this year? Is that one of the factors that is making progress so slow in setting up new industry?
  What directive has the Secretary of State given to the Agency to provide assistance to companies in financial or managerial difficulties? In saying these things I am not blaming the Agency in any way for the steps that may not have been taken so far. These are early days. The Agency has been recruiting people and it has been having difficulty in getting the right team. It has been accumulating its team, but it will never succeed unless it has a strategy. It will not produce the answers unless we have a economic development plan for Wales. I should have thought that such a plan would appeal to the Government and to Labour Members.
  In this context, are the Government satisfied with co-ordination between the Agency and the Welsh Office, in that the Welsh Office now has responsibility for Section 7 powers under the Industry Act? In my constituency there have been inquiries from a company that is thinking of coming into the area. There were considerable delays, as some of the inquiries involved the Agency and others involved the Welsh Office. Such delays can be detrimental to attracting com-
  1746
  panies to Wales. There is a need not only to speed up the procedure but for flexibility, particularly in terms of the requirement for profitability within the first two years. Many of the small acorns may not be able to offer profitability in the first two or three years, but over the years they may well grow to answer our employment needs.
  The question of the rôle of the Welsh Office and the Agency and the need for greater involvement in planning and coordinating raises the question of the capability of the Welsh Office to handle the work load. I am sure that many hon. Members will have had the same experience as myself over recent months and years, of delay in answers to correspondence. I understand that the Welsh Office has a large work load and has to work within the same constraints on staff as does every other Government Department.
  However, there have been some significant delays. It strikes me that the Welsh Office needs strengthening not only in the number of staff at its disposal but at ministerial level. We have one Secretary of State and two Under-Secretaries of State, compared with six persons at ministerial level in Scottish Office—namely, a Secretary of State, two Ministers of State and three Under-Secretaries of State. We have the same number of people in the Government team at the Welsh Office as in 1969, yet since that year the staff in the Welsh Office has increased from 500 to 1,500. I refer to Table 4.08 of the Digest of Welsh Statistics. I suggest that there is urgent need for the appointment of a Minister of State for the Welsh Office. That can be done by promoting one of the incumbents now doing the job as an Undersecretary of State or by transferring one of the Welsh Members at that level in another Department.
  In concluding, there are one or two specific isues to which I must refer. In terms of the planning function, there is a need for a long-term strategy. That need can be seen in my constituency, where there are one or two major schemes, such as the CEGB pump storage scheme in Llanberis. I pay tribute to the work that has been done by Mr. Iorwerth Ellis in running the CEGB side of the scheme at Llanberis, but what happens when that comes to an

  1747
  end? In the case of other capital programmes set up to deal with unemployment problems, we have seen that when they come to an end there is a vacuum. I put it to the Minister that the A55, which is the next priority in Wales after the M4, should have priority given to starting from the west as well as the east. We know that there is a problem in the middle, namely, the Colcon Crossing, and if we have to wait for the A55 to start from the east and to progress westwards over the Colcon Crossing we shall be waiting until kingdom come to see the job completed.
  There is also a need to ask whether more consideration should be given to other capital projects that would help when the CEGB scheme comes to an end. There is also a need for these schemes to maximise employment for local people.
  Another aspect of planning is the policy of job location within the public sector. In my constituency we have an instance of the Welsh National Water Development Authority centralising its function in Gwynedd and moving jobs eastwards, from Caernarvon to Bangor. That may only be a matter of moving jobs 15 miles, but when people working in the offices at Dinas and Caernarvon are already travelling 20 or 30 miles, from the Lleyn peninsula, to go the extra 15 miles is a disincentive. It is impractical for them and may well have a serious effect. This decision appears to have been taken by bureaucrats, contrary to the wishes of those who are members of the authority.
  I ask the Secretary of State to investigate what is happening in relation to the offices, and to bear in mind the fact that appointments come up next year. I underline that this is a good reason, along with many others, for a water authority to be answerable to an elected body in Wales. We hope that that will be the case within 18 months or two years when the Assembly comes.
  The Job Creation Programme is one that I welcome very much. I realise that it has warts, but it is a step in the right direction. I congratulate those responsible for the work done in the office in Cardiff, especially Mr. Ron Aston. I am also impressed by the initiative of
  1748
  local government officers, often taking on responsibilities which are not directly theirs to get these programmes under way.
  We in Gwynedd are very pleased that the county leads the league tables in this matter and that the Arfon District Council and the Aberconway District Council head the district council league table in Wales.
  But what happens after 30th September next year? The Government should announce soon what will happen, otherwise local authorities will not have the programmes rolling for that date to continue this work, if, as looks likely, the unemployment problem is still with us. We need to extend the scheme and make it more flexible, and also to make more provision for supervisory responsibility to be provided under the Job Creation Programme. There is room here for integrated manpower planning and the programme could be the first small tentative step towards such an approach to unemployment problems.
  When over 80,000 people are unemployed and we need 7,000 or 8,000 more houses a year, it is ridiculous that we cannot bring the two problems together and let one solve the other. Likewise, in my constituency, hundreds of people are standing idle while the centre of the city of Caernarvon is decaying because we are not getting on with the inner ring road scheme.
  I do not apologise for having concentrated on jobs because they are vital to solving all our other problems. I reiterate the need for an economic development programme hi Wales. I say again what I have said many times before, that if it cannot be done from this place, that only underlines the need for an Assembly with these responsibilities in Cardiff.
  Several Hon. Members Several Hon. Members rose—
  Mr. Deputy Speaker: Order. Before I call the next speaker, I remind the House of what Mr. Speaker said about the amount of time available for this debate and his hope that no hon. Member would speak for longer than 12 minutes.
  1.22 p.m.
  Mr. Leo Abse: I am sure that the whole House understood the reasons for the Secretary of State concentrating his own attention and that of

  1749
  Wales on our industrial problems. That should indeed be our sense of priorities. Our concern must inevitably be that we do everything we can to assist in the conquest of inflation and to increase our productivity. It is only by such means that we can overcome the difficulties which afflict not only the Principality but Britain and a great portion of the Western world.
  If we are to conquer inflation and to mobilise the efforts of all our people in Wales, if we are to ask them for sacrifices—as we must, since it is inevitable that the nation cannot go on living beyond its means—it is essential that by example, not only by talk, we show that in the policies we pursue we are mindful ever of the need for economy and the need to examine all our machinery of government so as to show that we are not self-indulgent and extravagant ourselves.
  Although we are discussing industrial problems, the media insist upon holding a debate upon devolution; therefore, in the time I have to speak, it will be wise to consider the cost of the suggestion to set up a Cardiff Assembly.
  Mr. Wigley: Again?
  Mr. Abse: I am convinced that, if we examine this proposal, we shall see how bad an example it would set to the whole of Wales when we are asking local authorities to accept cuts and our people to accept a diminution in their living standards.
  When it was announced in the White Paper that a Cardiff Assembly would be established, I said at the time that the costs were grossly underestimated. I said that they would be at least twice those originally prognosticated. In that White Paper, less than a year ago, we were told that the capital costs would be £1·2 million. By April, the cost was already beginning to mount. Then the Leader of the House said that the cost would be between £1 million and £2 million, which I presume we all understood to mean about £1½ million.
  The latest announcement is of an estimate of £2·8 million—about 2½ times the original estimate. On the way, the Secretary of State has told us that £25,000 has been wasted because of the abortive attempt to acquire the Temple of Peace.
  1750
  All that money will be spent for a 10-year lease. No commercial firm would contemplate such an exercise. Spending millions on a 10-year lease is an extravagant phenomenon. I hope that we shall be told before the devolution debates how much will be paid for the buildings per square foot. So far as I can see, the only group who can possibly benefit are the property developers of Cardiff, who already have acres of space they cannot get rid of and now find that they have hooked the Government into a pledge to spend nearly £3 million on a 10-year lease for what is generally regarded in Cardiff as an utter white elephant.
  Surely it is time that we knew something of the running costs of the Assembly. If we have more than doubled the capital costs, what will happen to the White Paper figure for running costs? That figure was £12 million, but on what basis was it made? We now know that it is intended that there will be about 80 members at Cardiff. How much will they receive? The Secretary of State should know. The original White Paper said that he would declare how much the salaried Cardiff men should have.
  Mr. Wigley: How much does the hon. Member want?
  Mr. Abse: Under this proposal, more than half the work we now do will be transferred. I assume that the Secretary of State contemplates reducing his salary by half so as to make the appropriate economy to pay the salaried men of Cardiff. I presume that our Undersecretaries will willingly make similar sacrifices since they, too, will want to ensure that costs are not increased.
  The Under-Secretary of State for Wales (Mr. Alec Jones): And my hon. Friend.
  Mr. Abse: I am not prepared to make such a sacrifice. I do not want this proposal. I am prepared to take on the burden of work here, to do the job my constituents expect me to do. I do not want it done by some Cardiff Assembly men.
  We are entitled to know how much they will be paid. We cannot know how much they will pay themselves. All Wales should understand that the White

  1751
  Paper makes it clear that after the Secretary of State has decided the salary of these people—whether £4,000, £5,000 or £6,000—they will be able to vote themselves whatever they like. Such is the confidence of Plaid Cymru in all the people of Wales, which they have been expressing on the Order Paper, that I am sure that they have no doubt that the Cardiff Assembly men will act with extraordinary restraint. That is not a judgment which I, or, I believe, the people of Wales can share.
  What about allowances? The White Paper also says that all the Cardiff Assembly men will receive allowances. What allowances? If we are to give them all this work, they will need allowances for secretarial and research assistance. Will the Secretary of State say what is included in the figure of £12 million—what basis of salary, and what allowances?
  I want to know, too, about the mini-Ministers whom it is intended to create at the Cardiff Assembly. We know from the White Paper that there are to be executive members on each committee. Will these new mini-Ministers have maxi-salaries? It is a reasonable assumption that there will be a differential between them and ordinary Assembly members. We are entitled to ask the Secretary of State: upon what is the estimate of £12 million based? We are entitled to ask that in view of the fact that the capital costs of the Assembly at Cardiff have already escalated in a manner to be expected of a Concorde, not of such a building.
  By how much does the estimate rise when account is taken of the extra civil servants as Kilbrandon recommended and as Plaid Cymru want? There are not to be 1,500 civil servants: that would be the number if shared with Whitehall. But apparently Plaid Cymru wants Wales to have its own civil servants. I do not doubt that the Assembly would want its own civil servants. There is no question of there being 1,500 civil servants shared with Whitehall. So we are entitled to ask what the costs would be if all these extra civil servants, far more than the original suggestion of 1,500 came under the purview of the Cardiff Assembly.
  I presume that Plaid Cymru would insist that there should be extra pay, weighting and promotional prospects for those
  1752
  civil servants who are Welsh-speaking. So the cumulative amount would soar far higher than £12 million. I do not doubt at all that the Assembly would soon need to take advantage of the right to make a surcharge—a prospect which is open to the Assembly in the supplementary White Paper. The people of Wales can expect to have an incubus in the Assembly. From a beginning of, say, £12 million a year, the people of Wales may well be faced with double that amount.
  It is clear, for example, that there will be great expenditure on buying expertise which, as the White Paper coyly points out, is now provided by London based Departments. That will be a new field for pickings, for some in Wales, when all this expertise will have to be brought unnecessarily yet again.
  What I am asking the Secretary of State is this. In view of the chastening experience in relation to capital costs, which we know have doubled, upon what does he base his estimate now for the running costs of this white elephant down at the Cardiff Exchange? It is not only a question of what it would cost to set up. What would be the cost of the largesse which these 80 salaried men would be in a position to dole out and to increase? It is known that at present £300 million is expended by 70 public bodies in Wales to which the Secretary of State and other Ministers nominate more than 1,000 members. The Secretary of State knows all about that. He spoke about it when he was interviewed last year by The Times. Many of that 1,000 will receive salaries and almost all will certainly receive allowances.
  I do not doubt that there will be many more appointments, above the 1,000, now that the Welsh Development Agency, to the consternation of all industry in Wales, is to be placed under the Welsh Assembly. It will be the Welsh Assembly men who will have the right to nominate people to paid positions on, for example, the Welsh Development Agency and the Countryside Commission; and no doubt a new right will come into existence to nominate people to the University Grants Committee. I am not surprised that Plaid Cymru supports and defends all these suggestions so enthusiastically.
  There may be too few passengers on the new Swansea to Paddington Inter-

  1753
  City expresses, but there will be a packed gravy train steaming out of the Cardiff City Exchange, and most of Wales knows that no carriages will be fuller than the first-class coaches marked "For Welsh speakers only". Plaid Cymru wants to impose on and dictate to Wales what it does not want.
  Mr. D. E. Thomas: Will the hon. Member tell us on what he bases the view that Welsh speakers would have priority in the Welsh Assembly, and will he also ensure that he comes within his allotted time to repeat the allegations about bribery and corruption?
  Mr. Abse: I base that on what is happening in Gwynedd and what is known to be happening throughout the English-speaking areas of Wales.
  Mr. Thomas: What is happening in Gwynedd?
  Mr. Abse: Demonstrations of the character we have witnessed today. What Plaid Cymru really wants is to let Wales decide everything except its own destiny, a destiny which is inextricably linked with the United Kingdom, a destiny informed by an international spirit free from the convulsive chauvinism and extremism of Plaid Cymru.
  I hope Wales will have the opportunity to express its opposition to the Assembly—to the gravy train—and to the possibility that those who are pushing this will have it imposed on Wales. The people of Wales are understanding this clearly and expressing it in every opinion poll. The Secretary of State says that he has been consulting the people. I should have thought that the easiest way for him to consult would be for him to conduct another opinion poll, although he should have no doubt about a reputable poll like Marplan which has already shown overwhelmingly that the people of Wales do not want any change in their constitutional structure.
  On Monday I asked the Secretary of State to confirm what had appeared in the lead story in The Times that morning indicating that there was to be a
  1754
  referendum. My right hon. and learned Friend gave me this curious reply:
  "I have no knowledge at all of the statement in this morning's edition of The Times."—[Official Report, 1st November 1976; Vol. 918. c. 948.]
  That would not be the Secretary of State's normal habit. I am sure he is an early riser. Does he mean that he has no knowledge of the contents? Has The Times suddenly and irresponsibly created a story; or could it be that within Government circles there is a growing intention that the people of Wales are to be consulted? The overwhelming majority of the Welsh people have spoken and said that they want a referendum.
  I hope that the Secretary of State for Wales will show wisdom. After all, he has shown elasticity at other times. He has shown himself not to be absolutely didactic and dogmatic on issues of great importance. I do not in any way resent that he should take more pragmatic attitudes or that he should be more sensitive to views or change his opinions. It is becoming abundantly clear that Wales wants a referendum. It is equally becoming abundantly clear that in that referendum Wales would indicate that it does not want an Assembly. Is my right hon. and learned Friend going to resist that?
  I tell my right hon. and learned Friend now that we want a united Labour movement. We want a movement which will be able in these difficult times to go forward in the coming year together. We could all accept whatever Wales decided. If Wales decided to have devolution I would submit to it and recommend that everybody submitted to it. My constituency party, the Labour group on my local council and the Gwent County Council want a referendum and they do not want devolution. They should have the right to express their view.
  The Secretary of State should put a clause in the Bill which makes it clear that, whatever its shape, it is subject to the will of the people of Wales. The Secretary of State has the opportunity to unite all who are behind him. He would then be praised by everyone: if he stubbornly resists, there will be acrimony. Hon. Members such as I will not support the Government even if there is a six-line Whip in proposals for devolution which bars the people of Wales from expressing

  1755
  their opinion. I hope that he will seize the opportunity and recognise the wisdom of what I have said. It will be a cause of no reproach if he grasps the nettle.
  Everyone realises that the Secretary of State has to battle with complex and difficult industrial problems and we know how difficult it will be for the people to accept the sacrifices that are necessary to overcome these difficulties. I hope that the Secretary of State will try to take along a united Wales. He has the opportunity and he will be a foolish man if he does not take advantage of it.
  1.42 p.m.
  Mr. Ian Grist: After such a splendid contribution, should this miserable Government survive an early election, I look forward to hearing the hon. Member for Pontypool (Mr. Abse) often and at considerable length. I hope that we shall see each other across the Chamber many times if an election does not intervene.
  There has never been a Welsh day in the House when the economy has been in so shattered a state or when the outlook has been so unutterably gloomy. Wherever one looks there is reason for disquiet or worse. The Secretary of State reminds me of Shelley's Ozymandias, on the base of whose sneering face was written,
  "'Look on my works ye mighty and despair!' Nothing beside remains."
  That is the position over which the Secretary of State and his right hon. and hon. Friends have presided for nearly three years in Wales. What is more nauseating about their performance is their total lack of contrition for the wrongs that they have done. It might be forgivable, at least it would be more honest, if they were publicly to admit that the policies which they offered to the electorate in 1964 were at best wholly misleading and at worst grossly deceitful. At least such an admission would win points for repentance. It would do little to help the thousands of school leavers or to help the 3,000 redundant shop workers in Wales—a total which is more than all the jobs which the Government claim will be created. It will do little to help redundant steel workers, construction workers and the rest who litter South Wales.
  1756
  An admission would at least be something. But no, today we have had the usual—I was going to say "smug", but it is better to say "uneasy"—performance from the Secretary of State. He said that he would give us "a flavour" of what was going on in the industrial scene. I did not like the way in which he made the claim that unemployment was falling. We all know that the wholly unemployed figure—the real figure—was rising at the last count. That was the flavour of the Secretary of State's speech.
  The Secretary of State claimed that some firms expected to increase recruitment but even in the worst days some firms increase recruits. The Secretary of State knows that because of various Acts, such as the Employment Protection Act, most firms prefer to increase production by means of increasing overtime rather than recruitment because it is so expensive to take on workers and they cannot be sure whether they can get rid of them later. There has been a cutback in training which will cause difficulties in the future when the economy picks up, because we shall be faced with a lack of skills. Even today, some firms cannot find sufficient skilled labour.
  I do not intend to take up too much time. Most of the arguments have been made brilliantly and tellingly by my hon. Friend the Member for Pembroke (Mr. Edwards). But I would say that Wales is paying heavily for the way in which the English electorate swallowed the promises and knuckled under to the threats of the Labour Party and their trade union allies in 1974. The Labour Party slogan was "Back to Work with Labour", in February; in October the claim was 8·4 per cent. What a deceitful way to gain power. The hon. and learned Member for Abertillery (Mr. Thomas) said that Britain had to face the oil crisis. But so did the rest of the world. But few places tried to borrow foreign money in order to buy domestic political popularity. That is what this Government did.
  In a Parliamentary Answer on 29th October, at column 391 of Hansard, it was revealed that the rise in unit labour costs in the United Kingdom in 1973 was 8·3 per cent. In 1974 it was 20·9 per cent. and in 1975, 33·1 per cent. That was the cost of Labour's electoral and party

  1757
  profligacy. Even they know that the game has now to stop.
  But even now the game cannot quite end unless the Government cut their own expenditure more severely than they have so far dared to tell the people. I think that the Government are nerving themselves to do that. If expenditure is not cut, there will be no profits, no savings and no drop in interest rates. There will, therefore, be no confidence for businesses and individuals to invest in new plant and machinery, as the recent CBI survey indicates. The Government continue to call for higher investment while making that investment less and less profitable.
  Why in heaven's name did the Government lump a further burden of £60 million on Welsh industry in July? The answer is simple. That seemed the easiest political step to take. The Government felt that no one—that is, very few of the ordinary electorate—would notice it and then, when industry failed to invest, they could talk about the failure of capitalism. That leads to the excuse of extending State power by channeling more taxpayers' funds and foreign borrowings to the National Enterprise Board and the Welsh Development Agency.
  I am not saying that this betrays a deeply laid Socialist plot—although it may. I suspect that in many respects it just happened through sheer bumbling. Next year we can look to unemployment in Wales reaching about 100,000 and inflation of between 15 per cent. and 20 per cent.
  The construction industry—where orders fell by 15 per cent. between June and August this year—is in complete disarray and in many cases it has been almost destroyed. In my constituency there is a crowning example. Crown offices in Cathays Park are being built to house more unproductive civil servants.
  Next year rentpayers and ratepayers will notice a sharp rise in their payments. At the same time, they will find that the services of the local authorities deteriorate. Those thousands of my constituents whose homes are on oil-fired district heating will notice a sharp rise in their costs because of the rise in the
  1758
  price of oil and the fall in the value of the pound.
  Industrialists in Wales who heeded the Government's call for new investment in the early part of the year—some of them have put in hand that investment—will find themselves severely squeezed by the new interest rates. Because the home market will be falling next year, as real incomes fall and the foreign markets fail to expand as people thought they would a year ago, some of those firms will go to the wall. Those buying their houses will find a sharp contraction in their spendable money. City and county halls will experience greater and greater difficulty in meeting the standards expected of them.
  Some cutback after the oil crisis was inevitable, but not this. There is far, far worse to come until the right action is taken. How much easier it would have been if the Government had been honest with people from the start, or even now, when at last they are two-thirds the way to saying the right things.
  Let the Government now denounce, and get their trade union allies to denounce, the restrictive practices in industry which contribute so heavily to the low return that our investment so often earns compared with that of our competitors. Let us have a statement from the Secretary of State on what he thinks about absenteeism in the steel and coal industries and elsewhere.
  Let the Government now say that they will restore differentials in pay and taxation, so that thrift, hard work and skills become worth exercising. Let them drop their divisive, time-wasting and money-consuming proposals for an unwanted Welsh Assembly. Let them allow those firms which can make real after-tax and after-inflation profits in fact do so, and applaud them for it. Let them urge those firms on and not sneer at them and tax them heavily, which is the way in which they usually treat industrial successes.
  Let the Government do all those things. If they cannot, let them get out and make way for those who can.
  1.52 p.m.
  Mr. Walter Padley: The hon. Member for Cardiff, North (Mr. Grist) used to be a constituent of mine.

  1759
  The recipes that he and his party advocate for dealing with the economic problems of Wales and of Britain as a whole will be absolutely rejected by all my present constituents. The massive cuts in public expenditure for which the hon. Gentleman calls would almost double unemployment, rather than solve the unemployment problem.
  In response to Mr. Speaker's plea for brief speeches, I shall confine myself to two issues. I am glad that the future of the steel industry in Wales has had such a dominant place in this debate. Despite the gloom and doom merchants of the Tory party, including the hon. Gentleman, there is a bright economic future for Wales and the rest of Britain, given the application of bold Socialist measures of public ownership and economic planning. But it is essential to the future of Wales that the steel industry is in good shape as the recovery comes.
  My right hon. and learned Friend the Secretary of State for Wales represents Port Talbot. Ogmore is next to the Aberavon constituency, and several thousand of my constituents work in the Port Talbot Works. Virtually all the coking coal that goes into the Abbey Steelworks at Port Talbot is dug at the pits in my constituency. Therefore, along with my hon. Friend the Member for Gower (Mr. Davies), who represents the tinplate end of the industry, I have the most direct Back-Bench interest in the expansion of steel production at Port Talbot.
  It has been generally accepted—certainly in the 10-year strategy agreed by everyone on both sides of industry and by my party in Government and Opposition—that the future of an efficient British and Welsh steel industry depends on the development of large, efficient coastal plants. Because of the foresight of previous Labour Governments, the situation at Port Talbot is second to none in the United Kingdom or even in Europe. The late Hugh Dalton took the decision a long time ago to site the Abbey Steelworks where it is. It was built largely with public capital. The Labour Government of the 1960s authorised the building of the £20 million harbour at Port Talbot, capable of taking the 100,000-ton vessels that bring in iron ore. Therefore, Port Talbot has all the
  1760
  necessary qualifications to be doubled in size in accordance with the 1973 strategy.
  In addition to the natural advantages, we now have the agreement, voluntarily arrived at, that manning at Port Talbot shall be at the level of 500 tonnes per man per year, if the full scheme is carried through. Only on that basis will Britain and Wales have a viable steel industry.
  I cautiously welcome the statement my right hon. Friend the Secretary of State for Industry made before the Summer Recess, when £350 million was made available for investment at Port Talbot. But that figure—£50 million for coke ovens, £50 million for continuous castings and £250 million for a new hot strip mill—depends in part on the decisions of the British Steel Corporation and ultimately the Government.
  Like my hon. Friend the Member for Gower, who is a member of the West Wales Steel Development Committee, I have the closest contact with the Works Council at Port Talbot. The chairman and assistant secretary are constituents of mine and are active workers on my behalf during General Elections. We strongly urge the BSC to take up the full offer of £350 million for development at Port Talbot. An investment of that size by the central Government is not to be sneezed at, even by Plaid Cymru Members when they talk about independence for Wales.
  Mr. Donald Anderson: Where are they?
  Mr. Padley: To be fair, two of them have been here for most of the debate. Doubtless they went away for a bite to eat, as I did a few minutes ago.
  Mr. D. E. Thomas Mr. D. E. Thomas rose——
  Mr. Speaker: I should tell the House that I invited the hon. Member for Merioneth (Mr. Thomas) to come and have a word with me, and that is why he was not in his place.
  Mr. Padley: As one who has been in this House for 27 years, I know that such things happen. I referred to Plaid Cymru, but I did not refer to the absence of its Members.
  I wish to emphasise that an offer of £350 million investment at Port Talbot is a substantial amount, which would be impossible if Wales were independent as Plaid Cymru wish it to be. As my hon.

  1761
  Friend the Member for Gower said, the new hot strip mill is essential if the quality of products at Trostre and Velindre are to be maintained. From the standpoint of Wales it is absolutely essential that the British Steel Corporation should take up the offer of £250 million.
  I note the information given to me by my close friends who are leaders of the Works Council at Port Talbot. The Corporation doubt whether without a doubling of steel-making capacity at Port Talbot an investment of £250 million on a new hot mill would be economically desirable or indeed possible. I gather that it has been calculated that it might add £20 per tonne to the price of steel produced if there is to be an 8 per cent. return on capital, which the Government expect. That would make it a high-cost plant and uncompetitive in the steel market. I know that I am preaching to the converted when I say these things to my right hon. and learned Friend, the Secretary of State for Wales, since Port Talbot is part of his constituency, but if the £250 million is to be taken up, it must follow as a matter of logic that there should be a doubling of steel production capacity at Port Talbot as well.
  In the period before the establishment of the Abbey Works at Port Talbot, a large number of small works were closed down and social problems were caused. There is now an agreement on manning which will create in my part of Mid-Glamorgan a serious employment problem, even if the Abbey Works are doubled in terms of steelmaking from 3 million to 6 million tons a year. The Government in the next few months should announce their plans for expansion not only at the finishing end. If they do not do so in terms of investment in steelmaking capacity, the prospect for the 1980s will not embrace a figure of 11,000 or 12,000 employees at the Abbey Works. If it is to be competitive in world markets, and if there is to be an output figure of 500 tonnes per man per year, the employment prospects could drop to a figure of 4,000 or 5,000 if steel-making capacity were not doubled.
  Although there are social problems at Shotton which cannot be forgotten, in pleading the case for Mid-Glamorgan and West Wales there is an equally important social argument as well as
  1762
  economic and technical arguments. Since the miners in my constituency dig so much of the coking coal which is consumed by the steel industry at Port Talbot, this is an important matter in the mining communities whose workers I represent. I ask the Secretary of State for Wales to renew his efforts to ensure that when the Government come to a final decision—I hope by the end of this year—Port Talbot will be genuinely doubled in size in steelmaking terms.
  We have heard reference in this debate to the priorities at the Morriston Hospital, and on Monday my hon. Friend the Member for Wrexham (Mr. Ellis) referred to the priorities at the Wrexham Hospital. It is possible to go into competition on these matters, but I should place on record that the case for a new Bridgend and General District Hospital has been widely recognised since 1966, and since 1973 the hospital has been placed by the Welsh Office and by successive Governments in the budget for 1977–78. I hope that the Secretary of State for Wales will listen to the special pleadings of all who represent such constituencies, but I hope he will remember that in regard to the Bridgend and District General Hospital it is a question not of advocating a new case but of re-affirming a case which has been stated and proved and which therefore should receive priority treatment which it deserves on its merits.
  2.5 p.m.
  Mr. Geraint Morgan: Despite the eloquent contribution by the hon. Member for Pontypool (Mr. Abse) and the fact that I, too, am a strong supporter of a referendum on the issue of a Welsh Assembly, I shall not be tempted in this debate to go into that subject. I imagine that we shall have plenty of opportunity to discuss that matter in the next parliamentary Session, whenever that begins.
  It was important for the Secretary of State, in opening the debate, to concentrate on the Welsh economy. Inevitably, he had to be selective, and I shall be even more selective because the time at my disposal is so much more limited.
  Inasmuch as the transport debate scheduled for yesterday vanished, for procedural reasons, into thin air, I think it important that I say something about the subject of communications, which

  1763
  was touched upon by the right hon. and learned Gentleman the Secretary of State for Wales. I suppose that I am stating the obvious when I say that good road and rail communications are essential to safeguard the economy of any country or region. The lack of good communications not only has an adverse effect on the attraction of new industry; but it carries with it the threat that existing industries may choose to move out of the area, particularly to places such as the new towns, where substantial sums of money have been spent on highway infrastructure.
  I wish first to deal with the subject of highways. Earlier this year the Secretary of State announced a completion of the review of all outstanding trunk road schemes in the Principality. The revised programme showed that almost total priority was to be given to completing the M4 motorway across South Wales and the A55 coastal road across North Wales. I do not basically disagree with this priority. My hon. Friend the Member for Flint, West (Sir A. Meyer) and I have frequently sought to emphasise that the A55 has for far too long been a scandal and a disgrace. It has to be observed that all the planned improvements to our North Wales roads—the A55, the A5 and the others—will not bring us a single yard of motorway. We are not cribbing on that score, but the fact that that is so strengthens our claim that Government action in, and for the benefit of, North Wales should not be limited to long-delayed and much-needed improvements on the A55.
  I feel entitled to call for such action despite the present economic difficulties, indeed in a sense because of them, for four main reasons. First, although—and this must be said in fairness to the Government—spending on road construction and maintenance in Wales has probably suffered less from public expenditure constraints than has been the case in any other region, the fact is that the lion's share of this has been expended and continues to be expended on the M4. Many authorities have felt for some time—and I agree with them—that the M4 should be divorced from the rest of the Welsh roads budget because of its status as a vital part of the national transport network.
  1764
  Secondly, the whole of North Wales has been practically denuded of railway transport. In my constituency the Beeching Plan did its worst over 10 years ago. The general state of public transport is very poor indeed, despite laudible attempts by local authorities to improve it. I refer particularly in this connection to the inauguration, just over a month ago, of the first ever community bus service in Wales—indeed, only the second such service to be organised in the whole of the United Kingdom. This was in western Clwyd, in the areas of Cerrig-y-Drudion, Llangwm and Llanfihangel Grlyn Myfyr.
  A recent report by the British Road Federation points out that Wales has one of the highest car ownership levels in Britain—70 per cent. of all households in some areas, as compared with an average of about 55 per cent. for the whole of Great Britain. I would like to be able to think that this was an indication of comparative Welsh affluence. Regrettably, that is not the case. It merely underlines the skeletal nature of our public transport system, such as still exists.
  Thirdly, much could be achieved by better co-ordination of road schemes running across the border into England. At present there is no adequate coordination of road construction that would give quicker access to North Wales from the English motorway network. There is a pressing need for more formal arrangements whereby the Department of the Environment, the Welsh Office and the representatives of the Welsh counties concerned could get together and agree priorities and programmes. There is an unhappy tendency at present for some of the English counties to be quite satisfied with the good road that stops just short of the Welsh border.
  Fourthly, much could be achieved by a more intelligent spreading of the funds available. The A5 can be considered as an example. There has been a considerable waste of time and money planning a Llangollen bypass, which very few local people want, and may oppose. The establishment of a line for this would only have the effect of sterilising for years development inside Llangollen town, since there is no prospect of such a bypass being built in the foreseeable future. As against that, there is only one projected improvement on that

  1765
  important highway along the whole of its route through the county of Clwyd.
  On the question of road improvements generally I have some questions to pose to the Under-Secretary. May I say that I very much welcome the hon. Gentleman back to the House after his illness. I do not expect him to answer these questions today. Perhaps he will do so in the usual way, by correspondence. The main questions that I wish to pose are these. First of all, will he give an undertaking to expedite the dualling of the A55 to a high standard in North Wales? Presumably he has that in mind anyway. Will he, in addition, give an estimated date for the completion of that work? Very much bound up with this, will the Minister let me know when the Secretary of State expects to reach a final decision with regard to the vexed question of the Expressway route?
  Over eight long years have passed since I first raised this matter in a Welsh debate. A most distinguished member of this House, then Secretary of State for Wales, kindly agreed to investigate local opinion on this matter. In answer to a recent question the right hon. and learned Gentleman told me that he has to consider seven volumes of reports from the inspector who conducted a long inquiry into this matter. I commiserate with him. I know that he will bear in mind, however, that more than seven years have passed while this has been hanging over the inhabitants of the towns along the coast. It is most important that this matter should be resolved as soon as possible.
  Can the Minister also inform the House what proposals, if any, exist for the dualling of the A5 from Chirk to the junction of the M6 motorway at Gailey? I appreciate that these are English improvements, but they are of considerable importance in improving traffic conditions in and out of Wales.
  More than once in these debates I have lamented the fact that there is still no respectable trunk road between North and South Wales, and I regret that a vital link in the chain of improvements planned for the A470, the completion of the dual carriageway north of Aberystwyth, is not now due to start until 1982. What I particularly want to remind the Minister of today—I do not think that I
  1766
  need direct his attention to it, because he must be aware of it—is the appalling state of the rail services between North and South Wales. While I am about it, I would like him to give a firm undertaking that there will be no further tampering with such rail services as are now left to us in North Wales. I shall return to that in a moment. Let me first say a word about the north and south services.
  I do not think that anyone with experience of them will deny that they are badly in need of improvement, in respect of both travelling time and facilities. Journeys from places like Shrewsbury to Aberystwyth and Shrewsbury to Swansea take as long as, if not longer than, many Inter-City services. There seems to be a marked inferiority in the quality of Welsh as compared with English rolling stock. There is all too often a complete lack of the simplest catering facilities.
  Dealing with the remaining North Wales lines, and particularly the coast line, I must impress upon the Minister the real fear that exists about the future of that railway artery along the coast, the closure of which would totally wreck the economy of Gwynedd and Clwyd. I cannot seriously believe that the Government would begin to consider permitting such a closure, but the fear is there, and no doubt it has been fostered and given increase by British Rail's proposal to cut the services on it with effect from May 1977, which is naturally seen as the thin edge of the wedge.
  There should not be any talk of closure or even restriction of services on this line. Instead, urgent attention should be given to its modernisation. British Rail promised long ago that improved rolling stock would be introduced on the Crewe-Holyhead stretch of this line. This has yet to materialise. The Government should regard the implementation of this promise as a high priority in their railway planning.
  I have to be more selective than was the Secretary of State. I want to make a short reference to agricultural problems and I can draw attention to only one aspect of agriculture in the time available. In the same Welsh debate that took place about a year ago, I said that what concerned my farmers more than anything else was the problem of the

  1767
  green pound. The situation in that respect is infinitely more serious than it was then. There had then been a series of four revaluations by the Government, and I give them credit for this. These reduced the gap to a comparatively bridgeable one of 7½ per cent. But the misfortunes of our currency have now made it a yawning gulf of 45 per cent.
  All reasonable people must accept that political and other considerations make anything like a total closure of the gap impracticable. Indeed, a violent revaluation, even were it possible, would not benefit some aspects of Welsh agriculture. For example, the incomes of many hill farmers derive essentially from three sales: store lambs, breeding ewes, and store cattle. From then until the next sales, the only effective revaluation would be the harmful one of an increase in feedingstuff prices.
  What I have said is not intended to discourage the Secretary of State from giving the most urgent attention to this problem, for some significant revaluation there must be if the industry is not to go under. What I am saying is intended to be constructive. I am urging a combination of a realistic revaluation of the green pound, on the one hand, and subsidy adjustments as temporary remedies, at any rate during the remainder of the transition period, on the other.
  I could not agree with the Secretary of State when he spoke glowingly of Government assistance to agriculture in what has now come to be known as the "drought package", produced by the Minister of Agriculture, Fisheries and Food about a month or so ago. In that respect, he was unduly complacent. May I give an example of what I have in mind and what the Government have failed to do? They recently rejected a proposal by the National Farmers' Union for headage payments for milk producers as an additional means of assisting them to overcome the effects of the drought—that is, if the guaranted price could not be raised sufficiently, and it was not raised sufficiently.
  In fact, the increase of 2p a gallon for producers during the winter months, which formed part of the drought package, will not come anywhere near meeting the effects of the drought, coupled, as it is, with the relentless and continuous increase in the cost of feeding stuffs which has gone on uninterruptedly for over three
  1768
  years. Indeed, the high cost of winter feed will undoubtedly mean that many farmers will be forced to sell dairy cows they might otherwise have retained, and this will put a further brake on the hopes of expansion in the milk sector expressed in "Food From Our Own Resources". I am sure that the Secretary of State will bear in mind that milk production is the cornerstone of our agricultural economy in Wales.
  Finally, I turn from the drought to flooding. The Secretary of State will, I am sure, be aware of the devastation which recently occurred in many parts of North Wales as a result of the sudden floods. He will also be aware that I have been in touch with his Department regarding the damage in one particular village, Llanfair Talhaiarn. The tragedy is that these visitations of nature have recurred with painful regularity, and I have been dismayed by the lack of action by the Welsh Office—not only under this Government, let me add—after such flooding occurred.
  In the instance of the village which I have mentioned, there is plainly an urgent need for rechannelling of a stream running through it from the mountains and for an examination of a series of weirs in the main river on which it stands. Action has been taken with regard to this purely because of the praiseworthy assumption of responsibility on the spot by the chief executive of the Colwyn Borough Council, Mr. Geoffrey Edwards. But for that, I dare say that the matter would have been allowed to drop, as it was after an earlier serious flood in that village five years ago. The sources of the trouble were known then, but no action was taken.
  The matter of flood prevention is assuredly one in which the Welsh Office should interest itself and take a lead. I should like to be assured that the Secretary of State will, through his Department, make a thorough study of the problems of those towns and villages which have been regularly afflicted by flooding in the past 10 to 20 years.
  As I have said, I do not expect replies to all the queries I have raised, save perhaps in the most general terms. I believe, however, that these are important issues which are of great concern to the people of North Wales. Therefore, they merit the immediate attention of the Welsh Office.
  2.24 p.m.
  Mr. Donald Anderson: A cynical observer of the Welsh scene today might say that there were two main areas of debate—jobs and devolution. Devolution is the concern of the politicians and the media; jobs, prices and the economy are the more immediate and pressing concern of our people.
  In Wales, unemployment is very deep in our collective consciousness. We are not suffering from the level of unemployment of my father's generation, but still it is scandalously high, and, although the impact of unemployment on the unemployed person and his family has been softened by the welfare provision won, in particular, by the post-war Labour Government, it remains true that an unemployed man is not a whole man. There is something lost about him. We must ask ourselves whether in Britain, and in Wales in particular, we can ever anticipate returning to the levels of employment which we enjoyed in the 1950s and 1960s or whether there are trends in society which, without substantial modifications to existing policies, will prevent us from returning to those high levels of employment.
  What are the best projections that one can make? The immediate future is bleak, because there are substantial factors militating against a dramatic reduction in unemployment in the immediate future. First, an increase in productivity and greater investment which is called for by the Government often mean a reduction in the number of jobs available. Secondly, there is evidence of substantial spare capacity in Welsh industry. Thirdly, the legislative protection for workers which has been properly introduced by the present Government and their predecessors means that industrialists are more reluctant to hire people because it is more difficult to fire them.
  We are in a period of public sector restraint. Some of the major additions to total employment in Wales in the past few years have been made in such public sector areas as the Driving and Vehicle Licensing Centre, in my constituency, and in Government employment in the Cardiff area. At a time of public sector restraint, we shall not in the immediate future have that sort of addition to our total employment.
  1770
  Finally, there is the decline in a whole range of our basic industries and such service industries as bus transport and the rail system. The Manpower Services Commission, in its document entitled "Towards a comprehensive manpower policy", published this week, concludes that even on the most optimistic projections and assessments, unemployment in the United Kingdom will remain at historically high levels until at least 1978–79. There are demographic trends which militate against a substantial diminution, particularly the fact that in future there will be an increase in the labour supply at a time when there are these weighty factors against job creation. Therefore, many more jobs will need to be created at a time when it will be increasingly difficult to create them.
  This problem is felt increasingly acutely in Wales because of our over-dependence on basic industries. It is reflected in West Glamorgan. In the past few months there have been many thudding blows to the people in that area and their representatives, as redundancies have been declared. Only on Saturday, Struels, the warehousing concern in my constituency, as a result of a bad property speculation by the parent company, announced that it is to lay off people in Swansea, as it did earlier in Cardiff. There is also the situation at the British Steel Corporation at Landore and the 300 projected redundancies among the busmen in Dyfed and West Glamorgan.
  My right hon. Friend the Secretary of State mentioned the light at the end of the tunnel. Perhaps my eyesight is not as strong as his. I can see but very darkly indeed over the next few years. There is little, save some expansion at Alcoa and some new retail outlets for Debenhams, to make a contribution to relief of our jobless problems. Against this sombre background, what policies are the Government prepared to take to maintain and increase jobs? There are three major contributions which the Government could make. They could endeavour to buttress existing jobs; they could seek to improve the infrastructure so that when the hoped-for improvement comes, these attractions are available; and they could radically rethink ways in which the jobs could be shared and more jobs made available to the increasing work force.

  1771
  When one thinks about buttressing existing jobs in the West Glamorgan area, the uncertainty hanging over the DVLC in my constituency immediately comes to mind. The more speedily that problem is resolved the better. Port Talbot was mentioned in cogent speeches by my hon. Friend the Member for Gower (Mr. Davies) and my hon. Friend the Member for Ogmore (Mr. Padley) and I do not intend to go over that again, save to join with them in urging the British Steel Corporation to accept the "bird in hand" offer of £350 million as a start for the investment to come. I do not think that there is a conflict between Shotton and Port Talbot. In Wales we have strong memories about the Llanwern—Ravenscraig dilemma and the way in which that was resolved in the past.
  My hon. Friends the Members for Neath (Mr. Coleman) and Gower joined me in Swansea two weeks ago to attend a rally of 300 busmen who are threatened by redundancies. The local offshoot of the National Bus Company, South Wales Transport, says that unless it sacks 300 men over the next financial year its deficit will rise from a projected £1·2 million to £1·6 million. Effectively, it will save £400,000 gross by sacking 300 men. Surely it is within the province of the Government to see the net effect of this, if the men are to be provided with social security benefits to compensate them. The Government could give some measure of assistance to the company to ensure the retention of these 300 jobs, and then the total effect on public expenditure would be nil. We have been met by a series of buck-passing operations by both the county and the Government.
  Another example of this is the GEC factory at Hirwaun. It has put up a strong case for temporary protection against low-cost imports. Generally, I am against protectionism, because invariably it increases the cost of goods to our own consumers. But in this instance there is a strong case, because there is evidence that overseas suppliers are trying to kill off sections of our economy. The indications are that they will increase their prices at considerable disadvantage to our economy and ruin job prospects for many people. I hope that the Government will agree that this GEC factory
  1772
  should be given some measure of temporary job protection.
  I commend the Secretary of State for giving priority to the M4 motorway and the 31 miles of this road that will be opened next year. My right hon. Friend has fought tenaciously for this priority, which will bring great benefit to the whole economy of West Wales.
  There is the question of a face lift for Wales, which was referred to by my hon. Friend the Member for Gower, who spoke of the Morriston hospital and the obsolescence of so many public structures in West Glamorgan. This sort of thing is a deterrent to people coming into the county, and this is an area in which money is urgently needed. There is a need to compensate Wales for the historical sacrifices that it has suffered for the United Kingdom economy as a whole. There is a need for greater public investment in Wales, particularly in derelict land. I am pleased that the Welsh Development Agency is looking urgently at this problem, under the energetic direction of Mr. Ian Gray. There is no better man to spearhead the agency.
  On the planning side, we must ensure that industry is linked around existing heavy industry and is ready for any improvement in the future.
  There is a long-term problem in the case of jobs. If there are to be fewer jobs to distribute in the future, we must examine the way in which we can best assist every individual by keeping younger people from the labour market for a longer period and extending their education; by the continuation of vocational preparation; and by increasing cooperation between education and industrial services as suggested by my right hon. Friend the Prime Minister in his recent speech. We could have shorter working hours, less overtime and early retirement. The miners in Wales have at last woken up to the fact that they are less well off than their Continental counterparts, in terms of retirement. We must ensure that the jobs that do exist are distributed more fairly around the total population.
  The Government should examine all areas of policy to ensure that they do not inhibit total development. They must ensure that they do not hinder greater mobility of the population.

  1773
  Earlier, I mentioned the two matters of employment and devolution. Only a few weeks ago it appeared that the governmental juggernaut of devolution was rolling ahead remorselessly over public opinion, and that this would take priority over every other issue in the next Session of Parliament. Then, last Monday, there was a report in The Times which said that the Government were coming round to the view that there should be a referendum and that the people of Wales and Scotland should be consulted. Monday's leak, whether or not it is disavowed by the Government, makes it clear that demands for a referendum have come from highly placed sources. This matter, having been floated in The Times, is now public knowledge, and obviously the Government are seriously considering a referendum. The chances are that the Government will yield graciously to overwhelming and widespread demands for a referendum instead of being hustled into devolution, resulting in a long war of attrition in this House during the next Session. The result of the latter course would be a veritable legislative Passchendaele. Unless the Government accept public opinion, which overwhelmingly wants a referendum, and makes a gracious concession, the result will be a hard-fought fight, in which the Government will be forced eventually to hold a referendum by cross-party co-operation.
  If the Government were now graciously to accept the case for a referendum, and were to agree to incorporate that provision into the Bill, so that the Bill would not become law without the approval of the people of Scotland and Wales, the sceptics—certainly I and, I anticipate, some of my friends—would go at least halfway to meeting them on the issue. That would be bound to make us seriously reconsider our position on Second Reading, and would lead in general to a far more constructive approach by us in the next Session's debates.
  I appeal to the Government to make a gesture of reconciliation about a referendum. If that gesture comes it will certainly be met by myself and, I expect, by my friends who feel deeply about the matter.
  2.41 p.m.
  Sir Anthony Meyer: The Secretary of State should have taken a leaf out of the book of the hon. Member for Swansea, East (Mr. Anderson) in terms of the honesty and candour with which he spoke.
  I do not want to consider who is to blame for the appalling situation in which Wales now finds itself, and the still grimmer future that the people face over the next few years. It does not matter who is to blame. The important thing is to start doing something about the situation here and now. The first thing is to admit just how bad things are, as the hon. Member for Swansea, East has just done, and not to delude ourselves with any false hopes.
  It would be wonderful if last month's slight drop in unemployment showed a real downward trend, or if the other few items of good news from the last 48 hours were part of an upward movement of the economy. However, there is precious little reason to suppose that that is the case, and there are too many reasons to suppose that the unemployment figure will go somewhat higher still, will stay higher for a very long time, and that much rougher economic weather lies ahead.
  There was no sign of any improvement in North Wales. The headline in the Liverpool Daily Post of 27th October stated:
  "Jobless—no joy for North Wales".
  There was an increase of 144 in the number of unemployed and reduction of 100 in the number of vacancies. This is small stuff compared with what is in store, compared to the announced closure of Courtaulds' Castle Works in Flint and compared to the job losses to come from the British Steel Corporation at Shotton.
  It will not do to say that Shotton is all right until 1981. The absence of a decision now to invest in modernising the open-hearth furnaces there is tantamount to a decision to phase out steel-making. It is a question not of deferring a decision on Shotton, but of taking a decision to put additional money in.
  In North-East Wales our worst fears have been confirmed. On 6th August 1975 I wrote to the Secretary of State explaining the extreme fragility of the Deeside economy. I said that my worry

  1775
  was that there might be a sudden increase in unemployment as the BSC, Hawkers and Courtaulds started to lay off workers simultaneously. By that time it would be too late to apply any of the usual regional incentives, such as the granting of full development area status, since such remedies took more than a year to have any effect.
  More than a year has now gone by, a year in which we have seen Courtaulds' labour troubles and its lamentable failure to see and prepare for changes in the demand for its products which had been clear to all, a year in which the future of Hawkers has become more doubtful than ever because of the steadily approaching threat of nationalisation, a year in which uncertainty still hangs over the heads of Shotton steel workers. In that year the Government have done precisely nothing to prepare for a tragedy which all could see coming, except to spend public money building advance factories which today stand empty or are occupied by half-a-dozen workers whiling away the day making clay models.
  The Government failed to do the one thing they could have done, which was to give the area full development area status such as is enjoyed—if that is the right word—by all the surrounding areas. I do not have much faith in the positive advantages of assisted area status. I would rather have first-class road communications. Anyone can see, however, the undoubted disadvantages of not having development area status when everywhere else around has it.
  It was only a Conservative Government who afforded any help to the Deeside area by giving it intermediate status. They did not wait until it was too late. The Secretary of State has. If he gives full development area status before the month is out—as he surely now must—he will do so in the knowledge that it will not now undo the harm that has been done. It can only palliate a still further loss of jobs which must be expected.
  The sorry state of affairs in North-East Wales, which used to be an area of relatively low unemployment, is due in part to some factors which are still outside the Government's control. Nevertheless, a substantial cause, as it is a substantial cause of the economic distress throughout the country, comes from the Government's
  1776
  failure to be frank with the people, to tell them that they must lower their expectations to match their achievements. It comes from the Government's failure to act soon or decisively enough.
  As my hon. Friend the Member for Pembroke (Mr. Edwards) pointed out repeatedly, the Government and the Secretary of State have led people to expect an improvement which could not possibly materialise. The right hon. and learned Gentleman was at it again today. They have postponed the sacrifices which people have been willing to accept. Because of this repeated double failure of the past two and a half years, the sacrifices now demanded are much greater and the chances of recovery much more problematical and much slower. If the Government had been open and courageous in 1974 the people of Britain, at the price of a mere standstill in their living standards for a year or two, could have laid the foundations for steady expansion.
  By 1975 the situation had been allowed to worsen to the point at which it became necessary to impose an actual drop in living standards. Even so it would have been possible to shield the least well-off from the hardships imposed on the rest of us. Now it is no longer possible to do even that. Now, as in 1931, the Government, though they will not have the courage to attempt it, must not only sharply lower the standards of the social services, they must also cut the cash benefits on social security and unemployment. They must do so, if only by the cowardly way of letting inflation do the job for them.
  Before the Secretary of State rejects this assertion, let him look at the Written Answer to my hon. Friend the Member for Norfolk, North (Mr. Howell) by the Secretary of State for Social Services on 15th October at Column 245 of the Official Report. It shows the net spending power of people in work and out of work. Let him also take into consideration the tax refunds which are available to people on short-term national insurance benefit as set out in the Written Answer to my hon. Friend on that day at Column 244. To save time let me give just two comparisons. A married man earning £45 a week with one small child would have a weekly spending power of £30·77 in work. But out of work he is

  1777
  50p a week better off at £31·24. That does not include a tax rebate of £9·35. In other words, he is £10 a week better off not working.
  The discrepancy is even more glaring for those on lower wages. A man earning £25 a week—and I regret that there are such people in North Wales—who has three children gets £39 a week in work with FIS and so on, but £49 out of work. In addition he draws another £11 tax refund. This incentive not to work is clearly less for those on higher incomes, but it is there up to and beyond wages of £60 a week. In North-East Wales these are typical wage levels. In all this I have not mentioned travel to work expenses or redundancy payments.
  That is the sort of mess that Government policy and reliance on the much-vaunted social contract have got us into and it will be almost impossible to get out of it.
  It is not pleasant for me to have to say this, but it will not be easy to get jobs for the Courtaulds workers to be laid off in January if most of them will be better off by not working, taking into account the figures I have just quoted and redundancy payments and the cost of travelling to work. A large number of Courtaulds workers fall into the categories I have described. It is no comfort to read in the Liverpool Daily Post that Shotton has a new, streamlined Jobcentre. It would be much nicer to read that the Government have a serious intention of tackling unemployment. If they have, they must either cut unemployment benefit or reduce the tax on incomes. But they lack the courage to do the first and the money to do the second.
  In the memorable words of my right hon. Friend the Member for Sidcup (Mr. Heath), we have reached the end of the road. But it was the wrong road, and we must go back and start again. Wales needs new measures and new men. The best service the Secertary of State could now render to the people of Wales would be to join his fellow Ministers and resign to make way for an Administration which will tell the people the truth and lay on them the sacrifices which they are ready to bear and thus sow the seeds of a slow recovery.
  If, despite yesterday's massive rejection of the Government by the electorate,
  1778
  this is not to be, should not the Secretary of State consider whether there is a personal contribution which he could make?
  The right hon. and learned Gentleman took up his great office with high intentions, but he must surely wonder whether he has lived up to them, whether he has not been a little too quick to respond to criticism with abuse—as we saw again today—a little too pat in his excuses and too narrowly partisan to set the new tone of unity and reconciliation which our people are longing to hear.
  Even within the ranks of the Secretary of State's own discredited party, there are hon. Members, one of whom was sitting beside him just a moment ago, who would evoke a wider response from the people and from this side of the House if they appealed for a united effort for national recovery. I would certainly respond to such a lead.
  2.53 p.m.
  Mr. Michael Roberts: The hon. Member for Swansea. East (Mr. Anderson) referred to the way in which the Secretary of State had stuck tenaciously to the construction of the M4 in South Wales. I also appreciate the way in which this important lifeline for South Wales is being developed under this Government as it was under the last Conservative Government.
  However, I wish to draw the attention of the Secretary of State to an aspect which affects the whole of South Glamorgan. While this lifeline is being constructed and we see the wonderful link to the West and to London, we do not believe that there are sufficient interchanges to allow Cardiff, Barry and, indeed, the whole area to take advantage of the lifeline.
  I know that the Secretary of State works within a limited budget. At a time when we are having to accept cuts in public expenditure, there is no question of my saying that we must have interchanges immediately. I know that the right hon. and learned Gentleman appreciates that they take years to prepare and plan, but if Cardiff was given hope that, when the resources were available, the necessary interchanges to the East and West would be provided, the area would look at its economic future with much greater hope.

  1779
  The hon. Member for Pontypool (Mr. Abse) asked whether his right hon. and learned Friend got up early in the morning to read The Times. There was a certain amount of speculation about that. I do so regularly and I read this morning that the Secretary of State was celebrating his 45th birthday. We wish him many happy returns, but not in his present office.
  The hon. Member for Pontypool also referred to the latest Marplan poll and made the legitimate point that the people of Wales had responded to this splendid, reputable poll, which was well conducted throughout the Principality. The authenticity and validity of the poll were borne out by the results in Walsall, North and Workington yesterday. I want the Secretary of State to know that even those of us who have opposed referenda in the past recognise that there must be some way in which the voice of the people of Wales can be heard. Their voice must be heard.
  It is interesting to see in the Marplan poll the derisory number who want devolution and set that against the constant propaganda in the last three or four years in the media in Wales. The Western Mail, the national daily newspaper, has devoted the whole of its centre pages today to an article on devolution, but I am sure that not many people in Wales will read it.
  During one of the 1974 General Elections, the BBC had an hour's programme for the electors of Wales. Every question was on the issue of devolution, as if the people of Wales were profoundly concerned about that and nothing else. As everyone who keeps in contact with his electors knows, devolution is not a burning issue. That is why we must demand that a way be found to allow the voice of the people of Wales to be heard on this important matter.
  I was pleased that the Secretary of State spoke about education—there were few of his remarks with which I could not agree—and I thank him for giving me a copy of his speech at Colwyn Bay.
  It is high time the Secretary of State began to take a keen interest in the quality of education in Wales. I know that the right hon. and learned Gentleman must be loyal to the Prime Minister,
  1780
  but when he said that his right hon. Friend had initiated a debate on standards, I wondered what we had all been talking about for many years. Standards in education have been the central theme of speakers from this side of the House in education debates. Yet we are told that, when the Prime Minister makes a few remarks in Oxford, he is initiating a debate.
  Let us be clear about the role of the Prime Minister and about that of the Secretary of State, who made his speech in Colwyn Bay. They are late gatherers in the vineyard. They are none the less welcome for that. But it is high time that they said something about it. They should have said it long ago.
  About a fortnight ago, I asked for some statistics about truancy in South Glamorgan. I received a reply from the Under-Secretary to the effect that those statistics were not available. It is true that he provided me with general statistics for the whole of Wales. It is also true that I can quite easily discover how many children in South Glamorgan are absenting themselves from school. But I make the point because it shows that, at the moment, people do not have their fingers on the pulse of education throughout South Wales, and it is high time that they did.
  I fear that in Wales there is great concern about education standards and about truancy. Many well-informed people believe that the figures issued are an underestimate of the true numbers missing from our secondary schools at 3.30 on a Friday afternoon, for instance. There is concern about growing illiteracy. There is a suspicion, which I hope is not proved to be a reality, that there is a decline of standards in our secondary schools.
  What frightens so many people is that they are not convinced that those who are responsible for educating our children and for administering education in the Principality themselves know the facts. One of the reasons is that they have not initiated inquiries to find out what is going on. That is worrying parents all over the Principality, and we must set their fears at rest.
  I am the first to recognise that great work is being done by teachers in the

  1781
  comprehensive and secondary schools in Wales. Now we have to think of how we can best make our comprehensive schools work. In that connection, I wish to make one or two suggestions.
  When my right hon. Friend the Leader of the Opposition was Secretary of State for Education and Science, she was one of the first to see the advantage of smaller comprehensive schools. In my view, it was a major contribution to making our comprehensive schools work more effectively. I know that the money is not available at the moment and, therefore, I do not ask for greater public expenditure in this connection. But I hope that the Secretary of State will look forward to a position where schools are becoming fewer in number because of the decline in the population and take advantage of that situation to have smaller schools, rather than to amalgamate schools to save the construction of new buildings in, for example, new council developments and new suburban areas. I hope that the Government will regard this as a priority when the necessary resources become available.
  Then I ask the Secretary of State to think very hard about the quality of some of our schools in those tough urban areas where perhaps the range of opportunity is not the same as it would be in other communities and to ask himself whether comprehensive schools serve the community as effectively as they should. I put it to the right hon. and learned Gentleman in this simple form. He went to the school which I myself would have attended had I not moved to South Wales, Ardwyn. He then moved to the University College of Wales, subsequently to Cambridge and then to The Hague. Can he believe that someone today entering a comprehensive school in a tough urban area at the age of 11 has the same opportunities to make that sort of climb, of which he took full advantage? If the answer is "No"—even if there is a suspicion that the answer is "No"—it is time for Ministers to look very carefully at the situation and to ask themselves what they can do to improve comprehensive education.
  Far too much of the idealism and concern of members of the Government party for education has been channelled into arguments about social engineering and arguments about structure. They have for
  1782
  years ignored the problems of quality in education, and our children have suffered as a result.
  Therefore, I conclude by asking for a most critical review of how comprehensive education is working, not because I am opposed to comprehensive education—I worked in a comprehensive school; I was headmaster of one at one time—but because I want to ensure that the system we shall have to use for the next 15 to 20 years at least will be the system which gives our children the maximum advantage.
  3.5 p.m.
  Mr. D. E. Thomas: I shall not be drawn by the hon. Member for Cardiff, North-West (Mr. Roberts) to take up the education issues that he raised, although I certainly join him in welcoming the initiative taken by the Secretary of of State in his Colwyn Bay speech, stressing the need for a technically and scientifically orientated curriculum in our schools in Wales.
  I had intended to speak on the whole area of social policy, which has so far been neglected in the debate, apart from some references to housing. I am concerned that the House is not giving adequate scrutiny to the health and personal social services functions of the Welsh Office. We have not had a Welsh Grand Committee debate on these aspects of the social services during my time in the House, and it is high time that we raised the issue and had a wide-ranging debate on it. However, in view of the time, I shall not concentrate on that, but I was so struck by the air of false optimism in the Secretary of State's opening speech that I felt obliged to reply in the same sort of personal way.
  Throughout the period during which the right hon. and learned Gentleman has been in office, my experience as a constituency Member of Parliament has been one of living in a very different Wales—perhaps even a different world—from the one which the Secretary of State seems to inhabit, commuting as he does between Blackheath and Llandysul.
  The Secretary of State paid a State visit to my constituency in April 1974, perhaps not unrelated to the result of the election the previous month, and, no doubt, in anticipation of a succeeding election. He called a meeting, which I was glad to be

  1783
  able to attend, at which he pledged his Government's priorities. They were, as we heard him repeat in the House, jobs and homes. The people of Wales judge the Secretary of State, the Welsh Office and the present Administration on their performance in that area of policy now, and will judge them whenever we have a General Election. There may be odd swings to third parties in certain regions of England, but there can be no doubt where the political swing will be in the valleys and industrial areas of South Wales when this Government are judged on their economic and social record.
  I return now to the Secretary of State's visit to Blaenau Ffestiniog. He spoke of the deep problems of the area, including its employment problems, and said how similar they were to those of Glyncorrwg, in his own constituency. At that time we discussed, in particular, the empty 50,00 sq. ft. advance factory in Blaenau Ffestiniog. I do not apologise for referring to that factory yet again, as I have so often done in questions, at meetings and on deputations, as well as by correspondence, because what causes me most anxiety in my constituency is that the factory is still empty. True, it has at last been refurbished, and we are grateful for that, but it is one thing to get in the decorators and quite another to bring in the producers.
  I ask the Under Secretary of State—1 know that he is equally concerned—when he last discussed with the Welsh Development Agency the question of setting up its own publicly-owned subsidiaries to operate in our empty advance factories. I realise that he will say that this is a matter for the WDA, but he should meet the WDA and raise the matter with it. In the Financial Times last month we were told that the Northern Ireland Development Agency has set up a wholly-owned subsidiary to manufacture bicycles in Derry. Those of us who were concerned with the attempt by a private entrepreneur to establish a bicycle factory at Blaenau Ffestiniog read that piece of news with a great sense of irony.
  The marketing work and the development project for the factory was done by the Northern Ireland Development Agency. That is the sort of work that we have been calling on the Welsh
  1784
  Development Agency to do since it was set up. I know that there have been difficulties about the recruitment of staff, but if the Agency can employ outside consultants to scrutinise the books of individual industrialists it could, on the same basis, utilise the expertise of outside consultants to design public enterprise projects to be established in the sort of factory to which I have referred.
  Whatever the right hon. and learned Gentleman may say about the number of jobs created and about the light at the end of his tunnel, I am afraid that the tunnel that I keep looking into is the long British Rail tunnel out of Blaenau Ffestiniog towards Llandudno Junction. The light at the end of that tunnel is a great deal further away than the light at the end of the tunnel frequented by the right hon. and learned Gentleman.
  The Secretary of State's remarks about the jobs created must be judged against job shortfall in both Gwynedd and Clwyd. I have the dubious honour of representing a bit of both counties. In fact, it is not an honour, it is an onerous burden. We should have heard more of the onerous burden facing the right hon. and learned Gentleman and less of the complacency which was so noteworthy in his opening remarks. It is an onerous burden these days to try to relieve the anxieties of our people who are facing unemployment. We should be reflecting those anxieties and not mouthing general platitudes and cant about devolution from Labour Members with the Benches three-quarters empty.
  Mr. Ifor Davies: Where is the hon. Member for Carmarthen (Mr. Evans)?
  Mr. Thomas: My hon. Friend is involved in a major constituency meeting. If two thirds of every other parliamentary party were present the Benches would be somewhat fuller.
  The anxieties of our people must be reflected in our debates. Not only is the factory at Blaenau Ffestiniog untenanted; the two Government factories at Dolgellau are untenanted. The nursery units at Bala are untenanted and, last but not least, we have had the closure of two creameries, one at Rhydymain, because of low milk production in the area and the Government's

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  policy in securing returns for milk producers. More recently, we have had 70 redundancies at Corwen Creamery.
  I know that the Secretary of State is scheduled to pay a visit to Corwen on 30th November, when he is due to open the de-luxe cowshed that has been built by Lord Newborough. Before the Secretary of State puts on his Wellingtons to open the de-luxe cowshed, I hope that he will take the trouble and time to go across the road to visit the creamery and to talk to those who have been made redundant. Those people are as worthy of his time as Lord Newborough.
  The creamery has been closed by the CWS. As the milk products director put it to me the other week, it has been put in mothballs because of the position of the United Kingdom cheese market, because we are taking imports from European Community countries and because the percentage of the domestic market being taken by British producers is down to 60 per cent. In my view, part of the reason for the difficulties is that Wales does not have a milk marketing board. A marketing board could decide priorities in terms of manufacture as opposed to bottle production. These are anxieties that we must reflect in response to the complacency of the Secretary of State when he talks about an alleged upturn and makes various hopeful comments based on factors that his officials have been scratching everywhere for all over Wales.
  An issue related to the economic crisis is housing. There are deepening anxieties about the housing crisis, an issue that was so aptly stressed by the hon. Member for Pembroke (Mr. Edwards). Will the Undersecretary of State confirm that 60 per cent. of the block allocations that are to be given to Welsh counties next year has already been committed? Will he confirm that the new building, the improvements, the acquisitions from the private sector and the building land acquisitions are already committed to the tune of 60 per cent.?
  The Secretary of State was not prepared earlier—he has not been prepared throughout his term of office—to give us any figures about job shortfall and to compare the Government's performance with that shortfall. Similarly, I am told by the Under-Secretary, the hon. Member for Rhondda (Mr. Jones), who I know is
  1786
  deeply interested in housing issues and intelligent about these matters, that he and his officials cannot calculate the housing shortage in Wales. He told me in a parliamentary answer last week that this is such a general term that it cannot be defined.
  The Plaid Cymru Research Group, in a memorandum to the Secretary of State earlier this year, proposed that the real shortfall in Wales amounted to the need for 25,000 new units per year for the next seven years. The Secretary of State wrote me a nice long letter rebutting that figure which he said he did not accept, but refusing to give any alternative figure.
  So on the jobs front we face a failure to give us the figures of the jobs shortfall, despite the county structure plans. In Clwyd, for example, the Economic Review published last month came up with a figure of 50,000 by 1981. A similar study has been undertaken in Gwynedd. Athough local authorities have figures relating not only to job shortfall but also to housing waiting lists and housing conditions, although we have the House Condition Survey and another is being prepared, it appears that the Government cannot come up with a single figure of the real homes needs in Wales.
  Therefore, when the Secretary of State says that jobs and homes are his priorities, what he means is that those priorities are open-ended, that he has no target to them and that he cannot be judged on his failure to meet a target. But he will be judged by his failure to meet the target which we who stare the real facts of Wales in the face know is necessary.
  It would be wrong if I were not to refer in passing to devolution. I say in passing because I am concerned about the real issues facing the people of Wales. I do not intend spending my time writing long, tedious articles in the Western Mail alleging that bribery and corruption will be increased, that there will be more opportunities for all forms of gravy trains, whether high-speed or not, driving around Wales after devolution.
  I am concerned about the real issues, about jobs, homes and the powers of the Assembly. That is what the Welsh people are concerned about. Opinion polls have shown that they are concerned especially about the powers of the Assembly. One

  1787
  produced earlier this year showed that 70 per cent. of the respondents wanted the same level of power for the Welsh Assembly as the Scottish Assembly is to have.
  We must be concerned about the relationship between devolution, the powers of Assembly, and the issues that we have been debating today. Those issues include the role of the Assembly in making housing allocations among different districts and its role in arguing with the Treasury in London about how much Welsh housing will get—whether it is to be £20 million or £30 million or, what I would judge to be nearer the real need, £80 million extra. That is the role of the Assembly—as the spearhead in demanding economic justice for the people of Wales.
  We have had today what will be one of the last Welsh affairs debates at Westminster. By this time next year, the Welsh Devolution Bill will be on the statute book and the Assembly will be established de facto.
  Mr. Abse: Will the hon. Gentleman reaffirm what I understand is the policy of his party—that he is deeply anxious, as we all are, that there should be a referendum, putting the Bill which he apparently wishes to support before the people of Wales? If he does reaffirm that, such a referendum is held, is he not being more than sanguine in assuming that by this time next year such a Bill will be on the statute book?
  Mr. Thomas: I am grateful for that constructive contribution. I endorse entirely what the hon. Gentleman says and repeat the position of my party, that we strongly favour a referendum. I should love nothing more than spending three weeks campaigning on the issues of self-government and economic power for the Assembly. Given that kind of referendum campaign, I am confident that I should be on the winning side this time, not as I was in the last referendum.
  It is not this House which will talk about so-called "Welsh affairs". That title has always amused me. I do not see why we should be discussing extramarital relationships in Wales. What I am concerned about is that we have an annual——
  Mr. John Morris: Puerile.
  Mr. Thomas: The Secretary of State says that my remark was puerile. This debate, and his contribution to it, have been more puerile than anything I have said. We have had annual complacent debates on Welsh affairs in the House and in Welsh Grand Committee. Welsh affairs will disappear from the curriculum and timetable of Westminster and become the permanent preoccupation of the salaried Assembly men about whom the hon. Member for Pontypool (Mr. Abse) is so worried. The priorities and policies of Wales will then be determined by the elected representatives of the Welsh people in their own Assembly in Cardiff.
  3.20 p.m.
  Mr. Wyn Roberts: I add my voice to those who have protested against this Welsh debate being held on a Friday. I suspect that the right hon. and learned Gentleman joins us in regretting that the debate is being held today, because it is his birthday. I, too, congratulate him and wish him many happy returns.
  I wish I had more upon which to congratulate the Secretary of State but, alas, his speech was one of the thinnest that I have heard from that Dispatch Box.
  It is customary for the Opposition to wind up a Welsh affairs debate by reiterating the main charges against the Government. It is equally customary by now for the Minister who follows sedulously to avoid answering those charges. I confidently predict that we shall get no worthwhile answers today. What we are likely to get from the Minister, when the Welsh economy is in a perilous condition and the people of Wales are as deeply anxious for their future as they have ever been since the war, are some constituency points probably intended to help nervous Labour Members. Of course he may do better than that. We sincerely hope so. What we will not get is a proper assessment of the problems facing us in Wales and realistic policies to solve them.
  Whatever happens, I hope that the Minister will not end his speech as the Secretary of State did in the Welsh Grand Committee on 21st January with the statement that he was
  "confident that we are now planning and preparing for the future, and we are taking every possible step to ensure that the Welsh economy

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  flourishes and prospers."—[Official Report, Welsh Grand Committee, 21st January 1976; c. 98.]
  The Secretary of State's peroration today was not so confident. Now, 11 months later, we are not talking about prosperity; we are talking about stopping the desperately serious decline that has taken place over the past two and a half years and that threatens to quicken its pace in the months ahead and fling us headlong into the worst disaster we have known since the early 1930s.
  Most of the grievances that we have heard about in this debate and those that fill our mail these days, ranging from the inadequacy of the mobility allowance for the disabled to the threat to occupational pensioners retiring early and a variety of cut-backs in central and local government services, in transport services, and so on, stem from the insufficiency of resources to meet our needs.
  It is incredible that there should be this inadequacy of resources when one considers the increases in taxation and Government borrowing over the past two and a half years. Income tax on the average family has doubled. One pound in every £5 spent by the Government is borrowed, but still needs cannot be met. Something is very wrong somewhere and we all know, or should know, what it is. What has gone wrong is that public expenditure has grown in real terms by 20 per cent. over the past three years while our economic growth has been at the rate of 2 per cent.
  Those are the present Prime Minister's figures, and I do not argue with them. There are other figures—Treasury figures—which show that public expenditure per capita has doubled since 1973–74. The point is that public expenditure has grown much faster than the economy. We say that it was wrong to allow it to do so. Public expenditure takes more than 60 per cent. of the national income and the political implications were pointed out by the right hon. Member for Birmingham, Stechford (Mr. Jenkins) in his Anglesey speech in January of this year. He rightly implied—I quote from The Times—that when 60 per cent. of national income is consumed by public expenditure then, as he put it—
  "We are close to one of the frontiers of social democracy."
  1790
  In other words, the end of the mixed economy is in sight and the advent of the State-controlled economy is near.
  Some hon. Members opposite—and there are not many of them in the Chamber—favour any advance towards what I would call the whole-hog Socialist State. They do not realise that such an advance would mean even more savage cuts in Government spending and a sharper reduction in the standard of living in the long term than if we reduced the proportion of national income consumed by public expenditure from 60 per cent. to a more modest and tolerable level to preserve the mixed economy. A mixed economy is worth preserving because if it is properly run with effective incentives to work and invest it is historically far more resilient and produces a higher standard of living than an economy which is wholly State controlled. Those who have visited and studied Eastern Europe will know that to be true.
  Of course, the debate on the issue continues within the Labour Party and when the Government say they are borrowing money to borrow time I suspect that they mean time to win the debate. If the recent defeat of the Government's policy at the National Executive of the Labour Party is any guide, the Government have a long way to go before they win that debate if they ever do. Meanwhile, we are slipping towards a full-blown Socialist State.
  Wales is more dependent on the public sector than the rest of Britain in the sense that, because of coal and steel a high proportion of the population is engaged in the public sector. Identifiable public expenditure in Wales, excluding such major items as capital expenditure by the British Steel Corporation, subsidies to nationalised industries and defence spending, amounts to about half our domestic income. We are therefore vulnerable to cuts in public spending. It would be fair to say that we are excessively and dangerously dependent upon the public sector. When public expenditure cuts are proposed, there will be a sharper outcry in Wales. Arguments are adduced for more public spending in Wales, for the maintenance of present spending levels or at least smaller cuts than those proposed for

  1791
  other parts of the United Kingdom that have higher per capita expenditure on housing, for instance.
  Plaid Cymru's charge, in the Western Mail's economic review of 26th October, that
  "Welsh councils have been allocated far less than 5 per cent. of total local government spending in Great Britain "
  is a dubious allegation. Welsh local authorities received 7·5 per cent. of the first late support grant distribution for 1976–77 to England and Wales compared with her population share of 5·6 per cent. Similarly she received 7·1 per cent. of the transport supplementary grant. Taking both those grants, the grant to Wales in 1976–77 is 22 per cent. higher than it would have been if it was calculated on a straight population basis. My figures are from the Association of County Councils.
  If we are to make special pleas, let us at least get the facts right. How Plaid Cymru reconciles its cries for more money from the Treasury with its cry for separatism I shall never understand unless what it really wants is satellite status.
  All the argument about cuts in spending beg the question why they have to be made at all. The Welsh TUC, arguing for the slow growth of the economy, says:
  "On this view, it is not public expenditure that has grown too fast but the economy that has grown too slowly."
  I would put it another way. Public expenditure has grown too fast and the economy has grown too slowly to sustain it. One cannot blame the public sector or the private sector particularly. The fact is that, as the hon. Member for Caernarvon (Mr. Wigley) pointed out, and as the index of production shows, production is still well below 1974 levels.
  Where the Government's strategy has gone wrong is that they thought they could wait for an upturn in the economy before making any significant cuts in public expenditure. The upturn has not come, and we are now borrowing our way into the lean years of public expenditure cuts with our industrial production still below that of the three-day working week.
  Why has the upturn not taken place? The Prime Minister gave the answer
  1792
  weeks ago when he said that it would be difficult to finance the public sector borrowing requirement and economic growth at the same time. Why he did nothing about it, I shall never know. Possibly it was too late. It was this difficulty that caused the expansion of the money supply, the fall in the value of sterling and the consequential action that had to be taken on interest rates. The full effect of that 2 per cent. rise in interest rates has yet to be felt in employment and investment, but it is bound to be severe. It is estimated that it will add another 100,000 to unemployment in the United Kingdom as a whole. If we had our share of that 100,000 we would lose nearly 6,000 jobs.
  The effect of the fall in the value of the pound, also, has yet to be felt in prices. I am told that the fall since mid-August is likely to add at least 3·7 per cent. to the retail price index. Therefore, it can be seen that the effect of the fall in the value of the pound will be severe, too. Looming ahead also are the actions that the Chancellor of the Exchequer is likely to take to secure the IMF loan. His mini-Budget cannot be long delayed, now that the by-elections are over. Then there are the likely increases in oil prices.
  I dread to think what the January unemployment figures for Wales will be and how the social contract, which, in his message to the electors in the by-elections, the Prime Minister called the basis for a sustained recovery, will look early next year. The prospect is grim in the extreme.
  In April, the employers' national insurance contribution will be increased, taking another £60 million out of industry in Wales—money that might otherwise have gone into investment, into the creation and preservation of jobs. Small businesses, on which we are also very dependent in Wales, will be hit yet again. Only this week the Western Mail reported that 3,000 shop workers in South Wales alone had lost their jobs in the past year, and that more job losses were expected in 1977.
  Against this alarmingly sombre background of deterioration and decline, under a Government who have manifestly failed to take the right crucial decisions at the right time, the House will be asked to consider the Government's devolution proposals, which will be largely irrelevant to

  1793
  the economic blizzard raging in Wales and elsewhere early next year. All the areas of government to be devolved will be areas where money is bound to be scarce. Therefore, it will appear to the Welsh people, quite rightly, that devolution is an attempt to deflect criticism from Whitehall to Cardiff and to put Wales out in the cold at the mercy of the wild men who will seek power over her in her weakness.
  I hope that there will be time to talk about devolution at a later date, although, judging by next week's guillotine motion, one can never be sure about time under this Government. They are becoming increasingly intolerant of democratic processes. I am not surprised, because the more wrong they are, the less opportunity they wish to give to others to say so and to point out the error of their ways.
  I wish to say a few words about education in Wales. Judging by some of the facts which are coming to light, we need to debate education in Wales even more than education in the rest of Britain. There was a time when we thought that a Welsh education was superior to any other. We must now look to our laurels. The situation is far more serious than the Secretary of State for Wales indicated this morning. I am told that absenteeism is running at twice the rate of that in England. I understand that 31 per cent. of our children who leave school in Wales have neither O-level nor CSE passes, compared with a figure of 20 per cent. in England. We have a poor pupil-teacher ratio, and low spending on books and materials. These are unpleasant and disturbing facts, which cause much concern to parents.
  Are we spending too much on administrators, educational advisers, and the like, at the expense of teachers? I ask that question in view of the recommendations of the Soulbury Committee regarding the increases in advisers' salaries—increases which shocked my authority of Gwynedd and myself.
  Mr. Ifor Davies Mr. Ifor Davies rose——
  Mr. Roberts: I am sorry, but the time left to me to complete my remarks is extremely short.
  There is not equality of opportunity of education in Wales, especially at the
  1794
  higher levels. The discretionary grants vary. I understand that Dyfed County Council is now proposing to set discretionary grants at a maximum of £320 and proposes not to pay student union fees. These facts pose the question whether available resources are being properly applied. There is hardly any sphere of life today in Wales where people are satisfied. They are disillusioned with politicians, as the hon. Member for Cardigan (Mr. Howells) said. I doubt whether they would be less disillusioned if they read the Early-Day Motion, tabled by his hon. Friends, proposing the closure of the Swansea licensing centre.
  The people of Wales have had enough of the present situation and cannot wait to get rid of this Government. Last night's results at Workington and Walsall would be repeated if by-elections were held in Wales. Ask the young people who are still waiting for houses. Ask the council tenants who are waiting for repairs. Ask the out-of-work teachers, the construction workers, and all the rest who are unemployed. Ask the trade unionists whose jobs are threatened. Ask the small business men who are threatened with bankruptcy or who are already bankrupt. Those people have only one question for us in Opposition: "When will you get rid of this Government?" The longer the Government delay in going to the country the more disillusioned people will become with the Government, the Labour Party and with Socialism. I am not surprised that the Prime Minister has talked of riots in the streets. He may see them himself if he remains in office.
  The Secretary of State for Wales and his colleagues in the Welsh Office are the victims of worse blunders in the Government—a Government of which they are a part. Politically, I am sorry for them, yet when one thinks of the irrelevant policies which they have pursued, apparently in all seriousness and with a view to some blithe future in the Secretary of State's imagination, while the Welsh economy has been going steadily downhill under their very noses, and when one thinks of the constant efforts of Ministers to disguise the truth by juggling the figures and seeking to lull us all into a false sense of security, with large doses of worthless and insincere optimism, one's pity turns into sour indignation at their

  1795
  curious naivety and the slightly grubby complacency that underlies it all.
  3.40 p.m.
  The Under-Secretary of State for Wales (Mr. Alec Jones): First I sincerely thank the hon. Member for Pembroke (Mr. Edwards) and other hon. Members who have welcomed my return to duties in today's debate. I understand the point made by my hon. Friend the Member for Gower (Mr. Davies)—that Friday was not exactly the most attractive day from the point of view of Welsh Members. I assure him that that point has been taken on board. As one who thought, not so long ago, that he would never have the opportunity, of addressing this House again, it is a pleasure to speak in a Welsh debate, be it Friday, Thursday, Wednesday, Tuesday or Monday.
  There are so many detailed constituency points which have been brought up that the only way I could have hoped to deal with them would be by rising to my feet at half-past three. The hon. Member for Conway (Mr. Roberts) and I agreed that that would be unfairly to curtail the debate. I will try to deal by letter with many of the points that have been raised. I must say, too, that it is not my intention to deal with devolution. I am sure that all of the interesting contributions which we have heard from both sides today will be heard in greater detail in the weeks to come.
  I take the point made by the hon. Member for Merioneth (Mr. Thomas) about the need to debate health and personal social services. This might well be a suitable subject for the Welsh Grand Committee. It is something we could consider.
  I do not agree that my right hon. and learned Friend painted too optimistic a view of the economic and industrial problems facing Wales. I think he gave us a realistic appraisal—certainly not one that was too optimistic. He was right to draw our attention to the things which are going well. I have gone through the debates which we have had in the past two years and I see that my right hon. and learned Friend has constantly warned the House, and Welsh Members in particular, of the serious nature of our economic problems and how the Welsh economy has been hit by the world recession in the same way as the economy of the United Kingdom.
  1796
  I understand the criticisms made by Plaid Cymru Members. I suggest that the remedy which they offer, of separating the economy of the United Kingdom, is not calculated to solve our problems but will intensify the difficulties facing the people of Wales.
  The hon. Member for Pembroke, with his usual charming vitriol, said that the Secretary of State had been somewhat selective. He accused my right hon. and learned Friend of being so selective about the economy that he had referred only to the bright spots and had conveniently overlooked the black spots. In support of this accusation he drew on the commentary of the Welsh Industrial Development Advisory Board, talking about a 40 per cent. decline in applications in respect of expansion projects and so on. The fact is that my right hon. and learned Friend said that there had been a decline in the number of applications for assistance in comparison with earlier years. He was perfectly open and honest.
  I believe that the accusation of the hon. Member for Pembroke is quite unjustified. Indeed, one may level a charge against him of being selective. He took a few figures out of the Board's report. I quote what it said on page 23:
  "However, there are some bright spots. In particular the manufacturing sector in Wales has so far weathered the recession with comparatively few closures and, despite the drop in manufacturing activity, there was still a movement of new industry into Wales. The Board are encouraged by the fact that the restructuring and diversification of the manufacturing sector has been advanced, even in these more difficult times."
  I am not saying that everything in the garden is lovely, but it is unfair to suggest that my right hon. Friend was selective when, in fact, he had pointed out the difficulties.
  On 4th December 1974, in the Welsh Grand Committee, the hon. Member for Pembroke warned of the storm which was already on us and how it was gathering intensity. He said:
  "This is not just an economic problem. We are in what is, undoubtedly, the worst world-wide economic situation since the 1930s … "—[Official Report, Welsh Grand Committee, 4th December 1974; c. 18.]
  If that is true, I ask the hon. Gentleman to reflect whether it is even moderately fair to attribute all our economic

  1797
  ills to the actions of the present Government. If he tempered his criticism with a little modesty and accepted, on behalf of his party, some of the blame and recognised the facts there would be a reduction in the quantity and volume of his criticism but a considerable improvement in its quality.
  The question of advance factories has been referred to briefly. I am willing to give figures, but time is a problem. [Interruption.] I have given the hon. Gentleman all the answers. There was no selection. The dilemma that we face about advance factories is this: should we wait until we have a prospective industrialist before we start building, knowing that if we do so there will be a delay of one or two years and sometimes longer? Is it not more sensible to say, "We shall build factories in advance of the need so that when an industrialist wants a factory he will not be kept waiting but will be able to move into production, creating jobs much sooner than would be the case if he had to wait for the factory to be built"?
  We should like to be able to fill all the factories as soon as they are completed, but life is not like that. It has been accepted by successive Governments that it is right, proper and wise to build factories in advance of need.
  The hon. Member for Flint, West (Sir A. Meyer) said that the Government had done nothing for Deeside. I understand the great anger felt in that part of the country, particularly about the news we have heard in the last week or two from Courtaulds. The hon. Gentleman referred to the question of development area status. The question of extending the areas covered by development area status is under continuous review. The problem has been made worse by the fact that Courtaulds, a private company, gave no real notice of its intention. It is difficult to attack the Government for not having done much when they were given no prior notice of the intention to close the factory in the area.
  The hon. Member for Caernarvon (Mr. Wigley) and a few other hon. Members spoke about the Welsh Development Agency. He said that he did not blame the Agency too much, but his words led me to think the opposite. Certainly he
  1798
  did not pay tribute to it. First, the Agency had to take on—and it has done it without a hitch—the ongoing work of the Estates Corporation and the Welsh Office Derelict Land Unit. It had the problem of recruiting senior staff who were obliged to give notice to their previous employment. I was asked whether the Welsh Development Agency would submit reports. The answer is yes, it will do so, and the reports will be presented to this House. They will provide the House with an opportunity to assess the performance of the Agency.
  I was also asked about monitoring. My right hon. Friend the Secretary of State attaches great importance to this, and detailed arrangements are being worked out between the Welsh Office and the Agency. Relations between the two bodies have been established at various levels. My right hon. and learned Friend has regular meetings with the Chairman and the Chief Executive of the Agency to review progress and to discuss any difficulties which may have arisen.
  Certainly there are guidelines for the Agency on the derelict land function, on the investment function, and on the factory rebuilding function, as well as a financial memorandum. Next year's investment budget is currently being discussed with the Agency as part of the settlement of the Estimates for the whole of the Agency's activities. We must recognise that the Agency is still a very young institution and is still in the process of developing, but it has already shown that it can be a great help to Wales.
  I was delighted, as are the people of Blaenau Gwent, to hear that the Agency is helping over Rassau. I know the importance which local people attach to Rassau, and certainly they are suffering from the curse of unemployment. I was staggered by the suggestion from hon. Members opposite that when the Agency announced that it was taking over this responsibility for development, 2,000 jobs should be created overnight.
  I welcome the many references made in this debate to housing. I also welcome the criticism. The basic fact is that we are not able to spend as much on housing as the local authorities and as some hon. Members, including myself

  1799
  would wish. Last year we had to restrain public spending on improvement work and mortgage lending. Now we find that we cannot allow such a major element of public expenditure as new house building to remain uncontrolled. However, I think that we are entitled to put the figures in perspective.
  The Conservative Government issued a White Paper in November 1973 Cmnd 5519 indicating how much they proposed to spend on housing in Wales for certain periods. Their provision for this year was £104 million, whereas this year we have provided not £104 million but £183 million—both figures at 1975 survey prices to ensure that I am being fair to them—an increase of £79 million or 76 per cent. over the Tory provision. I might add that that Tory provision was made before we had the worst of the oil price increase, the worst of the world recession and the confrontation with the miners, so that in these circumstances it is hardly credible that we have attained the figure which I have just given. Our figure of £183 million includes the extra £30 million which my right hon. Friend announced in Welsh Grand Committee. As for the July measures, there has been no cut in the provision made by the Government for public expenditure on housing in Wales. On the contrary, we have provided an extra £20 million for new building next year. This added provision represents our recognition of the special housing needs of Wales.
  The hon. Member for Pembroke seemed to think that my right hon. and learned Friend had been somewhat unfair, that he should have sat back and refused the extra £20 million or £30 million. But my right hon. and learned Friend has a responsibility towards the people of Wales, and on housing he was right to fight for that increase. Without the increase, many of those whom the hon. Member for Conway suggested were waiting for houses would have had to wait much longer.
  I am not trying to pretend that local authorities will not have to restrict their building programmes. To keep even within the increased programme, many district councils will be unable to proceed with all the building schemes they may have planned or contemplated. The effect on individual local authorities will depend
  1800
  on their contractual commitments and the relative size of their planned programmes. That is where the 60–40 argument comes in. No individual local authority has been told that it will have to cut back by 60 per cent. or by any other proportion. We merely say that in the next year local authorities will have to live within the planned programme. But, in spite of that, we expect more than 7,000 local authority houses to be completed next year. That figure is double what the last Conservative Administration achieved.
  I was pleased that one of the first jobs I tackled when I returned to duty was to invite local authorities to bid for a further small allocation of finance for the "S.105" schemes, which are improvement schemes and for mortgage lending. It was astonishing to find that 14 local authorities in Wales had made no additional bid for lending, and these included Aberconwy and Dwyfor. Eleven made no additional bid for money for improvement, and these included Merthyr and Merionydd. There may be some explanation or reason for that, and if hon. Gentlemen are aware of it we should like to hear it.
  I find it surprising that any council in Wales should be unable to generate and complete small schemes with the best part of six months left in the year, particularly in view of the urgent representations on the shortage of funds made to me by these authorities earlier in the year. I have sought, and will continue to seek, to work with local authorities. I want to ensure that we work together on housing.
  The Government's aim for Wales re-remains the same as for the rest of the United Kingdom. We want to build an economy which can sustain full employment, rising standards of living and a better public service. The Government's case is that the economies and restrictions that we have had to impose, distasteful though they may be, are absolutely essential if we are to succeed in our task.
  The main feature of the Opposition case seems to be to call for drastic cuts in public expenditure of up to about £10 billion. Although the Conservatives have indicated their support for public expenditure cuts, once more they have failed to tell us where in Wales those cuts would fall. I made a list of the speeches of Conservative Members, and hardly any of them failed to ask for additional

  1801
  spending, whether for dealing with flooding, the roads or the railways. It is nonsense and hypocrisy to ask the Government in specific terms to spend more money, and in general terms to call for a cut in public expenditure. Hon. Gentlemen should indicate exactly where, and when, they would cut.
  The hon. Member for Conway concluded by talking about the unemployed teacher and the homeless couple. Of course that is a sorry tale, but if these public expenditure cuts were made to the extent that the hon. Gentleman was demanding these people would be without homes or— —
  It being Four o'clock the motion for the Adjournment of the House lapsed, without Question put.

  BUSINESS OF THE HOUSE
  Ordered,
  That, at this day's Sitting, the Supplementary Benefits Bill [Lords] and the Land Drainage Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Thomas Cox.]

ORDERS OF THE DAY

  SUPPLEMENTARY BENEFITS BILL [Lords]
  Order for Second Reading read.
  4.1 p.m.
  The Attorney-General (Mr. S. C Silkin): I beg to move, That the Bill be now read a Second time.
  The Bill is pure consolidation and I do not think that it is necessary for me to go into it in detail. However, I should like to follow what was said in another place by my noble and learned Friend the Lord Chancellor, who took the opportunity on Third Reading of the Bill to express his appreciation of the work of Lord Simon of Glaisdale who is retiring at the end of this Session after four heavy and successful years as Chairman of the Joint Consolidation Committee. I add the thanks which I am sure are felt by hon. Members to those given by the Lord Chancellor.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the whole House.—[Mr. Thomas Cox.]
  Committee upon Monday next.

  LAND DRAINAGE BILL [Lords]
  Considered in Committee.
  [Mr. OSCAR MURTON in the Chair]
  The Chairman: The Committee will have seen the suggested groupings of amendments to the Bill which have been posted in the usual way. With the agreement of the Committee, I propose to put en bloc the Question on each series of clauses and schedules to which no amendment is attached. I shall read the first and last numbers in each series. If any hon. Member wishes to debate any particular clause within such a series, will he please say so at the time. If such a request is made, I shall put en bloc the Question on the clauses up to, but not including, the one concerned.
  Clauses 1 to 28 ordered to stand part of the Bill.

  Clause 29

    STRUCTURES IN, OVER OR UNDER WATERCOURSES
    4.3 p.m.
    The Attorney-General: I beg to move Amendment No. 1, in page 29, line 26, leave out '(2)' and insert '(1)'.
    This is a simple correction of a simple error.
    Amendment agreed to.
    Clause 29, as amended, ordered to stand part of the Bill.
    Clauses 30 and 31 ordered to stand part of the Bill.

  Clause 32

    POWER OF WATER AUTHORITIES TO PROVIDE FLOOD WARNING SYSTEMS
    The Attorney-General: I beg to move Amendment No. 2, in page 32, line 31, leave out 'the area of any water authority' and insert 'Great Britain'.
    The Chairman: With this, we may take Government Amendments Nos. 3 and 4.
    The Attorney-General: Precisely the same point and the same wording arise in the other two amendments. All cover the same point and correct an error in the Bill. They bring the Bill into line with the enactments which are being consolidated. They do so by substituting the words "Great Britain" for the words
    "the area of any water authority"
    in the definition of the term "inland water".
    Amendment agreed to.
    Amendments made: No. 3, in page 32, line 35, leave out 'the area of any water authority' and insert 'Great Britain'.
    No. 4, in page 32, line 39, leave out 'the area of any water authority' and insert 'Great Britain'.—[The Attorney-General.]
    Clause 32, as amended, ordered to stand part of the Bill.
    Clauses 33 to 55 ordered to stand part of the Bill.

  Clause 56

    AMENDMENTS AS RESPECTS DRAINAGE CHARGES
    The Attorney-General: I beg to move Amendment No. 5, in page 51, line 2, leave out 'board' and insert 'authority'.
    This again corrects a mistake in the Bill, and the amendment brings it into line with the enactments being consolidated.
    Amendment agreed to.
    Clause 56, as amended, ordered to stand part of the Bill.
    Clauses 57 to 63 ordered to stand part of the Bill.

  Clause 64

    ASSESSMENT OF DRAINAGE RATES ON THE BASIS OF ANNUAL VALUE
    The Attorney-General: I beg to move Amendment No. 6, in page 55, line 32, leave out 'and' and insert 'or'.
    This Amendment again corrects a mistake in the Bill and brings the clause into line with the enactments consolidated.
    Amendment agreed to.
    Clause 64, as amended, ordered to stand part of the Bill.
    Clauses 65 to 95 ordered to stand part of the Bill.

  Clause 96

    POWER TO HOLD INQUIRIES
    The Attorney-General: I beg to move Amendment No. 7, in page 81, line 12, after 'is', insert 'liable'.
    The comment that I made on previous occasions applies also in this case.
    Amendment agreed to.
    Clause 96, as amended, ordered to stand part of the Bill.
    Clauses 97 to 111 ordered to stand part of the Bill.

  Clause 112

    PROTECTION OF NATIONALISED UNDERTAKINGS ETC.
    The Attorney-General: I beg to move Amendment No. 8, in page 88, line 18, leave out 'the Maplin Development Authority'.
    The Chairman: With this, we may take Government Amendments Nos. 13 and 14.
    The Attorney-General: This is a somewhat different type of amendment from those with which we have been dealing. All three amendments will eliminate from the Bill references to the Maplin Development Authority and the Maplin Development Act 1973. It is now clear, although it was not when the Bill was introduced, that the Maplin Development Authority (Dissolution) Act, which- eceived the Royal Assent on 26th October and provides for the dissolution of the Maplin Development Authority, will take effect before this Bill achieves the Royal Assent.
    Amendment agreed to.
    Clause 112, as amended, ordered to stand part of the Bill.
    Clauses 113 to 118 ordered to stand part of the Bill.

  Schedule 1

    MEMBERS AND PROCEEDINGS OF REGIONAL AND LOCAL LAND DRAINAGE COMMITTEES
    The Attorney-General: I beg to move Amendment No. 9, in page 94, line 11, after 'by', insert 'or on behalf of'.
    Mr. Deputy Speaker: I suggest that it will be for the convenience of the House to consider at the same time Amendments Nos. 10 and 11.
    The Attorney-General: These three amendments cover a point in paragraphs 2 and 3 of the schedule and correct errors in the drafting.
    Amendment agreed to.
    Amendments made: No. 10 in page 94, line 25, after 'by', insert 'or on behalf of'
    No. 11, in page 94, line 34, after 'by' insert 'or on behalf of'.—[The Attorney-General.]
    Schedule 1, as amended, agreed to.
    Schedules 2 to 5 agreed to.

  Schedule 6

    TRANSITIONAL PROVISIONS
    The Attorney-General: I beg to move Amendment No. 12, in page 113, line 28, at end insert—
    ' (2) This paragraph is hereby repealed as from immediately after the time when the repeal by this Act of the entry referred to in sub-paragraph (1)(a) above has effect.'
    This amendment adds what is called a self-repealing provision to paragraph 5 of the schedule. It is needed because the Bill will probably come into force shortly before the coming into force of the Local Land Charges Act 1975, one provision of which it consolidates. The paragraph, therefore, will be needed at most for only a very brief period, possibly a matter of a few weeks.
    The inclusion of the so-called self-repealing provision will enable the Land Drainage Act when it comes to be printed for the new edition of the statutes in force to be printed without this paragraph which will by that time be dead wood.
    Amendment agreed to.
    Schedule 6, as amended, agreed to.

  Schedule 7

    CONSEQUENTIAL AMENDMENTS
    Amendment made: No. 13, in page 116, line 5, leave out paragraph 9.— [The Attorney-General.]
    Schedule 7, as amended, agreed to.

  Schedule 8

    REPEALS
    Amendment made: No. 14, in page 117, leave out lines 20 and 21.— [The Attorney-General.]
    Schedule 8, as amended, agreed to.
    Bill reported, with amendments; as amended, considered.
    Motion made, and Question, That the Bill be now read the Third time, put

    1807
    forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
    Bill accordingly read the Third time and passed, with amendments.

    STATUTORY INSTRUMENTS, &c.
    Mr. Deputy Speaker (Mr. Oscar Morton): Unless there is objection, I shall put in one Question the four motions relating to legal aid and advice.
    Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &c).

    LEGAL AID AND ADVICE
    Ordered,
    That the Legal Advice and Assistance (Financial Conditions) (No. 2) Regulations 1976, a copy of which was laid before this House on 18th October, be approved.
    That the Legal Aid (Financial Conditions) Regulations 1976, a copy of which was laid before this House on 18th October, be approved.—[The Attorney-General.]

    LEGAL AID AND ADVICE (SCOTLAND)
    Ordered,
    That the Legal Aid (Scotland) (Financial Conditions) Regulations 1976, a copy of which was laid before this House on 18th October, be approved.
    That the Legal Advice and Assistance (Scotland) (Financial Conditions) (No. 2) Regulations 1976, a copy of which was laid before this House on 18th October, be approved.— [The Attorney-General.]

    MR. ROBERT ALLAN
    Motion made, and Question proposed, That this House do now adjourn.—[Mr. Thomas Cox.]
    4.15 p.m.
    Mr. David Crouch: The matter that I wish to raise before the House adjourns concerns the death of Mr. Robert James Allan at the Birmingham General Hospital on 14th June. He had been admitted at 3 a.m., suffering from severe head injuries following a fall downstairs. The hospital authorities tried to save his life. They diagnosed that he was suffering from severe brain injury. His condition deteriorated, and at about 2.30 p.m. on 14th June
    1808
    he ceased breathing. The senior consultant surgeon at the hospital certified his death at 2.15 p.m.
    In the inquest report, which I have studied carefully, the report of the senior consultant surgeon reads as follows:
    "The deceased was kept alive with artificial respiration following this, and his heart was still beating."
    He went on in his evidence to say:
    "The respirator was not turned off until the transplant at 4.53 p.m."
    The surgeon, a Dr. Battan, was cross-examined by the solicitor representing the widow of Mr. Allan. In answer to the cross-examination the surgeon said:
    "I did not make any inquiries as to whether there was anybody who could say whether he would have objected to having his kidneys removed."
    That is the story of the last 14 hours in the life of Robert Allan. He was 31. The inquest took place on 7th September to establish the cause of death. The coroner's verdict was
    "Subdeural haemorrhage. Fracture at base of skull. Accidental death."
    I do not dispute that finding. It was not the coroner's duty to find out anything about what was done with Mr. Allan's body after death, but that is what I am concerned about. That is what concerns his widow and his son, Dale, who has also been to see me. That is what Parliament should be concerned about, and that is what the Press is concerned about, as it has already shown in this case. That is what the public wants to know.
    Robert Allan was a building worker. He drove mechanical diggers. Like so many workers in such jobs, he went wherever he could find work. It had always been like that since he had been married. Shortly before he died he had been working on a Birmingham building site. It is true that he had in this way been separated from his wife and family, who live in my constituency in Whit-stable. His wife and family are still my constituents.
    Mr. and Mrs. Allan had been separated in that way for six years, but his wife kept in touch with him regularly. She had spoken to him on the telephone in Birmingham on 7th, 10th and 11th June. The last phone call was made three days before the accident and his death.

    1809
    His son Dale has said he telephoned his father every week.
    Mrs. Allan said that their marriage had to some extent broken up because her husband had a drink problem. She said that she still cared for him and was worried about him. I have interviewed Mrs. Allan and I am convinced that she had genuine feelings for her late husband. She had not forgotten him, neither had she forgotten the time when they had discussed becoming kidney donors. She had tried to persuade him to become a donor and to sign a donor's card. She said that at this suggestion he went, to quote her word, "berserk". He said he would not sign it. He expressed the opinion that doctors would always try harder to save one's life if one did not carry such a card. He was passionately against being a kidney donor, and yet he became one at 4.53 pm on 14th June.
    How did this happen? Are there no laws or guidelines to the medical authorities to protect a person's human rights in such a delicate and personal matter? There is indeed an Act of Parliament— the Human Tissue Act of 1961. There is also a Health Service circular of guidance to NHS authorities dated June 1975. Both are explicit. I am not a lawyer, nor am I a doctor, but in my judgment neither the Act nor the circular was observed in this case.
    Explaining Section 1(2) of the Act, the circular says:
    "Where the deceased has not requested that his body or part of it may be used … the person lawfully in possession of the body"
    may still authorise the removal of any parts of it for similar purposes if
    "having made such reasonable inquiry as may be practicable, he has no reason to believe"
    that the deceased in his lifetime had expressed any objection to this or that the surviving spouse or any surviving relative objects.
    The circular goes on to say that any relative of a deceased person may object to the use of the body for the purposes specified and that this will override a lack of objection on the part of other relatives, but not the deceased person's own wishes. The person lawfully in possession of the body in hospital at the time of death is the area health authority or certain specified persons authorised by it.
    1810
    I ask the House to note what the circular says in paragraph 11 about the authorisation of the removal of any part of a dead person's body:
    "Where it is known that a potential donor has relatives but it has not been possible to contact any of them, a person giving authority for organ removal must be especially careful to ensure that the requirements of the Act with regard to the making of inquiries has been met. It is not enough to say in a case where organs must be removed very soon after death that on inquiry is practicable."
    There is also a note in paragraph 13 of the circular about the coroner's rights, which have to be respected:
    "Where there is reason to believe that the Coroner may require an inquest or post mortem examination to be held, authority to remove parts of the body may not be given nor may a part be removed without the Coroner's consent. In law a Coroner has no jurisdiction until death has taken place but in cases where organs, e.g. kidneys, must be removed very soon after death, Coroner's may wish to be informed of the proposed course of action before death is reported."
    There is no evidence in this case that the coroner was so notified.
    I do not consider that the medical authorities at Birmingham General Hospital observed and adhered to the Act with sufficient care. I do not consider that they made
    "such reasonable inquiry as may be practicable."
    They did not try hard enough to find out Robert Allan's views or whether his surviving spouse or any surviving relative might object.
    Mr. Allan was accompanied into the hospital by a woman whom the doctors assumed to be his wife. After a few hours, they discovered that she was only a friend, a Mrs. McKewan. The only mention made in the coroner's report of the inquest of an attempt to contact his wife is in the statement of Dr. Battan, who said:
    "We asked the police to trace his wife."
    That appears to have been at around 2.30 p.m. on 14th June. Robert Allan was already dead then, nearly 12 hours after his admission to the hospital.
    Mrs. McKewan, on the other hand, tried to find his wife's address by going to his flat at about 10 a.m. She said in the report of her evidence at the inquest:
    "I knew she lived in Whitstable."

    1811
    She had told Police Constable Dean at 3 a.m. at the time of the accident that she was a friend of Mr. Allan and not his wife. I repeat—not his wife.
    Sergeant Helpman of Queen's Road Police Station, Aston, stated that P.C. Hallgarth was handed a report to trace Mr. Allan's wife at some time after 1.40 p.m. Mrs. Allan believes that the police tried to trace her within two or three hours of the accident.
    The Minister has, with great courtesy, told me of his inquiries into this whole affair. He has told me that Mrs. McKewan telephoned the police at 10 p.m. on the 14th and gave them two addresses which she had found and which might help them find Mrs. Allan. Mrs. Allan was so traced and went to the hospital the next day, the 15th.
    The question I ask the Minister is: why did the hospital authorities delay for 12 hours before trying to trace Allan's wife? Police Constable Dean knew that Mrs. McKewan was only a friend. Was that reported to the hospital? If not, why not? When the doctors knew that Mrs. McKewan was not his wife, why did they assume that she could express an opinion on his views about being a kidney donor? Were they
    "especially careful to ensure that the requirements of the Act … have been met?"
    I do not think so. The circular says:
    "It is not enough to say … that no inquiry is practicable".
    I submit that proper inquiries were not made.
    Consider Mrs. Allan on her arrival at Birmingham on the 15th. It was a terribly tragic day for her, and she was no doubt extremely distraught. She tells me that the doctor she saw at the hospital "showed her no sympathy whatever"—those are her words to me—and that he made her feel as if she was intruding. She says:
    "He spoke of my husband as a perfectly healthy specimen."
    She said that they told her that he was dead on arrival at the hospital. That was not so. He died 14 hours after admission.
    Mrs. Allan has told me another piece of disturbing evidence in this case of which I have written to the Minister. When she went round to her husband's
    1812
    flat she found his wallet, which appeared to have been ripped open in a hurry. There was nothing in it that would have identified him—no photographs and no addresses. She says that this was utterly unlike him, as he was a very tidy man, who liked to keep things in order and to keep momentos and photographs of his family. She believes that someone had got there before her and "removed the evidence"—evidence that she was his wife and lived at 67 St. John's Hospital Road, Swalecliffe, Whitstable.
    This is a very worrying case. It is the most worrying case that I have ever had to speak to on an Adjournment debate in this House. I speak advisedly as a member of the regional health authority and, therefore, one who might be said to be on the side of the doctors.
    The fact that Mrs. Allan had been separated from her husband is not relevant. There is nothing in the Act about the marital location of the spouse. The Act is there to safeguard the public and to respect their views on this very personal subject. A person's views regarding his or her body must be respected.
    I have the highest regard for the medical profession and, in particular, for their constant effort and search to save lives. Kidney transplants are a magnificent break-through in medical science. They have given new hope to thousands—and literally new life to thousands more people. We need more kidneys to save more lives. We are short of them today, and people are dying each year because of a lack of them. That is why I support the kidney donor scheme. I want to see more publicity for it and to attract more people to come forward as donors voluntarily, declaring it.
    In this tragic case of the death of Robert Allan, I do understand that two people have been given new life with his kidneys. He did not waste his life. But his widow says that this transplant would have been against his wishes and that she herself would never have given permission. I believe that, even though lives have been saved, it was wrong that those personal views of the individual were not observed and were not obtained. I believe that it was wrong that this transplant should have been made.
    The public must be assured that the medical authorities do not have a free

    1813
    hand in these matters. That is why the Human Tissue Act was passed in 1961. The public today are very concerned, and are looking to see that Parliament cares. I speak as one who wants to see an expansion of the care that the health services can give the public, who are their patients, sometimes, in these tragic cases. However, above all I want to see that Parliament exercises that amount of authority which ensures that the public's rights—the individual's human rights— are never forgotten.
    4.30 p.m.
    The Minister of State, Department of Health and Social Security (Mr. Roland Moyle): I am grateful to the hon. Member for raising this matter, because it enables us to discuss a practical example of the way in which the Human Tissue Act works.
    It is always sad when somebody's best motivated actions and efforts result, as in this case, in grief and distress for another person. I hope that I can reassure the House and Mrs. Allan that every effort was made to save the life of her late husband and that, when it became clear that all the efforts of the hospital could not succeed, the authorities acted in a proper manner before Mr. Allan's kidneys were removed. On the basis of the information that it had at the time, the hospital acted in a proper manner.
    I shall first deal with the facts of the specific case. Mr. Allan was admitted to the Birmingham General Hospital at 3 a.m. on Monday 14th June suffering from severe head injuries. At the time of his admission he was accompanied by a woman who was taken to be his wife. In the course of the next few hours it became clear that this woman was not his wife but a Mrs. B. McKewan. At the inquest Mrs. McKewan stated that Mr. and Mrs. Allan had been separated for six years, and that she had been a close friend of Mr. Allan. The police were then contacted and asked to assist in tracing Mr. Allan's wife. The police have subsequently been consulted and checked their records for their 6 a.m. to 2 p.m. shift on that day, which have indicated that they carried out a full search for Mr. Allan's wife. The consultant concerned initially requested the
    1814
    police to make a search and in fact contacted them in total on three occasions regarding the progress of their search.
    The decision that Mr. Allan was dead and that the kidneys should be removed was taken at 5 p.m. No written consent was obtained, as the staff were aware of the existence of a wife who could not be located. However, the registrar concerned with the case telephoned Mrs. McKewan during the afternoon and inquired of her whether or not Mr. Allan would have had any objections to the removal of his kidneys, and she indicated that he would have had no objections. This discussion took place at about 3.45 p.m.
    At 10 p.m. Mrs. McKewan telephoned the police and gave them two addresses which she had found and which she thought might possibly assist them in locating Mr. Allan's wife. It was through these addresses that the police were eventually able to contact Mrs. Allan, who attended the hospital the following day—15th June. With regard to the point concerning the handling of Mr. Allan's wallet, about which the hon. Member for Canterbury (Mr. Crouch) is so concerned, the hospital patients' property records show that the existence of the wallet was recorded but that no other papers or mementoes were recorded at the same time. The coroner's officer, prior to the inquest, raised the question of the possibility of there being documentation in the wallet which might have assisted in locating Mr. Allan's wife. In view of this, the sector administrator at the hospital immediately interviewed the two nurses concerned, who were emphatic that no such contents ever existed. The routine procedure at the general hospital would have required any such documentation, even down to individual envelopes, being listed separately on the property record, in addition to cash and other valuables.
    I now turn to the broader issues. The legislation that governs the use of parts of a deceased person's body for therapeutic purposes, including transplantation, is the Human Tissue Act 1961. This says that, save in a case where the deceased person has made express wish to this effect, organ removal may be authorised only after there has been such reasonable inquiry as may be practicable into the

    1815
    views of the deceased and of any surviving relatives. It is not possible to lay down any hard and fast definition of "such reasonable inquiry as may be practicable", which must always be interpreted in the light of the facts of an individual case. If kidneys are to be used for transplantation they must be removed very shortly after death—preferably within half an hour.
    Because of this, it has been argued on occasion that no inquiry can be reasonable or practicable. I do not accept this, and only last year my Department so advised health authorities. Inevitably, the fact that Mr. and Mrs. Allan had been separated for six years must further cloud the issue. In this case the hospital authorities, through the police, made considerable efforts to trace Mrs. Allan, and when these efforts failed, the matter was discussed with Mrs. McKewan, who was Mr. Allan's close friend, as far as the hospital could ascertain. In what must have been difficult circumstances, it is my opinion that the hospital acted in a proper and reasonable manner.
    Mr. Crouch: My concern is that there is confusion among medical authorities, doctors and consultants about the exact meaning of the Act and the explanation of the Act given in the Department's circular. I have discussed the matter with the BMA and medical authorities at regional level. Consultants are worried, as a result of this case, about what steps they should take to help in the future. The Minister should consider giving still further clarification about what "practicable" steps should be taken at a time when there is a need for urgency.
    Mr. Moyle: That is a point of view, but there are considerable difficulties in providing further guidance. We wish to reassure the public and the profession as much as possible, and have therefore issued extensive guidance. But, given the pressures of time and some other pressures to which I shall come shortly, we have been able to think of no better solution than to leave the judgment as to what is a "reasonable" and "practicable" inquiry to the people on the spot.
    In recent years it has been argued that the Human Tissue Act should be changed. Some have argued that before organs may
    1816
    be removed the next of kin must give specific consent. Others, mindful of the critical shortage of kidneys for transplantation, as we all must be, have argued that consent should be presumed in the absence of a previously recorded objection by the deceased, thereby giving relatives no say. Having given careful consideration to these arguments, we still conclude, on the basis of present evidence, that the existing system is the best.
    I think it right that, if the deceased has requested that his kidneys should be used, the necessary authority may be given forthwith. In other cases the requirements of the Act are such that the present system is close to one in which the next-of-kin's specific consent, where available, is required. In the great majority of cases the two systems would be to all intents and purposes indistinguishable.
    It would be wrong for a health authority passively to await relatives' objections and in their absence after a certain time authorise organ removal. The onus is clearly on the health authority to make positive attempts to discover any such objections. I think that the health authority did this in the case we have in mind, albeit not with a great deal of success.
    The circumstances in which the removal of kidneys will be contemplated will almost always involve a sudden death—for example, after a road accident. It requires no great imagination to envisage the situation. Inevitably, relatives of the deceased will be particularly distressed. At this trying time, I think there is considerable advantage in placing the responsibility for the final authorisation on officers and doctors of the health authority. They are in a position, as far as anybody is, to know the requirements of the law. They will, I hope, make the necessary inquiries in a sensitive manner and allow the views of relatives to determine a decision to give or withhold authorisation for organ removal.
    In conclusion, I wish to make it clear that it is a doctor's clear responsibility to give his patient the best possible treatment. That responsibility can never be in any way diminished because the removal of kidneys is considered. That almost goes without saying.

    1817
    I hope that I have been able to reassure the hon. Member that both in this case and generally the removal of kidneys is carried out in a legal, ethical and sympathetic manner in so far as the legislation and guidance by the Department can make it so. A kidney transplant can offer a patient suffering from chronic renal failure the opportunity to live a near normal life once again. But we must face the problem that at present an insufficient number of kidneys are becoming available to meet the need and that doctors can help fewer than half of their patients who might benefit in this way.
    One of the ways in which this problem can be overcome is by people considering their own position on this matter and making their own positive wishes known by carrying kidney donor cards. The hon. Gentleman and I are in total agreement on the fact that that is an ideal solution. In such circumstances all doubt is removed and the position is made much easier for the health authority, the doctors and the deceased's relatives.
    In this case, I apologise on behalf of the NHS for the fact that our best-laid attempts to provide sympathetic and clear procedures were clearly unsuccessful in the circumstances which surrounded the unfortunate accident suffered by Mr. Allan. It is regrettable that this happened. I think that in the circumstances the hospital authorities did their best to try to trace relatives and to make inquiries to discover the exact position. I am satisfied that they behaved in a reasonable manner, despite the fact that in many ways it was not a totally successful procedure.
    Mr. Crouch: I would be concerned if the Minister's remarks in this debate might be construed by the medical profession and the public as indicating that in view of the need for kidneys there is perhaps not so much need to take care in respect of the obtaining of consent and being sure that it has been given. I would encourage him in the need for people to come forward, but I am concerned lest his reply should be considered as encouraging hospital authorities—
    Mr. Deputy Speaker (Mr. Oscar Murton): Order. I understand that the hon. Gentleman is asking a question.
    Mr. Moyle: I am sorry if I gave that impression to the hon. Gentleman. My aim was to set out the considerable procedures which have to be followed at law and in departmental circulars in situations where kidney donation has to be considered, and to emphasise the considerable lengths to which hospitals have to go to try to contact relatives. I wanted to make it absolutely clear that the prime consideration was the care of the patient. I was so adamant about that matter that I wondered whether it was worth while saying it. It seemed such an obvious point. Health authorities are under an obligation to do their utmost to discover, in the absence of a clear statement from the kidney donor himself, who his closest surviving relatives are and to make clear the position so far as they can. I take my stand on that principle.
    Question put and agreed to.
    Adjourned accordingly at sixteen minutes to Five o'clock.

SCOTLAND
  Queen's Silver Jubilee
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CIVIL SERVICE
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NORTHERN IRELAND
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FOREIGN AND COMMONWEALTH AFFAIRS
  Security Council (British Veto)
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  North Korea
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EUROPEAN COMMUNITY
  Passports
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SOCIAL SERVICES
  Medicines (Sales)
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  Firearms (Offences and Certificates)
EDUCATION AND SCIENCE
  Schoolgirls (Self-Defence Courses)
  Schoolgirls (Self-Defence Courses)
  Liverpool (Expenditure)
  Liverpool (Expenditure)
  Schools (Army Visits)
  Schools (Army Visits)
EMPLOYMENT
  Engineering Apprenticeships
  Engineering Apprenticeships
  Wages Inspection
  Wages Inspection
  Wages (Minimum Requirement Breaches)
  Wages (Minimum Requirement Breaches)
  Local Government Staffs
  Local Government Staffs
  Courtaulds Ltd. (Aintree)
  Courtaulds Ltd. (Aintree)
ENERGY
  British Gas Corporation (Direct Labour)
  British Gas Corporation (Direct Labour)
NATIONAL FINANCE
  Social Security and Public Service Pensions
  Social Security and Public Service Pensions
  National Giro and Savings Bank
  National Giro and Savings Bank
  Repositaries (White Paper)
  Repositaries (White Paper)
  Disabled Drivers
  Disabled Drivers
  National Savings Movement
  National Savings Movement
  Food Imports
  Food Imports
  Value Added Tax
  Value Added Tax
  Exchange Rates
  Exchange Rates
  Public Sector Borrowing
  Public Sector Borrowing
  Shops and Services (Input Tax)
  Shops and Services (Input Tax)
  Travel Expenses
  Travel Expenses
TRANSPORT
  Railways (Financing)
  Railways (Financing)
ENVIRONMENT
  Mole Tunnelling Machine
  Mole Tunnelling Machine
  Driving Licences
  Driving Licences
  CBI
  CBI
AGRICULTURE, FISHERIES AND FOOD
  Cattle Feeding
  Cattle Feeding
  Green Pound
  Green Pound
  Sheep Exports (Deaths in Transit)
  Sheep Exports (Deaths in Transit)
INDUSTRY
  Courtaulds Ltd.
  Courtaulds Ltd.
  European Regional Development Fund (Treasury Procedures)
  European Regional Development Fund (Treasury Procedures)
  British Leyland (Sales)
  British Leyland (Sales)
  France (Inter-Government Talks)
  France (Inter-Government Talks)
  Accelerated Projects Scheme
  Accelerated Projects Scheme
  Concorde
  Concorde
PRICES AND CONSUMER PROTECTION
  Retail Price Index
  Retail Price Index
TRADE
  Gatwick Airport
  Gatwick Airport

Preamble
The House met at eleven of the clock: The LORD CHANCELLOR 011 the Woolsack.
Prayers—Read by the Lord Bishop of Southwell.

EQUAL PAY
Lord CULLEN of ASHBOURNE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what progress has been made in narrowing the gap between the average weekly wages of men and women in British industry.
Lord JACQUES: My Lords, between April 1970 and April 1976 the average weekly earnings of women rose from 54·3 per cent. to 64·3 per cent. of the corresponding figure for men. During the same period the figure for the average hourly earnings of women, which excludes the effects of overtime, rose from 62·9 per cent. to 73·5 per cent. of men's hourly earnings.
Lord CULLEN of ASHBOURNE: My Lords, while thanking the noble Lord for that reply, may I say that, although I realise that the percentage increases for women have risen faster than those for men, since the base figure on which average earnings are worked out is so much smaller in the case of women than in the case of men the actual cash gap appears to be widening rather than narrowing? Is the Minister aware of that?
Lord JACQUES: No, my Lords, the cash gap is not widening. It is true that the average earnings of men are greater than the average earnings of women, but the increase in the hourly earnings, which I think is the correct figure to take, is quite substantial.
Baroness ELLES: My Lords, can the Minister therefore kindly explain why—and I will take the hourly figures because
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I accept that that is the right basis on which to approach this question—in October 1972 the gap was 31·32 pence as between men and women and by April 1976 it was over 40 pence? What are the Government doing about getting the real value of wages nearer as between men and women? Will the noble Lord accept that the working women of this country consider that they are being cheated under the Social Contract?
Lord JACQUES: My Lords, in the first place the Government have done quite a lot. They have allowed additional payments to women outside the Social Contract, so I do not know why the noble Baroness thinks that the Social Contract is injuring women. If the noble Baroness wishes to interrupt, she may.
Baroness ELLES: No, my Lords. If the Minister wishes to say something I hope he will finish his statement.
Lord JACQUES: My Lords, it is quite true that we have kept the increases to women outside the Social Contract. We have taken steps to see that discrimination is completely removed from all the national agreements and wage orders on the employment register. We have taken steps to give women additional opportunities for training. I do not know what else we could have done.
Baroness ELLES: My Lords, will the Minister kindly look closely at these figures because I think he will find that the cash gap is widening. As to a matter my noble friend pointed out, would the Minister concede that, once the base line is so divergent, even an enormous percentage increase does not increase the amount in a woman's pocket, and that household bills are not based on percentages but on cash?
Lord JACQUES: My Lords, very substantial progress has been made. I am astonished that the noble Baroness should take this line. I hope she will notice the increase in hourly rates from 62·9 per cent. to 73·5 per cent. of the men's rate. Let me give your Lordships a standard for comparison. In the teaching profession there has been equal pay since 1961, a period of 15 years. Let us look at the results there. After 15 years the women are receiving only 78 per cent.

1623
of the earnings of men, for reasons that have nothing to do with equal pay. There are two kinds of reasons. First, the women are concentrated in the primary schools sector, which is the lower paid sector, and secondly there are family reasons. The women are not prepared to move for, say, promotion because of family reasons; they are not prepared to take minor promotions which might involve, say, some work in the evenings. So the difference in the teaching profession is very much the choice of women themselves, and I suggest that the same is true in industry generally.
Baroness ELLES: My Lords, I do not want to continue this "argy-bargy" across the Table but I wonder whether the Minister would look closely at the figure for April 1975, which was 174 pence per hour for fulltime non-manual men and 105 pence per hour for fulltime non-manual women; and by April 1976 it was 210 pence for men and 131 pence for women. Would he kindly look at these figures and see what can be done about the situation?
Lord JACQUES: My Lords, looking at figures does not do much good. What does good is taking action, and I have explained the action that the Government have taken and nobody has challenged that it is inadequate.
Lord HARMAR-NICHOLLS: My Lords, will the Minister—
The LORD PRIVY SEAL (Lord Peart): My Lords, I really think we should go on to the next Question.
Lord WYNNE-JONES: My Lords, can my noble friend explain what is a "non-manual man"?

COLLEGES OF EDUCATION: TEACHER REDUNDANCIES
11.13 a.m.
Lord BELSTEAD: My Lords, I beg leave to ask the first Question on the Order Paper standing in the name of my noble friend Lord Elton.
The Question was as follows:
To ask Her Majesty's Government whether all teachers in colleges of
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education who are rendered redundant following their merger with other institutions by direction of the Secretary of State will be compensated for their redundancy at a level determined by the Colleges of Education (Compensation) Regulations 1975 (S.I. 1975 No. 1092).
The MINISTER OF STATE, DEPARTMENT of EDUCATION and SCIENCE (Lord Donaldson of Kingsbridge): My Lords, any teacher in a college of education who is made redundant as a result of a direction given by the Secretary of State under the Further Education Regulations 1975 may seek compensation under the Colleges of Education (Compensation) Regulations 1975. Whether or not compensation is payable in a particular case depends on the circumstances.
Lord BELSTEAD: My Lords, I am grateful to the noble Lord, Lord Donaldson of Kingsbridge, for that reply. Would I be right in thinking that a direction given by the Secretary of State, the words which the noble Lord has used, would include a situation where a college amalgamates with another college, and then a lecturer finds that he or she is redundant? Secondly—and this I know is something which is worrying the teaching profession—would this similarly cover the situation where a college amalgamates with another institution and subsequently, let us say two or three years later, a lecturer finds that he or she is redundant?
Lord DONALDSON of KINGSBRIDGE: My Lords, the answer to the first part of the question is, "Yes", and to the second part, "No". I think perhaps the second part needs a little explanation. The compensation is designed to deal with a change in Government policy affected by the birthrate and the lack of pupils coming forward for teaching and, therefore, the necessity to reduce the number of teachers being trained. I think this is common ground between all of us. It was thought that this was not the teachers' fault and, therefore, in so far as there is redundancy, special rather than the normal terms should be given. The view of the Government—and I think noble Lords will agree with this—is that this is all right as a result of direction of the Secretary

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of State's change. If the change is a normal one happening later, then it would not apply. Of course, if there were a further intervention by the Secretary of State, it would start up again under the Crombie Rules.

OVERSEAS DEVELOPMENT EDUCATION FUNDS
11.16 a.m.
Lord BELSTEAD: My Lords, I beg leave to ask a second Question standing on the Order Paper in the name of my noble friend Lord Elton.
The Question was as follows:
To ask Her Majesty's Government what funds have been allocated to overseas development education, when they will be released and for what purposes they will he applied.
Lord ORAM: My Lords, my right honourable friend is, I understand, at the final stages of his consultations related to providing funds for this purpose and will, as I told the noble Lord, Lord Elton, on 28th October, make a statement as soon as possible. There will be no unnecessary delay. In view of the questions asked on 28th October I may add that "development education" in this context covers the dissemination of information about the many problems which arise in connection with the development of what is called the Third World, many aspects of which may have effects at home as well as in the developing countries themselves.
Lord BELSTEAD: My Lords, I am grateful to the noble Lord, Lord Oram, for his definition of development education at the end of his reply. I have two questions to ask him. When the noble Lord replied to my noble friend Lord Elton on the 28th October, the noble Lord said that sums of money needed for development education have already been voted within the aid budget. As this is within the aid budget, could he not reveal today what the sum of money is? Secondly, if this money has been budgeted for by the ODM, why is it necessary to be conducting consultations about it? Presumably the money is there. I wonder what the consultations are directed at.
Lord ORAM: My Lords, I think the noble Lord, Lord Belstead, knows that a Working Party has been meeting to consider this matter.
Lord BELSTEAD: Yes, my Lords.
Lord ORAM: My Lords, that Working Party has to take into account the views of a considerable variety of voluntary agencies concerned. As the next stage, my right honourable friend wishes to consult further with them after he has considered the report of the Working Party. It is for that reason that I am reluctant to give figures, but I assure the noble Lord that things are making good progress.
Lord BELSTEAD: My Lords, I am grateful to the noble Lord. I know he wishes to be helpful in this matter. Therefore, am I right in concluding that the discussions of the Working Party concern the allocation of the total?
Lord ORAM: My Lords, that would be included, but I understand that the Working Party report includes the suggestion of the setting up of an advisory committee which will offer advice to my right honourable friend about the allocation, rather than a specific allocation within the recommendations of the Working Party.
Lord BROCKWAY: My Lords, is my noble friend Lord Oram aware that on 28th October, when this matter was raised, the Government promised consideration of this problem? Is he further aware that since then the Minister has written to me in detail, and that many of us wish to express our appreciation of the fact that the Government have given consideration to this matter? We hope that an early conclusion will be reached.
Lord ORAM: My Lords, I thank my noble friend Lord Brockway for his comments. As I have indicated, an early statement can be expected.
Lord BARNBY: My Lords, arising out of the first reply made by the noble Lord the Minister and the fact that the wording of the Question is a little ambiguous as to its breadth, can the noble Lord the Minister indicate, as has been so widely urged and there has been much discussion in the Press, that, in all forms

1627
of aid to education, emphasis should be laid (which I believe the Government support) on encouragement given at every possible grade and step to divert people from the social sciences into technological, agricultural or other instruction which is widely wanted everywhere with funds supplied by Her Majesty's Government?
Lord ORAM: My Lords, with respect to the noble Lord, his question is very similar to one which was asked on 28th October. I then indicated what was development education in the sense in which Lord Elton's Question then meant and his present Question now means. It was the reason why I added a rather careful definition—and I think Lord Elton wished me to do this—of what is meant by development education. The points that the noble Lord now raises concern the education of people within the developing countries, and that is not the implication of this particular Question, or indeed of the one on 28th October.
Lord BARNBY: My Lords, I appreciate the assistance the Minister has given in his reply, but would it be idle to ask for emphasis to be continually applied on this subject in every direction where Government funds are applied? In his reply just now the noble Lord referred to education in this country, but as a great deal of education is given in this country for students from Third World countries and is paid for by Her Majesty's Government does it not seem that the provision of education would apply equally well whether in this country or overseas?
Lord ORAM: Yes, my Lords, I do not dispute what the noble Lord is saying, just as I did not dispute what my noble friend Lord Peddie said when he asked a supplementary question on 28th October. I am fully in sympathy with this point of view about the need for emphasis to be on technological education rather than on more sociological fields, and so on. But I repeat that what I think the noble Lord, Lord Elton, is anxious to do is to establish the situation about development education in the more precise way that his Question indicates.
Lord GRIDLEY: My Lords, may I ask the noble Lord the Minister whether
1628
it is the intention of the Government to publish the Working Party's report, because I think this would be of interest to many noble Lords particularly on this side?
Lord ORAM: My Lords, I am not sure what my right honourable friend's intention is in that respect, but I take the point that many would find it of interest and I will put the suggestion to my right honourable friend.

AIRCRAFT AND SHIPBUILDING INDUSTRIES BILL
11.24 a.m.
The MINISTER of STATE, NORTHERN IRELAND OFFICE (Lord Melchett): My Lords, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report.—(Lord Melchett.)
Lord HARMAR-NICHOLLS: My Lords, the point I wanted to put to the noble Lord the Leader of the House was this—and I do not expect an Answer today. If I put down a Question next week, is he prepared to give an Answer as to whether he accepts the 1962 ruling, that if there is a doubt, however small, a Bill must be deemed hybrid? If in answering that Question he accepts the 1962 ruling, has he given consideration to the submission I made to him that there are very clear doubts about the Bill we are now going to discuss? If I put that Question to him next week, would he be in a position to give me an Answer?
The LORD PRIVY SEAL (Lord Peart): My Lords, this is a matter for the House to decide. I will look at it.
The Earl of LAUDERDALE: My Lords, as the noble Lord the Leader of the House has risen to his feet, may we take this opportunity of expressing our sincere condolences to him on the very grave personal blow which he must have suffered in seeing his own constituency reverse its representation, and can he tell us what views he has about the future?
Lord PEART: My Lords, of course I am always sorry whenever anything goes Tory.
On Question, Motion agreed to.
Lord CARR of HADLEY Lord CARR of HADLEY moved Amendment No. 149:
After Clause 36, insert the following new clause:
Compensation for severance
.—(1) This section applies to a person who—

(a) is entitled to receive compensation under section 36 above in relation to the securities of a company (the "relevant company")and

(b) suffers special loss or damage or reasonably incurs expenses (not being taxes) as a direct result of the vesting of those securities in a Corporation.

(2) A person to whom this section applies shall be entitled to receive a payment (to be determined in like manner to the compensation payable to him) equal to the loss or damage or expenses referred to in subsection (1) above.
(3) Where the relevant company forms part of a larger undertaking, the payment referred to in subsection (2) above shall include a sum equivalent to the reasonable cost of rearranging the affairs of that undertaking and a sum calculated by reference to any increase in the proportion of the overhead expenses of the undertaking to the volume of the business over which those expenses are spread, so far as that increase is due to the vesting of those securities and is not reasonably capable of being avoided or diminished.
The noble Lord said: My Lords, I beg to move the new clause to be inserted after Clause 36, as printed on the Marshalled List of Amendments. This new clause repeats precisely an Amendment which we moved in Committee. When I withdrew the Amendment in Committee I said that the Government's reply had been very disappointing to us, and that while I was withdrawing the Amendment I really felt I must have further consultations, particularly, of course, with the industry, about this; and almost certainly I would wish to return to the subject on Report. Indeed, as your Lordships will see, that is what I am now doing. My further consultations and the further consideration I have given to the matter myself indicate to me that there really is a need for this matter to be considered further by the Government.
If I may just remind your Lordships what this new clause is about, it is to provide for compensation to companies taken over in respect of expenses which
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they cannot avoid incurring in the process of handing over their company to the Corporation; in other words, in the words of subsection (1)(b) of the new clause, it is to compensate a company which
"suffers special loss or damage or reasonably incurs expenses … as a direct result of the vesting of those securities in a Corporation."
It is impossible to be precise about what such expenses may be. In many cases they may be minimal, in which case there will be no measurable hardship to the companies concerned if this clause is not there. But in other cases they may be substantial, and I think we have established in our previous discussions that no allowance is made for them in the terms of compensation. Therefore, we are dealing with expenses which are unavoidably incurred by companies purely because of vesting their subsidiaries in the new Corporation. It really does seem to me to be contrary to any reasonable concept of equity to deny them some compensation when they unavoidably incur such expenses simply by virtue of the vesting of their securities in one of the Corporations.
When we debated this matter in Committee the Government gave about four reasons for their refusal to accept the Amendment. First of all, they said that the effects of severance were difficult to quantify. Well, I do not dispute that, but I must point out again that a previous Labour Government was prepared to make this attempt, difficult though it might be, in the case of port businesses. They did that, I must remind your Lordships, undeterred by their experience of having to quantify the severance losses suffered by coal owners on the nationalisation of their collieries in 1946. So there are those two precedents where, in spite of the difficulties, Labour Governments have been prepared to make provision for the sort of compensation for which this clause is asking. So I think that really disposes of the Government's first argument against accepting this Amendment.
The second argument was that the subsidiary status of a company would be a relevant factor to be taken into account when its securities came to be valued. As I have said, I think we elicited in the last debate that this was not taken account of in working out the compensation terms. I really do not believe that that argument is valid at all, because if a holding com-

1631
pany were selling its subsidiary as a whole as between a willing seller and a willing buyer it would, of course, take these considerations I am talking about into account in setting its price. That is precisely what the Government's method of valuation does not permit them to do. Therefore, I think it is undeniable that the actual compensation evaluation does not take into account the possibility of the sort of expenditures we are talking about in this new clause.
The third argument used by the Government in rejecting the Amendment on Committee stage was that parent companies will be able to use the compensation they would receive to expand or diversify, and thus find new employment for the head office facilities. That argument was put forward by the Government, and one of the things that we pointed out at Committee stage was that if a group suddenly lost one of its subsidiaries it would still be left with the head office overheads and perhaps the research and development overheads and other overheads which were previously spread over all of the companies in its group if suddenly it lost one or more of those companies. It is impossible to reduce the overheads very quickly or suddenly. In some cases it is not possible to reduce them completely.
I do not believe that the Government have answered that point, because it is true that the companies can reinvest the compensation they get and, to some extent at least, replace the activity which they have lost, but that is not something which cannot be done overnight. First of all, they are not going to get the money overnight. There will be considerable delays before they actually get that money. Having actually got the money, it is not possible suddenly to start up some new activity, either from scratch or by buying some other company overnight. There is at least bound to be a substantial period in which the fixed overheads of the groups have to be spread over a smaller range of activities and therefore will add to the costs and reduce the profitability of those other activities. There again, I think that the Government have not begun to answer the argument we are making.
The last argument that the Government made against accepting our Amendment
1632
on Committee stage was that the precedents I quoted then, and again this morning, of the coal and port businesses, were not analogous to the aircraft and shipbuilding industry. It may be true that the severance losses to be expected in these cases may be less severe than they were in the case of coal and the port businesses. I do not believe that that alters the principle. We do not know how great they will be. I accept that it is likely that they may be smaller than in those previous cases, but the principle we are arguing is a principle of equity. One cannot dispose of an argument on equity by saying that the loss will he smaller than in some other cases which have been dealt with in this way in the past, unless a substantial argument can be produced that they are going to be so small that it would be genuinely possible to discard them on de minimis grounds.
The Government simply have not brought forward any arguments to show that it is reasonable for us to accept that the sort of losses which we are seeking to cover will be so small as for it to be fair to discard them on de minimis grounds. Therefore, I believe that there is an argument in principle here which Governments ought, in fairness, to accept. I really do not understand why they should be reluctant to accept it. May I end my speech by pointing out that the Government are themselves being inconsistent because in what is now clause 50(12) of the Bill they provide compensation for disruption of existing compensation schemes. Of course we are glad that they are doing that, but by doing so they are giving away their case in principle. They are admitting that there is a case for providing compensation for extra costs involved as a result of a group having to vest its subsidiary or subsidiaries in one of the corporations. If they are prepared to do it for pensions—and of course we welcome that—then I believe that they throw away their argument in principle against allowing it to be done in other cases as well.
I hope I have said enough to indicate to your Lordships that there is a case in equity for dealing with this matter along the lines that we suggest. If it turns out in practice that the fears of some companies about the costs in which they are going to be involved of the kind I have mentioned are indeed very

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small, then no one will be any worse off. The taxpayer will be no worse off. But since we cannot be sure what these costs are going to be, in fairness I believe we ought to provide for them to be compensated for if they arise. I beg to move.
Lord TREFGARNE: My Lords, I hope the noble Lord, Lord Melchett, will take the point of my noble friend Lord Carr seriously and give us a fair and considered answer. I should like to put to the noble Lord by way of emphasis a simple but hypothetical case to which I hope he will listen, and I hope lie will consider it carefully and explain to me why it is, as I believe, that the Government are not compensating these companies in a proper way. Let us imagine a small group called Smith Holdings (that was, I believe, a mythical group referred to by my noble friend Lord Carr at an earlier stage) purchasing a computer or renting a computer to operate its accountancy system. It would have its bought and sold ledgers, its pay roll and so on, all programmed into the computer. It would have, for example, three subsidiaries and the parent company, making four companies in all, using the services provided. If the annual rent of that computer were £120,000, then each of the members of the group would contribute £30,000 a year to the rental of the computer. If one of those subsidiaries were nationalised, there would be only two subsidiaries plus the parent company; that is, three companies remaining to operate the computer. Therefore, the annual contribution that each company would have to make to the rental would be £40,000. In other words, each of the three subsidiaries would be experiencing additional costs of £10,000 per annum simply arising out of nationalisation. I agree and accept that that is a hypothetical case, but it is, I hope, reasonably simple and straightforward. I want to ask the noble Lord why it is that the Government are imposing these additional costs, such as those upon companies not to be nationalised when they take their subsidiaries without proper compensation.
Lord ORR-EWING: My Lords, may I add my voice to the desire we have for some form of compensation here. Rather than take a hypothetical case, I will take the particular instance of the company of which I am a non-executive director, and
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thereby I declare an interest. By taking an instance which is live, where I know the facts, I feel it underlines the position rather better. We have a group of 18 companies and if the Bill goes through in its original form two of those companies will be nationalised. It may not seem to be many but in terms of turnover it is substantial. That will take between a third and one-half of the total group turnover away under nationalisation.
It happens that our headquarters office is on land owned by one of the big companies to be nationalised, George Clark & NEM Limited, the marine engine building company. Although we own the offices, the land is leased to us by the marine engine building company. We do not know at present how long we want to stay there. Obviously we would want to stay in those offices during the period of negotiations for compensation because it is easier to be on site when the files and facts are available. Incidentally one of the injustices is that at present, after vesting day, we have no right to information at all; all that is going to be denied to us after vesting day in helping us to negotiate a fair compensation price. Putting that apart, it could well be that the nationalised company would want those offices. It would be common to most nationalised concerns; they generally breed people in offices fairly fast and they will want them. We would not want to be right on their land, we would want to move further away, perhaps nearer to the geographical centre of the new group. What would happen?
First, as we have lost half to a third of our turnover it is right that presumably we should want less people to be at group headquarters. At present 30 are employed there; key people, accountants, specialists, metalurgists, engineers, advisers to the group. Obviously, it would not justify the same number, so we have to run down the numbers. We have therefore got redundancy pay to he met in the cases of however many it might be. It might perhaps be 10 out of the 30 will have to go, many of them long serving, many of them seniors. We have to get rid of those. In the case of redundancy pay half is paid by the taxpayer but half falls upon the company itself. So we have to look for new offices; some new centre nearby. We may have to pay out because people may have to move a long

1635
way away, and nowadays there is generally some compensation to be paid for movement costs; finding a new house, agency fees, and the like. This is common for key personnel in any industrial concern.
So we have a double cost. First we have to find new group headquarters, we have got to negotiate either its purchase or its lease. We have got to run down our personnel. We have got surely every conceivable entitlement to some sort of compensation for severance. That is an actual case. The facts are in broad terms as I have given them. I should have thought that there was a castiron case for accepting this Amendment in the interests of fairness, but in the interests incidentally of continued prosperity for the rump of the firm and the well being of all those other people employed who are not being taken over. This must be just as important for the well being of our country as for any other industrial manufacturing concern. I hope that the Government will take this illustration seriously because the facts are as I have given them.
11.42 a.m.
Lord MELCHETT: My Lords, as the noble Lord, Lord Carr, said, we had a useful discussion of the subject of severance payments in connection with a similar Amendment tabled at the Committee stage. Since that time we have given further thought to the subject in the light of the points raised, but I regret to say that I have to tell noble Lords opposite that the Government have no reason to change their position on this Amendment.
The question of severance payments cannot be considered in isolation. The subject has to be viewed in the light of all the vesting and compensation provisions in the Bill. The Bill provides for the securities of the scheduled companies to be vested in the new Corporations under Clause 20. Therefore, complete companies are taken over as going concerns. However, we have recognised throughout that within a group company structure, which is the prevalent situation in the case of companies covered by the Bill, subsidiary companies are less distinct from their parents or fellow subsidiaries than might otherwise be the case. For historical reasons the edges of ownership
1636
of particular assets may well be blurred, and the owner and the user are on occasions different people. I think that is the case in the example which the noble Lord, Lord Orr-Ewing, gave to us. In fact, the example he gave of the head office of a vesting company could be owned by its parent company, even though it is occupied solely by the vesting company; or at least that is a different variation on the theme that the noble Lord gave to us. I am sure that there are other examples as well.
In view of this, Clause 21 has been included in the Bill to tidy up the loose ends. It provides for property, rights or liabilities of a non-vesting company in the same group as a vesting company to be taken into public ownership where they are directly relevant to the vesting company. The mechanism of the clause allows for these "appurtenant" assets to be vested in the scheduled company at the date of transfer. Under Clause 39(7) compensation for the securities of the vesting company is adjusted on the assumption that the assets so vested were part of the vesting company during the reference period. I hope that noble Lords will agree that this goes a long way towards removing the possible disruptive effects on group companies brought about by the vesting of subsidiary companies. But that is not the whole story. Under the Bill we are valuing unquoted securities as if they were quoted.
Lord CARR of HADLEY: My Lords, is it too much to ask the noble Lord to see whether he could apply that principle he has just enunciated in the Bill to the particular case mentioned by my noble friend Lord Orr-Ewing? I do not mean in amounts, but so that we understand how much of the problem mentioned by my noble friend would be dealt with under the clauses that the noble Lord has mentioned. I do not quite understand.
Lord MELCHETT: My Lords, I have only got half-way through the explanation but I think it would be difficult—and I hope that the noble Lord, Lord Orr-Ewing, will accept this, and other noble Lords opposite—for me to give an answer on a particular case. After all, that will be the subject of negotiation and then arbitration if necessary, and indeed if the noble

1637
Lord's Amendment to the Bill stays in the arbitration may go very wide on this sort of point. I know that the noble Lord, Lord Trefgarne, has raised a hypothetical case and, if I may, I will come to that in a moment. But it would be very difficult for me to give an answer to a question raised on a particular case. I can enunciate the broad principles, but it is difficult to say what would be the particular answer. To put it more simply than I did just before the noble Lord intervened, the broad principle is that if assets are wholly relevant and necessary to the business they will be acquired under Clause 21 and compensation will be paid.
Lord TREFGARNE: My Lords, is the noble Lord saying that Clause 21 provides that the new Corporation could, in the case of my hypothetical example, take over the leasing agreement, for example, on the whole of the computer when the subsidiary that was to be vested only used it for say a quarter or less of the time?
Lord MELCHETT: My Lords, no, I said that if the assets are wholly relevant and necessary to the business then they can be taken over by the new Corporation. Again, it is difficult to give an answer in a hypothetical case because it would depend on a variety of factors which the noble Lord has not mentioned. For example, how necessary it was for the bit that was vesting to continue to use the computer in the future or not, and I can think of a whole string of other possibilities. If I could be allowed to continue with my speech, I hope that I might be given a chance of enunciating the broad principles of the Government's case. So far I have gone through half of the story.
Under the Bill, we are valuing unquoted securities as if they were quoted. If the securities of a company were quoted, then it could not have been a subsidiary company. The basis of valuation therefore produces two indirect benefits to the shareholders. First, unquoted securities are almost always worth less than equivalent quoted securities. But by valuing unquoted securities as if they were quoted, this discounting is ignored. Secondly, the valuation process, in assessing the worth of the securities will need to take into account the factors which
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would have been relevant to the company had its securities been quoted, and hence if it had not been a subsidiary. To a certain extent, therefore, the effects of severance will be reduced by virtue of the assumption that the company stood as an independent entity when the share valuation takes place.
The noble Lord, Lord Carr, again referred to the precedents in the coal Act and the Ports Bill for making allowances for severances. I went into some detail at the Committee stage on why I felt that neither of those two precedents was relevant to this Bill. I honestly do not have anything more to say about that, but, to be frank, the noble Lord, Lord Carr, has very often during the stages of this Bill criticised me for completely ignoring what noble Lords opposite have said and not answering the points at all. I think the same criticism could, ever so gently, be directed at him in regard to what I have said on the two precedents at the Committee stage, because the Ports Bill does not provide any sort of precedent at all, and I tried to make that clear.
The noble Lord, Lord Carr, also suggested in his speech, as he did in Committee, that there was inconsistency in the Bill in respect of severance because we were compensating the group under Clause 49, which is now Clause 50, for severance of pension schemes, but were refusing to include in the main compensation provisions compensation for severance of other central services and other matters. This is a misunderstanding. The pension schemes have of course separate legal identity distinct from the companies and their shareholders.
The pension funds are trusts for the benefit of the members of the schemes. Clause 50 as it now is provides that where regulations are made under the clause—for example, to split pension schemes—as a general principle nobody should be worse off and, accordingly, there might have to be some adjustment of funds between those members coming into the publicly owned sector and those not coming in. The comparable principle in the case of companies and shareholders, which is a quite different situation, is the payment of compensation for the vesting part as if it were free standing. In other words, Clause 36 provides for compensation for the loss of shares and Clause 50

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provides for compensation for loss resulting from changes in pension schemes.
For these reasons we believe that with the existing provisions of the Bill, the problems of severance raised by noble Lords opposite will be significantly reduced if not entirely eliminated. The vesting of the scheduled companies will be achieved with the minimum of disruption to former parents and fellow subsidiaries and compensation will be determined fairly in relation to the situation of each company. I hope that with this further, rather lengthy, explanation, the noble Lord will not press the Amendment.
11.52 a.m.
Lord LLOYD of KILGERRAN: My Lords, may I ask the noble Lord, Lord Melchett, a question about the phrase he uses from time to time about compensation in relation to assets which are necessary for the operation of the company? I think those were his words—that compensation is payable in relation to assets which are necessary for the operation of that company. I realise that he may not be able to give me an immediate answer, but is he aware that many companies, subsidiaries or corporations also may have very considerable know-how—property known as industrial and intellectual property—which they are able to exploit? As often happens, however, such assets are not immediately necessary to the operation of the company at a particular time. The know-how of this sort of property is valuable in the exploitation of further developments of the company or it may have been of advantage to the company some months previously, although it may not be necessary for the operation of the company at a particular time. If I misunderstood the phrase the noble Lord used I apologise for interrupting him.
Lord MELCHETT: My Lords, I had in fact completed my remarks but perhaps it would help if I repeated the phrase I used, though I should not like to answer off the cuff the points which the noble Lord made. I said that Clause 21 provides for property rights or liabilities of a non-vesting company in the same group as a vesting company to be taken into public ownership where they are directly relevant to the vesting company. I do
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not know if repeating those words makes the matter clearer, and I will write to the noble Lord on the particular points he made.
Lord LLOYD of KILGERRAN: I am obliged to the Minister, my Lords. Is he aware that many companies have this know-how of intellectual property which is of tremendous value, property which is totally different from any other property such as plant and factories? I am grateful to the noble Lord for undertaking to write to me because the words he used did not seem to carry the matter much further forward.
Lord CARR of HADLEY: My Lords, I fear that we are going to give the noble Lord, Lord Melchett, a busy week-end of letter writing because I, too, want him to write to me as a matter of urgency. We want to be reasonable about this and I accept that Lord Melchett wants to be reasonable, too. It is a matter of difficulty of understanding and I appreciate the noble Lord's difficulty in answering the sort of intervention I made, even if I had made myself as clear as possible, which I probably did not. As I see the case that he is making to us again today, the noble Lord, Lord Melchett, is not attempting to deny that some genuine severance expenses will be, or at least may be, incurred but is seeking to claim that in so far as they are incurred they are fairly taken into account in the compensation clauses. If I remember correctly our debate in Committee, I felt that he was not making that claim in Committee, but that may have been my mistake and not his. If I did not re-read what he said carefully enough, I apologise, but I think I am right in saying that what he is saying now is that there will be or may be some expenses but that in so far as they are involved they will be taken into account in the method and amount of compensation.
So that we may consider the matter before Third Reading, I should like the noble Lord to write to me—no doubt also to my noble friend Lord Orr-Ewing!explaining, not in any quantitative sense but in principle, how this applies to the specific concrete case which my noble friend quoted. It is clear from what my noble friend said that the group of which lie is a non-executive director will undoubtedly incur expenses wholly due

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to this measure. The remaining group will undoubtedly, after a short interim period, need to remove their head office off the land of one of the companies in the group which is being nationalised. Obviously it would not be a suitable arrangement permanently for them to have their head office on land owned by the company which has been nationalised, even if the Corporation were prepared for that to be a permanent arrangement, which I doubt, and equally I doubt whether the remainder of the group would want such an arrangement. There will, therefore, be the expense of moving their head office and one cannot deny that that could be a considerable expense.
Further, as the concern will be losing about one-third of the group's present turnover, they will have to reduce their headquarters staff, at least until they have their compensation money and can re-expand again. It is not only painful but expensive to reduce staff, and rightly so because people who are declared redundant must be properly compensated and looked after in many ways, and although there are redundancy funds which roughly speaking cover this on a sort of insurance basis, an employer suffers direct costs when, through no fault of his own, he must reduce his staff. The concrete case which my noble friend put clearly brings home that real cost will be incurred by that group solely because of the Bill and the nationalising of this company within the group. I want to be assured—not in quantitative terms; not to agrue whether the amount is or is not enough—that the compensation terms allow for some compensation in principle to the group which my noble friend quoted for expenses which will undoubtedly be caused wholly and solely because of this nationalisation.
There can be a further argument later as to whether or not the amount of compensation is enough. I stress that I am not arguing about adequacy. I want to be assured before Third Reading, in view of what the noble Lord said today, that I am right in thinking that in principle the compensation terms can take account of the sort of costs which my noble friend put before the House. If they do not, then I do not believe the Bill is fair in its present form. If they do, then perhaps we might be prepared to admit that it is fair. If the noble Lord will write to me
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about that before Third Reading I will be prepared to withdraw the Amendment now, on the understanding of course that depending on the letter 1 receive from him we may or may not wish to return to the subject on Third Reading next Tuesday.
Amendment, by leave, withdrawn.
Clause 37 [Payment of compensation]:
Lord MELCHETT Lord MELCHETT moved Amendment No. 150:
Page 50, line 10, leave out ("22(7)(a)") and insert ("22(6)").
On Question, Amendment agreed to.
12 noon
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 151:
Page 50, line 31, leave out subsections (6) and (7) and insert—
("(6) where, after the date of transfer, a Stockholder's Representative submits a claim in writing to the Secretary of State for payment on account of compensation in respect of the vesting of securities under this Act, the Secretary of State shall within six months of that date make a provisional estimate of any compensation so payable and compensation stock equal in value to 75% of that amount shall forthwith be issued to, or at the direction of, that person or his successor in title".)
The noble Lord said: My Lords, the Amendment addresses itself to making it obligatory on the Secretary of State not to delay paying compensation. We had a little debate about this at the Committee stage and, under strong pressure, the noble Lord, Lord Winterbottom, reluctantly agreed to go back to his right honourable friend to see whether there was any possibility of his considering some of the points that we had made. At the time, we received strong support from the noble Lords, Lord George-Brown and Lord Robbins, among others. I believe that the noble Lord, Lord Winterbottom, agreed in principle. In fact, he said most specifically that there was nothing between us about the Government's intentions. He said that payments on account should be substantial and should he made at the earliest possible opportunity. I was not quite sure what he meant when he prefaced his remarks by saying,
"If the provision is to be of any real value"
but I am sure that that was only a lead-in to the main point that we all agree that

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payments should be substantial and should be made quickly.
The difficulty is that nobody wants to part with their money prematurely and that, with the greatest respect, neither the Government nor the Civil Service are noted for the speed with which they operate, particularly if they are parting with their money. Indeed, anybody who has had practical experience knows that a bureaucracy may sometimes, if pressed too hard, be tempted to say: "Look, if you make my life too awkward and if you push me too hard, I promise you that this particular thing will take a very long time to process." This should not happen. We agree that it is regrettable but, frankly, we all know that it does happen from time to time. The noble Lord, although he gives all sorts of undertakings, has resisted most strongly accepting any obligation to be placed on the Secretary of State.
I must deal with one argument put forward by the noble Lord, which I did not think a very good one. He suggested that there was a possibility that an overpayment might be made and that this would not be in the best interests of the shareholders. I accept that an overpayment could be made, because I think that the noble Lord was taking the point that there could conceivably be liabilities which had not come to the surface in trying to determine what the ultimate compensation would be, but I do not think that there is any point at this stage in resurrecting all the arguments about the treatment of these liabilities about which, as the noble Lord will be aware, we were not terribly happy in some cases. This was particularly so in the case of certain kinds of loan which are not given their full value.
I do not believe there is any need to go into the splendid semantic argument between the noble Lords, Lord Winter-bottom and Lord George-Brown, about the definitions of industrial democracy being like elephants that one can recognise when one sees them, because that had nothing to do with this point. However, the other thing that I think one should say is that we are here in an inflationary situation·I can never remember the figures and do not know what the devaluation of the pound has been in the last few months, but what one knows beyond
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doubt is that inflation is running at the rate of something like 1½ per cent. per month—and it is doubly important that, in circumstances of this kind, there should be no delays in payments. My noble friend Lord Carr also made the point, which I feel is again relevant here, that the probability is that these moneys will be needed and will be used for reinvestment in further productive activities associated with the industry which it is likely that the companies will wish to deploy.
Therefore, we are saying here once again that it is of course nice that the Government accept the principle involved. Of course it is very good of the noble Lord to give us undertakings but we ask him to accept that, with the best will in the world, undertakings are not suable and are not very powerful weapons in the hands of the suppliant and that we believe that, in equity, it would be proper to put in some such provision as this. I am not particularly wedded to the figures and I know that the noble Lord said that flexibility would be reduced, but I would ask him, if he cannot accept exactly what is written here, if he would not do his best to come forward with some alternative form of words that would strengthen the arm of a person who is merely asking to be paid what he is owed without undue delay. I beg to move.
Lord WINTERBOTTOM: My Lords, the noble Lord has reminded the House that we had a full discussion on this Amendment and Amendment No. 152 at an earlier stage and that at one moment I even strayed into the jungle with the noble Lord, Lord George-Brown. I attempted to explain the intention of the Government with respect to payments on account. I am afraid that I cannot do very much more than reiterate the position. The noble Lord, Lord Strathcona, thought that the door had been opened a chink by the reply given in Committee and hoped that it would be pushed open a little wider later. I am afraid that I may disappoint him, but I may be able to state with greater clarity what is the Government's attitude.
Of the 43 companies named in the Bill, 42 are unquoted. In all these cases, compensation will be determined under the provisions of Clause 39, by negotiations with recourse to arbitration. While

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it is our intention and wish to complete these negotiations as quickly as possible, it is inevitable that, even with the best will in the world, it will be some time before all the settlements are reached. We recognise that shareholders could feel aggrieved if they have a long wait before they receive their compensation, even though interest on the stock will accrue from vesting date. It is for this reason that we feel it right to make provision in the Bill for the Secretary of State to make payments on account of compensation stock. May I say, speaking personally, in relation to that, that I feel that the noble Lord's argument in regard to inflation is valid, in that the longer the delay, the less valid the coin in which the settlement is paid. I think that that is a valid argument which I am certain my right honourable friend will note.
I believe that we all agree that the negotiations will he complex. Not only will it be necessary to settle the base value for compensation, it will also be necessary to establish, on the basis of a detailed investigation of the companies' records, whether there are any inter-company debts to be treated as securities under Clause 22 and whether there are any appropriate deductions to be made under Clause 40. I repeat the Government's intentions: while it is our intention to make payments on account within six months of vesting day, the complications of the negotiations may be such that, in some cases, it might not be possible to reach a sufficiently definitive view in that time scale. The Amendments, if passed, would reduce the flexibility in the present provision which could act against the interests of shareholders where the negotiations were particularly complicated. I think it is fair to argue that it is much better to avoid making payments on account that might, in the light of further negotiations, have to be reclaimed. This is a hypothetical situation, but one which might arise.
I have to repeat the phrase that I used before, that if the provision is to be of any real value payments on account should be substantial and should be made at the earliest possible opportunity. I think that the noble Lord will agree that too small a payment made too late is of no real value, and that is the reason for my introductory phrase to the effect that if the provision is to be of any real value
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payments must, I repeat, be substantial and must be made at the earliest possible opportunity. It is therefore intended that payments on account should be as large as possible and should be made as early as possible, consistent with the uncertainties still surrounding the negotiations.
The noble Lord mentioned that it is the nature of Governments and their servants to be dilatory, but we can also say that it is the nature of Parliament to be alert and awake, and I should imagine that six months after vesting clay noble Lords will be recalling what I have said and may question me if substantial and early compensation has not been paid. I should think that that is a corollary of what I have been saying.
The Earl of ONSLOW: My Lords, I should like to interrupt the noble Lord if only for my own clarification. Is there to be any interest payable on the money from vesting day to the time that it will eventually be paid out? I ask this because if there is not it will mean that to a certain extent the Government are borrowing for nothing when they would have to pay 15 per cent. in the open market, and consequently even after six months this would be a depreciation on a loan of 7½ per cent. Perhaps the noble Lord can assure me on this.
Lord WINTERBOTTOM: My Lords, I thought I said clearly that interest is paid from vesting day to the date of payment. Noble Lords who have put down the Amendment suggested a payment of 75 per cent. of the Secretary of State's estimate, but the setting of such a figure is bound to reduce the flexibility of the provision, and in cases of great uncertainty it could be too high, while in other cases where there are a few problems it could be too low. Either way one party or another could suffer, and it is far better for everyone to retain the degree of flexibility in the existing provisions. In Committee, the noble Lord, Lord Robbins, suggested that a solution to the problem could be to allow the Arbitration Tribunal to settle the timing and the amount of payments on account. This suggestion may have some superficial appeal, but it might act to the detriment of the shareholders. Noble Lords should remember that the arbitration process is reached only

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at the stage when negotiations have failed to reach a solution.
In these cases where there is no arbitration the shareholders could be deprived of the opportunity of payment on account, and if arbitration took place at a late stage payment might become unacceptably delayed. The noble Lord, Lord Robbins, did not really suggest a true safeguard, but I assure the House that the existing provisions for payments on account are intended to give a real benefit to shareholders. It is not intended to be a cosmetic provision, but one which will be used to the fullest possible extent consistent with the progress of negotiations. It will be operated in the best interests of shareholders, and payments will be made as soon as possible and in the largest amounts possible. I hope that I have now made somewhat clearer what I said at a previous stage of the Bill and that the assurances I have given are somewhat firmer. For this reason I ask your Lordships not to press the Amendment.
Baroness SEEAR: My Lords, before the noble Lord sits down I should like to put a point to him, although I do not really expect him to answer this. Why could the Government not consider indexing the payments? This would be a very useful prod in order to get on with it, on the one hand, for those who have to pay, and if there were delay there would be satisfactory compensation for those kept waiting.
12.14 p.m.
Lord SHINWELL: My Lords, have we no experience to guide us in these matters, the kind of experience of what has happened in the past when industries have been transferred from private ownership to public ownership? Tribunals have been appointed and some have been expeditious in their operation while some have been a little sluggish. It seems to me that everything depends on the capacity, the ability and the readiness to come to terms by those who are responsible for the negotiations about the time of compensation, how much should be paid on account and so on. In part of his reply my noble friend gave what is perhaps a more satisfactory answer than much of the jargon that has been used about this matter, when he said that he would not
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be at all surprised if after a period of six months—or some period—he might be asked questions about why the transactions had not been implemented or carried through. If there is any sluggishness on the part of those who are responsible for dealing with this matter of compensation, there is always the remedy that questions can be asked in Parliament, and that could be very helpful.
Quite frankly, I dislike the whole of this part of the Bill, because I can recall that when the mines were nationalised the demand was made by quite a number of people for confiscation. They said, "Why pay the coal mine owners anything at all?" I resisted that very strongly and I had considerable support in my hesitation to accept that concept. But we appointed a tribunal. We said that it is not for the Minister to decide; it is not for the civil servants to decide. We appointed a tribunal which on the whole dealt with the matter expeditiously. I know that there were some cases where it took about eight years to come to a decision, but that was because of complications which existed and into which I need not enter now. I would rather have had a tribunal appointed—not civil servants necessarily; they are inclined to be a little sluggish. They do not like to pay out, or perhaps they are too busy, or they may have gone on holiday. I do not want to indulge in unnecessary criticism, but this matter could have been dealt with much more satisfactorily had it been decided in the Bill to appoint a body, a tribunal—judicial or otherwise—which would have dealt with the whole question of compensation, with instructions to proceed as expeditiously as possible.
Lord CAMPBELL of CROY: My Lords, I should like to refer briefly to the suggestion made by the noble Baroness, Lady Seear. She asked why had the Government not accepted some form of indexation? I have twice moved Amendments, at the Committee stage and earlier, which the Government did not accept, but which I still hope they will reconsider, which would have introduced an indexation system for payments of compensation where the payments were delayed through no fault of the people who were due to receive them, and I hope that the Government will keep an open mind on this.
Lord TREFGARNE: My Lords, I found the answer of the noble Lord, Lord Winter bottom, unconvincing. He seemed to be saying that if anybody was concerned or aggrieved about not being paid quickly enough he could arrange for a Question to be asked in your Lordships' House or in another place and that that would prod the Government into action. But questions to Ministers, either in your Lordships' House or in another place, have no binding effect upon the Government. They do not necessarily oblige them to take any course of action. Perhaps the noble Lord imagines that by exposing some undue delay the Government would be prodded into action by the odium of the companies concerned or by the odium of the people, but if the Government were in any way responsive to the odium of the people they would not be introducing this Bill in the first place.
Lord STRATHCONA and MOUNT ROYAL: My Lords, the industry will have listened carefully to, and will have appreciated, what the noble Lord has said, and we will follow this up in Parliament as the noble Lord has suggested and as the noble Lord, Lord Shinwell, has mentioned. I was not suggesting that there was dilatoriness necessarily, but we were suggesting that the wheels of some Government Departments grind exceeding slow at times.
Thirdly, I accept the point which the noble Lord was making that the suggestion made by the noble Lord, Lord Robbins, might have the effect of leading to further delay. I am bound to tell the noble Lord that I do not really think he has made the point that our suggestion could act against the shareholders' interests, but I do not think there is any need for us to pursue this. I know his heart is in the right place. He has offered to bare the Government's breast, and if we have any weapons to thrust into it later on I can assure him that we shall lose no opportunity to use them. My Lords, I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Clause 38 [Base value of securities of a listed class]:
12.21 p.m.
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 153:
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Page 51, line 4, after ("days") insert ("multiplied by 4/3").
The noble Lord said: My Lords, I rise to move Amendment No. 153, which is to Clause 38, and I should like to speak at the same time to Amendment No. 154, which is to Clause 39. I am of course aware that two Amendments similar to these, which were designed to have the same effect, although I think these do it better, were moved by myself during the Committee stage, and I am sorry to say that I was totally unconvinced by the reply that I received. The fundamental point that I want to make—and it is quite simple—is that the Government have set the basis for compensation as the Stock Exchange price of these shares calculated over a certain period, and have said that that is a fair and reasonable method of calculating the value of the whole enterprise. I want to say quite clearly that I think that is a totally mistaken impression on the Government's part, is quite wrong and is totally unjust.
My Lords, there is a certain amount of case history available to us on Stock Exchange bids and deals, of course, and I want to tell the noble Lord, Lord Winter-bottom, if he does not already know, that during a period similar to the one provided in the Bill a number of takeover bids were effected through the medium of the Stock Exchange in relation to quoted companies, and that the average percentage increment over the share price finally paid by the acquiring companies was, on average, no less than 48 per cent. above the hid price prevailing at the start of the bid. Perhaps I can take some examples quite at random from the list that I have been given. When, for example, Brook Motors acquired Opperman Holdings on, I see, the 25th July 1973, the increment was 28 per cent. above the prevailing share price. To take another example, when GKN acquired Kirkstal Forge on the 15th December 1973, the final acquisition price was no less than 48 per cent. above the share price immediately before the bid was announced. As I have said before, the average over that period was 48 per cent., and there were examples of 122 per cent, and 100 per cent. spread throughout the list.
Lord PARGITER: My Lords, would the noble Lord give way for a moment? Would the noble Lord not agree that very often these prices bear a particular

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relationship as between two companies, in that the acquisition of one company by another company may not have a proper regard to its existing share value but to what it might be worth to that particular company; that is, not what it is worth on the general market?
Lord TREFGARNE: No, my Lords, I would not agree with that at all, I am afraid. If that were to be the case there would be some examples where the bid price was below the prevailing share price, and I am sorry to tell the noble Lord that there are no examples on my list, and I believe none available, of such a case. My Lords, the fact of the matter is that, in my view, the Government are seeking to acquire these companies together with the control by acquiring all the shares, but are paying nothing for the control. In other words, they are confiscating the control; and the Amendments which I have tabled seek to rectify that, what I believe to be, glaring injustice.
It is not true to say that the shares as quoted on the Stock Exchange represent the price of the control, because companies never acquire control by means of repeated small purchases on the Stock Exchange. Indeed, I believe that is contrary to the rules of the Stock Exchange, to acquire control simply by purchasing shares on the open market. My understanding is that when a company seeking to acquire another acquires more than a certain percentage of that company's shares, it is required to declare that fact and to make a formal bid; and it is at that point that, to acquire all the shares, it becomes required to pay a premium over and above the share price immediately prevailing before the bid. My Lords, I hope I have made my point clearly. I beg to move.
Lord WINTERBOTTOM: My Lords, the noble Lord is in fact putting into numbers the argument that we had at earlier stages of this Bill; namely, that the sum of these elements of a company is less than the value of the company as a whole and as a going concern. That is really the argument that we have been hammering out. I accept that it is a very important point that he and other noble Lords have raised. Before I go on to try to answer his argument, I would say that
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taking a takeover figure as the one which we should use to illustrate the argument is, I think, not correct. My noble friend Lord Pargiter has in fact, I think, given that answer: that the bringing together of two companies by a takeover bid brings into the calculations many factors which are completely outside the situation we are discussing now. I do not think I will go into that in detail, but it is a different sort of operation from the one which the noble Lord is expressing in the terms of his 4/3 or from those which noble Lords have argued as matters of principle earlier in our discussions.
However, I am afraid I cannot accept the arguments, used by honourable Members in another place and some companies, that since we shall be acquiring a large number of subsidiary companies which will be wholly owned by their parents we ought to be paying something more than the Stock Exchange listed price for the controlling interest. We have tried to find the best formula we can, and we believe that the Stock Exchange quotation represents the willing-seller/willing-buyer price for a security, which, we believe is the fairest way to reach a calculation which we can achieve. Where companies are negotiating for the price of controlling interests in other companies, it may be necessary to pay a premium to persuade existing shareholders to sell. This is a situation of a willing buyer and an unwilling seller. This additional payment of a premium is the subjective adjustment reflecting the degree of unwillingness. But in a nationalisation measure approved by Parliament the compensation paid to shareholders should reflect the objective worth of the companies.
Indeed, it could be argued, perhaps, that in the case of unquoted securities the compensation terms already give a benefit. Unquoted securities are generally worth less than equivalent quoted securities simply because they are less easily traded. But if we are valuing unquoted securities as if they were quoted, this might be of value to the parent company in reaching the final calculation. Thus, for this reason we believe that the discount which might be associated with the lack of quotation may be ignored. For these reasons, my Lords, I ask the House to reject the noble Lord's Amendment.
The Earl of ONSLOW: My Lords, the noble Lord, Lord Winterbottom, made quite a lot of play about the fact that in a voluntary takeover situation there is a premium on the shares solely to make it agreeable. But this is not a voluntary situation; this is a forced sale. It seems to me to be more logical, if it is a forced sale and the people do not want to sell, that you should pay a higher premium than when it is voluntary.
Lord ROBERTHALL: My Lords, although I do not agree with the Bill as a whole, I feel that the Government would be unwise to accept this Amendment. The difference between an ordinary takeover of the kind referred to and these is that the take-over company expects to make much more use of the assets than have the existing company. It seems to me, speaking as a taxpayer, that it is not very likely in this case that the assets will be used much more advantageously than they are now. I think there is a marked difference here.
The Earl of LAUDERDALE: My Lords, the noble Lord, Lord Roberthall, has put his finger on the nub of the matter. The assets—and we have been saying this throughout the debates—are not going to be used more advantageously. This is the tragedy about the whole project. It was Tacitus who said long ago that they have laid the country waste and called it peace. The project is virtually to destroy these industries and to reduce the use of their assets. The noble Lord, Lord Roberthall, put his finger on the heart of our disputes over the Bill. As my noble friends Lord Trefgarne and Lord Onslow have said, this is a forced sale.
The noble Lord, Lord Winterbottom, whom we all respect and whose position as a social democrat we all honour, is somebody we trust. He is one of the people in his Party—there are a few left—in whom we really have great confidence. I do not want to embarrass him by saying this, for it may be that the laurels I cast about him are to his disadvantage elsewhere. He has used the argument that what Parliament decides is not a forced sale. But it does not make it less of a forced sale because Parliament has decided it; let alone when Parliament decides it through a minority Government
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resting on a very small element of public support—and a good deal less today than yesterday, may I remind him. He will have heard about Workington and about Walsall where, as a matter of fact, I was born. I was born abroad; I happened to be born in Walsall.
He will realise that what is being thrust upon Parliament is being thrust upon it by a minority Government unsupported by the public and at the behest of a part of the Government's supporters. Because that is thrust on Parliament and because Parliament is so constituted that we probably cannot prevent it, then he says that it is not a forced sale, that the victim must accept it with a smile. But it is a forced sale, and no amount of pretence about the Government representing the will of the people makes it not a forced sale. Even if all the people wanted it—and they do not—it is still a forced sale. That is why we are really in the situation of a willing buyer dealing with an unwilling seller.
My Lords, I have asked this question twice before and have not had an answer. How is it if the Government do not approve of takeover prices in the case of nationalisation, that they approved of the British Transport Docks Board's offer of £1·50 a share for shares standing at 90p when the offer was made? The Government accepted the takeover price. They rallied their troops to come here to support that point of view. They put up my friend the noble Lord, Lord Wynne-Jones, to move the Bill about Felixstowe because they believed in a takeover price. Now they say that they do not and that what Parliament says must obtain, regardless of the pain of the victim. This is not fairness by any stretch of the imagination. I think that in his heart the noble Lord, Lord Winterbottom, knows it is not fair—and he is a very fair-minded man.
Lord CARR of HADLEY: My Lords, I am not going to advise my noble friends to support this Amendment in the Division Lobby because, however regretfully, we have come to the decision that it is now hopeless at this stage of the Bill to try to get the Government to accept a totally different basis of compensation. Therefore, we have continued to concentrate our efforts on Amendments

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which would at least provide the arbitration tribunal with sufficiently wide terms of reference to be able to take into account all the relevant factors in order to arrive at the end of the day at something nearer the fair valuation than can be provided by the Government's chosen formula.
Although that is our position, I feel that I must repeat what we deeply believe to be the utter fallacy of the sort of arguments advanced again by the noble Lord, Lord Winterbottom, and by other Ministers in this House and in another place. We must remind the Government and not only Tory MPs in another place or Tory Peers in this place but Peers of all Parties and of none in this House, and anybody who claims to have expert knowledge of these matters outside this House, that the Government's chosen method, the formula which they have put into the Bill, cannot produce the results which they admit they want to produce. There really is no difference of objective between us. It is a total disagreement about method.
All I want to do now is to repeat the basic reason for this difference of method. The Government keep talking about the earning power of the assets being nationalised, and they say that the Government's aim is to enable shareholders to replace that earning power. Where they go wrong is to say that they can do that by having compensation based on the Stock Exchange price. Earning power is of two kinds. The earning power of the Stock Exchange shareholder is measured by the dividends he receives from his shares. That is quite clear. If one is wanting to compensate the Stock Exchange shareholder on the earning power of his shares it is perfectly fair to do it on the basis of Stock Exchange prices. I think that we agree about that.
Where the Government seem unable to move intellectually is to the understanding that that is quite different from the valuation of the earning power, which one possesses if one owns all the shares in a company. Then one is not merely entitled to dividends on the shares one owns; if one owns all the shares, one is entitled to the whole income of the company and not just dividends. That is the basic reason why share prices can never
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be a fair basis of valuation when buying the whole of the shares in a company.
We are not going to press this Amendment. We have given up pressing Amendments to change the basis of compensation. We are trying to get fairness through the arbitration tribunal. But I cannot resist the opportunity once more of saying to the Government that they really are on a wholly false intellectual basis in the case they are making. That is universally recognised by anybody of all Parties and of none who know anything at all about this subject.
12.40 p.m.
Lord TREFGARNE: My Lords, I am obliged to my noble friend Lord Carr for his speech. There is one problem. One unfortunate company is quoted and will not therefore be able to have recourse to the arbitrators. All the shares of that company will be acquired quite simply on a calculation based upon the prices that prevailed on the Stock Exchange at the particular time. I feel very strongly on this matter. I do not think that the interests in particular of that quoted company are in any way properly represented by the provisions in this Bill.
On Question, Amendment negatived.
12.42 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 155:
Page 53, line 34, leave out from the beginning to ("the") in line 36 and insert—
("the arbitration tribunal, in determining the base value of the company's securities in accordance with subsection (1) above, may have regard to".)
The noble Lord said: My Lords, Amendment No. 155 naturally follows the debate which has just taken place on Amendments Nos.153 and 154. The point was discussed in Committee when I moved a similar Amendment. The noble Lord, Lord Winter bottom, said that the Government would consider the arguments that I put forward. The wording of the Bill gives the impression that a Stock Exchange quotation of a parent company is relevant in all cases and also that that quotation is of primary importance. Moreover, the Bill as drafted obliges that to be taken into account; it is obligatory. Our Amendment would

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make it one of the factors that can be taken into account. It is not obligatory; it does not have to be taken into account. We believe this would put this into the right perspective.
I will not repeat the arguments and illustrations that have been given in previous debates that a parent company's quotation may have no relevance at all to the value of a subsidiary. We now await the Government's views after their reconsideration in accordance with Lord Winterbottom's undertaking.
Lord WINTER BOTTOM: My Lords, as the noble Lord has said, there was considerable discussion on this Amendment at an earlier stage. Clause 39(6) provides that, where a vesting company represents a substantial proportion of a quoted parent, the share quotation of that parent shall be one of the relevant factors. I must emphasise that this is only one of the relevant factors. The basic requirement on the Tribunal is to take account of all relevant factors in determining the notional share quotation of an unlisted company. The inclusion of Clause 39(6) merely ensures that the quote of a parent is not excluded from the considerations when it is strictly relevant.
The application of Clause 39(6) is strictly limited. First it applies only where an acquired company represents a sustantial part of a quoted group. In other words, Clause 39(6) will apply only where the activities of the acquired company are clearly a major factor in determining the quotation of the parent. It is not our intention to apply Clause 39(6) where the activities of the acquired company are less than major in determining the share price of the parent.
Secondly, noble Lords in all fairness will agree that it is clearly stated in Clause 39(6) that the provisions of that subsection define only one of the relevant factors. It is not provided that Clause 39(6) should be the overriding factor; any other factor which is of relevance to the valuation of an acquired company will also be taken into account. The significance of Clause 39(6) in any particular case will depend on just how substantial a part of the quoted group an acquired company is. In Committee, it was made clear that the assurance given by my noble friend Lord Beswick
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to the British Insurance Association that the parent company quotation would not be overriding held good.
Amendment No. 155 would limit the application of Clause 39(6) unnecessarily. It would make the arbitration tribunal responsible for deciding whether or not to take into consideration a parent's share quotation. This could lead to an anomalous situation where, for example, if the arbitration tribunal decided not to consider a parent's quotation where it was in fact strictly relevant.
Clause 39(6) is so drafted that it can be applied, in negotiations, in the way most appropriate to the particular valuation in question. Any reduction in the flexibility of application of the provision—which could result from the inclusion of the Amendment—could be detrimental to either party in the negotiations.
May I point out that although I have failed to satisfy noble Lords that the basis of valuation was wholly fair, nevertheless that is not the end of the day. Negotiations between the stockholder's representative and the Secretary of State, and, subsequently, the work of the tribunal must have the ultimate influence on what the original stockholder receives. For this reason, I hope that the noble Lord will withdraw his Amendment.
Lord CAMPBELL of CROY: My Lords, the noble Lord has given a better reply than we received at Committee stage. The Government have been able to consider carefully what was said then. The noble Lord, who is not a Minister at the Department of Industry, has made a much more forthcoming reply today. We are grateful for that. He said that this particular factor—I think I have his words correctly—would be taken into account only when it was strictly relevant. As we had originally read the Bill, that was not clear. It looked as though this factor was to be relevant in all cases, and that it was obligatory that it should be taken into account. Therefore I cannot see why the Government cannot accept the wording of our Amendment. The noble Lord has come a long way, if not all the way, to meeting the change in the words that we suggested. I suggest that the tribunal should have either the noble Lord's reply as guidance before them, or it should be included and elaborated on

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if necessary in some wider remit so that it is made perfectly clear that what the noble Lord has said is a better description of what is to be done than what might be interpreted from the Bill.
This has indicated that it was well worth while putting down this Amendment so that the subject could be considered again at Report stage. We have had a more satisfactory reply from the Government, though we would prefer to see this made clear in the text of the Bill. I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
The DEPUTY SPEAKER (Lord Derwent): My Lords, there is a misprint in Amendment No. 156. In line 3 the word "divided" is incorrect. It should read "dividend".
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 156:
Page 53, line 37, at end insert—
("( ) In determining the base value of any securities of a company in accordance with subsection (I) above, it shall be assumed that dividend had been paid by that company of such an amount as would have been appropriate if no restrictions as to the payment of dividends had been imposed on the company under the terms and conditions of a temporary loan made to the company by the Secretary of State for Defence.")
The noble Lord said: My Lords, this is an Amendment on two specific narrow points. We were rather disappointed with the replies that we received at the Committee stage. When certain loans are made, one of the provisions included is that there should be a limit on the dividend. If the dividend is liable to be one of the considerations which is borne in mind in producing this regrettable notional Stock Exchange price, it seems unjust that the dividend which is so limited should be used as a basis of valuation.
The answer that the noble Lord, Lord Winter bottom, gave us during Committee stage was that it would be up to the stockholder's representative to make a case when it came to arbitration. We are not very convinced by that argument. After all, it is possible that the stockholder's representatives may be able to persuade the tribunal to accept the company's view of what the hypothetical situation would have been in 1973/74
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had they then been quoted on the Stock Exchange, and also the various consequences that would have flowed from that.
But the clause already contains a number of pointers intended to guide the arbitration tribunal through the minefield of all the guess work that we like to call the hypothetical assumptions that would be required of them. They have to assume under subsection (4) that the securities actually issued in the middle of the relevant days had been issued before the first relevant day. Under subsection (5) they must assume that the assets of the company were not subject to any charge, whether or not that was the case. Under subsection (7) they have to suppose that the assets not actually vested in the company until the day of transfer were vested in it before the relevant days. Similarly, under subsection (9) they arc asked to assume that a sum paid to a company had never been paid to it, and then to make three further separate assumptions under subsection (12). Therefore we propose that one further assumption should be made by the tribunal. It is one which they ought to make and which, if it is not written into the Bill, they might fail to take into account among all the other hypotheses which are required of them.
It is worth pointing out that in these two specific cases we are taking only about two loans. The one made to Yarrows in 1971 is specifically mentioned in the Bill and is to be taken over under Clause I5(3)(f). The other loan, which was made to Brooke Marine Limited, has already been repaid in full. Therefore, as I say, this is a point of very narrow application but there is the possibility of injustice if this small point is not added to the Bill. My Lords, I beg to move.
Lord WINTERBOTTOM: My Lords, doubtless noble Lords will have noticed that I stick tightly to my brief. As the noble Lord, Lord Campbell of Croy, so generously remarked when he withdrew the last Amendment, he recognises that we listen to what is said by noble Lords opposite: if we can meet them, we do, and if we cannot meet them we try to explain with great clarity the reasons why that is so. As I understand it, the Amendment we are now discussing seeks to specify one of the relevant factors to which the

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arbitration tribunal should have regard as a relevant factor when determining the base value of unquoted securities. When an identical Amendment was moved in Committee it was withdrawn following an assurance I gave. As I said earlier, my noble friends and I have given this careful consideration, but I must repeat that I cannot reverse the rejection that I put to your Lordships on the last occasion. I hope to be able to clarify the reasons for that. The question has to be argued within the context of the provisions included in Clause 39, for varying unquoted securities for compensation purposes.
Clause 39 provides that the base value of these securities is to be determined by agreement between the Secretary of State and the stockholders' representative or, in default, by arbitration on the basis of an imputed Stock Exchange quotation taking account of all relevant factors. The arbitration tribunal is required to have regard to all factors which are relevant to the determination of the base value of these securities. It is therefore inevitable that in the negotiations both parties must have equal regard to the same factors. The provisions are deliberately widely drawn in the interests of practicability and fairness. Since 42 of the 43 scheduled companies are unlisted, it was necessary to devise basic terms of common application which could nevertheless be applied with equal fairness to the differing underlying conditions of the many companies covered by the Bill.
I hope it will be helpful to noble Lords if I repeat again the assurance given by my noble friend. Specific factors which might be considered to be relevant are not listed, because their relevance could vary from company to company. It is for the stockholders' representative to make a case for including a factor among the relevant factors. Since the companies concerned are free to put their cases to the Secretary of State as to why the conditions attached to the Ministry of Defence loan should be disregarded, this Amendment is unnecessary unless, of course, companies do not feel that their case is sufficiently strong to persuade the Secretary of State. We believe that the Amendment is unnecessary and also that it would destroy the generality of the phrase "all relevant factors". To specify certain relevant factors would give particular weight to the specified factors and, conversely,
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could downgrade the significance of those factors not specified. That would unbalance the terms and could well undermine their inherent fairness as related to particular companies.
Lord HAWKE: My Lords, I am sorry to interrupt the noble Lord but is that last statement consistent with the little bit of the Bill which runs from line 34 to line 38, where it specifics that "relevant factors" must be taken into consideration?
Lord WINTERBOTTOM: My Lords, as regards the relevant factors, if I might just read what we said about the previous Amendment, we refer to various elements—paragraphs (a), (b) and (c) of subsection (6). Those are relevant factors which the arbitration tribunal shall take into account in determining the base value of the company's securities. There may be a certain strength in the logic of the argument put forward by the noble Lord, but in this particular case we believe that the suggestion put by the noble Lord on moving this Amendment might cause the downgrading of other unmentioned relevant factors while we wish all relevant factors to be taken into consideration in negotiations between the stockholders' representative and the Secretary of State.
Lord HAWKE: Yes, my Lords, that really rather confirms what I thought. When I was listening to this debate I thought: "Why on earth leave in lines 34–38? Surely the tribunal know what the relevant factors are?" Now the noble Lord is saying that the relevant factors should not be adumbrated because they remove the weight put on the unknown relevant factors. I agree with him.
Lord WINTERBOTTOM: All or none, in fact, my Lords?
Lord HAWKE: Yes.
Lord WINTERBOTTOM: We want to keep in all the relevant factors. I reject this Amendment because of the freedom which is provided in the clause for companies with valid cases to have factors considered as relevant for the purpose of the valuation. It is unnecessary also because it destroys the flexibility of approach in the valuation process and could be potentially damaging to the interests of shareholders. It is for this reason, and

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I hope because of the clarity of my explanation, that I hope that this Amendment will be withdrawn.
The Earl of LAUDERDALE: My Lords, somebody claimed once that this Bill was a great act of imagination. After what we have just heard, I think it is an act of hallucination. I wonder sometimes whether we are not reading Alice Through the Looking Glass as we pick our way through the thickets of hypothesis. We all know perfectly well and accept that Government loans are given to companies very often on the basis that their servicing takes priority over everything else and there is no danger of conflict with the payment of dividends. That is well understood and nobody complains about that. Equally we understand that this matter has been cleared up in the case of Yarrows, whose loan has been taken over by the Secretary of State anyway, and in the case of Brooke Marine, where it has already been repaid. But we want to make quite sure that the phrase "all relevant" does include "all relevant".
What we have just heard from the noble Lord is to the effect that if you specify any relevant factors you then downgrade the rest and, therefore, if you add one more you downgrade the rest that much more. But the Government have already put in a lot of relevant factors which have to be considered, and all of them hypothesi It has to be assumed that securities were issued before the relevant day; it has to be assumed that the assets have not been subject to a charge; it has to be assumed that the assets were vested in the relevant company before the relevant day. There are three more assumptions in sub-section (12). If it is the case that to add one further relevant factor which should go before the tribunal, ultimately, would downgrade the rest, then take the whole lot out. The noble Lord has just said that if you specify certain relevant factors—and the Bill lists half a dozen or so—that downgrades the rest. Well, take them all out. But when you list some you make them more relevant than others. Therefore, we want to make sure that this particular point is covered and is really taken care of in the arbitration tribunal. Are we to take it from what the noble Lord says that, if the stockholders' representative makes the point in his negotiations with
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the Secretary of State, that immediately becomes a relevant factor and ipso facto should it go to arbitration? If that were so, I for one would be less unhappy. But I am bound to say that the argument we have had is most unsatisfactory, as indeed are the purposes of the Bill. I hope I shall never be deterred from detecting a cheat or what I think to be a cheat by the menaces of a ruffian. I am not saying that the noble Lord opposite is a ruffian, but I know that he enjoys Dr. Johnson as much as I do.
Lord STRATHCONA and MOUNT ROYAL: My Lords, I think the noble Lord will have got the drift of the fact that he has totally failed to satisfy at least two of my noble friends and I believe that the noble Earl, Lord Lauderdale, reinforced a point made by the noble Lord, Lord Hawke, that the Minister in sticking to his brief—which is a regrettably narrow brief—seems to be trying to have it both ways. He did not apparently pay any regard to the fact that I mentioned a whole series of assumptions which it says are to be taken into consideration. He then objected to adding another one on the grounds—which struck me as a proper old Parliamentary draftsman-type argument—that this would destroy the generality of the clause. I do not mind terribly if it does destroy the generality of the clause, not that I think it does, because as I have said to him several times we are only dealing with two specific cases. The best thing we can do is to say that we assume he is trying to do his best. We know it is only two particular cases that are being discussed and perhaps some of the things that are being said in the two Houses of Parliament will be useful ammunition in case these assumptions are not properly taken into consideration when the cases are being considered. I do not think we can do anything further at this juncture so I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
1.5 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 156A:
Page 53, line 47, at end insert—
("(7A) If any property rights or liabilities belonging to the company in connection with

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the business of repairing, refitting, or maintaining ships carried on by it other than at a shipyard or other works in which the company had an interest in possession on the initial date shall have been transferred or granted to any person and the consideration for the transfer or grant shall have been received by the holders of securities of the company or any of them, then, for the purpose of determining the base value of any securities of the company in accordance with subsection (1) above, it shall be assumed that immediately before each of the relevant days such property rights or liabilities were not vested in the company.").
The noble Lord said: My Lords, this Amendment was discussed with Amendment No. 138A on the ship repairing industry and that Amendment No. 138A, was accepted by your Lordships' House. I, therefore, beg to move this Amendment formally.
On Question, Amendment agreed to.
Clause 40 [The appropriate deduction]:
Lord CARR of HADLEY Lord CARR of HADLEY moved Amendment No. 157:
Page 56, line 42, at end insert—
("and that the word "prior" in each of subsections (1) and (2) of section 24 above were omitted").
The noble Lord said: My Lords, in Committee we moved an Amendment which would have removed from Clause 24 the word "prior". On that occcasion, the Government rejected the Amendment on the grounds that the need for prior approval by the Secretary of State for an excessive dividend would prevent directors paying out dividends in the hope of getting retrospective approval and then finding themselves penalised if they did not get it. Taking account of the reasons given by the Government in Committee, we are now moving this Amendment to Clause 40 of the Bill—compared with the Clause 24 in Committee. This new Amendment, we believe, applies only to the situation where deductions from compensation are to be made under Clause 39 due to excessive payments of dividend made between February 1974 and March 1975. We believe, therefore, that this Amendment does not affect the liability of directors at all as we were advised our previous one did.
My Lords, the Bill provides that the restrictions on dividends contained in Clauses 24 and 25 are to apply by virtue of Clause 59 to the period February 1974
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to March 1975. The restrictions on dividends are, we have argued, unfair and could produce ridiculously low levels of dividend. The Government have acknowledged this but have said that that was why the Secretary of State could give his "prior" approval to the payments of dividends which would exceed the level formally permitted. However, just the same disadvantageous interpretation of a dividend formula could affect a company in this period between February 1974 and March 1975. But because the provisions of the Bill were not announced until May 1975 when the Bill was published, there would have been no possibility to seek prior approval to pay greater amounts of dividend during this period we are talking about—February 1974 to March 1975—nor could the Secretary of State authorise such payments even if he wanted to.
So all this Amendment does is to enable the Secretary of State to use his discretion—and I emphasise that it is only to use his discretion—to grant retrospective approval for excessive dividend payments made before the Bill was published and before the prior approval which the Bill requires could have been obtained. In the period we are talking about, it was impossible to ask for prior approval because the Bill had not been published and the statement had not been made. We believe that this period—this blank period, if can call it that; this vacuum period—needs covering and we believe that this new Amendment, unlike our previous one in Committee, has the limited purpose that we desire. I beg to move.
The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey): My Lords, this Amendment is identical in terms to one negatived in Committee, but as the noble Lord, Lord Carr of Hadley, has pointed out, the context is slightly different. This Amendment highlights the fact that Clause 24, as applied by Clause 40, effectively prohibits any approvals of dividend or interest payments above the permitted level. In other words, the Secretary of State does not have the discretion which the noble Lord spoke of and this Amendment seeks to give it to him. But to understand why the Bill contains such a prohibition we have to have regard to the overall purpose of the provisions of Clause 40 and the

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possible practical implications of Clause 24.
Clause 24, which has already been looked at very carefully, is unique among the safeguarding provisions in that it is the only one which does not allow for retrospective approval. There are good reasons for that which I think have been given in relation to quoted securities and there are likely to be a great many security holders. If an excessive dividend payment were made, and subsequently approval was sought and withheld, it would be very difficult for the dividends to be reclaimed. As a result, the directors would automatically become liable. The requirement for prior approval therefore ensures that the directors are duly warned of the danger of doing something that could well be a serious error of judgment on their part.
Turning from that explanation to Clause 40, as I hope noble Lords will appreciate, Clause 40 is not a penalising clause. No person could be made personally liable in respect of any transaction to which Clause 40 relates. The clause provides no more than that the compensation shall be adjusted in line with any abnormal financial transactions in the period between the reference period and the start of safeguarding, which in most cases is 17th March 1975. In effect, therefore, if shareholders receive unusually high dividends between the reference period and the start of safeguarding—and this is not purely hypothetical but is a real case—this is treated in the Bill, and particularly in this clause, as an advance of compensation. Nobody suffers. In fact, in these cases where Clause 40 will apply it could be argued that the shareholders have benefited because they have received at least part of their compensation earlier than they would otherwise have done. Against that background, the question of any approval procedure under Clause 40, particularly in relation to dividends, is of little relevance. With that explanation, although I acknowledge that there is logic in what the noble Lord, Lord Carr, has said, I would ask the noble Lord not to press his Amendment.
Lord CARR of HADLEY: My Lords, I am sure that the noble and learned Lord will understand that particularly for a non-lawyer it is not easy to take in the
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full import of what he has said. He himself admits that there was a logic in the case that I made. I appreciate the noble and learned Lord's explanation and I should like to study it. If I am satisfied by it, as I may well be when I have had a chance to consider it, that will settle the matter. I am sure he will understand that if I am not satisfied then I must at least reserve the right to return to it at Third Reading, although I shall certainly not do that unless I feel that I cannot be satisfied by his explanation. On that basis, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL had given Notice of his intention to move Amendment No. 158:
Page 57, line 12, leave out from beginning to ("there") in line 15 and insert ("on the date of transfer").
The noble Lord said: My Lords, I believe that on reading carefully what was said in Committee stage in another place the answer was considered to be satisfactory and therefore I do not intend to move this Amendment.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 159:
Page 57, line 16, leave out from first ("of") to end of line 19, and insert ("any sum the right to repayment of which could be treated as a security under section 22(6) above").
The noble Lord said: In connection with this Amendment, the noble Earl, Lord Ferrers, raised a point in connection with Amendment No. 138. That was an Amendment which we saw as consequential, and at that time I acknowledged the possibility that we might have to look again at the particular wording. The same point arises in relation to this Amendment No. 159. We are giving the matter consideration and noble Lords will appreciate that if we come to the view that the point is a sound one—and we may yet do that—then we shall take a further opportunity at a later stage to alter the words contained in Amendments Nos. 138 and 159 in order to put the matter beyond doubt. I beg to move.
Lord STRATHCONA and MOUNT ROYAL: My Lords, that is entirely satisfactory. I am grateful to the noble and learned Lord. I was going to raise

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the point, but we will await his explanation and will see what has to be done at Third Reading, if necessary.
On Question, Amendment agreed to.
1.18 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 160:
Page 57, line 19, at end insert—
("and the Secretary of State has not later than the prescribed date notified to the stock-holders' representative his intention that this subsection should apply in relation to such repayment or part repayment.
For the purposes of this subsection "the prescribed date" shall mean—

(a) in the case of the application of this subsection to a part repayment of the principal of a particular debt, the date of service of a notice under section 21(1) above in respect of the amount of the principal of that debt remaining outstanding immediately before the date of transfer; and

(b) in the case of its application to the repayment of the whole of the principal of a particular debt, a date 9 months after the date of transfer.")

The noble Lord said: My Lords, I hope we can deal with this Amendment fairly briefly. During the Committee stage the Government asserted that our argument was ill-founded because no debt would be treated as a security unless a notice had been served in respect of it, but our advice is that this is wrong, because Clause 39(5) applies to the situation where, if a notice had been served, the debt would have been treated as a security. No notice can be served if the loan has been repaid, and the Amendment provides a time limit within which the intention of the Secretary of State must be made known to the stockholders' representative.
Lord McCLUSKEY: My Lords, I should like to ask the noble Lord a question on this. He referred to Clause 39(5). Does he mean Clause 40(5)?
Lord STRATHCONA and MOUNT ROYAL: My Lords, I am sure that if the noble and learned Lord has looked it up while I have been speaking he is more likely to be right than I am, but Clause 39 is what it says in my brief.
Lord McCLUSKEY: My Lords, I merely asked because I think this was
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originally Clause 39 and it may be desirable that it should be accurate before we discuss it further.
Lord STRATHCONA and MOUNT ROYAL: My Lords, I think the noble and learned Lord is probably right and that what has happened is that there has been a slippage of the clause numbering which we have not spotted, in which case I regret it. I am sure that the noble and learned Lord is correct and in fact I should have referred to Clause 40(5). I beg to move.
Lord McCLUSKEY: My Lords, this is not a matter which takes me entirely by surprise and I will seek to answer it in this way. The Amendment seeks to prescribe that no deduction shall be made unless the Secretary of State has notified the stockholders' representative that a deduction will be made, in the case of a part repayment by the time the notice is served under Clause 22 and in the case of a total repayment, by nine months after the date of transfer. In the Government's view this is unnecessary and at this stage it is intended that no debt shall be treated as a security unless a notice is served in respect of it. There may be—and I acknowledge the possibility at least, although I cannot go further at the moment—some substance in the doubt expressed by the noble Lord, but I think that doubt would be caught up by the Amendment about which I was speaking a little earlier, which we are considering in relation to what were Amendments Nos.138 and 139. I think the point will then be met. Let me make it quite clear that it is not intended that any debt will be treated as a security unless notice is served in respect of it.
Lord STRATHCONA and MOUNT ROYAL: My Lords, I am sure that explanation will be satisfactory to those who understand these things better than I. I am very happy to withdraw the Amendment for the time being in the hope that we are all seeking to achieve the same objective.
Amendment, by leave, withdrawn.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 161:
Page 58, line 19, leave out ("22(7)(a)") and insert ("22(6)").
On Question, Amendment agreed to.
Clause 42 [Stockholders' representatives]:
1.21 p.m.
Lord REDESDALE Lord REDESDALE moved Amendment No. 162:
Page 59, line 19, leave out from ("every") to ("are") and insert ("class of securities which").
The noble Lord said: My Lords, when the noble Lord, Lord Winterbottom, on Committee began to say that he had sympathy my heart leapt. But I am afraid it was sympathy in the wrong sense, in that the noble Lord was sympathising that he was not actually going to say anything about it, so I was disappointed. As I said at the time, I felt the answer was not satisfactory. I said as much and reserved the right to come back at this stage, which I am now doing, with the same Amendment.
My Lords, having read very carefully what was said by the noble Lord, and I know he said it in all good faith, I do not really agree with what he says today. When the noble Lord said there would be meetings for different classes of securities but it would still be before the same stockholders' representative, I did not think this got us any further. I did not think it was really very fair on the basis that the different stockholders had different interests, and these interests ought to be represented by different people.
The noble Lord went on to say that there shall be one stockholders' representative for each company. All right, but he cannot have it both ways. If one stock-holder for one company gets one answer, another could quite easily get a different answer for a different company. Frankly, you can turn this little argument inside out. The noble Lord, Lord Melchett, at times has talked about circular arguments. This one disappears in a blue flash at the end, because you can take it further on.
My Lords, there is another point I wanted to raise; and here, the noble Lord, Lord Winterbottom, dug a little pit into which he jumped, and now I am throwing him a rope, kindly I hope, to pull himself out of this little elephant trap. The noble Lord said that different stock-holders' representatives for different classes would cause delay; if there were delay it would be caused because there was a certain unfairness. The noble Lord
1672
is a fair person, so I hope he will reconsider this point because otherwise, the delay only emphasises the point that there is unfairness. This unfairness should have been seen to. I hope that the noble Lord will come back at this stage and, being a reasonable man, reconsider what he has said. I beg to move.
Lord WINTERBOTTOM: My Lords, I thank the noble Lord, Lord Redesdale, for trying to help me out of an elephant trap. I have got into enough trouble from elephants in this debate to last me for the whole Parliamentary Session. But when we discussed several Amendments on Committee stage, I explained, I hope with clarity, why we could not accept that. May I give your Lordships once again our reasons why we still cannot accept them.
My Lords, Amendment No. 162 would have the effect of appointing a stockholder's representative for each class of security for each company, and the other Amendment is consequential to it. One might have three stockholders' representatives for a single company; the ordinary shareholders, the first preference and the second preference shareholders, something like that. We believe this would be a harmful situation. Schedule 6 provides that all the holders of the securities in a company shall appoint their own stockholders' representative who will represent the various interests of that company in negotiations with the Secretary of State, and if it becomes necessary, before the Arbitration Tribunal.
The stockholders' representative may call a general meeting of all the holders, or alternatively, he may call a meeting of particular classes of stockholders where matters affecting these classes exclusively are to be discussed. At both types of meeting, the procedure governing fairness for all would rule and, in particular, ensure safeguards for the minority shareholders. Every stockholder is entitled to one vote for each I by normal values of the securities held by them. To have more than one stockholders' representative per company could open the way to certain groups of shareholders being treated differently, either more or less advantageously than other groups. Further, it could delay the process of negotiation which would be detrimental to the shareholders.

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My Lords, certain of the earlier arguments we have had were finely balanced, but, in this case, I am quite clear that to have more than one stockholders' representative for a single company might well bring about unfair treatment of some other class of stockholder. In preparing a negotiating machine, it is clear that one unit—namely, a company—must be represented by one stockholders' representative. We could not have two or three stockholders' representatives arguing with differing voices in the interests of one single judicial person, to wit, a company. I believe it would only cause confusion and delay. That is the last thing we want, and for this reason, I hope your Lordships will not accept the Amendment.
Viscount SIMON: My Lords, I have not taken part in the earlier discussions on this point, but I am rather surprised by what has been said by the noble Lord, Lord Winterbottom. We are legislating to cover every possible case, and it may be that the sort of case I have in mind does not exist. We know that what have been acquired have been described as wholly-owned subsidiaries of other companies or groups; but there may be, perhaps, in the subsidiary companies security holders of debentures, or whatever it may be. Surely, their interests might well be at variance with the interests of the equity holders.
It seems to me hard for a single representative to represent fairly the interests of classes of shareholders whose interests as between one class and another may be different. Perhaps I misunderstood the point, but it seems to me eminently sensible that the holders of any class of securities should be represented separately from the holders of other classes of securities, whose interests may not be the same as theirs.
Lord WINTERBOTTOM: My Lords, with permission, may I answer that point, because the noble Viscount, Lord Simon, has given me a chance to clarify the position. May I explain the procedure as I see it happening? We have a company with, say, three classes of shareholder. I would imagine that the stockholders' representative would call a general meeting of all classes of shareholder, each with
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voting powers equivalent to £1 unit shares; and within this general meeting, agreement would be reached between the various interests within that one company. In fact there would be preparatory work for the negotiations that the stockholders' representative would conduct on behalf of all classes of stockholders with the Secretary of State.
Obviously, there would be preparatory meetings and discussions when the interests of the various individual differing groups of stockholders would be appointed and then the company would represent these interests with a single voice to the Secretary of State. That is how it is seen as working. I believe that any attempt to complicate the method of negotiation by having more than one type of stock-holders' representative could only be counter-productive.
Lord REDESDALE: My Lords, the noble Lord, Lord Winterbottom, did a very fine action replay of what happened before. I am afraid it makes me even more dissatisfied with the answer than before; I am sorry. I think all he has said has highlighted the unfairness of this situation. I feel that each class of stockholder is now going to be treated unfairly, because they cannot be represented by one person when the interests of each class of stockholder can be different. I feel that this highlights the unfairness of compensation all the way through. However, unhappily, I will beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Clause 49 [Duty of British Shipbuilders to consult etc., with Northern Ireland state-controlled.]:
1.31 p.m.
Lord MELCHETT Lord MELCHETT moved Amendment No. 164:
Page 65, line 26, leave out from ("their") to end of line 32 and insert ("respective functions, British Aerospace and British Shipbuilders shall each have full regard to the need to consult, and wherever possible coordinate their activities with those of, any company incorporated in Northern Ireland which is engaged in one or more of the relevant activities and at any general meeting of which the Crown is entitled to exercise or to control the exercise of at least one-third of I the voting power.

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(2) In subsection (1) above "relevant activities" means—

(a) in relation to British Aerospace, the activities specified in subsection (1) of section 2 above, and

(b) in relation to British Shipbuilders, the activities specified in subsection (3) of that section.").

The noble Lord said: I beg to move Amendment No. 164. I made it clear in the Committee stage that the Government were as anxious as noble Lords opposite to see proper coordination between the new Corporations and publicly-owned companies in Northern Ireland which are carrying out the same activities. We believe that Clause 49 should secure this objective so far as British Shipbuilders and Harland and Wolff are concerned. I explained in Committee how the arrangements are working for British Shipbuilders and Harland and Wolff when we discussed Amendment No. 193. I accept that the principle is just as important for the aircraft industry in Great Britain and Northern Ireland, and I am, therefore, bringing forward this Amendment, which extends the scope of the clause to cover British Aerospace and Short Brothers and Harland.
Both Corporations in carrying out their functions will now be required to consult and wherever possible co-ordinate their activities with any publicly-controlled company incorporated in Northern Ireland carrying on those activities. This means the requirements on both British Shipbuilders so far as Harland and Wolff are concerned and on British Aerospace in relation to Short Brothers and Harland. I should make it clear that this clause, as now extended, in no way departs from the independence of the Northern Ireland companies. In particular, it could not result in either Corporation being required to provide work for these companies, so cutting back on their own employment requirements. But it should ensure that the Corporations and the Northern Ireland companies are in a better position to face foreign competition.
My Lords, this Amendment meets the assurance I gave during our debates in the Committee stage. It aims to meet an objective which I believe noble Lords opposite and I want to achieve, and we believe that these provisions are the best way of achieving our common objective.
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I hope your Lordships will accept the Amendment. I beg to move.
Viscount ROCHDALE: My Lords, the Amendment which we are now discussing, No. 164, certainly meets the point that my noble friend Lord Brookeborough and I were trying to make when we wanted to insert into this clause British Aerospace and the Northern Ireland company, Short Brothers and Harland. The noble Lord's Amendment entirely meets our point. We are extremely grateful to him for having put down this Amendment. As he will have noticed, we have withdrawn the Amendments which we had put down, which were intended to meet the same objective. Therefore, I accept this Amendment very readily. The noble Lord, Lord Melchett, went on to talk about what really comes under the next Amendment, which is quite a separate point. Perhaps I could speak on that when we come to the next Amendment.
On Question, Amendment agreed to.
Viscount ROCHDALE Viscount ROCHDALE moved Amendment No. 169:
Page 65, line 32, at end insert—
"(2) In carrying out their obligations the Corporations shall make available to the bodies corporate referred to in subsection (I) above any information or facilities which the said bodies corporate—

(a) could reasonably expect to have had access to as members of their respective United Kingdom industries before vesting date; and

(b) will be made available by each Corporation to their wholly owned subsidiaries after vesting date.

(3) The information or facilities made available pursuant to subsection (2) above may be the subject of such reasonable charges as are agreed between the parties."
The noble Viscount said: My Lords, this Amendment, as I said a moment ago, deals with a separate point. But, before I come to the main point, may I deal very briefly with a minor point: it is an important point, but a minor point, that my noble friend Lord Brookeborough made at the end of the debate we had in Committee. I may say that my noble friend is very sorry that, I think for reasons of transportation, he has been unable to be here this afternoon. He made the point, when we were discussing the clause in Committee, regarding the financing of Harland and Wolff and

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the way in which the present method of financing made considerable inroads into the social budget of Northern Ireland. This was, of course, a major and complicated matter, and the noble Lord, Lord Melchett, rightly I am sure, in order to save time—he drew attention to the fact that he had pages of notes on this—said that he would kindly write to my noble friend on this point. All I want to say is that the noble friend has written a very well thought out letter on this point. He sent a copy, I believe, to my noble friend Lord Strathcona and he sent a copy to me. Obviously, we will consider it. It is not a matter for us to discuss further now.
I would merely make two points. One is that I am sure my noble friend Lord Brookeborough will not necessarily allow it to lie there but will be pressing the noble Lord from time to time, as appropriate. The second point is to ask the noble Lord, Lord Melchett, whether he would feel it possible to publish it in some way, so that it can be on the record, whether, if my noble friend put down a Question for Written Answer, that might be a way of dealing with it?
Having said that, can I now come to the main point at issue in my Amendment. This deals with the relationship between the Corporations and the Northern Ireland companies, as the noble Lord, Lord Melchett, has said. Obviously he agrees that something had to be put into the Bill, as it was in another place; otherwise, we should not have had Clause 49 in its present form at all. The question that my noble friend and I ask is this: does it go far enough? Does it leave too much to the good will and discretion of the present leaders of the Corporations, or the leaders at any particular time? In saying that, I do hope no one will accuse me of casting any aspersions or criticisms on the present incumbents. I am quite sure they are anxious to do all they can in this matter. But the fact remains that the heads of nationalised industries have a way of coming and going rather unexpectedly from time to time, and they cannot commit their successors. Therefore, we feel that something more is needed in the clause.
As it now stands, all that the Corporations have to do is to have full regard to the need to consult and wherever possible
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coordinate their activities with the companies in Northern Ireland. We do not think this goes nearly far enough. We think it can mean anything or nothing, depending on the individuals who are carrying out these considerations. The point I am most anxious to make is that we are not asking that these companies should have any more now than they have had in the past, as members of the United Kingdom shipbuilding industry—if I can speak primarily about shipbuilding, but the argument is just the same in the case of aerospace—and as members of their trade associations, who act as the industry's focal point. Nor do we want that these companies should have any more than other members of the industry who are now to be within the umbrellas of the Corporations.
Again, lest there be any misunderstanding—I say this because I have heard some mutterings about this—we are certainly not asking that these companies in Northern Ireland should have any access to what might be regarded as trade secrets from Swan Hunter or any of the other companies that come under the Corporations, any more than they would expect to have access to the trade secrets of Harland and Wolff. That does not mean to say that there will not continue to be a healthy interchange of know-how, as is the case, I believe, in any progressive industry today
In order to make it absolutely certain that the question of trade secrets and improper information getting across does not occur, I would draw your Lordships' attention to the fact that in our Amendment the two criteria which we include in Clause 49(2)(a) and (2)(b) are connected together by "and" and not by "or", so that the circumstances that we are considering in both those criteria have to be complied with. What we want to make sure is that when the Bill becomes an Act and the Corporations come into being with their subsidiaries, then the Northern Ireland companies will be in no worse or weaker position than they are today. Without some such Amendment as we have put down, we believe they will be, through no fault of their own.
I know that the noble Lord, Lord Melchett, has said, both today and in Committee, that he believed there was nothing much between us and that our intentions

1679
were the same. I am delighted to hear that, but I am still doubtful. I do not want to repeat what I have already said in Committee, but I should like to remind your Lordships of the various areas where Harland and Wolff have today access as of right to information, discussion and facilities through the trade associations or other central bodies to which they now belong. I referred in Committee to technical research—on matters of policy particularly—market research and overseas promotions.
There are of course other areas. For instance, one which is very important is the way in which Harland and Wolff can be associated with the shipbuilding companies of Western Europe. There is an association that deals with that. There is also a committee which is a link between the shipbuilding industries of the nine companies in the European Community. There are questions of standards, recruitment, financial matters, various discussions with Her Majesty's Government and—although this is slightly different it is very important—the question of national agreements. The wage systems in the industry are based on national agreements. Clause 7 of the Bill lays down that the Corporations have to go into this question of agreements with the trades unions. Yet those national agreements which the Corporations would make would affect the working of Harland and Wolff. Unless it is in on those discussions and has full access to the facts and figures and so on, it might be very seriously affected by agreements in which it had had no say in the past.
Those areas of work which I have itemised are the areas where the Corporations will step in and take over from the trade associations, the SRNA, the SBAC and so on. Where will the honourable Short Brothers and Harland stand? I have already quoted one particular example dealing with Clause 7 in the Bill. My noble friend and I say that there should be no doubt whatsoever that these companies should, as of right, have access to the information, facilities, facts and figures that they have had in the past through the various trading organisations that exist today. We have conferred and we make it quite clear that we are not expecting that they should get those facilities for nothing, but they should make payment
1680
for them where appropriate, just as they do now, whether by means of subscriptions to trade associations or actual payment for services which they have received.
The chief executives of these companies are very busy people and they do not want to be worried constantly as to whether or not they can get in on these discussions. They want to be there as of right and play their full part. That is why we have tried to amend this Amendment which we have put down so as to meet the doubts of the noble Lord, Lord Melchett, about the earlier Amendment we put down in Committee, when we used the word "assist". I recognise, as the noble Lord said, that that might have unfortunate connotations. We hope that this Amendment will meet the case, although from what the noble Lord said on the last Amendment, he still seems to think that the present clause is adequate. I am afraid we do not agree with him that the evidence so far suggests that it will be adequate, and I hope my noble friends will support me in this Amendment. I beg to move.
1.48 p.m.
Lord MELCHETT: My Lords, may I first respond to the point the noble Viscount made about the letter I wrote to his noble friend, the noble Lord, Lord Strathcona, with a copy to him. Certainly I would be happy to see it included in Hansard. I suggest that a Question for Written Answer might be the best way of elucidating the information. No doubt the noble Lord will pass that on to his noble friend, if I do not have a chance to do so in the near future.
My Lords, I regret to have to tell the noble Viscount from the start that the Amendment is not acceptable to the Government, as I think he deduced from the remarks I made about the Government's Amendment that we put down to this clause. The Government are as anxious as noble Lords opposite to see a proper degree of co-ordination between British Aerospace and Short Brothers and British Shipbuilders and Harland and Wolff, but they believe that the clause as it is now will achieve that. The noble Lord's Amendment adopts a means of achieving this objective which we do not consider to be the right one. It also goes considerably beyond what we want to see.

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If I may deal in a little detail with the text of the Amendment, in the first place I should like to point out to noble Lords that their Amendment is technically defective. By not amending the reference to Clause 2(3), it leaves out the clause applying solely to shipbuilding activities; it would not encompass Short Brothers and Harland and Wolff. However, we consider that the requirements to make available the same information and facilities as were available before is in any event unnecessary. All companies which remain outside the scope of our public ownership proposals will want this to be the position. We are, by our own Amendment, already putting Short Brothers and Harland and Wolff in a privileged position by virtue of Clause 49, and I do not think there is any need to go any further.
However, the intended requirement that the same information and facilities should be made available to Shorts and to Harland and Wolff as to the Corporations' wholly owned subsidiaries goes much beyond what we consider desirable. It could mean that Shorts and Harland and Wolff would in effect be treated as wholly-owned subsidiaries. Facilities could, for example, be interpreted as including finance, so that these two companies would be able to call on the financial resources of British Aerospace and British Shipbuilders. In our view, these companies should not be excessively integrated in the activities of the new Corporations.
As I explained during Second Reading debate, we feel strongly that these firms should continue to he considered primarily in the context of Northern Ireland. Given Short's importance to the economy of Northern Ireland, employing over 6,000 people, the Government believe that it should be controlled locally and should be ready to he the responsibility of any future devolved Administration. As to Harland and Wolff, ownership is vested with the Northern Ireland Department of Commerce. Both these companies however should be seen in the perspective of Northern Ireland as a whole, and this is the point I made during Second Reading and again at Committee stage.
As the noble Viscount knows far better than I, there is a background of 50 years of devolved Government in Northern Ireland, which traditionally
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and historically has dealt with industry in the Province. All parties in the Convention were agreed that they wanted an early return to a devolved Administration, and it remains the declared aim of Her Majesty's Government to achieve just that. At the same time, I do of course, as I have done all along, I hope, recognise the concern expressed by the noble Viscount and his noble friends.
In response I would say this. Of course Northern Ireland is part of the United Kingdom and of course there is a need for co-ordination. Hence our acceptance of Clause 49 and the Amendment that I have just moved to extend it to aerospace. In this way the two companies can retain the separate identities which we believe that they should have without becoming isolated from industry in Great Britain. For those reasons, and also given the technical defects in the noble Viscount's Amendment, I hope that he will not press it and that he will consider, on reflection, that the distance the Government have gone to meet the very proper concern which he and his noble friend have expressed about this clause, has been met to a large part by the Amendment I moved earlier this afternoon.
1.53 p.m.
Lord CAMPBELL of CROY: My Lords, I should like to speak immediately after the Government on this Amendment which has been moved and explained so well by my noble friend Lord Rochdale. We must ensure that there is proper co-operation between the new Corporations proposed in the Bill and the aircraft and shipbuilding companies in Northern Ireland. Previously, the Government have made no provision at all for this. It makes sense that there should be common services, and we believe that this should be written into the Bill. This addition cannot in any way affect the purposes of the Bill. It spells out the co-operation which ought to continue to take place with the companies in Northern Ireland. Naturally we welcomed earlier the Amendment which the noble Lord, Lord Melchett, moved and which has now been agreed to in the Bill, but that did not go nearly far enough. As my noble friend Lord Rochdale has explained, where there is a pooling of common services and facilities he has in this Amendment made provision for

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payment to be made. He recognises it is not a question of just getting free services.
The noble Lord, Lord Melchett, indicated that there was some defect in the drafting of this Amendment, and that it had not taken into account changes in the Bill at Committee stage. This is something that we can tidy up without any difficulty at Third Reading on Tuesday. May I say in extenuation that, because the Bill has been proceeding through your Lordships' House at the sort of speed which no Bill of this kind would ever go through in normal circumstances, with a minimum of time between the Committee and Report stages, and we have had great difficulty in getting the reprinted Bill in time, I think it is difficult for my noble friends to propose an Amendment which is perfect in its drafting.
Lord MELCHETT: My Lords, I did not make any reference to the Bill as amended in Committee. I stand subject to correction about this, but I think that the technical defect is the same as the one I pointed out when the Amendment was moved at Committee stage, and it is unaffected by any changes in the Bill since then. I may have got that wrong, but I did not make any reference to changes made at the Committee stage.
Lord CAMPBELL of CROY: My Lords, I was not able to get the exact point that the noble Lord made, and he has now made it. But my answer remains the same, that with the short time available, in many cases we simply had to put down straight away the Amendments which we wanted to raise again at the Report stage, and we had, with great difficulty, managed to get them down by last Friday night in readiness for the Report stage beginning on Monday. From this Bench I certainly would accept that there could be defects in the drafting of not only our own Amendments from the Front Bench but also some of my noble friends' Amendments, but I see no difficulty, if the principle is accepted, of a tidying up Amendment to put this right at Third Reading. After all, that is what Third Reading allows us to do in your Lordships' House. I hope for the reasons I have given that my noble friend will press his Amendment.
Lord O'NEILL of the MAINE: My Lords, I should like briefly to support the mover of this Amendment and to appeal to the noble Lord, Lord Melchett, if he can, to think again between now and Third Reading. I am one of those, coming from Northern Ireland, who wants to see a Northern Ireland Assembly reestablished as soon as possible, and I was not in favour of the feeling which existed there that a firm like Harland and Wolff should cease to be vested in the Department of Commerce and be much more integrated into London affairs, so I am in full agreement with the remarks the noble Lord made with regard to that.
At the same time it seemed to me, although I am not an expert in either the aircraft business or the shipyard business, that the Amendment moved by the noble Viscount was a most reasonable and sensible one. It seems to me that when Scotland has its own Assembly firms in that position in Scotland will be given the facilities for which the noble Viscount is asking. I therefore suggest that another think should perhaps take place between now and Third Reading, because it seems to me that the Amendment is reasonable and not in any way out of the way.
Viscount ROCHDALE: My Lords, naturally I am extremely sorry that the noble Lord, Lord Melchett, feels unable to accept this Amendment. I do not want to take up your Lordships' time too much, but there are three points I should like to make on the points he made. First, he suggested that Harland and Wolff would, as a result of this Amendment, find themselves in "privileged positions". They were the words he used. I am certain in my mind that, unless this Amendment is included, or at any rate the intention behind this Amendment is constantly worked on, those two companies will be under-privileged. They will be under-privileged in the sense that they are now, and have been in the past.
Then the noble Lord mentioned the question of finance. Somehow he read into this Amendment that it would be possible, as a result of this, for these companies to ask for, or expect to acquire through the Corporation, financial assistance. I cannot see how that could be,

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because a careful reading of the Amendment shows that information and facilities for which they are asking could only have been those which they could reasonably expect to have had before vesting date. How could that possibly apply to finance, and those same bits of information and facilities as the subsidiaries in the Corporations will now have? I cannot agree with him on that. Finally, he refers to inadequate drafting. Well, this is always possible, and if your Lordships now agree to putting this into the Bill then, if the
Resolved in the affirmative, and Amendment agreed to accordingly.
Clause 52 [Furnishing of information to the Secretary of State]:
2.8 p.m.
Lord CARR of HADLEY Lord CARR of HADLEY moved Amendment No. 171:
noble Lord feels that there are errors in the drafting, I feel sure that he will be able to come forward on Third Reading with appropriate alterations, and it will then be up to your Lordships to decide on the strength of his arguments which they prefer.
2 p.m.
On Question, Whether the said Amendment (No. 169) shall be agreed to?
Their Lordships divided: Contents, 73; Not-Contents, 43.

CONTENTS

Amory, V.

Grimston of Westbury, L.

Orr-Ewing, L.

Ampthill, L.

Hailsham of Saint Marylebone, L.

Platt, L.

Balfour of Inchrye, L.

Hanworth, V.

Rankeillour, L.

Barrington, V.

Harmar-Nicholls, L.

Redesdale, L.

Beaumont of Whitley, L.

Hawke, L.

Rochdale, V.

Belstead, L.

Henley, L.

St. Davids, V.

Berkeley, B.

Hereford, V.

Sandys, L.

Broadbridge, L.

Hornsby-Smith, B.

Seear, B.

Byers, L.

Jessel, L.

Sempill, Ly.

Caccia, L.

Killearn, L.

Simon, V.

Campbell of Croy, L.

Lauderdale, E.

Skelmersdale, L.

Carr of Hadley, L.

Lindsey and Abingdon, E.

Stamp, L.

Chelwood, L.

Long, V.

Strathcona and Mount Royal, L

Clancarty, E.

Lucas of Chilworth, L.

Sudeley, L.

Colville of Culross, V.

Lyell, L.

Thorneycroft, L.

Cullen of Ashbourne, L.

Mancroft, L.

Trefgarne, L.

Daventry, V.

Molson, L.

Trevelyan, L.

Denham, L. [Teller.]

Monck, V.

Vickers, B.

Drumalbyn, L.

Mottistone, L.

Vivian, L.

Effingham, E.

Mowbray and Stourton, L. [Teller.]

Ward of North Tyneside, B.

Forbes, L.

Westbury, L.

Gainford, L.

Munster, E.

Wigoder, L.

Gore-Booth, L.

O'Hagan, L.

Winstanley, L.

Greenway, L.

O'Neill of the Maine, L.

Wolverton, L.

Gridley, L.

Onslow, E.

NOT-CONTENTS

Bowden, L.

Houghton of Sowerby, L.

Peart, L. (L. Privy Seal.)

Brimelow, L.

Jacques, L. [Teller.]

Peddie, L.

Brockway, L.

Janner, L.

Sainsbury, L.

Bruce of Donington, L.

Kagan, L.

Shinwell, L.

Buckinghamshire, E.

Leatherland, L.

Stedman, B.

Burntwood, L.

Llewelyn-Davies of Hastoe, B.

Stewart of Alvechurch, B.

Champion, L.

McCarthy, L.

Stone, L.

Chorley, L.

McCluskey, L.

Strabolgi, L. [Teller.]

Collison, L.

MacLeod of Fuinary, L.

Wallace of Coslany, L.

Davies of Leek, L.

Melchett, L.

Weidenfeld, L.

Donaldson of Kingsbridge, L.

Milford, L.

Wells-Pestell, L.

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

Oram, L.

Winterbottom, L.

Gordon-Walker, L.

Pannell, L.

Wynne-Jones, L.

Hale, L.

Pargiter, L.

Henderson, L.

Parry, L.

Page 70, line 35, at end insert—
("(4A) Where it appears to the Secretary of State that a requirement is imposed on a person under this section and that person has refused or failed to comply with the requirement, the Court on the application of the Secretary of State may make such order or orders requiring compliance by that person with the requirement as the Court thinks just and reasonable for the purposes of this Act.

1687
For the purposes of this subsection "the Court" means the High Court in England or Northern Ireland or the Court of Session in Scotland, as the case may be.").
The noble Lord said: My Lords, it may be for the convenience of the House if I speak at the same time to Amendment No. 172, that being consequential upon No. 171. Here we are concerned with the disclosure of information and we accept that it is right that if a person fails to disclose information reasonably required under the Bill he can be taken to court. As we understand it, he cannot go to the court to test his case; he must be summoned to appear before the court by the Secretary of State. As the Bill stands he must be summoned before the magistrates' court under the threat of a fine. Our objection to this is that the magistrates' court is not a suitable court to deal with this sort of matter. Accordingly, we seek in the Amendment that it should be the High Court and not the magistrates' court. I need not say more about the purpose of the Amendment; it is simply the level of court to which cases like this should go.
Lord McCLUSKEY: My Lords, speaking on a personal level, as a lawyer who has many friends who appear in the High Court, I have a certain trade union-type of sympathy with lawyers because undoubtedly this would make work for lawyers at the Bar, but the Government are unable to support the Amendment for a number of reasons. As the noble Lord has explained, what the Amendment does—at any rate in the case of England and Wales—is to retain the magistrates' court jurisdiction (in Scotland it would be the sheriff court) in all cases where there is a question of furnishing false information or of intention to deceive. However, it insists on High Court jurisdiction if someone refuses to comply with a requirement. However, as the Bill is drafted, someone who refuses to comply with a requirement and is prosecuted in the lower court and found guilty has the right to take a point of law such as the reasonableness of his refusal to the High Court or its equivalent in Scotland.
Therefore, the Bill provides that if there is an interpretation of whether a requirement is reasonable—for example, that the reasonable excuse put forward by the
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defence under subsection (5)(a) is that the requirement was unreasonable—the High Court could adjudicate on that question. The only difference is that under the Bill the adjudication could occur only on appeal and not directly as the Amendment provides. So I think that noble Lords opposite will surely accept that the ultimate arbiter of the matter of reasonableness is, or can be at the instance of an aggrieved person, the High Court. Of course, exactly the same applies in the case of Scotland although the lower court there is the sheriff court and the higher court is the High Court of Judiciary. In Northern Ireland, appeals from the magistrates' courts go direct to the Court of Appeal.
In the circumstances, I would urge upon your Lordships the present provisions. I submit that they are satisfactory and are consistent with previous legislation. What is laid down in the Bill as it now stands is common form procedure in most if not all comparable Statutes. Wherever there has been a requirement to provide information, the Statute has laid down that the proceedings following that requirement should be brought in the magistrates' court or its equivalent in Scotland and Northern Nand, and we should like to be consistent. So I hope that, in the light of that explanation, noble Lords will reconsider the Amendment and withdraw it.
Lord CARR of HADLEY: My Lords, I shall certainly give consideration to what the noble and learned Lord has said. This illustrates the great difficulty one has when the normal period between Committee stage and Report is contracted to about half what is normally regarded in your Lordships' House as the proper amount of time. It does not give the Opposition and people wishing to make representations an adequate opportunity to think matters through. In order to make quite sure that one does not miss a point, the only thing to do is to slap an Amendment on to the Order Paper. This is a typical example of "more haste less speed". I hope that the Government will take this on board because, if any of these Amendments are unnecessary, they are the people to blame for not having given the normally accepted amount of time not only for each stage but—what is very important in this respect—between

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each stage. However, so far as the Amendment is concerned, all I can say is that I have listened carefully to what the noble and learned Lord has said. To me, as a layman, I thought it sounded fairly reasonable, but I must stress that I am speaking as a layman. I must therefore seek advice. If we are satisfied, that will be the end of it. If not, I shall have to return to it on Third Reading on Tuesday. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
2.15 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 173:
After Clause 53, insert the following new clause:
Acquired company's documents to be made available to former parent company
.—(1)This section applies to—

(a) a company which comes into public ownership (the "former subsidiary") and which immediately before its date of transfer was a subsidiary of a company not being a company which comes into public ownership (the "former parent company"); and

(b) the books, accounts and documents of the former subsidiary so far as they relate to its affairs subsisting at, or at any time before, that date of transfer.

(2) Subject to subsection (4) below, the former subsidiary shall, at any time, and from time to time after the date of transfer of its equity share capital, make available to the former parent company such facilities for the examination of and the making of extracts from or copies of the relevant documents as the former parent company may reasonably request for the purposes of its business or, in the event of any question arising between the former parent company and the former subsidiary whether any request is reasonable, as may be directed by the Secretary of State.
(3) For the purposes of this section a company which comes into public ownership and whose equity share capital was held immediately before the date of transfer by two companies in equal proportions shall be deemed to be a former subsidiary, and the two companies, and any company of which either of them was at that time a subsidiary, shall each be deemed to be a former parent company.
(4) Subsection (2) above shall cease to have effect on the expiry of the period of 10 years beginning on the relevant vesting date.
The noble Lord said: My Lords, the Amendment is on similar lines to one moved at the Committee stage, but it has been slightly altered. In urging the rejection of the then Amendment No. 201, the noble Lord, Lord Kirkhill, gave us four grounds for objecting to it. He said first that it was open-ended and would
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give the parent company the right of access to the books of the subsidiary no matter how long after the date of transfer. That is the principal point that we have tried to deal with in this Amendment, where the time period has been limited to 10 years. Then, the noble Lord said that a prudent company would ensure before the date of transfer that it had all the necessary documents. The difficulty about that is that one can never be quite sure what points the Inland Revenue, for example, may raise after a considerable passage of time.
So far as compensation is concerned, the noble Lord said that the stockholders' representative would have access to all the necessary information under what was then Clause 41 but what is now Clause 42. I hope that I shall not fall into the same trap as I did a few minutes ago. Then they pointed out that when the ownership of a company changes the former owner loses all rights or interest in respect of the company; but we made the point at the time that, in the ordinary way, a company which is selling another takes the precaution of reserving to itself a right of access to further information if it wants it.
Finally, may I say that, in order to prevent any possibility of vexatiousness or abuse of these provisions, our Amendment makes the Secretary of State the final arbiter as to whether the information that is required is reasonable. We had earlier on today an example given by my noble friend Lord Orr-Ewing of the sort of situation where this kind of information might well be available. I am not sure whether it was an exact illustration but the Government will recall that my noble friend cited an example of a company that could well find itself needing information which, if we have no clause on these lines in the Bill, would be denied to it. I beg to move.
Lord ORR-EWING: My Lords, I should like to add my support to this Amendment. It seems to me that some period must be allowed. It is not right that, as from vesting day, a company should not have any access to its files, data, patent conditions, licences and all sorts of things. On the other hand, if the company is required to micro-miniature photograph every single piece of paper which, over the years, has been collected in files of one sort or another,

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it will be involved in tremendous costs—not only the cost of reproducing all these documents, but the cost of filing them away, of housing them and of arranging for them to be reproduced and so on. Those of us who have experience of this also know that the Inland Revenue are not terribly quick on the draw. What happens if, after a year or two one is suddenly asked to pay some tax and one wants to go and look at the files or to examine the accounts carefully? I am sure that the Government, wishing to be fair, will think that this is a reasonable and progressive Amendment. It merely makes sure that a company losing one of its main subsidiaries but carrying on a business which is not competitive but which may be in associated engineering fields, will have access to important data in order to answer queries coming from other sources, perhaps including overseas licensees and people of that ilk.
The noble Lord will note that we have been at pains to specify 10 years. If noble Lords opposite feel that that is too long, perhaps they could come forward and make a constructive suggestion for some shorter period, though it must not be too short. We have also given the Secretary of State powers to supervise. Therefore, it seems to me there is nothing against the Amendment and that, on the whole, it will help the changeover and will not make the holding company which has lost its subsidiary vulnerable to all sorts of difficulties that might arise if none of this information is available to it after vesting day.
Lord McCLUSKEY: My Lords, I do not want to labour the point but I still have to resist the Amendment, I am afraid. A similar Amendment was moved during the Committee stage and, since that time, the Amendment has been altered in order to prevent the right of access being open-ended, although the period taken—10 years—is an excessively long one on any view. From the reading of the Official Report of the Committee stage it appears that we could agree with noble Lords on one thing anyway; that is, that the Bill in this context should reflect what is normal practice in the case of change of owner-ship. But we would differ from noble Lords opposite about what is normal in the private sector.
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We still hold that it is normal that, when the ownership of a company changes, the former owner loses all his rights and interests with respect to the company; the one exception to this, the one which the noble Lord, Lord Strathcona and Mount Royal, used in Committee as the basis of his support for the Amendment then being moved, is the exception in the case where the former parent company undertakes continuing guarantees or warranties beyond the date of transfer. If that were the situation, one would acknowledge that it was a valid point. If such guarantees are to continue, we would accept that it would be logical and reasonable for the parent company to ask for and to receive continued access to documents. But under Clause 54 of the Bill the Corporations would take over all warranties, guarantees and liabilities given by the former parent companies in respect of the obligations of their former subsidiaries. Therefore, the one exception which has been cited to the complete break doctrine which my noble friend Lord Kirkhill mentioned in Committee cannot therefore arise. I hope that noble Lords opposite will accept that the position is not comparable to the private sector case of a change of ownership within a period of warranty. Where there is not a period of warranty connected with a change of ownership it is not normal practice for the former parent company to have access to its former subsidiaries' books and so on, especially for such an enormous period, and we do not think it is appropriate to have such a provision here.
The Government do not see any reason why the former owners should be given rights after nationalisation which they would not have got from a comparable private takeover. I ask the noble Lords to withdraw the Amendment. In the light of what has been said today on the point in relation to tax, I should say that surely the Amendment is making something of a mountain out of a molehill. If there was a tax problem it is difficult to believe that a reasonable request without the need of a statutory backing for documents would be granted. In the circumstances, I ask that the Amendment be withdrawn.
Lord HAWKE: My Lords, have not the Government got the wrong end of

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the stick here? Surely this is not the same as a private enterprise transfer of business, because there is an essential difference; namely, if the Bill becomes enacted in any form this will be compulsory, whereas the transfer of business from private enterprise is a voluntary one within the rules that apply and is not enforced by the full weight of legislation of the Crown. So the Government are in a different position to another private enterprise business taking over one that it purchases in the ordinary way.
I suggest to noble Lords opposite that this is a vitally important matter and that it is no loss to them. One wonders why the Government think that it matters that this facility should be available to the companies in the terms of the Amendment. What are the Government to lose by being just moderately generous and, if one likes to put it this way, moderately sensible of other people's attitudes, instead of taking a rather doctrinaire view and trying to relate it to a circumstance which is totally different from the one with which we are confronted. Therefore, I ask the Government to think again before they invite my noble friends on the Front Bench to make a decision about this.
Lord MOTTISTONE: My Lords, I should like some information from the noble and learned Lord. He speaks about the liabilities and so on having been taken over, but suppose these companies had been conducting work for, say, a foreign Government or something like that on an escalation clause basis, and that after a number of years the foreign Government came to the conclusion that the escalation clause basis had not been calculated properly, either through a mistake or on purpose, and were proposing to sue the people for a return of money already paid. Against whom have they a remedy? Is it against the new nationalised Corporation, in that it has taken over the liabilities? Or is it against the old owners of the business whom they may claim have wilfully swindled them, to put it mildly? If the noble and learned Lord could answer that question, it might clear up the matter about the books.
Lord McCLUSKEY: My Lords, with the leave of the House, may I direct the noble Lord's attention to Clause 54? I should hate to suggest that I can make
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anything in the nature of an authoritative pronouncement on it—it would be dangerous for me to do so—but the wording seems to be clear enough. If an action is to be taken against the company, and I assume that it would be taken, then the wording appears to apply:
"If any sum required by any judgment or order to be paid by a company which at the time of the judgment or order is a wholly owned subsidiary of a Corporation or has at any time since the cause of action arose been such a subsidiary is not paid by the company within the period of 14 days …"
—then the Corporation becomes liable. If the answer is not in Clause 54, then I cannot answer the noble Lord's question.
Lord HAWKE: My Lords, this is a case where the matter has not gone to the court at all but is merely a claim.
Lord MOTTISTONE: My Lords, before the noble and learned Lord sits down, would he care to answer my question: what have the Government to lose by accepting the Amendment?
Lord McCLUSKEY: My Lords, in reply to the noble Lord, Lord Mottistone, I can only say that the Government see no reason to depart from the normal practice in this type of case.
Lord MOTTISTONE: But there is not a normal practice in this type of case.
2.27 p.m.
Lord STRATHCONA and MOUNT ROYAL: My Lords, I am bound to say to the noble and learned Lord that this is a profoundly disappointing reply. It seems to me that part of the time we are arguing on a question of fact. I know that I am sticking my neck out in trying to cross swords with somebody of the training of the noble and learned Lord, but he is asserting that the Government are the best judge of what is the normal good commercial practice. But we have spent many weary hours trying to say to him, with the greatest of respect, that the Government have not got a clue about what is good commercial practice if we judge what they believe the Stock Exchange does. I am not attempting to open up the whole issue of compensation, but time and again noble Lords opposite have said: "We are following good Stock Exchange practice", and rows of noble

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Lords behind me, and on the Cross-Benches and on the Liberal Benches have said that, with the greatest respect, that is simply not so.
The noble and learned Lord is now telling us that the Government, most of whom have never been in commerce, have a better idea of what is normal commercial practice than those who are actually doing it on a day-to-day basis. We are asked on the basis of that to accept that no reasonable request would be refused. The implication here is that the Minister shall be the judge of what is reasonable. I suggest to him that it leaves us in a most unreasonable situation. One of my noble friends gave an example of the kind of thing we have in mind. We gave a number of other examples of the kind of situation which could arise. Let us please not say that they are hypothetical; one of them is a reality, and the others are perfectly likely to occur.
The noble Lord, Lord Mottistone, pointed out that we are dealing here not with an ordinary willing seller and willing buyer. Again, how often do we have to say this: we are dealing with an enforced takeover. I do not know, because I do not know my way about this Bill well enough, whether it will be possible for the companies, in order to prepare themselves against this possibility, to enter into all sorts of undertakings now. I suspect that there is something in the Bill which says that any onerous transactions which they enter into now can be avoided by the Minister later if it suits him. That is the sort of thing I would expect to find in here, but I have not been able to turn it up during the time that we have been having this rather unsatisfactory exchange. It really is not the kind of thing that we would in the least want to divide upon, but the Minister really has put us in a very great difficulty here. We want to get on with our business on a Friday afternoon. On the other hand, we may later on be castigated for having a whole lot of Amendments at the Third Reading stage. When we get such a profoundly disturbing and unsatisfactory answer as that, I think we may have to return to the point later, but for the time being I am willing to leave it at that. My Lords, I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Clause 57 [Interpretation]:
2.31 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 174:
Page 74, line 40, at end insert ("being a date falling not less than twenty-eight days after the making of the order").
The noble Lord said: My Lords, I beg to move Amendment No. 174, and I think it would be convenient if Amendment No. 177, which is connected, were discussed at the same time. We went into this at Committee stage, so I will very briefly remind the Government of the point. The Secretary of State will be able to make an order specifying vesting dates, but that order may be made without warning and could specify an immediate date for the vesting in each Corporation of the companies to be nationalised. We believe that the companies should be given some warning, and the object of the two Amendments is to secure a minimum notice of 28 days between the day when a vesting order is made and the date when it comes into operation. I am moving this again to provide the Government with an opportunity to give any further indication they wish of their thinking on this.
My Lords, there is some irony in the contrast between the Government's attitude on this point and that to be found in Clause 28 of the Bill, subsection (7), where, if a notice to exclude a company from nationalisation is withdrawn or revoked, the date of the transfer is fixed at two months after the date of withdrawal or revocation. We hope that even at this stage the Government will recognise that a reasonable amount of notice of vesting date ought to be given to the company. I beg to move.
Lord MELCHETT: My Lords, as the noble Lord has said, he and I, and your Lordships, discussed these Amendments during the Committee stage, and I do not want to repeat all the same objections that I then put forward. However, I should like to deal with some of the points which the noble Lord, Lord Campbell of Croy, made during the Committee stage. As I understand it, he was concerned that the companies involved should have some warning of vesting. As I said then, it

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may well be that there will have to be a period of some weeks, or even months, between Royal Assent and vesting. We will obviously aim to make the vesting order well in advance of vesting day, though I confess I am surprised that the companies should feel that they need any more notice of our intention to vest them in the Corporations. However, we see no advantage in having a statutory requirement for such a gap, which, as I explained during Committee, would only limit flexibility to do what is best in the interests of the industries.
My Lords, during the Committee stage the noble Lord, Lord Campbell of Croy, mentioned that the Iron and Steel Act 1967 specified that the vesting date would occur 36 weeks after the passing of the Act, or such earlier date as the Minister may appoint. The noble Lord said that at least this made it clear that a considerable interval was expected. But even that provision left the actual date flexible, which the noble Lord's Amendment does not. Here we think that precedent is correct and that a statutory and unalterable gap would be unsuitable. However. I repeat the assurance which I have now given to the noble Lord, that we will give the companies as much warning as we possibly can and that we will aim to make the vesting order well in advance of vesting day. I hope that meets the main concern of the noble Lord.
Lord CAMPBELL of CROY: My Lords, I am grateful to the noble Lord because he has now given a definite assurance that it is the intention of the Government to give reasonable notice to the companies. I think the companies do need that notice. I will not argue the point with him now, but he started by saying that he did not think they did need notice. However, he has made it clear that the Government intend to give notice, and I am sure that the companies need about 28 days as a minimum. But in the light of what the noble Lord has said, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 175:
Page 75, line 21, at end insert—
(""holding company" shall be construed in accordance with section 154 of the Companies Act 1948;").
The noble and learned Lord said: My Lords, this Amendment simply fulfils an undertaking which was given by my noble friend Lord Melchett in Committee. I need not elaborate it. I beg to move.
Lord STRATHCONA and MOUNT ROYAL: My Lords, we are grateful to the Goverment. As the noble and learned Lord has said, this was something which we put forward. I think they have put it in a different place, hut otherwise we are in total agreement.
On Question, Amendment agreed to.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 176:
Page 75, line 45, at end insert—
""net loss" means the amount by which the value of the securities of the company would have been reduced upon the hypothesis that the relevant transaction had occurred immediately before the first of the relevant days."
The noble Lord said: My Lords, this is another matter which was raised at Committee stage. Deductions from compensation will he related to values at the date of transfer. Losses valued at 1976 prices will he deducted from 1973–74 base values. The purpose of the Amendment is to ensure that both the positive and the negative elements of compensation are valued on the same basis regarding the time of valuation. When I moved this Amendment, giving rather more detail, at the Committee stage, the noble Lord, Lord Kirkhill, seemed to dismiss it somewhat lightly. I hope, none the less, that the Government were able to consider what was said during that debate; and I put the Amendment down again so that the Government, after consideration, could tell us whether they had had any second thoughts on this subject. I beg to move.
Lord McCLUSKEY: My Lords, as has been pointed out this Amendment seeks to limit the amount of any "net loss" wherever this concept is used in the Bill, and it would apply in relation to Clauses 31, 32 and 40. It is exactly the same Amendment as was discussed and then withdrawn in Committee, and the Government see no reason, after consideration, to change their view on the matter. I do not propose to restate the reasons which were cogently given by my noble

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friend Lord Kirkhill—they appear in the Official Report in column 255—but I should perhaps add in relation to Clause 40, which I do not think the noble Lord dealt with, that it provides for compensation to be restricted to the extent of any "net loss" resulting from material or onerous transactions which take place between 28th February 1974 and the safeguarding date.
I would say to noble Lords that it must surely be accepted that it is most unlikely that any of the transactions covered by Clauses 31, 32 or 40 would have any immediate bearing upon the value of the securities calculated under the Bill. One could imagine that the share quotation of a company might be decreased to some extent if an onerous transaction of this kind came to light; but, equally, a high dividend could conceivably, in certain circumstances, increase the value of securities, particularly in the eyes of investors who were looking for high incomes and expected a repetition of the payment of the high dividend. This effect on securities is in the Government's view nothing to do with what is meant by "net loss" under the Bill. "Net loss" means exactly what it says; namely, the amount of money of which the new Corporation is deprived by virtue of the transaction in question. As my noble friend Lord Kirkhill said, the concept of net loss here implies simply an arithmetical sum for which the directors would become liable or by which compensation would be reduced under the relevant clauses in the Bill. It is inappropriate in these circumstances to look at the securities in the way proposed. I would invite the noble Lord to withdraw the Amendment.
The Earl of ONSLOW: My Lords, it seems odd that we should in this instance take no account of the difference in the value of the pound. For the benefit of this House it would be nice if the noble and learned Lord, Lord McCluskey, could state what that difference is. That is the first point. The second point is that we have had discussions about inflation proofing. The noble Baroness, Lady Seear, brought the subject up earlier today. We have pensions, which is a slightly different issue; but there is a terrible danger in the highly inflationary situation which
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we have had—20 per cent. last year and 14 per cent. this year and I cannot remember what it was the year before. These amounts should be calculated on the 1973/74 prices.
Lord CAMPBELL of CROY: My Lords, I am sorry that the noble and learned Lord has not been able to change the kind of reply, because it was a very similar reply to that given me in Committee stage—although he has added one point. With all respect, I am afraid that I did not think that the reasons given by the noble Lord, Lord Kirkhill, were very cogent. I do not propose to pursue this now and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY had given Notice of his intention to move Amendment 177:
Page 77, line 34, at end insert ("being a date falling not less than twenty-eight days after the making of the order").
The noble Lord said: This Amendment was discussed with Amendment No. 174, and I do not propose to move it.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 177A:
Page 79, line 23, at end insert—
("or any factory, dry-dock, graving dock, or other premises or land situated in the United Kingdom to which an acquired company was entitled to an interest in possession or a licence to occupy and which on or at any time after the initial date was being used for repairing, refitting or maintaining ships unless such factory, dry-dock, graving dock, or other premises or land are either wholly appurtenant to the shipbuilding undertaking carried on at a shipyard or other works in which the acquired company had an interest in possession on 31st July 1974 or are mainly appurtenant to property or rights which are wholly appurtenant to that undertaking or cannot reasonably be severed therefrom;").
The noble Lord said: This Amendment was discussed with Amendment No. 138A. It is one of the Amendments involved with the ship repairing industry. I beg to move it formally.
On Question, Amendment agreed to.
Clause 58 [Short title and extent]:
2.42 p.m.
Lord CARR of HADLEY Lord CARR of HADLEY moved Amendment No. 178:
Page 79, line 42, at end insert—
("(1A) This Act shall not come into operation with respect to British Aerospace or to any of the companies referred to in subsection (1) of section 20 above, until such day as the Secretary of State may appoint by order made on or after the date of the first meeting of the next Parliament, but shall otherwise come into operation immediately").
The noble Lord said: My Lords, this is the substantive Amendment which puts into operation the intention we have expressed on a number of occasions that the vesting date of the British Aerospace Corporation should be postponed until after the next General Election. The last time we considered the Bill I moved the Amendment leading to this and it led The Times newspaper to report the following day that we had changed our intentions on the subject. I thought I made it clear two days ago that we had not, and I am glad to confirm it now.
My Lords, this is the substantive Motion to achieve that. I have given the reasons for our view before, and I do not think I need to repeat them except to say that the nationalisation of the aircraft industry will bring such a loss of efficiency, investment and employment in this industry in the future that we feel it our duty to try to stop it. I beg to move.
Lord MELCHETT: My Lords, I am sorry to interrupt the smooth and rapid progress that we are making this afternoon by addressing some harsh words to noble Lords opposite, but I feel that this Amendment calls for it. This Amendment is an irresponsible attempt by noble Lords opposite to frustrate the will of the elected majority in another place and to circumvent—
Several noble Lords: Oh!
Lord MELCHETT:—and to circumvent the constitutional processes by holding back the Government's programme for longer than would be possible under the Parliament Act. It is a straightforward Party political attack. I gave in Committee the compelling industrial case for proceeding with this legislation. It is a case accepted by those in the industry who put its future prospects first, even though some of them may be opposed to the principle of nationalisation. They realise at this critical time that the industry is more damaged by delay than by anything
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else. I have to say that I think it is a great pity that noble Lords opposite are not as responsible.
My Lords, I must again make it clear, as I did in Committee that this Amendment is completely unacceptable and that the Government will resist it with every means at their disposal.
The Earl of ONSLOW: My Lords, would the noble Lord consider advising Mr. Callaghan to go to the country and ask the citizens for their opinion? I suspect that, after yesterday's results, he would not.
Baroness WARD of NORTH TYNESIDE: My Lords, may I ask one question? It worries me that we get so little support from the Government on many of the very useful Amendments we have moved. I am not going to argue that, but when an undertaking is given (which the Government are entitled to give) that certain Amendments will be considered during a very short period, what then do the Government do? Do they discuss with the Treasury the Amendments on financial matters which have been moved? Because I think this is of tremendous importance.
I do not really have any confidence in any of the Ministers sitting on the Government side, because I think they have had practically no experience at all. I still have quite a feeling of respect for Treasury officials but the Treasury is always pretty busy. We seem to have been forced into taking very quick decisions. If I had had my way, I should have supported many of our Amendments in the Lobby. I do not like holding up masses of Amendments, even to be polite to the Government because I do not feel polite towards them. What I want to know is this. After an undertaking has been given that some of our financial Amendments will be looked at and considered, do the Government merely consider them among themselves or do they go to the Treasury and really consider them from the point of view of what I might call the financial aspects?—for the Treasury cannot always believe in Ministers who really have had so very little experience. I believe in experience much more, sometimes, than political principles.
Lord BYERS: My Lords—
Baroness WARD of NORTH TYNESIDE: Can I have an answer?
Lord BYERS: My Lords, I really do not think that we were entitled to that outburst from the Government Dispatch Box. I have a feeling that the words were written yesterday and probably if amended in the light of the by-elections they might have been a little different. This is a very difficult decision to make. I do not think it is right to charge anybody with irresponsibility. I get the sense that this Bill is totally out of keeping with our whole economic problems at the present time. Just to honour a Manifesto pledge given in 1974 is, to my mind, quite irresponsible against the background of our economic balance of payments, our borrowing requirements and all the rest.
I accept the fact that if this Amendment is passed it will cause uncertainty. That is where the difficulty of the decision lies; but, on balance, I believe that this House (which is entitled to exercise a delaying power to give the other place an opportunity to think again) is fully entitled, in a situation like this, to send it back to another place and to say, "In the light of the economic situation, please look at it again". I can say that I and my noble friends will reluctantly support this. It is a difficult balance of judgment, but at this moment we think it right to send it back to the other place. I hope that the other place under their Time Table Motion will give sufficient discussion to this so that we get a reasoned reply if they disagree with us.
Lord CARR of HADLEY: My Lords, I want briefly to support what the noble Lord, Lord Byers, has said. It is nonsense to describe this as an irresponsible attempt to thwart the democratic authority of an elected Government. The Government we have at the moment have never really had any democratic authority for these measures. Certainly they have not had them since yesterday. Of that there can be no doubt. All evidence we have shows that the great majority of people in this country do not wish to have any further nationalisation in general or nationalisation of this industry in particular. All the evidence that we can achieve from election results, tests of opinion, and so on, shows this to be true over and over again. Please do not let us
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hear this utter nonsense about thwarting democratic authority.
Nor is this just a Party point. Despite what the noble Lord said just now, he has never given a compelling industrial case as to why this industry should he nationalised. As I pointed out the other day, in particular he is recommending the House, and the Government are recommending the country, to take the exactly opposite view and course recommended by the Plowden Committee for this industry. The Plowden Committee were set up by a Labour Government to examine this matter of industrial strategy. They specifically came down against nationalisation and gave arguments as to why. Those have never been dealt with by the Government. No compelling industrial case has ever been given. The only compelling case has been the one given by the Plowden Committee, and that needs to be argued against if the Government wish to go in exactly the opposite direction. As the noble Lord, Lord Byers, said, at best this measure is irrelevant to our urgent economic needs at the moment. Because of the cost of money and harm it will do to this great industry, it is damaging. Certainly, nobody could say that it is unconstitutional and improper for the House to exercise delaying powers. The Labour Government gave us delaying powers in the Parliament Act. We are doing no more and no less than what a Labour Government told us to do.
2.53 p.m.
Lord SHINWELL: My Lords, when a Government associated with a political Party decide on a course of action it is naturally expected that the members of that Party should follow the line embarked upon. On the Second Reading of this debate, I made a comment about the proposal to transfer the aerospace industry from private to public ownership. My comment was a simple one. Although I accept implicitly the principle of nationalisation, I qualify it in a pragmatic fashion: is it desirable, is it worth while and is the timing appropriate? My comment was the simple one that we are embarking on a gamble. Although in the course of these debates it has been sought to demonstrate that some of the companies concerned make considerable profits, I am doubtful whether in the future—

1705
perhaps not in the foreseeable future, perhaps the more remote future—they will continue to do so. The aerospace industry is a highly speculative industry; of that there can be no doubt.
In these circumstances, one has to come to a personal decision. What can one do? These proposals have to be considered in another place. Is it possible that anything said here on either side of the House can influence the majority in another place? I would not care to swear to it. Speaking with no egotism whatever of my personal experiences, I have been associated for a very long time with the Labour Party. Indeed, I can almost claim that there is no other member of the Labour Party active in public life who has a longer experience. From the very outset I have been devoted to the principle, never mind about the practice—it is a matter of timing and circumstances—of national ownership. Not that I regard it—now I repeat myself—as being an essential principle of Socialist philosophy. I do not. But it is part of the mechanics of Socialism.
We have undertaken in the course of time to embark on a number of propositions which have transferred private industry to public hands. The concept was that by doing so, we would make those industries more efficient and more profitable. I use the term "profitable" in a general sense. Also, it would provide security of employment for a large number of people associated with the particular industries involved. I must confess to a considerable degree of disappointment. It simply has not happened. At the same time, I would not retrace my steps and not ask the Government to retrace their steps; in other words, to de-nationalise. That would be a mistake. There must be continuity. Once we embark on a particular line of policy, we have to stand by it, make it efficient, worthwhile, and justify the action that we have taken.
I should like to say something which will influence some of my honourable friends in another place. To repeat what I have said (and forgive the repetition, my Lords, for there has been a lot of repetition in the course of our debates), when my noble friends in another place are considering not so much the political activities, the alleged—I emphasise the term—alleged filibustering, the Opposition
1706
have a perfect right to scrutinise every item, every line and comma of legislation that emerges from another place. Never mind about the constitutional aspect, it is a sensible course to take, otherwise you might as well abolish this place and be done with it. My advice for what it is worth, is: be careful before you embark on the policy of transferring an industry from private to public hands unless it has been carefully, studiously and practically thought out.
Regarding the circumstances surrounding the industry, is it going to be worth while? If it is embarked upon for purely ideological reasons, I reject it. There is a place for ideology but it must be associated with practical considerations. My advice to my friends in another place is this: be very careful indeed. Later there is another Amendment and I should like to say a word on that as I do not want to have to speak again. This is in connection with ship repairing. This is not strictly in order, but I merely mention it. I object to that.
For reasons which I ventured to advance on a previous occasion, we believe—I am speaking now about the Labour Party, and this cannot be challenged—in what is called a mixed economy. Make the public sector efficient and there to stay; let there be private ownership and private enterprise, and let it be "enterprise". That is our policy. In those circumstances, and accepting that policy, there is no reason at all why we should associate the inevitable change—and I would emphasise the importance of this—of transferring shipbuilding from private hands to public hands. I have advocated that for a long time, because I understand the shipbuilding industry. I have taken part in many of the disputes associated with the political aspects and I know what has happened. The shipbuilding industry has been in trouble almost ever since I can remember, and I may say that I came into the business representing a shipbuilding ward on the Clyde. That was before the First World War, so I know something about it.
I accept the nationalisation of shipbuilding per se, but I see no reason at all why shipbuilding should be associated with ship repair. Ship repair is an accessory, subordinate to and associated

1707
with shipbuilding, but not shipbuilding itself. There is no logical or valid reason why it should be associated with the shipbuilding industry in the take-over. Leave it where it is. That is all I want to say about that. As regards the political quibbles and disputations, and the out-bursts which are alleged against may noble friend Lord Melchett, one must say that after one has sat in this Chamber day after day and sometimes night after night listening to the repetition and the speeches, which are sometime very boring—and I have made my contribution, too—an outbreak of temper is not surprising. I forgive my noble friend for outbursts of temper because of his remarkable industry.
My Lords, I leave it at that; but if there is a Division on this Amendment I shall not have the courage to vote. I shall sit on the fence and simply abstain. I dislike it intensely, but to go into the Lobby will not make all that difference, so all they can say is that I have not the courage of my convictions. Certainly I lack the courage but I have the conviction, and therefore I would oppose the take-over of the British aerospace industry.
Lord GORE-BOOTH: My Lords, I rise with some diffidence, for two reasons. Coming directly after that very impressive and courageous speech by the noble Lord, Lord Shinwell, I feel that someone from these Benches should rise, even if the contribution that is made is only modest and not perhaps very knowledgeable, because the suggestion has been made that this Motion is purely a political manouevre. Even if I merely stand up, I think perhaps that will add some force to the argument that it is not just that: it is something far more important and far more fundamental. I have not ventured to speak earlier, and so I hope that your Lordships will forgive these few words—and I shall make them very few—which are perhaps rather more suitable for Second Reading than for Report. I should simply like to say this. This is a badly-conceived and badly-constructed Bill, which seeks to do the same thing to a number of disparate aspects of our industry. At least the Motion seeks to detach one from the rest.
I do not have ideological views on whether or not things should be nationalised.
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That depends a great deal on things like capital requirements, on the balance between industries to form a genuinely mixed economy and many items of that kind. I was much impressed by remarks of the noble Lord, Lord George-Brown, at a previous stage when, although he made a number of remarks about nationalisation with which I would not wholly agree, he made the point that what the Bill is liable to do is simply to keep on the same management but under a different ticket and to do that in order, quite rightly, to pay compensation for which it is necessary to increase the flow of money at a time when in all other aspects of our affairs this country is united in thinking that we should do precisely the opposite.
From my own particular part of this Bench, I can do no other than come to the conclusion that the very least thing one can say is that the inclusion in the Bill of this particular aspect of our industry, of which the noble Lord, Lord Shinwell, has spoken, is entirely inopportune and against what we ought to be doing. For that reason, I personally—and again I emphasise that I am not speaking for any of my noble friends but simply to give a non-political view—shall vote for this Amendment if it is put to a Division.
Viscount HANWORTH: My Lords, the noble Lord, Lord Gore-Booth, has done precisely what I was going to do. From these Benches, one can speak only for oneself, but I think it is perhaps not inappropriate to say that many people to whom I have spoken share precisely the views that have been put forward by the noble Lord, Lord Carr. It was mentioned earlier that even if one says that the Government may have to put substantial funds into an industry, that does not mean that it has to be nationalised. If it is necessary—and I think it is unlikely to be—it can take a majority holding. That is nothing like as traumatic an upheaval as nationalisation.
Finally, I would say this. Nationalisation in these circumstances without a justifiable industrial reason, and at a time like this, can only be called doctrinaire. I should like those on the Government side perhaps to think back a little and wonder whether in fact this sort of thing really

1709
forms any useful part of the Socialist ideal. The Socialist ideal in the old days appealed to many of us. Today it has degenerated very often into nothing but prejudice.
Resolved in the affirmative, and Amendment agreed to accordingly.
Schedule 1 [Aircraft Industry]:
3.16 p.m.
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 178A:
Page 80, line 10, leave out ("Scottish Aviation Limited").
The noble Lord said: My Lords, I rise to move Amendment No. 178A and at the same time I should like to speak to Amendment No. 178C, which was tabled to
3.8 p.m.
On Question, Whether the said Amendment (No. 178) shall be agreed to?
Their Lordships divided: Contents, 74; Not-Contents, 46.

CONTENTS

Airedale, L.

Greenway, L.

O'Hagan, L.

Amory, V.

Halsbury, E.

O'Neill of the Maine, L.

Ampthill, L.

Hanworth, V.

Onslow, E.

Arran, E.

Harmar-Nicholls, L.

Rankeillour, L.

Atholl, D.

Hawke, L.

Redesdale, L.

Balfour of Inchrye, L.

Henley, L.

Robbins, L.

Barrington, V.

Hereford, V.

Rochdale, V.

Beaumont of Whitley, L.

Hewlett, L.

St. Davids, V.

Bessborough, E.

Hornsby-Smith, B.

Sandys, L.

Byers, L.

Howe, E.

Sempill, Ly.

Campbell of Croy, L.

Inchyra, L.

Simon, V.

Carr of Hadley, L.

Jessel, L.

Skelmersdale, L.

Carrington, L.

Lauderdale, E.

Stamp, L.

Chelwood, L.

Lindsey and Abingdon, E.

Strathcarron, L.

Clancarty, E.

Long, V.

Strathcona and Mount Royal,

Colville of Culross, V.

Lucas of Chilworth, L.

Sudeley, L.

Cullen of Ashbourne, L.

Lyell, L.

Trcfgarne, L.

Daventry, V.

Molson, L.

Trevelyan, L.

de Clifford, L.

Monck, V.

Tweedsmuir, L.

Denham, L. [Teller.]

Monson, L.

Vickers, B.

Drumalbyn, L.

Morris. L.

Vivian, L.

Effingham, E.

Mottistone, L.

Ward of North Tyneside, B.

Elles, B.

Mowbray and Stourton, L. [Teller.]

Westbury, L.

Forbes, L.

Wigoder, L.

Gore-Booth, L.

Munster, E.

Winstanley, L.

NOT-CONTENTS

Birk, B.

Houghton of Sowerby, L.

Peart, L. (L. Privy Seal.)

Bowden, L.

Jacques, L. [Teller.]

Peddie, L.

Brimelow, L.

Janner, L.

Pitt of Hampstead, L.

Brockway, L.

Kagan, L.

Ponsonby of Shulbrede, L.

Buckinghamshire, E.

Kaldor, L.

Shepherd, L.

Champion, L.

Leatherland, L.

Stedman, B.

Collison, L.

Llewelyn-Davies of Hastoe, B.

Stewart of Alvechurch, B.

Davies of Leek, L.

Lovell-Davis, L.

Stone, L.

Donaldson of Kingsbridge, L.

McCluskey, L.

Strabolgi, L. [Teller.]

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

MacLeod of Fuinary, L.

Wallace of Coslany, L.

Fisher of Camden, L.

Mais, L.

Weidenfeld, L.

Gordon-Walker, L.

Maybray-King, L.

Wells-Pestell, L.

Gregson, L.

Melchett, L.

Winterbottom, L.

Hale, L.

Oram, L.

Wynne-Jones, L.

Harris of Greenwich, L.

Pannell, L.

Henderson, L.

Parry, L.

replace 178B, which I shall not move. Scottish Aviation is a wholly-owned subsidiary of the Laird Group in which the Government already have a 50 per cent. stake. Its status therefore is not dissimilar in many ways from that of Short Brothers and Harland in Northern Ireland, aircraft manufacturers which the Government say they do not wish to be nationalised. The Plowden Committee Report on the aircraft industry, to which my noble friend Lord Carr has referred and on which I had the honour to make my maiden speech to your Lordships, did not recommend nationalisation, as we have heard, but it

1711
did suggest part ownership by the Government and I submit that Scottish Aviation already complies with that recommendation.
Geographically and in scale Scottish Aviation is far removed from the other companies to be vested in British Aerospace. It has two factories, at Prestwick and Cummock, and I think these are smaller than the individual plants of the British Aircraft Corporation or Hawker Siddeley Aviation or Hawker Siddeley Dynamics. I believe it is not inconceivable that in the fullness of time Scottish Aviation will become what has been called the Shotton of British Aerospace—not profitable but impossible to close for political reasons. Just because the company is not doing as well as it might is no reason for nationalisation. We are of course against nationalisation in principle, as we have said many times, but if financial assistance to Scottish Aviation is required that can easily be done by any one of the existing agencies and in particular the facilities provided by the 1972 Industry Act. The Government have given a number of assurances that the maximum autonomy will be accorded to the management of Scottish Aviation Limited within British Aerospace, but it is hard to see how this can be achieved without affording to Scottish Aviation a degree of authority within the Group which will be totally out of keeping with the size, scale and importance of the company, and indeed much out of keeping with the autonomy granted to the other companies within the British Aerospace Group.
The workload at Scottish Aviation is a very specialised one and quite different from that of BAC and Hawker. Scottish Aviation concentrates on the manufacture of light training aeroplanes. They have so far produced about 250 Bulldogs which have been supplied to the RAF and certain foreign Air Forces and they have recently announced an aeroplane called the Bullfinch, which is a derivative of the Bulldog. That aeroplane is to be developed for civil use. The company have also recently completed production of a short run Jetstream aircraft. A number were originally supplied to the Royal Air Force and have now been transferred to the Royal Navy for observer training, and eight are to be used for pilot conversions
1712
in the Royal Air Force. A further five are in reserve, but production of these is now over.
My Lords, in addition, Scottish Aviation undertake a certain amount of special contract work for Lockheed, such as on the C130 Hercules aircraft and the 1011 Tristar. They overhaul some military aircraft for the Canadian armed forces stationed in Europe. I understand that they also do a certain amount of overhaul work on aircraft engines. Unhappily, the workload of the company is rather declining. Indeed, only a week or so ago a number of men were declared redundant. There is a risk. I believe that the profitability of British Aerospace as a whole is likely to be impaired if subcontract work in future is put out to Scottish Aviation from Hawker Siddeley and BAC, other than on a commercial basis as to other firms. Light aircraft manufacture, which is really the principal business of Scottish Aviation, is a highly customer orientated business and has to be very responsive to market pressures. The outstanding and successful companies in this field are the American firms making the Piper, the Cessna and the Beech. I accept that with really vigorous management, Scottish Aviation could be pulled round, but I do not think it is likely to compete effectively in the field of light aircraft as part of British Aerospace.
An Amendment to delete Scottish Aviation was moved in Committee in the House of Commons, but defeated on a Division. It is interesting to note that the Scottish Nationalist Member of the Committee who might have been thought to have been most directly interested, was not able to attend the Committee on that day and did not vote. Whatever steps are taken to give Scottish Aviation maximum autonomy within the British Aerospace group, its interests are bound to be of less concern to the British Aerospace Board in London than those of BAC and Hawker Siddeley. It has been said that Scottish Aviation could become the nucleus of a light aircraft manufacturing facility within British Aerospace, but I am not convinced that this is feasible or desirable. First of all, there is the problem of the geographical difficulties of the company being based in Scotland. Secondly, it is true to say that, at present anyway, they do not have any basic

1713
aircraft design capability. The two aircraft I have mentioned, the Jetstream and the Bulldog, are both derivatives of a design initiated by other companies and taken over by Scottish Aviation at a late date. Therefore, I do not believe that that is an appropriate use for the facilities of Scottish Aviation which the Government want to be vested in British Aerospace. I beg to move.
Lord McCLUSKEY: My Lords, as my honourable friend the Parliamentary Under-Secretary of State explained during Committee stage in another place, the Government decided to take Scottish Aviation into public ownership following, and, indeed, as a result of, representations made to the Government following publication of the Consultative Document in January 1975. These representations came, and came strongly, from the unions at both company and district level, urging inclusion in British Aerospace. I may add that we were also told by the management that they considered the future for their company outside a large public organisation would not be an easy one. Perhaps while dealing with that point, I should make a short comment on what was said by the noble Lord, Lord Trefgarne.
The Government do not have a 50 per cent. stake in the Laird Group. The Government have a 50 per cent. stake in Cammell Laird Shipbuilders, the other 50 per cent., belonging to the Laird Group. That is the information which I have received to enable me to comment upon the noble Lord's point. So in seeking to remove Scottish Aviation from the scope of the proposals within this Bill the noble Lord is seeking to override the wishes expressed by those who work in the company. As my right honourable friend the Secretary of State made clear in the Second Reading debate in another place, the future for workers ultimately depends on the ability to sell their products. We believe, and those in Scottish Aviation agree, that they will do better in public ownership than outside it. The situation is a difficult one, and the Government would not pretend otherwise; but under public ownership the resources represented by Scottish Aviation, and most important the skill and experience of management and workforce, can, in our judgment, be used to the best advantage
1714
of the nation as a whole. Just how this should be done will be a matter for the Organising Committee, and, in due course, for the new Corporation, to consider.
May I take up one or two of the points the noble Lord made in moving the Amendment. The Organising Committee has already made it plain that they will not be establishing a centralised bureaucracy. The relevant Corporation is obliged under the Bill to take into account the desirability of promoting the largest degree of decentralisation of management consistent with the proper discharge of its functions. As my right honourable friend the Secretary of State announced in another place on 29th June, it is the Organising Committee's intention to maintain the separate identity of Scottish Aviation with a high degree of local autonomy, to maintain it as a separate profit source within British Aerospace. This is in line with the strong views expressed by the workforce there. But it must remain, of course, for British Aerospace to decide exactly what role Scottish Aviation should have within the organisational structure which they will be establishing.
I should also perhaps say a word about the employment rundown. The company's present rundown, which was mentioned by my noble Lord, is due partly to the completion of the Jetstream project and to a general rundown in its subcontract work. That, I am afraid, is symptomatic of the depressed state of the aircraft market in the current world economic situation. I do not think I can really add to what has already been said here or in another place. It becomes at the end of the day a matter of judgment in the light of the representations that have been made, and I would urge noble Lords to reject this Amendment.
Lord CARR of HADLEY: My Lords, may I say one or two words very briefly about this. There are two issues here. One is, should this company be in public ownership or not? And, strange though it may seem to noble Lords opposite, at this late stage on Friday afternoon on this Bill I do not want to argue that point. But, even if one accepts that it should be in public ownership, it does not necessarily follow that public ownership has to be equated with nationalisation in the sense we are talking about. This is a point made a number of times during our debates.

1715
What we are really saying is, "For the moment let us accept the argument that public ownership is appropriate. It is none the less not appropriate to put this particular kind of company within a great organisation like British Aerospace", which is comprised of two giant companies, BAC and Aerospace Division of the Hawker Siddeley Group.
A company of the size of Scottish Aviation, with its type of work, is disparate; it does not fit into that sort of matrix. I do not want at this juncture to argue about public ownership, but I do not believe it is the right form of public ownership to put it within this great nationalised corporation. I do not think we can press the matter today. My noble friend must take whatever decision he likes but I hope he will not altogether close the door on further discussion of this before we have finisned our debates.
Lord TREFGARNE: My Lords, I am not going to pursue the argument to a Division this afternoon. I will read carefully what the noble Lord has said. I will take particular note of the closing words of his speech: "It is a matter of judgment, in the light of representations made." He had referred earlier, of course, to the representations from the workforce. In the light of that observation, I hope now that he will apply his judgment to the representations made in the case of other companies which have been included in this Bill against their will. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 179:
In page 80, line 34, after ("aircraft") insert ("other than guided weapons").
The noble Lord said: My Lords, at night, the noble Lord, Lord Melchett, and I had an exchange on this subject. This Amendment is a drafting Amendment on our side of which the noble Lord admitted he had totally misunderstood the purpose. He said he would have a look and see whether he thought it was necessary or desirable. Therefore, I have nothing further to say, the point being that we thought it might be useful to make it quite clear that unmanned aircraft for this purpose did not include guided weapons. I beg to move.
Lord WINTERBOTTOM: The noble Lord, Lord Strathcona and Mount Royal, has put the point very shortly. I shall try to explain that we believe that although obviously this is an intention to ensure clarity, it is not really necessary. The Amendment as we see it seeks to make sure that the guided weapons are within the scope of the Bill by including them within the definition of "aircraft". We have taken a rather different approach which makes it unnecessary.
If the noble Lord would look at line 18, he will see that we have explicitly covered guided weapons in that line. What is included or excluded from the definition of aircraft makes no difference to the guided weapon criteria. This means that of the two guided weapons companies, the British Aircraft Corporation meets the criteria because it makes both aircraft and guided weapons, while Hawker Siddeley Dynamics meets the criteria of making guided weapons. Given our approach, which we believe has the best chance of making the position clear, no drafting changes are necessary, we believe, and I hope that I have convinced noble Lords opposite of this fact. Perhaps I have not properly understood the noble Lord. Would he let me know if I have convinced him or not?
Lord STRATHCONA and MOUNT ROYAL: My Lords, I am not quite sure that I am the right person to be convinced or otherwise, but the noble Lord sounded entirely plausible to me. We shall study what he has said and see whether it is satisfactory. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Schedule 2 [Shipbuilding Industry]:
3.34 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 180:
In page 81, leave out lines 15 to 17.
The noble Lord said: This Amendment has associated with it Amendments Nos.183, 186 and 187, which I suggest might be discussed with it. These Amendments draw attention to the special position of the warship builders as distinct from the merchant shipbuilders. The

1717
warship builders consist of three companies, Vickers, Yarrow (Shipbuilders) Limited and Vosper Thorneycroft Limited. We have debated their situation at an earlier stage of the Bill. Now I shall remind your Lordships only briefly of the reasons which we have given.
First, these companies are specialists in a highly technical field. Secondly, they are profitable, successful companies, providing valuable exports for Great Britain. Thirdly, far from unemployment having been caused by their operations or redundancies, in these companies as a whole employment has increased in recent years. Fourthly, they are not a burden on the taxpayers. Where some loans have been made from public sources they are being repaid.
The naval shipbuilders are fulfilling orders for the Royal Navy. In addition, they have been winning orders from foreign countries. The individual companies have close, direct contacts with their foreign customers. These naval shipbuilders are operating in a completely separate market from the merchant shipbuilding side, and the three British firms have shown that they can compete against the best of world competition. But the sharpness of their competitive edge and efficiency in a specialised and technical market is likely to suffer under the impersonal centralised structure of a nationalised industry. This debate now gives the Government an opportunity to consider again the inadvisability of causing an unnecessary and irrelevant disturbance to a successful industry which is making valuable contribution to exports, to our economy, and to the defence of our country.
3.36 p.m.
Lord MELCHETT: My Lords, may I apologise first of all for not being in the Chamber when the noble Lord rose to move his Amendment. I confess that the rapid progress that we have begun to make through the Amendments rather took me by surprise. My Lords, I know that noble Lords opposite believe that successful companies such as these should not be nationalised, but the Government do not merely see public ownership as a last resort rescue operation for loss-making companies. The Government believe that these companies, who are successful largely
1718
because they are major Government contractors, and who form an important part of the industry, should not be left outside the public sector. I agree that warship building is a highly specialised industry, but I believe that this has perhaps been over-emphasised as an argument against nationalisation.
The building of warships is of course not entirely confined to the specialist builders Vosper Thornycroft, Yarrow, and Vickers. The distinction between these three warship builders and other shipbuilders is not perhaps as clearly drawn as has been sometimes suggested by noble Lords opposite. Several other firms as well as these three have warship building capabilities. Although it remains Government defence policy to increasingly concentrate warship orders on the three specialist yards, it has always been acknowledged that if the Royal Navy is to obtain the ships it requires in the right timescale it will be necessary to place orders with other yards from time to time. That is why at this moment Swan Hunter have on order for the Royal Navy four type 42 destroyers and two other naval vessels, including an antisubmarine cruiser. Cammell Laird are also building two warships, and other companies have fleet auxiliaries or smaller patrol craft, on order for the Royal Navy.
If the specialist warshipbuilders were left outside the scope of the Bill, British Shipbuilders would still therefore have a considerable warship building capability. Surely it would not be in the best interests of the industry as a whole, or those who depend on it for employment, to split warship building into a public and a private sector in this way. The Government believe that it is highly desirable that British Shipbuilders should include a sector whose completions for export over recent years have fluctuated between £15 million and £40 million per annum, and who give direct employment to some 20,000 people.
As I said at Committee stage, these arguments on performance are not arguments for exclusion, but point to the very significant omission that will be created if the warship building companies were to be left out of the Bill. I put forward other arguments for including warship builders in the Bill during the other discussions we have had on this point,

1719
and I have carefully considered the opposing arguments put forward by noble Lords opposite. I can say firmly that the Government remain convinced that it would be totally illogical and damaging to both British Shipbuilders and to the shipbuilding industry as a whole to remove the warship builders from the scope of the Bill.
Lord WIGODER: My Lords, we on these Benches strongly support the Amendment. We accept the observation of the noble Lord, Lord Melchett, that the mere fact that an industry is successful is not in itself a decisive argument against it ever being nationalised. However, we are dealing here with three companies which are not merely successful; they are enterprising, inventive, thriving and highly competitive. We believe that in those circumstances no proper case has been made out by the Government for their nationalisation proposal. We understand that the other place will have various matters arising out of this and other Bills to reconsider during the next week or two and we think it entirely proper that the other place should be given an opportunity to reconsider whether this most important and successful industry should be included within the scope of the Bill. Therefore we very much hope that the noble Lord, Lord Campbell of Croy, will press the Amendment to a Division.
Baroness WARD of NORTH TYNESIDE: My Lords, the noble Lord, Lord Melchett, is perhaps not old enough to remember that it was an argument about naval shipbuilding just before 1931 that produced in that year an Election and the overwhelming defeat of the Socialist Party, followed by a very long and successful run by the Conservatives and, on occasions, the Liberals. I thought I would mention that to Lord Melchett because, having lived a very long time, I remember well how that naval shipbuilding matter produced a split at a time when we had a very brave Prime Minister, Ramsay Macdonald, who left his own side and formed a National Government—not that I am in favour of a National Government. I like having the facts presented, and I thought that I would let a rather young Minister know what
1720
happened on the last occasion when we had a controversy over naval shipbuilding.
Lord ROBBINS: My Lords, in contradistinction to the noble Baroness, I would always hesitate to argue with the noble Lord, Lord Melchett, on the ground of his age group; I think there is no a priori reason why he should be more right or more wrong than I am in my age group. However, on this occasion he has totally failed to convey conviction to my dim understanding. Does he argue that nationalisation would make these firms more efficient or that the omission of their brand of present efficiency would make the remainder of the industry less efficient, neither of which arguments would seem to convey the slightest conviction?
Lord HAWKE: My Lords, the argument for taking these enterprises out of the Bill is that in future, if I were a foreign Government, I would not place an order in this country—knowing the political record of the Labour Party and its love-hate relationship with foreign Governments—with a Government-owned shipyard.
Viscount SIMON: My Lords, I strongly support what my noble and learned friend Lord Wigoder said in support of the Amendment and I will mention only one other point of great importance. Here we have a specialist group of ship-builders with a very high technological achievement. If they are lumped in with merchant shipbuilders who have not had such great success it seems almost inevitable—I understand that this has been indicated by the Organising Committee—that the profits which they make will go into a common pool and that British Shipbuilders will then decide how it should be spent. I can think of nothing that would be more damaging to the morale of specialists than to feel that their success is being used not to develop their industry but simply to prop up perhaps failings in other parts of a similar industry.
I believe that this is a quite separate industry. It is as though the Government said that they were going to nationalise the motor car building industry and that that would include tanks. Admittedly, these people are building ships, but they are of a very different type and the whole

1721
operation is different. The high technology involved in all that goes into these ships is different. Therefore, I believe that it would be much better to take these three companies out. They are the three companies that are specialising in this field and I do not believe that it would in the least prevent orders for warships being placed with the other shipbuilders, as the noble Lord, Lord Melchett, said.
The Earl of HALSBURY: My Lords, may I remind the noble Lord, Lord Melchett, for the second time of the Fabian pamphlet by his right honourable friend Mr. Anthony Crosland, which states that the private sector is freedom's guarantee against bureaucracy? In the spirit of what the noble Viscount, Lord Simon, has said, why is the nationalised sector so afraid of the competition that it might get from a freely operating private sector? Is it felt that the quality of the management they would employ would put the public sector at a disadvantage?
Lord CAMPBELL of CROY: My Lords, the noble Lord, Lord Wigoder, has, in his contribution to this debate, confirmed what we understood from the earlier debate—that is, that the noble Lords on the Liberal Benches agree with
us on this point. Indeed, they joined their names with ours in these Amendments because, on consideration, they thought them preferable to those that they had themselves tabled.
The noble Lord, Lord Melchett, gave as a reason against these Amendments that some naval work was carried out elsewhere other than in the yards of these three companies. Of course one would expect that, from time to time, particular work would he arranged elsewhere. There will always be flexibility and one would expect it, particularly if a special reason suddenly required a particular job to be done in a hurry. But this is no argument at all as regards these three specialist companies. They can easily be separated from the merchant shipbuilders from whom they are very different in the activities that they carry out. I believe that your Lordships' House should give the other place the opportunity to look at this matter again.
3.48 p.m.
On Question, Whether the said Amendment (No. 180) shall he agreed to?
Their Lordships divided: Contents, 74; Not-Contents, 45.

CONTENTS

Airedale, L.

Greenway, L.

Onslow, E.

Amory, V.

Halsbury, E.

Rankeillour, L.

Ampthill, L.

Hamilton and Brandon, D.

Redesdale, L. [Teller.]

Arran, E.

Hanworth, V.

Robbins, L.

Atholl, D.

Harmar-Nicholls, L.

Rochdale, V.

Auckland, L.

Hawke, L.

St. Davids, V.

Balfour of Inchrye, L.

Henley, L.

Sandford, L.

Barrington, V.

Hereford, V.

Sandys, L.

Beaumont of Whitley, L.

Hornsby-Smith, B.

Sempill, Ly.

Byers, L.

Inchyra, L.

Simon, V.

Campbell of Croy, L.

Lauderdale, E.

Skelmersdale, L.

Carr of Hadley, L.

Lindsey and Abingdon, E.

Stamp, L.

Carrington, L.

Long, V.

Strathcarron, L.

Chelwood, L.

Lucas of Chilworth, L.

Strathcona and Mount Royal, L.

Colville of Culross, V.

Lyell, L.

Sudeley, L.

Cullen of Ashbourne, L.

Maybray-King, L.

Trefgarne, L.

Daventry, V.

Merrivale, L.

Trevelyan, L.

de Clifford, L.

Molson, L.

Tweedsmuir, L.

Denham, L. [Teller.]

Monck, V.

Vickers, B.

Drumalbyn, L.

Monson, L.

Vivian, L.

Dudley, E.

Morris, L.

Ward of North Tyneside, B.

Effingham, E.

Mottistone, L.

Westbury, L.

Elles, B.

Newall, L.

Wigoder, L.

Forbes, L.

O'Hagan, L.

Winstanley, L.

Gore-Booth, L.

O'Neill of the Maine, L.

NOT-CONTENTS

Ardwick, L.

Henderson, L.

Parry, L.

Birk, B.

Houghton of Sowerby, L.

Peart, L. (L. Privy Seal.)

Bowden, L.

Jacques, L.

Peddie, L.

Brimelow, L.

Janner, L.

Pitt of Hampstead, L.

Brockway, L.

Kagan, L.

Ponsonby of Shulbrede, L

Champion, L.

Kaldor, L.

Shepherd, L.

Collison, L.

Kennet, L.

Stedman, B.

Davies of Leek, L.

Leatherland, L.

Stewart of Alvechurch, B.

Donaldson of Kingsbridge, L.

Llewelyn-Davies of Hastoe, B.

Stone, L.

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

Lovell-Davis, L.

Strabolgi, L. [Teller.)

Fisher of Camden, L.

McCluskey, L.

Wallace of Coslany, L.

Gordon-Walker, L.

Melchett, L.

Wells-Pestell, L. [Teller.]

Gregson, L.

Murray of Gravesend, L.

White, B.

Hale, L.

Oram, L.

Winterbottom, L.

Harris of Greenwich, L.

Pannell, L.

Wynne-Jones, L.

On Question, Amendment agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.
3.56 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No, 181:
Page 81, leave out lines 19 to 30.
The noble Lord said: My Lords, I beg to move Amendment No. 181, and connected with it are Amendments Nos 182 and 184 which I suggest might be conveniently discussed with it. Amendment No. 181 is another in the series which would complete the changes necessary to remove the independent ship repairers from the Bill. We have already discussed that subject two or three times during the course of the Bill. This Amendment removes the list of 12, an arbitrary selection of companies, and the other two Amendments delete other references to ship repairers in the Bill.
Viscount COLVILLE of CULROSS: My Lords, I wonder whether I might say one word before the noble Lord, Lord Melchett, answers. The great merit of these Amendments is that they preclude any necessity for me to make a speech on hybridity. Having studied very carefully the Written Answers from the noble Lord, Lord Peart, I am now delighted to say that I would be happy to make a speech on hybridity, but I think not this afternoon. I hope the occasion will never arise; but, at any rate, if these Amendments are passed that makes sure of it for today.
Lord BALFOUR of INCHRYE: My Lords, could the Minister explain one point when he comes to reply? When we were discussing the nationalisation of Scottish Aviation, in support of the Government's action the Minister cited
1724
the wishes of the operatives. If, in the one case, the Government take into account the wishes of the operatives, surely in a case like this they ought equally to take into account the wishes of the operatives, which are not for nationalisation.
Lord MELCHETT: My Lords, I think we would probably disagree about the wishes that have been expressed by the people working in this industry, but, as the noble Lord made clear, we have already had a substantial debate on the main Amendment, and divided on it, and I would not wish to delay the House by dividing on the consequential Amendments.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 182:
Page 82, line 12, leave out ("a shiprepairing company").
The noble Lord said: My Lords, this Amendment is consequential on Amendment No. 181. I beg to move.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 183:
Page 82, leave out lines 30 to 33 and insert ("15,000 gross tons").
The noble Lord said: My Lords, this Amendment is consequential upon Amendment No. 180, concerning the naval shipbuilders. I beg to move.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 184:
Page 82, line 42, leave out paragraph 3.
The noble Lord said: My Lords, this Amendment is consequential upon Amendment No. 181, concerning ship repairers. I beg to move.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 186:
Page 83 line 43, leave out ("except in the case of a warship").
The noble Lord said: My Lords, this Amendment and Amendment No. 187 are related to the Amendments on warship building, and particularly Amendment No. 180. I beg to move Amendment No. 186.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 187:
Page 84, line 5, leave out from ("registered") to end of line 9.
Schedule 4 [Acquisition of certain assets]:
Lord MELCHETT Lord MELCHETT moved Amendment No. 188:
Page 86, line 12, after first ("the") insert ("property or").
The noble Lord said: My Lords, this Amendment and the next one, Amendment No. 189, are purely drafting Amendments. I beg to move.
Lord MELCHETT Lord MELCHETT moved Amendment No. 189:
Page 86, line 13, leave out ("those") and insert ("the property or").
Lord MELCHETT Lord MELCHETT moved Amendment No. 190:
Page 87, line 44, after ("transferor") insert ("or incumbrancer to whom it is payable).
The noble Lord said: My Lords, Amendment No. 190 ensures that where compensation is due to an encumbrancer rather than the transferor, there is provision for compensation stock to be issued to him. I do not think it makes any alteration in substance. I beg to move.
Schedule 7 [Procedure etc. of arbitration tribunal]:
3.59 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 191:
Page 97, line 8, at end insert—
("(e) the provisions as to Awards.")
The noble Lord said: My Lords, the last time we dealt with this we were in even greater haste than perhaps some noble Lords may feel we are at the moment. I thought perhaps we had been a little cursory in dealing with what could be quite an important point, which returns to this question of the timescale for paying compensation. All that these two Amendments are seeking to do is to improve the tribunal's procedures to ensure that there is not undue delay in settling these matters.
The noble Lord said that he was about to give us a list, which would take 15 minutes to read, of some sections of the Arbitration Act which he did not feel it would be appropriate to include here. He also mentioned—and I am sure we agree with him, except that I do not agree with his English—picking upon speed as the only "criteria" worthy of mention in the Bill. I cannot remember what time of the day it was, but it was certainly a slip which was entirely legitimate at the time. While I would agree with that, what we are seeking to do is to ensure that there is not undue delay. We have gone over this point once before, and I wonder whether he thinks that perhaps he was overhasty. I am hoping that we might conceivably end on a happy note of agreement. Therefore, I beg to move Amendment No. 191.
Lord MELCHETT: My Lords, I regret to say that we are not going to end on that happy note. I cannot accept either of the two Amendments to which the noble Lord has spoken. The problem with Amendment No. 191 is that it would apply to a long list of sections of the 1950 Arbitration Act and to respond to it effectively I should have to go through each section and say why it is inappropriate for it to apply. I did not do this in Committee. Perhaps the noble Lord will allow me to write a letter to him setting out each section and the reason why it need not apply. There is nothing underhand about this. They are perfectly

1727
straightforward and reasonable reasons for not wanting each of the particular sections of that Act to apply. If the noble Lord will agree, I will write him on that point.
On Amendment 192, which the noble Lord also spoke to, perhaps I can try to improve on the English which I used at the Committee stage. The Government sympathise with the desire to see speedy decisions reached by the Tribunal, but in addition to speed there are other important objectives; for example, the need to give the parties a fair hearing and adequate opportunity for presenting their case. Subjects likely to figure in the Arbitration Tribunal rules would include the institution of proceedings, the joinder of parties, pleadings, interlocutory directions, service of documents, representation at hearings and evidence.
I can assure noble Lords that the Government have taken fully on board the need to reach speedy decisions and the regulations will be framed with this in mind consistent with the need to see justice done. However, I do not think it necessary to make statutory provision for this as speed is not the only criterion worthy of mention in the Bill. With the assurance that we have taken this point on board, I hope that the noble Lord will not press Amendment No. 192, either.
Lord STRATHCONA and MOUNT ROYAL: My Lords, I am grateful. I am sure the letter the noble Lord writes will reassure the industry; and, indeed, the further assurance he has given will also reassure the industry. I am not sure that I have put over to him the point of difference between "criterion" and "criteria". That is a rather narrow point on which to disagree at the end of an arduous Report stage. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.

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