Sitting of 12 December 1977

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

REPORT OF SIR HENRY FISHER
Address for Return
of the Report of an Inquiry by the Honourable Sir Henry Fisher into the circumstances leading to the trial of three persons on charges arising out of the death of Maxwell Confait and the fire at 27 Doggett Road, London, S.E.6.—[Mr. Merlyn Rees.]

ORAL ANSWERS TO QUESTIONS
  TRADE
  Mr. Speaker: May I remind the House that brief supplementary questions and brief replies have been a great blessing to us all.
  TRADE

    British Airways
    Mr. Michael McNair-Wilsonasked the Secretary of State for Trade what dis
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    cussions he has had with the Chairman of British Airways about the purchase of new aircraft for the airline.
    Mr. Terry Walkerasked the Secretary of State for Trade if he will discuss with the Board of British Airways its plans to purchase foreign aircraft to renew its present fleet.
    Mrs. Haymanasked the Secretary of State for Trade if he will make a statement on the future purchasing policy of British Airways.
    The Under-Secretary of State for Trade (Mr. Clinton Davis): At this stage the evaluation of the relative merits of the various possible replacement aircraft is a matter for British Airways, but my right hon. Friend and I are arranging to meet the chairman shortly to discuss the airline's re-equipment position.
    Mr. McNair-Wilson: Does the Minister hold the view that British Airways should be allowed freedom to use its commercial judgment without interference in ordering any new aircraft? If it decides to buy American, can he say whether either the Boeing or Douglas or parts of it could be built under sub-contract by British Aerospace?
    Mr. Davis: The second part of that question is clearly a matter for my right hon. Friend the Secretary of State for Industry. As to the first part, if I may say so with respect, the hon. Gentleman has put the matter a little simplistically

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    because, whilst it is perfectly true that British Airways is entitled to and should use its commercial judgment in arriving at a fair evaluation of competing quotations, nevertheless the matter has to come to my right hon. Friend the Secretary of State, who must, of course, be able to look at wider interests too. But the commercial judgment of British Airways is obviously a very important criterion.
    Mr. Walker: Will my hon. Friend have close consultations with the Department of Industry as it alone knows whether British Aerospace will be allowed to make proposals for new projects which are absolutely vital for work continuation in this country for many workers? I believe that this must be the main consideration for all of us.
    Mr. Davis: Of course, consultations would take place with my right hon. Friend the Secretary of State for Industry, and there is nothing to suggest that British Aerospace will in any way be inhibited from making quotations where quotations are required from it. Indeed, nothing that has arisen in recent weeks suggests otherwise.
    Mrs. Hayman: Is it not a matter of concern that the Deputy-Chairman of British Airways should have seemed to pre-empt this decision? Before the meeting, will my hon. Friend make sure that British Airways has had discussions with the Department of Industry and is fully briefed as to the potential of British Aerospace in this field?
    Mr. Davis: The Deputy-Chairman of British Airways was attending an informal Press conference. He denies that any quotation, which has not yet been forthcoming in any event, has been preempted by what he has said. The matter is therefore open, and it will be for British Airways, I hope very carefully and fairly, to consider all the quotations that it receives on this matter.
    Mr. McCrindle: Are not British Airways' requirements for aircraft, which will have to last well into the 1980s, already well known to British Aerospace? Would not the Minister's best contribution to this controversy be to make sure that the chairmen of both corporations engage in discussions, so that the chairmen of both corporations engage in discussions, so that hopefully an aircraft will
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    be available which would come up to the standards required by British Airways?
    Mr. Davis: I am sure that that sort of discussion would take place.
    Mr. Hoyle: Is my hon. Friend aware of the concern expressed by British Aerospace about the morale of the people employed in the factories, particularly in relation to the statement made by the Deputy-Chairman of British Airways?
    Mr. Davis: The morale of the work-people in the factories, I dare say, might have been adversely affected by a suggestion that British Aerospace was out of the running. The suggestion is now denied and refuted. Accordingly, I hope that British Aerospace will be able to tender competitively for this very important project.
    Mr. Rost: What are the Government doing to make up for their mistake in neglecting to come in on the European airbus? In particular, what are the prospects now of getting involved in this so that we may have Rolls-Royce engines with it?
    Mr. Davis: The hon. Gentleman knows perfectly well that that is not my responsibility but the responsibility of the Secretary of State for Industry.

    Uganda
    Mr. Canavanasked the Secretary of State for Trade what is the latest estimate of movement in the amount of trade between the United Kingdom and Uganda.
    The Secretary of State for Trade (Mr. Edmund Dell): United Kingdom exports to Uganda in the first 10 months of 1977 were £17·2 million fob and imports in the same period £29·9 million cif. Exports in the corresponding period of 1976 were £8·4 million and imports £29·1 million.
    Mr. Canavan: As it is now six months since the Foreign Secretary promised to do everything possible to stop the shuttle service from Stansted to Uganda, why is it still running four times a week? Will the Government take immediate steps to stop this immoral traffic of expensive luxury goods which the dictator Amin is using to buy the loyalty of his murderous henchmen?
    Mr. Dell: That matter is still under consideration. As my hon. Friend will know, we have certain responsibilities and commitments under the Chicago Convention.

    USSR (Freight Rates)
    Mr. Goodladasked the Secretary of State for Trade when he next plans to discuss the subject of freight rates with the Soviet authorities.
    Mr. Clinton Davis: Until the Soviet authorities have demonstrated their willingness to make progress towards resolving current practical problems, I see no point in engaging in any further ministerial discussion with the Soviet Government.
    Mr. Goodlad: Is the Minister aware that great concern is felt by the shipping community here that he should make further representations to the Soviet authorities at the earliest possible opportunity? Will he tell the House when discussions with his EEC counterparts on an appropriate Western response to the Soviet behaviour will be established, and what he hopes that response will be?
    Mr. Davis: I do not believe that that is the view of British shipping interests in this country. They are well aware that I met the Soviet Minister in Moscow, and it was clear that no progress had been made in a number of important issues which tested the good faith of the Soviet Government in seeking to resolve problems. The next move must be in the hands of the Soviet Government.
    As regards the EEC, I spoke at the Council of Ministers on this issue on 27th October and we hope that progress will be made early in the new year—perhaps at the next meeting, which I hope will take place in March.
    Sir J. Langford-Holt: Is it not clear that, while this delay is taking place, the Soviet Government are continuing to operate artificially low dumping rates for their shipping?
    Mr. Davis: Of course that is true, and it is important that we should be able to co-ordinate a strategy. It is of little use seeking to exercise unilateral action in a situation of this kind. That is why I and the German Minister in particular have made an appeal at the EEC to try to
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    arrive at a co-ordinated strategy at the earliest opportunity.
    Mr. David Huntasked the Secretary of State for Trade what positive steps he has taken to protect British shipping from the threat posed by the Soviet merchant fleet.
    Mr. Clinton Davis: I have urged our EEC partners to consider proposals for co-ordinated defensive measures.
    Mr. Hunt: Is the Minister aware that there is strong support for his move to seek prompt action against the Russians through the EEC? Although earlier today he suggested that he expected prompt action by the Commission, is he aware that it is talking of a period of 12 months for consultation? Will he therefore make sure that the Commission treats this problem with the urgency that it deserves?
    Mr. Davis: I certainly have not been advised that the Commission contemplated taking 12 months. That would not be in the interests of the United Kingdom. I should hope for urgent consideration of this matter. I hope that even now, at this stage, the Soviet Union will show a preparedness to arrive at a reasonable accommodation rather than to engage in confrontation.

    Companies Bill
    Mr. Tim Smithasked the Secretary of State for Trade if he will introduce new categories of companies in the forthcoming Companies Bill.
    Mr. Dell: The Companies Bill will contain proposals for substantial revision of the definitions of public and private companies, and will require public companies to adopt a new designation.
    Mr. Smith: In view of the Secretary of State's statement that, in effect, the Companies Bill will be limited to implementation of the second EEC directive on the reform of Company law, does he not agree that another opportunity to reform the framework within which business is required to operate in this country—most of which is now 30 years out of date—has been lost?
    Mr. Dell: I did not quite say what the hon. Gentleman suggests. I said that I

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    could give no assurance that it would be possible to incorporate in the Companies Bill that will come forward the matter covered in the White Paper that I have recently issued. I hope that it will be possible. I am not now certain of the position and, therefore, I can give no assurance. But certainly we are attempting to use this time to engender public discussion about a number of issues, including the position of small companies, which would be important in any such review of company law.
    Mr. Anthony Grant: Is the Minister aware that the difficulties of small companies arise not so much from their status under company law as from the excessive and oppressive nature of legislation, particularly on taxation and employment protection, which has been piled upon them in recent years? Is he aware that, if that aspect can be put right, it will probably be unnecessary to jigger around with them and create a second-class citizen in our company law?
    Mr. Dell: I note what the hon. Gentleman says. There is nevertheless an argument for considering the position of the small company under company law. We are in the process of doing so, and it may well be appropriate to issue a Green Paper on that subject.

    Spain, Portugal and Greece
    Mr. Biffenasked the Secretary of State for Trade what is the estimated current annual value of British exports to and imports from Spain, Portugal and Greece as a percentage of current trade with non-Communist European countries.
    The Under-Secretary of State for Trade (Mr. Michael Meacher): In the 12 months to October 1977, United Kingdom exports to and imports from these countries together were £967 million and £751 million respectively, representing 6 per cent. and 4 per cent. of our trade with non-Communist European countries.
    Mr. Biffen: Could the hon. Gentleman have an assessment made of that trade, to indicate whether there are any particularly sensitive items which will require a protracted transitional arrangement should these countries be brought within an enlarged Community, and report to the House accordingly?
    Mr. Meacher: Yes, Sir. We shall certainly do that, but I can assure the hon. Gentleman that the transitional arrangements will include a reciprocal safeguards clause. However, perhaps the most sensitive item is textiles. There have been negotiations on that subject with all three countries, in view of the renegotiation of the MFA with the 30 low-cost countries.
    Mr. Ioan Evans: What calculations have been made of the effect on the trade balance if Spain, Portugal and Greece come into the Common Market and on the effect of the common agricultural policy applied to those countries? Will there be wine, sherry and port lakes in Europe?
    Mr. Meacher: I cannot give my hon. Friend any precise estimates, but we are concerned about the effect on agricultural goods. There will have to be a Mediterranean agricultural régime, since present measures apply only to Northern European agriculture. Our concern for radical reform of the CAP will, in fact, be strengthened by the accession of the three new countries.

    Poland
    Mr. Blakerasked the Secretary of State for Trade if he will make a statement about Anglo-Polish trade.
    Mr. Tim Rentonasked the Secretary of State for Trade what calculations his Department has made of the long-term effect on the British balance of payments of the recent shipbuilding deal with Poland.
    Mr. Dell: Poland is our second most important export market in Eastern Europe with a consistently favourable trade balance to the United Kingdom. Trade has continued to expand during 1977.
    No detailed calculations have been made by my Department on the overall effect of the shipbuilding deal on the balance of payments, but I would expect it to be positive.
    Mr. Blaker: Does the Secretary of State accept that he is responsible for looking after the interests of British shipping lines? Are not their interests and those of the people who work for them likely to be affected adversely by the proposed British-Polish shipbuilding deal?

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    In view of the practice of Communist countries of competing at unfair rates, and of the large subsidies which the British taxpayers will apparently have to pay towards the construction of the ships, what provision will there be that they will not compete in the cross-shipping trade between third countries?
    Mr. Dell: As the hon. Gentleman says, I have a responsibility for British shipping. On the other hand, the rest of the hon. Gentleman's question is posited on the premise, which is totally untrue, that if we had not accepted the orders no one else would have built the ships.
    Mr. Higgins: How many British cars have been exported to Poland, compared with the number of Polish cars imported into this country? What barriers are there to the export of British cars to Poland?
    Mr. Dell: I do not have the figures on the trade in cars. I shall look them up and communicate them to the hon. Gentleman.
    Sir J. Langford-Holt: Has the right hon. Gentleman received any undertaking that the Polish Government will not do with the ships precisely what the Soviet Government are doing with theirs?
    Mr. Dell: I have received no such undertaking. However, once again, the question is posited on the premise that if we did not build the ships no one else would. That premise is totally false.
    Mr. Parkinson: Can the Secretary of State tell us at what stage he was brought into the negotiations and whether, in fact, he was ever consulted about the terms before the Prime Minister's statement to the Labour Party Conference?
    Mr. Dell: As the hon. Gentleman knows, the order has a long history, including discussions last December between the Polish and British Prime Ministers. I have been aware of the facts all along.
    Mr. Renton: Will the Secretary of State confirm whether ECGD was forced to increase its limit per country vis-á-vis Poland in order to accommodate the shipping contract? Has ECGD gone beyond the normal, prudent, commercial insurance limit for the contract to be taken on?
    Mr. Dell: The hon. Gentleman knows that Polish credit is good, and the ECGD terms are within the terms of the OECD arrangements.

    Civil Aviation Authority
    Mr. Warrenasked the Secretary of State for Trade how many applications he has received to date seeking the release of information which the Civil Aviation Authority considers itself unable to supply by reason of the Official Secrets Act.
    Mr. Clinton Davis: None, but in four cases I have been asked to permit or direct disclosures of information under Section 36 of the Civil Aviation Act 1971. I did so in three cases and the fourth is at present under consideration.
    Mr. Warren: I thank the Minister for his reply, but will he bear in mind that under the Civil Aviation Act 1971 the Civil Aviation Authority is defined as neither servant nor agent of the Crown? Therefore, what authority has the CAA to invoke the Official Secrets Act?
    Mr. Davis: The hon. Gentleman, when he served on the Committee, raised no question concerning the relevant clause at that time. If he consults the Act, he will find that his interpretation of the position is clearly wrong and that, in fact, Section 61 applies.

    European Community
    Mr. Martenasked the Secretary of State for Trade when he expects to have a balance of trade surplus with the EEC.
    Mr. Meacher: Within the improvement in our overall trading position during this year, there has been a further reduction in our visible deficit with the EEC. But I cannot predict future trends.
    Mr. Marten: Now that we have been in the Common Market for five years, is not the Secretary of State deeply concerned that the balace of trade has been running at about £2,000 million a year plus or minus a little, particularly in manufactures, which must be extremely worrying? Would it not help the overall balance of payments if we were now to purchase more of our food, which comes into the balance of trade, on the world maket?
    Mr. Meacher: As I have already indicated, we are certainly concerned to

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    achieve radical reform of the CAP, to move nearer the objective that the hon. Gentleman raised at the end of his question. The latest figures we have in the past year show that our visible trade with the EEC fell by £239 million, whilst our visible trade deficit with the rest of the world rose by £219 million. Therefore, the ratio of United Kingdom exports to the EEC as against our imports from the EEC rose from 72 per cent. in 1975 to 88 per cent. in the third quarter of this year, which is the highest point since 1971. I think that this indicates a considerable improvement.
    If I may comment briefly on the important point that the hon. Gentleman raised about the £2 billion trade deficit, this is based on our statistics. The Eurostat statistics, which are based on country of origin and not country of consignment, suggest that the deficit may be considerably smaller if that method were used.
    Mr. Speaker: Order. That was brief for the Minister.
    Mr. Robinson: Does not my hon. Friend agree that, if we take the Eurostat figures and eliminate the change that was made in 1974, there has nevertheless been during the past five years an annual deterioration in the trade in manufactures, which is what matters and to which he was referring, of £1,200 million per year? Does he not agree that that is a disastrous trend, and will he tell us what are the dynamic benefits that so many people promised us as a result of entry against that disastrous trend?
    Mr. Meacher: It is certainly a very serious trend. The point I was making is that, if this alternative series for calculating the size of the deficit were used—I am saying not that it is the right method but that it is an alternative method—the trend would be not only smaller but also becoming smaller in the past three years as compared with the British Government's methods of statistics.
    On the general point, it is a very serious trend, but the answer to it lies partly in the Government's industrial strategy and partly in the fact that the results of joining the EEC in the form
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    of full integration will take several years to have effect.
    Mr. Ridsdale: If the Minister wants to make some improvement in this position, will he give far more encouragement to small businesses and industries, which would help to clear unemployment and increase productivity and exports to the EEC?
    Mr. Meacher: It was precisely for that reason that the Government recently introduced the market guarantee entry scheme, particularly for small businesses.
    Mr. John Ellis: Does my hon. Friend realise that all he has demonstrated in his answers so far is that things are getting worse slower than they were before? It is still a disastrous position. Does he realise that he does not have to defend everything at the Dispatch Box? Can he tell us one good thing in the sphere of trade that has come out of the Common Market?
    Mr. Meacher: One result has certainly been that we have in the past had a surplus on our invisible trade. I admit that that is less at present than it was a few years ago, but the net effect is certainly that during the past four years there has been a surplus. Also, one of the other offsets lies in monetary compensation amounts, which are worth up to £400 million a year. My hon. Friend is wrong in saying that things are getting worse slower. They are slowly getting better.
    Mr. Shersby: Will the Minister be kind enough to tell the House exactly what he meant in replying to my hon. Friend the Member for Banbury (Mr. Marten), when he seemed to indicate that the Government were turning their attention to buying more foods from the world market? Will he say which place he has in mind?
    Mr. Meacher: I am saying, as has been said by several other Governments, that we are concerned to achieve radical changes in the CAP, in particular to prevent a further growth of surpluses and a further prevention of the distortion of trade with third countries, which is certainly very bad from the points of view of the Departments of Trade and Industry.

    Aircraft Noise (Heathrow)
    Mr. Jesselasked the Secretary of State for Trade if he will make a statement concerning the future control of aircraft noise around Heathrow Airport.
    Mr. Clinton Davis: My right hon. Friend will use his powers to continue the range of noise abatement measures now in operation, and will seek to strengthen them whenever practicable in consultation with those concerned.
    Mr. Jessel: When the Minister decides on the Mole Valley flight path, following his consultation meeting last week, will he remember that he introduced the present flight path two and a half years ago as a 12-month experiment? Does he agree that it would be most unfair to penalise the people under the present route on the ground of route stability merely because they happen to be the last in line?
    Mr. Davis: I cannot fail to remember the point because the hon. Gentleman has been at me incessantly for weeks on end, and in particular at the meeting on 5th December. I have given him the assurances for which he has asked, but I must look at the matter on the basis of finding a solution which adversely affects the fewest number of people, and that is not an easy solution to find.

    Japan
    Mr. Hal Millerasked the Secretary of State for Trade if imports of Japanese cars to date in the current year exceeded the voluntary limit imposed by the Japanese Automobile Manufacturers Association.
    Mr. Meacher: The Japanese predicted no significant increase for the calendar year. There will be an increase, but exactly how much is not yet clear.
    Mr. Miller: In view of the increase, can the Minister tell the House what powers he has to ensure that any limit for next year is observed, and can he give us an assurance that those powers will be used?
    Mr. Meacher: My right hon. Friend has already made clear to the Japanese Ambassador our very serious concern about the trend in Japanese imports. In
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    the light of the figures for the first 11 months—although there was a drop in October and November—we have made it clear to the Japanese Government that, in our view, this was a significant increase and that a more acceptable level of sales for the future is essential.
    Our own industry is presently in discussion with the Japanese industry, and in deciding what to do—which is very much under consideration by the British Government at present—we shall look carefully at the December figures and Japanese forecasts for next year.
    Mr. Litterick: Is my hon. Friend aware that the Japanese Ambassador recently wrote to me in somewhat indignant terms asserting that the Japanese Government do not apply restrictions on the importation of foreign-made motor cars to Japan? Will he tell the House whether he believes that?
    Mr. Meacher: There are problems in regard to tariffs and non-tariff barriers for imports of foreign cars in Japan, but I believe that more serious than this is the custom and habit of the Japanese of buying, whenever possible, from their own industry. Getting a change in that is the most important thing.
    Mr. Parkinson: Does the Minister agree that, unless and until our own motor industry starts to improve its performance, even if we are successful in limiting Japanese exports to this country, foreign cars from other countries will fill the void? The answer is for the British motor industry to perform better.
    Mr. Meacher: It is true that the productivity and performance of the British car industry has been one of the main reasons for a substantial increase in imports. However, the main thrust of the increase in imports comes not from Japan but from the EEC. Our own problems are partly a result of industrial disputes, but they must also be a result of marking down our targeted output, because there is no other way of explaining the fact that in 1973 we built 1·9 million cars and this year so far only 1·3 million.
    Mr. Formanasked the Secretary of State for Trade if he will make a further statement on the ways in which the Government intend to counter unfair competition from Japan, especially in the electronic components industry.
    Mr. Meacher: The EEC Commission is already investigating an allegation that quartz crystals from Japan are being dumped in the Community. If a United Kingdom industry has evidence that other electronic components are being dumped it should approach my Department's antidumping unit, which will be able to advise it on the presentation of its case to the EEC Commission.
    Mr. Forman: Will the hon. Gentleman also undertake to publish in the Official Report the detailed criteria used by the Government when they try to establish whether dumping is taking place? Why will not the hon. Gentleman's Department make available to interested parties in British industry the data on which such decisions are made?
    Mr. Meacher: In the past we have consistently made available the basis on which we made our judgment. Since 1st July this year anti-dumping powers have been transferred to Brussels, but both the EEC's anti-dumping code and our previous code were based on the same authority, namely, the GATT anti-dumping code. Therefore, there is a close comparison between the two codes. If the hon. Gentleman knows of any industry that does not know the facts, perhaps he will approach us.
    Mr. Lipton: Is my hon. Friend aware that it is possible to bring Japanese money into this country and that the Japanese are willing to provide employment in this country by establishing a television factory in the North of England which would enable them to increase British exports of Japanese sets to other countries? Does my hon. Friend agree that we should all benefit by such a step?
    Mr. Meacher: That is a matter, as my hon. Friend knows, for my right hon. Friend the Secretary of State for Industry. I believe that the Minister of State has made clear his views on that matter.
    Mr. Higgins: Does the Minister have any evidence that Japanese cars are being dumped on the United Kingdom market?
    Mr. Meacher: If evidence is available to suggest that, it should be brought to our attention by our own industries. So far they have not done so.
    Mr. Hoyle: Does my hon. Friend agree that the establishment of the proposed
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    Japanese television factory in the North would have had disastrous consequences on employment in the components sector and on indigenous industry?
    Mr. Meacher: Certainly. The strength of the United Kingdom electronics industry as a result of this inward investment had it occurred was one of the central factors which would have had to be taken into account by the Government in balancing the considerations.

    Nigeria and South Africa
    Mr. Hooleyasked the Secretary of State for Trade what was the value of imports from: (a) Nigeria and (b) South Africa in 1976 and the first half of 1977.
    Mr. Meacher: Imports from Nigeria were valued at £317 million in 1976 and £133 million in the first half of 1977. The corresponding figures for South Africa were £613 million and £468 million respectively.
    Mr. Hooley: Does my hon. Friend agree that his reply illustrates that the pattern of trade is changing and that other parts of Africa are becoming more important sources of raw materials for this country? Might it not therefore be a good idea to diversify our imports away from South Africa, which is a region of high political instability?
    Mr. Meacher: My hon. Friend is right: there is a marked shift in trade. Indeed, by the end of this year it is likely that our exports to Nigeria will be nearly twice the level of our exports to South Africa. On the question of diversion, I am sure that many companies will inevitably draw the conclusion from the recent trend of events that South Africa is likely to be an increasingly risky proposition.

    British Tourist Authority
    Mr. Adleyasked the Secretary of State for Trade what representations he has received from tourism interests concerning the alteration to the constitution of the British Tourist Authority proposed in the Scotland Bill; and if he will ensure that the board retains a membership adequate to represent all the interests of tourism.
    Mr. Dell: I have received representations from the British Tourist Authority and one of the regional boards. But

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    members of the BTA board are not at present appointed in a representative capacity, and I am sure that the smaller board will be able to maintain its close links with the tourist industry.
    Mr. Adley: I thank the Secretary of State for that answer, but is he not aware that the reduction of British Tourist Authority board membership from five to one, as proposed in the Scotland Bill, will reduce the scope of the board to include the varied commercial interests involved in the tourist industry? In view of the fact that there is now on the Order Paper an amendment signed by representatives of the Scottish and Welsh nationalists, the Liberal Party and the Conservative Party to increase this number from one to three, will he give the amendment his support?
    Mr. Dell: Obviously the House will have to consider the amendment, but it was thought that within the context of devolution it was sensible that the chairmen of the national boards should have a decisive influence on the operations of the British Tourist Authority, which acts as an agent for them. The constitution was designed to achieve that effect. I think that that is the best solution.
    Mr. MacCormick: In view of the importance to Scotland of the tourism industry, does the Minister agree that once we have the devolved siutation the Government should do all they can to encourage the airlines to make direct flights available between Scotland and other countries abroad?
    Mr. Dell: There are many routes between Scotland and other parts of the world. It is also a matter for the airlines to discuss the commercial viability of particular services.
    Mr. John Ellis: Does not my right hon. Friend agree that tourism is perhaps the fastest growth industry we have, and would it not be better, whether in Scotland or anywhere else, to have a Minister in office directly responsible for tourism? Would the Minister be opposed to that?
    Mr. Dell: I am the Minister directly responsible for tourism, and I am in office.
    Mr. Neubert: Is it not an unjustifiable consequence of the devolution proposals that England, which attracts the vast
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    majority of visitors from overseas to Britain, should be left at a disadvantage?
    Mr. Dell: I do not believe that England is at a disadvantage. I hold strongly to the view that this is a United Kingdom and that each part of the United Kingdom benefits from the promotion of any other part of it.
    Sir A. Meyer: I fully agree with the right hon. Gentleman's last statement, but is he none the less aware that it would be extremely difficult to satisfy legitimate Welsh requirements on the basis proposed in the Bill?
    Mr. Dell: I hope that is not the case. I think that this is a sensible solution to a problem in which the interests of Wales and Scotland are keenly involved, as well as those of England. I think that the system will work well, and on this basis the British Tourist Authority is able to act as the promotion agent overseas for the three national boards.

    Tourism (Scotland)
    Mr. Crawfordasked the Secretary of State for Trade what are his Department's estimates of the contribution made by overseas visitors to Scotland to the United Kingdom balance of payments.
    Mr. Meacher: I regret that estimates of this sort are not available. The Scottish Tourist Board has estimated that in 1976 expenditure by overseas visitors in Scotland amounted to £115 million.
    Mr. Crawford: Does the Minister agree that it is high time that he agreed with the Scottish Tourist Board Chief Executive, Philippe Taylor, to the effect that that board should be allowed to advertise the tourist potential of Scotland overseas? Does he not think it is a disgrace that the STB should be forbidden by statute from advertising overseas the tourist interests of the very country that it is supposed to represent?
    Mr. Meacher: Under the provisions of the Scotland Bill now before the House, a Scottish Administration would be able to make funds available to the British Tourist Authority to promote overseas visitors going to Scotland. I should have thought that that met the hon. Gentleman's point.
    Mr. Canavan: As many visitors to Scotland come from England and Wales, does my hon. Friend agree that it would damage the Scottish economy if such people had to have a passport to visit a separate Scottish State, particularly if the hon. Member for Perth and East Perthshire (Mr. Crawford) were in charge of a special Scottish Treasury?
    Mr. Meacher: Certainly.

    Multi-Fibre Arrangement
    Mr. Hoyleasked the Secretary of State for Trade what is the present position in relation to the renegotiation of the Multi-Fibre Agreement.
    Mr. Maddenasked the Secretary of State for Trade how many bilateral textile agreements have been agreed between the EEC Commission and textile exporting countries; and if these agreements represent a satisfactory basis for renegotiating the Multi-Fibre Agreement.
    Mr. Dell: The European Commission has completed its discussions on quota levels with 24 low-cost suppliers. We and other member countries are now assessing the results, and the EEC Council of Ministers will decide on 20th December their position on renewal of the Multi-Fibre Arrangement.
    Mr. Hoyle: Is my right hon. Friend aware that, whilst welcoming the MFA, the textile industry is concerned about the transitional arrangement which will allow countries which already have quotas to ship for the whole of next year provided that they ship before 31st December and will allow those which do not have quotas, provided they ship before 31st December and provided the goods arrive before March, to escape the 1978 quotas? Will he bear in mind that in the past there has been disruption of the industry by arrangements of this kind?
    Mr. Dell: We are at the moment giving consideration to the need for transitional arrangements, and that is one of the matters under consideration.
    Mr. Madden: Can the Secretary of State say whether these arrangements have curbed the harmful effects of imports from Hong Kong, Taiwan and South Korea? If he were asked to give
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    a Christmas message to the British textile workers about trading prospects in the year ahead, what would that message be?
    Mr. Dell: The object of the renegotiation has been that the Christmas message should be for an improvement. On the other hand, at this stage I do not want to give my hon. Friend any assessment of the results of the bilateral negotiations so far completed. At the moment, the figures are under close study. During this week there will be consultation with the British textile industry, and the decision will be made next week.
    Mr. Fletcher-Cooke: Nevertheless, does this new position mean that the bad and deleterious practice of giving a 6 per cent. increase in the quota every year to overseas imports, irrespective of the state of trade, has completely disappeared in EEC negotiations?
    Mr. Dell: The hon. and learned Gentleman knows that certain categories of products were established within these negotiations, with different degrees of penetration, different degrees of sensitivity and different rates of proposed growth. We are now just over a week from the day on which we make the decision, We shall be having consultations. We have in mind the intense anxieties of the British textile industry. I hope that we shall be able to make a decision that brings a happier future for that industry.

    Hong Kong
    Mr. Arnoldasked the Secretary of State for Trade whether he met the Governor of Hong Kong during his recent trade discussions in London.
    Mr. Dell: Owing to commitments elsewhere, I was not able to meet the Governor myself. However, I met him in London on 29th September.
    Mr. Arnold: Is it still the case that Hong Kong, as one of the principal suppliers of textiles to the Community, is being asked to accept for 1978 an initial quota level for some products substantially below that of 1976 import levels?
    Mr. Dell: It is certainly true that for certain sensitive products there will be a cutback from the 1976 levels.
    Mr. Madden: As Hong Kong supplies two-thirds of the cheap textile imports to this country, does the Secretary of State

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    agree that it is in any way unfair or unjust to ask Hong Kong to adopt a fairer attitude towards the British textile industry?
    Mr. Dell: We thought it was right to ask Hong Kong to accept a certain reduction in the trade flows. Of course, we run a large balance of payments deficit with Hong Kong. If in the Multi-Fibre Arrangement discussion we were to achieve the overall result that we want, it was essential that Hong Kong should accept that position. There is now bilateral agreement, which fulfils the point in respect of which I have just answered my hon. Friend.
    Mr. Hal Miller: What consideration did the Secretary of State give the Governor's representations on the argument that Hong Kong's quota should be cut back further than required by the needs of the trade, to make way for other third country suppliers?
    Mr. Dell: The Governor certainly made that point when I met him on 29th September, but I indicated that in a difficult negotiation of this kind it was necessary to make arrangements for new suppliers—sometimes suppliers poorer than Hong Kong—which might wish to enter the market. If we were to meet the requirements of the mandate, the renegotiations, as the European Community as a whole saw them, would require certain action to be taken. That action, I hope, is now embodied in the bilateral agreement. At the moment, I do not wish to judge that bilateral agreement any more than any of the others to which hon. Gentlemen have referred.

    China and Japan
    Mr. Neubertasked the Secretary of State for Trade what is the United Kingdom balance of trade with China and Japan, respectively, for the last 12 months to date.
    Mr. Meacher: Figures on a balance of payments basis for trade with individual countries are not compiled. Our crude trade deficit over the last 12 months up to October was £49 million with China and £593 million with Japan.
    Mr. Neubert: Does the Minister have some progress to report on boosting exports to these two countries?
    Mr. Meacher: The decline in our exports to China is the result of the completion of past contracts, particularly in aerospace and mining machinery. But I hope that the recent visit of the Chinese Minister of Foreign Trade and the Vice-Minister in charge of the State planning commission will lead to the United Kingdom's becoming a new major source of supply.
    In conjunction with the EEC and the United States, we have repeatedly pressed Japan to increase its import of manufactured goods from the West. I understand that the new Japanese Cabinet has now agreed a package of advance purchases and administrative measures in advance of action on the multilateral trade negotiations, for which I am hopeful.
    Mr. Lipton: Will my hon. Friend bring his influence to bear upon his colleagues in the Department of Industry and let them know that the balance of trade between this country and Japan would be vastly improved if Japanese industrialists were encouraged to come to this country to invest, establish factories here and export goods to Japan?
    Mr. Meacher: We certainly make efforts in that direction, as my hon. Friend knows. We welcome more visits from Japanese business men and we also look to their doing their part to increase their trade by buying from us.
    Mr. Ridsdale: Is the Minister aware that, if we wish to do something about the adverse balance of trade with Japan, we must do something more to improve the climate to encourage investment in this country? Is he further aware that a great deal of the adverse criticism that has come from many people has turned away important Japanese investment in this country, which will be adverse to us?
    Mr. Meacher: Despite the recent case in respect of Hitachi, I fully expect the Japanese to continue to take a close interest in this country, particularly because of the low wages in Britain.
    Mr. MacFarquhar: My hon. Friend mentioned aerospace. Can he deny allegations that negotiations of some kind for the sale of Harriers which were going ahead under the previous Government

    23
    have slowed to a standstill under the present Government?
    Mr. Meacher: I have no such knowledge.

    Export Credits
    Mr. Ridleyasked the Secretary of State for Trade how many times to date he has invoked his powers under Section 2 of the Export Credit Guarantees Act to withhold export credits.
    Mr. Dell: These powers are frequently invoked. The day-to-day administration of Section 2 of the Act entails frequent judgment on whether or not in the national interest export credits shall be made available for particular contracts or particular markets, in the circumstances where such business is not considered suitable for cover on a commercial basis under Section 1.
    Mr. Ridley: As the right hon. Gentleman admits that the reason for refusing credits is that cover is not considered suitable for the creditworthiness of countries to which exports might be sent, what powers does he believe he uses when he refuses them for reasons of enforcing incomes policy? Should he not ask the House to legislate if he wishes to take powers of that sort, rather than misuse the powers given to him?
    Mr. Dell: I am advised that under Section 2 I have powers to make a judgment in the national interest involving a variety of considerations, including the consideration of pay settlements.
    Mr. Nott: Does the credit to be granted under the Anglo-Polish shipping deal come under Section 1 or Section 2? Is it within the prudential limits laid down for Section 1 or Section 2 or not?
    Mr. Dell: I believe that it is under Section 1, but if I am wrong I shall tell the hon. Gentleman. It is certainly within our judgment of the prudential limits and, I repeat, it is within the OECD understanding.
    Mr. Powell: Has the right hon. Gentleman any evidence that firms that are refused export credits have done any worse in consequence?
    Mr. Dell: It is, of course, open to any firm that is refused a guarantee by ECGD to look elsewhere in the market to secure it. It may be that firms will discover that there are other opportunities.

    Industrial Democracy
    Mr. Ioan Evansasked the Secretary of State for Trade when the Government will publish a White Paper on the Bullock proposals for industrial democracy.
    Mr. Radiceasked the Secretary of State for Trade when the Government will publish a White Paper on industrial democracy.
    Mr. Dell: The Government's proposals will be published when the consultations in which we are at present engaged have been completed.
    Mr. Evans: Will my right hon. Friend seek to persuade his Cabinet colleagues to give higher priority to self-government in industry rather than the constitutional measures relating to devolution and direct elections to Europe? Is it not as important for workers to have a say in the running of industry as for shareholders? Will the Government give priority to the public industries in setting an example to the rest of industry?
    Mr. Dell: We have been trying to establish a consensus on this matter. My hon. Friend will remember that there was a certain change of emphasis, in my judgment, within the TUC's composite motion on this matter which suggested that the worker-director approach to industrial democracy was not the only approach to it. Certainly we believe that workers should be involved in the discussion of important decisions made by companies. We are also attempting to give an impetus to the development of industrial democracy in the nationalised industries.
    Mr. Adley: As trade subjects are considered to be so important by the Liberal Party that it has not sent one representative to sit in the Chamber during the entire period of Question Time, will the Minister say what representations the Government have received from the Liberal Party on the Bullock proposals? We wonder how much notice to take of those representations when Members from the Liberal Party do not bother to turn up.
    Mr. Dell: I have had discussions with the Liberal Party on the question of industrial democracy.
    Mr. Pavitt: Will my right hon. Friend, in his consultations, give full weight to the evidence given to the Secretary of State for Employment by Glacier Metals, which for a quarter of a century has had a remarkable system of worker participation and has a number of reservations about the Bullock Report?
    Mr. Dell: Yes. The experience of Glacier Metals is well known. I have found no lack of representations to me about the lessons to be learned from the experience of Glacier Metals.
    Mr. Tim Renton: Does the Secretary of State regard some paragraphs of his recent White Paper on the conduct of directors as taking the place of and substituting for the majority proposals of Bullock? Does he propose to legislate on those proposals this Session?
    Mr. Dell: The White Paper deals with a number of the minor points which were referred to in the Bullock Report. To that extent, the White Paper fulfils those elements of the Bullock Report. But it does not address itself to the major question in the Bullock Report relating to worker-directors. I have already dealt with the point about legislation and research, and I cannot guarantee that legislation will be introduced this Session on the content of the White Paper.
    Mr. Clemitson: Is it not true that much of British industry is at the moment in a kind of no-man's-land where traditional forms of authority have declined and newer forms of industrial democracy have not yet fully developed? Is it not therefore necessary and urgent that we press ahead with the encouragement of industrial democracy as quickly as possible?
    Mr. Dell: We certainly wish that companies should press ahead. Of course, there is no reason at the moment why they should not now do so on a voluntary basis, and we would encourage such developments.
    Mr. Parkinson: Is the Minister aware that many of us welcome the realism shown in the recent White Paper compared with the Bullock Report, because in the Bullock Report the training for directors seems to require something of
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    the order of two to six weeks of part-time training, whereas in the White Paper it is recognised that being a non-executive director requires skill and experience and that most of those people should come from the ranks of senior management?
    Mr. Dell: The hon. Gentleman should not underestimate the realism of the Bullock Report. The members of that committee addressed themselves specifically to the requirements of training for a director. In any case, the hon. Gentleman should also read the part of the White Paper which deals with the skills necessary under the laws of this country in a director. That section of the White Paper has already been the subject of some criticism.

  ENERGY

    Energy Commission
    Mr. Rostasked the Secretary of State for Energy if he will make a statement on the first meeting of the Energy Commission.
    The Under-Secretary of State for Energy (Dr. John Cunningham): The Energy Commission met on 28th November. In the course of a very useful meeting we examined in particular our Department's working document on energy policy, and we shall be incorporating many comments made by members of the Commission in the Green Paper which we hope to publish early next year.
    Mr. Rost: Will the Under-Secretary confirm that all papers produced by the Energy Commission and its proceedings will be published? Secondly, will he give some indication as to whether he is satisfied with the composition of the Energy Commission, and at what stage he is prepared to review its membership?
    Dr. Cunningham: To take the second part of the question first, we are hardly likely to review the membership as the Commission has just had its first meeting. Clearly, we shall bear in mind the need for other views to be taken into account. In that connection, the documents for the Commission are widely circulated, and even though people may not be represented with a seat at the Commission they can see and comment on the documents. I think the hon. Gentleman knows that

    27
    Commission papers have been made available.
    Mr. Palmer: Whilst appreciating that these are early days, may I ask my hon. Friend to bear in mind the opinion which is widely held that the Energy Commission is biased too much towards what I will call the "special interests" and that expert opinion is not strongly enough represented on it?
    Dr. Cunningham: I do not accept that comment. If my hon. Friend could be a little more specific, I might be able to answer his supplementary question. If he has in mind the representation by his own union, he will recognise that that is a matter more for the TUC than for the Department of Energy.

  WALES

    Clwyd Area Health Authority
    Mr. Stanbrookasked the Secretary of State for Wales what action he is taking following the criticisms of the Clwyd Area Health Authority made by the Parliamentary Commissioner in the case of Mrs. Ellen Hughes, deceased.
    The Under-Secretary of State for Wales (Mr. Barry Jones): My right hon. and learned Friend has seen Lord Kenyon, the Chairman of Clwyd Area Health Authority. He told him that he is deeply dismayed and has asked him to ensure that no such case can arise in future. My right hon. and learned Friend has asked Lord Kenyon to convey his views to his authority.
    Mr. Stanbrook: Does the Minister agree that this is one of the strongest reports ever to have come from the Parliamentary Commissioner, using words like "inhuman conduct" and implying dishonesty on the part of officials of the health authority? Will the hon. Gentleman give a guarantee that there will be no cover-up following this report?
    Mr. Jones: There will be no cover-up. It is one of the strongest reports, and I should like to tell the hon. Member that the Clwyd Area Health Authority is discussing the case today and will consider what action is necessary. Its meetings are open to the public.
    Sir A. Meyer: Will the hon. Gentleman remember that, whatever the shortcomings of the Clwyd Area Health Authority in investigating this matter, the hospital concerned, in spite of this one unfortunate lapse, enjoys wide confidence and sympathy for the excellent work it does in the community?
    Mr. Jones: The observations of the hon. Member speak for themselves.

  INDUSTRY

    Multinational Companies
    Mr. Edwin Wainwrightasked the Secretary of State for Industry if he will raise in the Council of Ministers of the EEC the problem of the economic power of multinational companies, and its conflict with national obligations.
    The Under-Secretary of State for Industry (Mr. Les Huckfield): The Commission has already raised the issue.
    In is communication to the Council, "Multinational Companies and Community Regulations"—COM(73)1930 of November 1973—the Commission surveyed the field and proposed a number of general measures which could help to alleviate concern which might be felt about its activities. Work is in progress on matters such as employment, competition, harmonisation of company law and taxation. Members of the EEC also play an active part in the work on multinational companies in the OECD, ILO and the United Nations.
    Mr. Wainwright: Is my hon. Friend quite satisfied that the regulations or the action that it is intended to take will be strong enough to control multinational corporations? Is he aware that multinational corporations which carry on massive business are not directly accountable to any country or to any Government throughout the world? Does he not think, therefore, that strict control ought to be directed to multinational corporations to ensure that no harm is done to other countries?
    Mr. Huckfield: I shall bear in mind what my hon. Friend has said, because I realise that there is a great deal of concern about some of the aspects which he has mentioned. However, the

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    EEC's attitude towards multinational companies is based upon the same fundamental principle as that of the United Kingdom Government, namely, that there should be no discrimination on grounds of nationality. My Department feels that this is the best basis on which to make progress.
    Mr. Rhodes James: Is the Minister aware that the rôle of multinational corporations can be of considerable benefit to developing countries—a fact which has been recognised by the United Nations and by the OECD? What is the Government's approach towards the OECD code of conduct?
    Mr. Huckfield: As I have said, the Government are playing their part in organisations like the OECD to make progress along the lines to which the hon. Gentleman has referred.

  CLERGY (PAY)
  Mr. Michael Lathamasked the hon. Member for Kingswood, as representing the Church Commissioners, what is the level of pay increases recommended to be made to (a) beneficed clergy, and (b) assistant curates under the current pay round by the Commissioners in their rôle as Central Stipends Authority.
  Mr. Terry Walker (Second Church Estates Commissioner): The Commissioners, as Central Stipends Authority, have not yet made final recommendations as to the stipend ranges and scales that should apply to either the beneficed clergy or to assistant curates from 1st April 1978, the next incremental date.
  Mr. Latham: Will the Commissioner remember when drawing up his recommendations that we are talking about some of the worst-paid people in the country and that any possible recommendation that the Commission might make would leave many clergy below the poverty line?
  Mr. Walker: The Church Commissioners have expressed publicly the view that clergy stipends are inadequate. I assure the hon. Member that maximum levels known to be attainable for next year will be recommended, provided that they can be justified and that the Government guidelines are adhered to.
  Mr. Clemitson: As one who was the recipient of these appallingly low wages for 12 years, may I ask my hon. Friend whether, even if the Church Commissioners wish to keep within the Government guidelines, much more could be done in terms of fringe benefits and the meeting of proper expenses?
  Mr. Walker: The Commissioners have made great efforts over the years to make sure that dioceses pay expenses. Happily, the information that comes to us is that most dioceses are doing just that.
  Mr. Canavan: As the clergy seem to have a good case for breaking the 10 per cent. limit, is it not clear that the firemen and the TUC now have God on their side?
  Mr. Walker: We hope to make a decision on the clergy's pay at about the end of January. We shall take into account the Government's guidelines.

ENERGY CONSERVATION
The Secretary of State for Energy (Mr. Anthony Wedgwood Benn): With permission, Mr. Speaker, I should like to make a statement on further energy conservation measures.
Existing policies have contributed to energy savings approximately estimated to be worth £2,000 million over the last four years. As was recognised at the London Summit meeting in May, energy conservation must play a major rôle in our future energy policies. I therefore set in hand a review of action to bring about a significant reduction in the future growth of energy demand, following recommendations made by my Advisory Council on Energy Conservation, and with which my hon. Friend the Under-Secretary of State, the hon. Member for Whitehaven (Dr. Cunningham), has been closely involved. Today I am announcing a substantial package of decisions.
First, the Property Services Agency will extend its existing programme in the civil and defence estates, at a cost of £5 million per year. This will make possible continued progress towards the eventual target of saving 35 per cent. of the fuel used at the start of the programme in 1972. This represents around £30 million a year at today's prices.

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Second, as part of a long-term programme for installing thermal insulation and heating controls in National Health Service buildings, it is planned to invest an additional £5 million in 1978–79 and £10 million in each of the succeeding three years.
Third, as part of a similar programme in educational buildings it is planned to make available an additional £10 million in 1978–79 and £20 million in each of the succeeding three years.
Fourth, the Government will discuss with local authorities the very substantial opportunities for energy savings in their non-domestic buildings, other than schools. We propose to make additional funds, of up to £7 million a year, available for the necessary staff to secure efficient energy management and for the installation of heating controls. The precise sums to be spent will depend upon the discussion with local authorities.
Fifth, the Government are launching a 10-year programme to bring public sector dwellings up to a basic minimum standard of thermal insulation. This will involve treating over 2 million dwellings and will have major social benefits. Spending for this purpose will be made eligible for central Government housing subsidies. Provision is being made for expenditure over the next four years at an annual rate of L281 million. In addition, £2 million a year will be spent on improving the insulation of Ministry of Defence dwellings.
The Department of the Environment has for some time been consulting outside interests on proposals for building regulations to prescribe thermal insulation standards in new non-domestic buildings, and regulations resulting from this consultation are expected to be made shortly. The Government have now decided on further steps in this area.
Sixth, the introduction of building regulations requiring the provision of appropriate controls on heating systems is under consideration. The regulations would apply to the installation of heating plant in new non-domestic buildings and to its replacement in existing non-domestic buildings. A consultative document will be issued as soon as possible.
Seventh, to promote efficient energy management in non-domestic buildings, a
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new Government advisory and training service will be set up. Half a million pounds a year has been made available for this purpose.
Eighth, in addition the Government have allocated £4 million in 1978–79 and £5 million in each of the next three years to expand information and advisory services to industry.
Ninth, the Government have allocated an additional £2 million in 1978–79, rising to £8 million in 1981–82, for an expanded programme of demonstration projects.
Tenth, more efficient motor vehicles could make a significant contribution to containing the growth in demand for oil for transport. The Government have opened discussions with the motor industry on possible targets for raising the average miles per gallon achieved by new cars and on methods of achieving those targets.
Eleventh, the Government have allocated an additional £500,000 a year over the next four years for an information and publicity campaign aimed at persuading motorists to see that their cars are well maintained and to drive in more economical ways.
This reinforcement of our policies will require additional staff on energy conservation. In the Department of Energy I am establishing a separate division, responsible solely for energy conservation. Conservation will now rank with the energy-producing industries as an essential element in our energy policies.
The measures which I have described will involve additional public expenditure on energy conservation in the United Kingdom estimated at some £65 million gross in 1978–79, rising to over £80 million a year gross in the following three years. This will be spread over a number of programmes and will be financed as far as possible from savings elsewhere in those programmes, including in later years savings on energy consumption resulting from the investment made in earlier years.
These programmes will take up to 10 years to complete and will involve expenditure, in the first four years alone, of some £320 million at 1977 survey prices. They offer satisfactory returns on the expenditure involved, even at today's energy prices, and they could

33
lead to savings of up to 10 million tons of oil equivalent a year at the end of the 10-year period worth some £700 million a year at current prices. They will also provide jobs in the construction industry. But energy conservation is not a matter for the Government alone. To achieve the potential savings in full will depend in large part on how far the private sector matches the steps we have embarked on in the public sector. Higher energy prices make conservation good sense for everyone.
Our programme is a continuing one. We shall be bringing forward further measures in other areas, as and when necessary. We shall need to decide how far any further reinforcement of our policies should be achieved by mandatory measures, by fiscal action, or in other ways. However, the measures I have announced today represent an important stage in the development of our energy conservation programme. Despite Britain's ample energy reserves, conservation is just as important here as in other countries less fortunately placed.
Mr. Tom King: Is the Secretary of State aware that we give a warm welcome to the conservation package that he has just announced? This will come as no surprise to him as we have been pressing him for many months to bring forward just such a package. It is only tragic that another winter has been lost and that we are the last of the major industrial countries to bring forward a conservation package along these lines. He will appreciate that we shall obviously need to study in detail the proposals that he has made, but I would ask him two specific questions.
First, he talked about possibly including thermal insulation standards in building regulations for non-domestic buildings. The domestic sector is also very important, of course. Is any thought being given to including this in domestic building regulations as well? Secondly, he referred in passing to the employment aspects. We have always maintained that insulation is employment-intensive—and all the more creditable for that. Has the Department made any assessment of the employment content of this package?
Mr. Benn: I welcome the hon. Gentleman's welcome for what he has urged and we have worked on. It is the privilege
34
of Opposition to be ahead of Government in that the Government of the day have to prepare the actual proposals, and they have been worked on very hard. I would not accept, however, that the United Kingdom is behind other countries. President Carter's energy package is not through Congress. The Germans have published proposals which have not yet gone through. I think the hon. Gentleman will find that our record is not at all a bad one compared with other countries. But I let that pass because I think that progress speaks for itself.
The building regulations are a matter for my right hon. Friend the Secretary of State for the Environment. The hon. Gentleman will appreciate that today I have announced measures which spread over the whole of government and therefore details would have to come from others. On jobs, I, too, have long believed, as all have believed, that this insulation work, being labour-intensive, is welcome in its own right. It is very difficult to put a specific figure to the number of jobs that will be created, but it will be substantial and welcome.
Mr. Palmer: May I, too, congratulate my right hon. Friend very warmly on his most encouraging statement? It is the most far-reaching programme of this kind that we have had in this country. May I ask whether he envisages a permanent energy budget for the country on the lines suggested by the Select Committee on Science and Technology?
Mr. Benn: I am grateful to my hon. Friend for his kind comments. His Committee has played a leading part in preparing public opinion for the need for action on this matter. I think he knows that the Energy Commission, at its second meeting, in February, will be turning its mind to the concept of energy budgeting. How far we shall get in early years I do not know, but it would be sensible for a national energy policy to seek optimum returns for all investment, and there is no investment as rich in return as conservation.
Several Hon. Members rose—
Mr. Speaker: Order. I remind the House that our first major business later is a half-day's Supply debate. I hope that hon. Members will bear that in mind

35
in relation to the amount of time we can spend on this subject.
Mr. Patrick McNair-Wilson: In order that we may make the best use of our substantial coal reserves—the biggest of our fossil fuels—what action is the Secretary of State taking to ensure that local authorities make fireplaces and chimneys available in their housing and other accommodation, to take the strain off other domestic fuels?
Mr. Benn: This point has been regularly drawn to my attention by the hon. Gentleman, as well as by others in the trade, and indeed by those interested in coal and coal markets. It is a matter primarily for my right hon. Friend the Secretary of State for the Environment. All I can tell the hon. Gentleman is that it is a point that I have pressed. I hope that we shall make progress in getting greater coal use for sensible purposes—that is, for central heating systems and other uses in domestic buildings.
Mr. Pardoe: May I ask the Secretary of State to be a little more forthcoming about the Government's plans for private dwellings? Is he aware that the suggestion from the hon. Member for Bridgwater (Mr. King) about building regulations would affect only new buildings? What about incentives for the insulation of existing private dwellings?
Mr. Benn: It is a very fair point. The hon. Gentleman will appreciate that we have responded as a Government to the obvious economic advantages of conservation. The arguments that have led us to spend this money in the way that I have described apply with equal force to private dwellings. From that point of view, when my proposals have been looked at carefully I think that people will see that, if we are getting the return of the magnitude that I have forecast, it will make sense for others to seek to invest similarly.
Mr. Swain: Is my right hon. Friend aware that a consumer resistance is quickly developing to the use of electricity in new dwellings—both private and council dwellings—for central heating and other heating? Will he seriously look at the possibility of relaxing in some areas the smoke-control zones? In the area wheres I live, which is a very high coal-producing
36
area, we are now suffering from the cost of electric central heating. It is costing more to the consumer, so we are having this consumer resistance.
Mr. Benn: I appreciate what my hon. Friend says, but I would rather contemplate further research on smokeless fuels than an easement of the clean air legislation, which has, as I read in a newspaper this morning, given us 70 per cent. more sunshine, at least in the urban areas, than we had before that legislation was introduce. Let us make the fuels that people wish to use more acceptable rather than lowering the environmental standards.
Mr. Gordon Wilson: Does the Minister realise that many of our constituents in public sector dwellings suffer from the miseries of condensation in their houses, due to insufficient insulation? Under his new scheme what priority will he recommend local authorities to give to dwellings suffering from such condensation?
Mr. Benn: I am aware, as a constituency Member of Parliament, of the problem to which the hon. Gentleman draws the attention of the House. But I must be careful, in making a statement about a broad range of expenditure covering a large number of Departments, that I do not intervene in the specific responsibilities of the local authorities and the Ministers with whom they deal.
Mr. Hardy: Will my right hon. Friend agree that this major statement is well worth waiting for? But could he publish in the Official Report figures showing the detailed expenditure that we shall incur by the mid-1980s, and compare that with the other Western industrialised nations in a similar condition, as evidence that this country is more than pulling its weight?
Mr. Benn: I should be happy to put both our record and our policy side by side with others. I believe that it will turn out that we have done well.
I can give my hon. Friend some figures. Of the four-year programme involving £321 million, there were additional allocations of £166 million, from existing departmental programmes £93 million, and from fuel savings from the previous year's measure £62 million. Those give the total which I announced.
Mr. Forman: Is the right hon. Gentleman aware that, much as many of us on

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this side of the House warmly welcome his statement, it is nearly four years since the CPRS first reported on the very important matter of energy conservation? Is he satisfied with the Government's rather regrettable delay? Secondly, will the right hon. Gentleman note that the time has come to move on to another aspect of energy conservation, its more efficient production, so that it can be conserved in the actual conversion and distribution process?
Mr. Benn: I am well aware of the latter point, although, as the hon. Gentleman knows, if there is a move to combine heat and power—a subject of great interest to the House—that involves a different stategy and needs some time to develop. However, I gave the figures for the last four years. We calculate that £2,000 million has been saved, even before the announcement of the measures. [HON. MEMBERS: "Conjecture."] That may seem conjecture to hon. Gentlemen opposite, but it is worked out on the basis of calculations which are accepted internationally as being valid.
Several Hon. Members rose—
Mr. Speaker: Despite the pressure of time, I shall call those hon. Members who have stood to ask questions, but I hope that they will be brief.
Mr. Madden: Will my right hon. Friend the Secretary of State ensure that the materials announced in his programme will not present any risk to health, bearing in mind the growing concern about the dangers of glass fibre? Secondly, will he ensure that those installing the materials are properly trained and supervised and are aware of the proper standards of health and safety which should apply to the work?
Mr. Benn: That would not be for me to decide, but I shall see that my hon. Friend's question is put to the Minister responsible.
Mr. Hannam: Will the right hon. Gentleman accept that the 35 per cent. target of energy saving that he has announced represents a much more worthwhile objective than the minimal savings which have been seen in recent years? Furthermore would he examine the situation which exists concerning local authority grants towards heating installations
38
for elderly and disabled people? The indications are that there is total confusion among local authorities.
Mr. Benn: On the first point, the answer is "Yes." As far as the second point is concerned, we have gone ahead with the winter discount scheme, which provides some help. However, in the long term, the insulation of old people's dwellings would be a more satisfactory way of providing assistance.
Mr. Ioan Evans: I join in congratulating my right hon. Friend and his colleagues on the 11-point, positive plat.. for energy conservation. In view of the job creation aspect of the programme and the fact that a 10-year period is being considered, if there is a successful start to the programme would my right hon. Friend consider bringing it forward so that the problem of unemployment can be helped, as well as that of energy conservation?
Mr. Benn: Job creation has been a factor in all conservation discussions which I have attended here, at the IEA, the United States, the Common Market and elsewhere. The programme is intended to go ahead on a phased basis. However, that is not necessarily the Government's last word.
Mr. Rost: Does not the Minister's admission that £2 billion has already been saved as a result of a 2 per cent. reduction in energy consumption emphasise how much further he has to go? Is it not disappointing that the Minister has not included incentives for domestic thermal insulation, that he has not exempted building insulation materials from VAT and that he has not referred to the Plowden Report, which recommends that we should get on with the more efficient production of electricity?
Mr. Benn: The hon. Gentleman knows that one can always do more. However, I must say that to be able to announce a programme of £320 million should satisfy the House that we are serious. As I said, it is by no means our last word.
Mr. Michael Latham: Is the Secretary of State aware that it was in 1974 that the House passed the powers to make building regulations on insulation? Does it not indicate some slowness on the part of the Department of Environment that it

39
is only now getting around to a consultation document?
Mr. Benn: I am told that we doubled roof insulation requirements for domestic buildings in 1975. However, the House must recognise that the introduction of new criteria of energy-saving into existing patterns of thought throughout a number of Government Departments involves a great deal of work. That work has been undertaken. There has been a ministerial committee under the Under-Secretary of State, my hon. Friend the Member for Whitehaven, and the official committee to which I referred and an advisory committee. What I have announced today represents the sum of their wisdom and is, I believe, welcome.

BILLS PRESENTED
  HEARING AID COUNCIL ACT 1968 (AMENDMENT)
  Mr. Laurie Pavitt, supported by Dr. M. S. Miller, Mr. Clement Freud, Mr. Donald Stewart, Mr. Harold McCusker, Mr. Ioan Evans, Mr. Leslie Spriggs, Mr. Arnold Shaw, Mr. Sydney Irving, Mr. Ted Fletcher, and Mr. Joseph Dean, presented a Bill to amend The Hearing Aid Council Act 1968: And the same was read the First time; and ordered to be read a Second time upon Friday 27th January and to be printed. [Bill 37.]
  COMPANIES
  Sir Brandon Rhys Williams, supported by Mr. Kenneth Baker, Mr. Sydney Bidwell, Mr. John Cope, Mr. David Crouch, Mr. Edward du Cann, Mr. Robert Edwards, Mr. McCrindle, Mr. Tom Normanton, Mr. John Pardoe, Sir John Rodgers and Mr. Timothy Sainsbury, presented a Bill to amend the law relating to directors and auditors of companies; further to define their responsibilities; to make provision with respect to the appointment and functions of non-executive directors, auditors and audit committees in certain companies; to require the preparation of certain data and estimates; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 10th February and to be printed. [Bill 38.]
  HOUSING (SHORTHOLD TENANCIES)
  Sir Brandon Rhys Williams, supported by Mr. Kenneth Baker, Mr. Peter Brooke, Mr. Tony Durant. Mr. Reginald Eyre, Mr. Geoffrey Finsberg, Mr. David Knox, Mr. Stephen Ross, Mr. Michael Shersby, and Mr. Cyril D. Townsend, presented a Bill to make further provision for the letting of properties on fixed terms; and for purposes connected therewith: And the same was read the First time; and ordered to be read a Second time upon Friday 28th April and to be printed. [Bill 39.]

BUSINESS OF THE HOUSE (SUPPLY)
Motion made, and Question proposed,
That, at this day's sitting, Mr. Speaker shall put forthwith any questions necessary to dispose of the proceedings on the Motions in the name of Mr. Robert Sheldon relating to Civil and Defence Estimates as soon as the House has entered upon the business of Supply.—[Mr. Jim Marshall.]
Mr. Ron Thomas: I should like to call to your attention, Mr. Speaker, the amendment on the Order Paper relating to the Defence Supplementary Estimates. There are many of us on the Labour Benches who cannot let pass without some comment the demand for an additional sum of over £400 million for defence. I assure you, Mr. Speaker, that we shall be as brief as possible, as we fully realise that there is to be a Supply Day debate on an extremely important issue.
I am not sure how the motion will be put to the House. However, about the same time last year there were separate motions put to the House, both in terms of the Vote on Account and in terms of Supplementary Estimates, and about 45 Members on this side of the House were able to put down an amendment simply and solely on the Defence Supplementary Estimates. I hope there will be separate motions because there are a number of us on the Government side of the House who want to express our disapproval of the fact that the Government now want another £427 million for defence commitments.
We have isolated—taken out of the amendment as it were—those Votes which refer to the pay of members of

41
the Armed Forces. There is no question of our wishing to reduce their pay in any way. In fact, many hon. Members on the Government side of the House feel that the ordinary squaddie at least has an extremely good case for an increase in excess of 10 per cent. Therefore, we have tried to isolate the other Votes which do not deal with pay.
Secondly, I want to make it clear that while there are 39 names to this amendment, several others of my hon. Friends would have signed it—including my hon. Friend the hon. Member for Preston, South (Mr. Thorne)—had they had the opportunity to do so last week.
Thirdly, I want to make it absolutely clear that we are looking at this increased demand of about £427 million, but are considering the sum that would be left if we take out the pay increases, namely, £259 million. That is the sum upon which I wish to concentrate.
Mr. Speaker: Order. I have been listening with great care to the hon. Gentleman because I realised that if he were able to make his point it might shorten our proceedings. But I must advise him now—and it might clear up things in his mind—that all that we can discuss at the moment is whether we should accept the Prime Minister's motion, and what are the reasons for it. I can assure the hon. Gentleman that when it comes to putting the Estimates to the House, I shall have to put four separate Questions. Of course, if the motion is carried I shall not put the amendment.
Mr. Thomas: Would you be kind enough, Mr. Speaker, to help me? When the Question is put on the Supplementary Estimates for Defence, shall I be able to speak at that point in the proceedings?
Mr. Speaker: I am afraid not, because the House will have decided that the Question be put forthwith.
Mr. Frank Allaun: I do not wish to discuss the merits of the case at all, although I think you will be aware, Mr. Speaker, of my opinion of them. What I wish to do is to oppose passing on the nod, without debate, the spending of an additional £427 million on defence.
May I give a relevant illustration? In local government, it has been known for a council to spend a whole afternoon discussing
42
whether to spend £900 on a public lavatory. This discussion has been used to divert attention from the fact that a sum of £2 million or so was being spent on building a new police station. This matter is far more worthy of debate than that which we shall debate later this evening, which is merely the question whether a certain clause in the European Assembly Elections Bill shall be discussed tomorrow or at some other time. We should have a sense of proportion about this.
Further, there is no explanation at all of these items, and we are entitled to one. I refer to one item. It says in the Supplementary Estimates that we are to spend £99 million extra on "Defence Procurement: Land Systems". There is not one sentence, not one word, to explain why an additional £99 million must be devoted to that item. This is a democracy, and surely we are entitled to debate this matter.
This is government without explanation, government by concealment. It is happening continually, and I and many other hon. Members feel very strongly about it.
This is not the first occasion this year that this has occurred. According to the document, we have already spent £1 billion supplementary on defence in addition to the £6.3 billion originally in the Estimates. There was no debate on that occasion. Therefore, in view of the strong feelings on the Government side, I believe that we should oppose the Prime Minister's motion.
Mr. Gow: I rise to oppose the motion, because if there was one reason above all for which Back-Bench Members were elected to this House it was in order to scrutinise the conduct of the Executive and, above all, the expenditure of very large sums of money by the Executive.
The Prime Minister has seen fit to place on the Order Paper a motion requiring that three motions that would ordinarily be debateable in this House should not be debateable at all, but should be put to the House and approved or rejected without any explanation from the Front Bench and without any opportunity for Back Benchers to question the Ministers responsible,
We are invited this afternoon to approve expenditure for 1978–79 totalling

43
£17,945 million and for the current year Defence Supplementary Estimates of £427 million, a total of public expenditure of more than £18,000 million. In considering the Estimates for 1978–79, I wish to advance arguments as to why we are entitled to an explanation from the Government about them. On the last page, for example, we have a figure of—
Mr. Speaker: Order. Perhaps I can help the hon. Gentleman. He knows, as does the whole House, that I in no way wish to prevent hon. Members from asking questions. I wish only to remind the hon. Gentleman that these questions are coming out of the time allotted for the Supply Day debate. I hope that the hon. Gentleman is aware of that.
Mr. Gow: I am very aware of that, Mr. Speaker, but it is no fault of the Opposition that this motion appears on the Order Paper today. I do not think that it would be right for Back Benchers, however insignificant, to allow these motions to pass without protesting that we have no opportunity to debate the matter. I am aware of what you say, Mr. Speaker. Nevertheless, the control of public expenditure is a matter of key importance for Back Benchers. If we allow this motion to go through without debate, I believe that we shall betray the trust of those who are opposed to it.
I wish to refer to some of the items which appear in the Supply Estimates for 1978–79. What, for example, is the sum of £317,000 for the Crown Estate Office? What is the Vote of nearly £2 million for the Paymaster-General's office?
Mr. Speaker: Order. I think that the hon. Gentleman is anticipating somewhat a debate which he hopes will take place if the motion is not carried. But he cannot discuss now the details of the Estimates. He must merely discuss whether we shall support or reject the motion in the name of the Prime Minister, and give his reasons accordingly.
Mr. Ron Thomas: On a point of order, Mr. Speaker. Would you be kind enough to advise me if it is the case, as I understand the hon. Member to have put it, that 12 months ago, on 14th December 1976, we were able to debate these Estimates under their separate headings?
44
Do I understand that the Government may put down a motion that to all intents and purposes prevents all debate on a total defence cost of over £6,000 million and another £400 million of Supplementary Estimates? Is that the position?
Mr. Speaker: The whole House can read what is on the Order Paper in the name of the Prime Minister. The motion is clear.
Mr. Arthur Latham: Further to that point of order, Mr. Speaker. You previously arrested two of my colleagues in their remarks on this proposition. It is somewhat difficult to comprehend how one may discuss whether it is right to debate or not to debate a matter without making some references to that which it is proposed to debate or not to debate.
May I submit to you, Mr. Speaker, that whilst it would perhaps be out of order to anticipate a debate which might or might not take place by discussing the merits or demerits of the inclusion of particular items, it is surely not out of order to refer to their inclusion or explain why the items that are printed in the paper before us are inadequately presented? Surely it is in order to do that?
As no amendments are tabled to the other items of Supply and Supplementary Estimates, and as this item is the subject of not one but two amendments, signed by Members who may appear surprisingly to be of one mind on the subject today, and as it is also the subject of representations from the Opposition Benches, would not it make sense not to impede the half-day Supply debate but for the Government to withdraw the item and provide proper time? Then the House may discuss it without embarrassing you, Mr. Speaker, and we may be able to obtain the information to which we are entitled.
Mr. Speaker: May I say in answer to the first part of the hon. Gentleman's question that of course it is in order to make a passing reference to items that are included, but to seek details of any item as though we were debating the subject would, in my judgment, anticipate the decision on the Prime Minister's motion. The hon. Member for East-bourne (Mr. Gow) was, I think, addressing the House.
Mr. Gow: The hon. Member for Bristol, North-West (Mr. Thomas) is correct. A year ago when these or similar motions stood upon the Order Paper, we had an opportunity to debate them. The reason I am opposing the Business Motion in the Prime Minister's name is in order to pretest that this year we are following a different procedure. I can remember taking part in a debate about a year ago on motions similar to this when we were allowed time to debate it.
It is all very well for the Government, when they proposed this motion to prevent us from discussing the matter, to say "Oh well, these are the sums which have been set out in documents", but if you look, Mr. Speaker, at the Vote on Accounts 1978–79, page 9 of the Supply Estimates, you will see that the sum of £100 is allocated to the Public Trustee. Why should he be allocated £100? When you look at the Cabinet Office Vote—
Mr. Speaker: I do not want to look at it. The hon. Gentleman must realise that he cannot now debate the contents of the Estimates in detail. There is no need for me to tell him how to get around these difficulties.
Mr. Gow: Of course, I defer to your ruling, Mr. Speaker, and I do not wish to detain the House, but I do not think it would be right that this motion which prevents the House from discussing the expenditure of very large sums of money should pass without debate. I certainly intend to vote against it.
Miss Richardson: I rise to add my few words of protest to what is happening this afternoon. Most Members had expected at some stage, perhaps not today, that the Government would make some reply about the suggestion made by my hon. Friend the Member for Paddington (Mr. Latham). The House—certainly Back Benchers—expected to be able to question and to ask for clarification about many of the items in the Supplementary Estimates.
The situation strikes me as being ridiculous. Here we are feeling utterly confused about what can and what cannot be debated. If we are confused, imagine the confusion of the citizens of this country whose money we are spending in these Supplementary Estimates.
46
How are they, and the people listening from the Gallery, to find out what is the procedure whereby this Parliament, which is supposed to be the tribune of the people, can question matters of this kind?
We all wish that the procedures of this House could be simpler, but when it takes two or three days in order to find out how one can question matters of this kind, the procedure has reached ridiculous proportions.
Mr. Speaker: The Question is—Mr. Frank Allaun, on a point of order.
Mr. Frank Allaun: On a point of order, Mr. Speaker. Am I right in believing that if this is voted on today, any subsequent debate would be completely worthless and ineffective?
Mr. Speaker: If this motion is carried, I shall put the Question without discussion on each of the Estimates. That is what it means.
Mr. Gordon Wilson: I shall be very brief because I support the hon. Members who have complained about the action of the Government in tabling this procedural motion and seeking to stifle debate. It seems to be the politics of a madhouse. Here we are about to spend some three hours debating £28 million of Government money while allowing to go through on the nod about f17 billion. I cannot see why the official Opposition are consenting to such a procedure when they have made so much about the control of expenditure. But from whichever part of the House the opposition comes, it must be based on the fact that if Parliament cannot control money it can control nothing.
Mr. Speaker: The Question is—
Mr. Ron Thomas rose—
Mr. Speaker: The hon. Gentleman has already addressed the House on the motion.
Mr. Ron Thomas: On a point of order, Mr. Speaker. I was already in the middle of my contribution when the hon. Lady interrupted me—
Mr. Speaker: The hon. Lady the Member for Barking (Miss Richardson) referred to people being confused. This is taking things a bit far. I think the whole House thought that the hon. Gentleman had concluded his statement.

47
Would he like to conclude it now, if he had not concluded his statement? I want to be fair, but I hope that the hon. Gentleman, too, will be fair to the House, as I am sure he will.
Mr. Neubert: On a point of order, Mr. Speaker. Is it in your experience of the House that there should be two interventions before the hon. Member resumes his speech?
Mr. Speaker: I think that the hon. Gentleman had probably reached his last sentence. Had he?
Mr. Ron Thomas: Thank you, Mr. Speaker. That I do not think is a sentence. I should like to add a couple of points.
I reiterate what has been said by hon. Members on both sides of the House, that it is unacceptable for the Government to put down this motion preventing us from discussing these Estimates in detail. In the Defence Supplementary Estimates there are some increases of 18 per cent. and some of 22 per cent., yet no real explanation is given.
Lastly, I say to the Opposition that some of the original Estimates may have been in a document of one kind or another, but the Supplementary Estimates are nowhere in a document. We have only this afternoon in which we are able to discuss them.
Question put:—
The House divided: Ayes 243. Noes 82.

Division No. 46]

AYES

[4.11 p.m.

Abse, Leo

Davis, Clinton (Hackney C)

Johnston, Russell (Inverness)

Adley, Robert

Dean, Joseph (Leeds West)

Jones, Alec (Rhondda)

Alison, Michael

Dean, Paul (N Somerset)

Jones, Barry (East Flint)

Anderson, Donald

Dell, Rt Hon Edmund

Jopling, Michael

Archer, Rt Hon Peter

Dempsey, James

Joseph, Rt Hon Sir Keith

Armstrong, Ernest

Doig, Peter

Judd, Frank

Atkins, Rt Hon H. (Spelthorne)

Dormand, J. D.

Kaberry, Sir Donald

Atkinson, Norman

Douglas-Hamilton, Lord James

Kaufman, Gerald

Bagier, Gordon A. T.

Dykes, Hugh

Kitson, Sir Timothy

Barnett, Rt Hon Joel (Heywood)

Eadie, Alex

Lamont, Norman

Bates, Alf

Ewing, Harry (Stirling)

Latham, Michael (Melton)

Beith, A. J.

Eyre, Reginald

Lawrence, Ivan

Benn, Rt Hon Anthony Wedgwood

Fairbairn, Nicholas

Leadbitter, Ted

Bennett, Dr Reginald (Fareham)

Finsberg, Geoffrey

Le Marchant, Spencer

Berry, Hon Anthony

Fookes, Miss Janet

Lewis, Kenneth (Rutland)

Biggs-Davison, John

Foot, Rt Hon Michael

Lewis, Ron (Carlisle)

Bishop, Rt Hon Edward

Fox, Marcus

Lipton, Marcus

Blenkinsop, Arthur

Fraser, John (Lambeth, N w d)

Loveridge, John

Booth, Rt Hon Albert

Freeson, Rt Hon Reginald

Lyons, Edward (Bradford W)

Boothroyd, Miss Betty

Freud, Clement

Mabon, Rt Hon Dr J. Dickson

Boscawen, Hon Robert

Fry, Peter

McCartney, Hugh

Bottomley, Rt Hon Arthur

Gardiner, George (Reigate)

McElhone, Frank

Bowden, A. (Brighton, Kemptown)

Garrett, W. E. (Wallsend)

Macfarlane, Neil

Boyden, James (Bish Auck)

George, Bruce

MacFarquhar, Roderick

Bradley, Tom

Gilbert, Dr John

MacGregor, John

Braine, Sir Bernard

Golding, John

MacKenzie, Rt Hon Gregor

Bray, Dr Jeremy

Goodhart, Philip

Maclennan, Robert

Brittan, Leon

Goodhew, Victor

Marshall, Dr Edmund (Goole)

Brown, Sir Edward (Bath)

Gourlay, Harry

Marshall, Jim (Leicester S)

Brown, Hugh D. (Provan)

Gower, Sir Raymond (Barry)

Marshall, Michael (Arundel)

Brown, Robert C. (Newcastle W)

Grant, Anthony (Harrow C)

Marten, Neil

Bryan, Sir Paul

Grant, George (Morpeth)

Mates, Michael

Buchanan-Smith, Alick

Grant, John (Islington C)

Mather, Carol

Buck, Anthony

Hamilton, James (Bothwell)

Mawby, Ray

Butler, Adam (Bosworth)

Hardy, Peter

Maxwell-Hyslop, Robin

Callaghan, Jim (Middleton & P)

Harrison, Rt Hon Walter

Meacher, Michael

Campbell, Ian

Hart, Rt Hon Judith

Mellish, Rt Hon Robert

Carlisle, Mark

Haselhurst, Alan

Mendelson, John

Cartwright, John

Hattersley, Rt Hon Roy

Meyer, Sir Anthony

Chalker, Mrs Lynda

Hatton, Frank

Millan, Rt Hon Bruce

Channon, Paul

Holland, Philip

Mills, Peter

Cocks, Rt Hon Michael (Bristol S)

Howe, Rt Hon Sir Geoffrey

Mitchell, David (Basingstoke)

Cohen, Stanley

Huckfield, Les

Monro, Hector

Coleman, Donald

Hunt, David (Wirral)

Montgomery, Fergus

Conlan, Bernard

Hunter, Adam

Morris, Charles R. (Openshaw)

Cormack, Patrick

Hutchison, Michael Clark

Morris, Rt Hon J. (Aberavon)

Cowans, Harry

Irvine, Rt Hon Sir A. (Edge Hill)

Morrison, Hon Peter (Chester)

Cox, Thomas (Tooting)

Irving, Charles (Cheltenham)

Mudd, David

Craigen, Jim (Maryhill)

Irving, Rt Hon S. (Dartford)

Neave, Airey

Crouch, David

Jackson, Miss Margaret (Lincoln)

Neubert, Michael

Cunningham, G. (Islington S)

Jay, Rt Hon Douglas

Nott, John

Cunningham, Dr J. (Whiteh)

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

Oakes, Gordon

Davidson, Arthur

John, Brynmor

O'Halloran, Michael

Davies, Denzil (Llanelli)

Johnson, James (Hull West)

Orme, Rt Hon Stanley

Page, Rt Hon R. Graham (Crosby)

Shersby, Michael

Wakeham, John

Page, Richard (Workington)

Silkin, Rt Hon S. C. (Dulwich)

Walker, Harold (Doncaster)

Palmer, Arthur

Sinclair, Sir George

Ward, Michael

Pardoe, John

Small, William

Warren, Kenneth

Park, George

Smith, John (N Lanarkshire)

Watkins, David

Parkinson, Cecil

Sproat, Iain

Weatherill, Bernard

Perry, Ernest

Stallard, A. W.

Weetch, Ken

Peyton, Rt Hon John

Stanbrook, Ivor

Wellbeloved, James

Price, David (Eastleigh)

Stanley, John

Wells, John

Price, William (Rugby)

Stewart, Rt Hon M. (Fulham)

White, Frank R. (Bury)

Prior, Rt Hon James

Stoddart, David

Whitelaw, Rt Hon William

Pym, Rt Hon Francis

Stott, Roger

Willey, Rt Hon Frederick

Rathbone, Tim

Stradling Thomas, J.

Williams, Alan Lee (Hornch'ch)

Rees, Rt Hon Merlyn (Leeds S)

Strang, Gavin

Williams, Rt Hon Shirley (Hertford)

Renton, Tim (Mid-Sussex)

Summerskill, Hon Dr Shirley

Williams, Sir Thomas (Warrington)

Rhodes James, R.

Tebbit, Norman

Wilson, Alexander (Hamilton)

Roberts, Albert (Normanton)

Thatcher, Rt Hon Margaret

Wilson, Rt Hon Sir Harold (Huyton)

Roberts, Michael (Cardiff NW)

Thomas, Mike (Newcastle E)

Wilson, William (Coventry SE)

Roberts, Wyn (Conway)

Thorpe, Rt Hon Jeremy (N Devon)

Wood, Rt Hon Richard

Roper, John

Tinn, James

Woodall, Alec

Ross, Stephen (Isle of Wight)

Tomlinson, John

Wrigglesworth, Ian

Ross, Rt Hon W. (Kilmarnock)

Tomney, Frank

Young, David (Bolton E)

Ryman, John

Torney, Tom

Young, Sir G. (Ealing, Acton)

Sainsbury, Tim

Trotter, Neville

Younger, Hon George

Sandelson, Neville

Tuck, Raphael

Sedgemore, Brian

Varley, Rt Hon Eric G.

TELLERS FOR THE AYES:

Sever, John

Vaughan, Dr Gerard

Mr. Ted Graham and

Shaw, Giles (Pudsey)

Wainwright, Edwin (Dearne V)

Mr. Joseph Harper.

Sheldon, Rt Hon Robert

NOES

Ashton, Joe

Gould, Bryan

Newens, Stanley

Atkinson, Norman

Gow, Ian (Eastbourne)

Pavitt, Laurie

Bain, Mrs Margaret

Hayman, Mrs Helene

Powell, Rt Hon J. Enoch

Bell, Ronald

Heffer, Eric S.

Reid, George

Bidwell, Sydney

Henderson, Douglas

Richardson, Miss Jo

Burden, F. A.

Hooley, Frank

Robinson, Geoffrey

Butler, Mrs Joyce (Wood Green)

Hordern, Peter

Rodgers, George (Chorley)

Canavan, Dennis

Hoyle, Doug (Nelson)

Rooker, J. W.

Carmichael, Neil

Hughes, Robert (Aberdeen N)

Rost, Peter (SE Derbyshire)

Castle, Rt Hon Barbara

Hughes, Roy (Newport)

Selby, Harry

Clark, Alan (Plymouth, Sutton)

Jessel, Toby

Shelton, William (Streatham)

Clemitson, Ivor

Johnson Smith, G. (E Grinstead)

Short, Mrs Renée (Wolv NE)

Colquhoun, Ms Maureen

Kelley, Richard

Sillars, James

Cook, Robin F. (Edin C)

Lambie, David

Silverman, Julius

Corbett, Robin

Lamond, James

Sims, Roger

Costain, A. P.

Latham, Arthur (Paddington)

Skeet, T. H. H.

Crawford, Douglas

Litterick, Tom

Spriggs, Leslie

Davies, Bryan (Enfield N)

Lloyd, Ian

Stewart, Rt Hon Donald

Dodsworth, Geoffrey

MacCormick, Iain

Thomas, Ron (Bristol NW)

Drayson, Burnaby

McCrindle, Robert

Townsend, Cyril D.

Dunlop, John

McMillan, Tom (Glasgow C)

Watt, Hamish

Edge, Geoff

McNamara, Kevin

Wilson, Gordon (Dundee E)

Ellis, John (Brigg & Scun)

Madden, Max

Wise, Mrs Audrey

English, Michael

Mayhew, Patrick

Woof, Robert

Evans, Fred (Caerphilly)

Maynard, Miss Joan

Evans, Ioan (Aberdare)

Mikardo, Ian

TELLERS FOR THE NOES:

Flannery, Martin

Miller, Dr M. S. (E Kilbride)

Mr. Frank Allaun and

Fletcher, Ted (Darlington)

Moate, Roger

Mr. Russell Kerr.

Garrett, John (Norwich S)

Molvneaux, James

Question accordingly agreed to.

Ordered,

That, at this day's sitting, Mr. Speaker shall put forthwith any questions necessary to dispose of the proceedings on the Motions in the name of Mr. Robert Sheldon relating to Civil and Defence Estimates as soon as the House has entered upon the business of Supply.

ORDERS OF THE DAY
  SUPPLY
  [2nd ALLOTTED DAY] [FIRST PART]—considered.

  DEFENCE ESTIMATES, 1978–79 (VOTE ON ACCOUNT)
  Motion made, and Question,
  That a sum, not exceeding £2,834,077,000, be granted to Her Majesty out of the Consolidated Fund, on account, for or towards defraying the charges for Defence Services for the year ending on 31st March 1979, as set out in House of Commons Paper No. 30.—[Mr. Robert Sheldon.]
  put forthwith, pursuant to Order this day and agreed to.

  CIVIL ESTIMATES, 1978–79 (VOTE ON ACCOUNT)
  Motion made, and Question,
  That a turn, not exceeding £15,111,547,000, be granted to Her Majesty out of the Consolidated Fund, on account, for or towards defraying the charges for Civil Services for the year ending on 31st March 1979, as set out in House of Commons Paper No 31.—[Mr. Robert Sheldon.]
  put forthwith, pursuant to Order this day and agreed to.

  DEFENCE SUPPLEMENTARY ESTIMATES 1977–78
  Motion made, and Question,
  That a further Supplementary sum, not exceeding 4.427,464,000, be granted to Her
  52
  Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1978 for expenditure on Defence Services, as set out in House of Commons Paper No. 32.—[Mr. Robert Sheldon.]
  put forthwith, pursuant to Order this day and agreed to

  CIVIL SUPPLEMENTARY ESTIMATES, 1977–78
  Motion made, and Question,
  That a further Supplementary sum, not exceeding £1,570,837,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1978 for expenditure on Civil Services, as set out in House of Commons Paper No. 33.—[Mr. Robert Sheldon.]
  put forthwith, pursuant to Order this day and agreed to.
  Bill ordered to be brought in upon the foregoing resolutions by the Chairman of Ways and Means, the Chancellor of the Exchequer, Mr. Joel Barnett, Mr. Robert Sheldon and Mr. Denzil Davies.

  CONSOLIDATED FUND (No. 2)
  Mr. Robert Sheldon accordingly presented a Bill to apply certain sums out of the Consolidated Fund to the service of the years ending on 31st March 1978 and 1979; And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 40.]

  SECRETARY OF STATE FOR INDUSTRY
  4.25 p.m.
  Mr. John Nott: I beg to move,
  That the salary of the Secretary of State for Industry should be reduced by half
  Perhaps I should comment initially that we do not feel particularly strongly about the Secretary of State's salary, but, naturally, we wish to protect the Business of the House, since we would obviously have won an Adjournment motion. While still on my opening comments may I thank the hon. Member for Manchester, Ardwick (Mr. Kaufman) for so courteously circulating so many of my right hon. and hon. Friends to say that he would refer to us in the debate? I have here his letter to me which says:
  "Mr. Kaufman has asked me to inform you that he will be making reference to you during his winding-up speech."
  It is a unique occasion for Labour Ministers to refer to the people who actually take part in the debate and I should like to congratulate him. The Leader of the House, as far as I am aware, has never actually referred to anything that has ever been said in a debate at all, so we look forward to hearing what he has to say about us.
  Before considering the merits of the Polish deal for the United Kingdom economy and particularly for our shipbuilding, marine engineering and shipping industries, it is just not possible to pass over the disastrous picture facing shipbuilding throughout the world. The House is very conscious of the crisis that affects the steel industry, but a combination of factors makes the world shipbuilding situation even worse.
  World capacity for shipbuilding is likely to be over 200 per cent. too great by 1980–81. Shipyards in nearly all the OECD countries are concentrated in areas of high unemployment and social stress. The LDCs—the less developed nations—are engaged in extending their capacity out of sheer economic nationalism and are being encouraged to do so by aid assistance of the kind that we understand the right hon. Lady the Minister of State for Overseas Development is now contemplating to gain orders
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  from India. The Soviet Union and the COMECON countries are using their growing merchant fleets to undercut world freight rates further, and this is being done at the expense of our shipping industry, which employs at least 100,000 people.
  Compounding all these problems for the shipbuilding industries of the world is, of course, the total lack of effective discipline, even within the OECD itself, to prevent more and more protectionist measures, and I think that the lack of discipline within the OECD is exemplified by the cynical avoidance of the rules in the case of the Eurobond issue which accompanies the Polish deal. It is on that subject that I wish to talk in the course of my remarks.
  No doubt the Secretary of State, in so far as he goes beyond the unemployment problems of Govan and Swan Hunter, will wish to rest much of his case on the international situation. I shall not elaborate further on that, because we have started the debate rather late. All of us are conscious of some of the massive problems facing world shipbuilding, and I leave it to the Secretary of State to fill in the points that I have not mentioned.
  Suffice it to say that Japan alone now has the capacity to produce all the world's shipping requirements, having multiplied its capacity 10 times in 10 years and having accompanied this massive expansion of its shipbuilding capacity as usual by a fairly protectionist policy for its own shipping industry. It is, amazingly enough, this Government who have been at the forefront of Community efforts to restrain the Japanese, to criticise the Japanese and to lambast the Japanese for their protectionist policies. It is this Government who only a week or two ago, were protesting to the French in a letter—I believe to the French Prime Minister—about the way in which the French were contemplating the extension of credit to the Soviet Union.
  We have here hypocrisy on a grand scale. We have this Government lecturing others—particularly the Japanese and now the French—on the extension of the credit race in international dealings, something from which everybody loses, yet it is this same Government who, in

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  this particular deal are extending the frontiers of shipbuilding credit and protection beyond that of any method so far used by any country.
  As with so many developing tragedies, the solution to the problem is all too clear. The current spate of protectionist measures all over the world, the use of intervention funds, of soft credit, of extended credit and of unsecured credit, of subsidised steel—and our steel is being heavily subsidised on its way to the shipyards at present by the loss that British steel is making—and reorganisation grants are all being practised in every nation in varying degrees, but never has there been such a combination of protectionist measures used by any country as is being used by the Government in this case.
  All these measures are merely prolonging the slump in world freight rates and so making the position worse. The Government, the trades unions and the chaps working in the shipyards know perfectly well that until world freight rates recover and until the supply from the world's yards is brought into line with the demand for ships, especially bulk carriers, prospects for employment will grow worse. The chance of a stable future for the shipyard workers and their far more numerous brothers in marine engineering and in the shipping industry will deteriorate at an accelerating pace if this situation continues.
  The Secretary of State has been open and honest about this. He has said that redundancies are inevitable. The Government's Shipbuilding (Redundancy Payments) Bill is an acknowledgment that redundancies are inevitable in the shipyards. By the way, the Conservative Party fully support the Bill and it may be that we would be prepared to go further on the amounts that are included in the Bill.
  With regard to the amount of money being put by the taxpayer into the Polish order, the forthcoming Shipbuilding (Redundancy Payments) Bill talks of a mere £8 million in redundancy payments for shipyard workers. As I shall show, the sum of money which actually goes into the yards as a result of this deal is infinitely greater than that.
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  Maybe the Prime Minister and his colleagues have bought one extra year of employment for Govan and, possibly, for Swan Hunter, if the problems there are sorted out, but they have done so at the expense of an even worse future for shipyard workers generally as a result and, as I hope to show, they will do substantial damage to the morale of the marine engineering industry and of the shipping industry in the process.
  The situation was put into proper perspective in a speech the other day by Mr. Otto Norland, a director of Hambros, the bank which has helped the Government in the worst aspects of this deal. Mr. Norland said:
  "If a ship which costs $25 million to build allowing for depreciation and no profit is sold for $15 million with 70 per cent. credit over seven years the direct subsidised loss of $10 million may not be an important factor in itself compared with alternative 'ad hoc' solutions for the shipyard in question. But what appears to be of little importance in each individual case quickly compounds into a series of consequences which have a major impact on ship values, shipbuilding prospects and finance."
  He concluded:
  "With each new ship built on uncommercial terms and for which there is no genuine demand, the return to a reasonably balanced supply and demand position in shipping is deferred a little longer and the cost to governments of continuing to support the surplus shipyards is increased."
  That encapsulates the situation very well.
  For the purpose of my remarks on the deal I should like to assume some facts. I am not privy—if that is the correct terminology—to all the details of this deal, but I should like to say this to the Secretary of State about the information. The Secretary of State initialled a letter of intent, or something of that kind—not the contract, but a letter of intent—on 21st November. That was publicised and I have here the Press announcement made by him at the time. Because of the problems at Swan Hunter and the difficulty of allocating some of the ships to yards, we know that the schedule attached to the contract—I hope that I have got the terminology correct—the schedule that will set out which ships go to which yards, has, of course, been held up. Therefore, so far as I am aware, the final contract has not yet been signed; or, if it has been signed, it was signed last weekend.
  We have been waiting for the final contract, but all the fundamental principles

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  have been clear for several weeks. As I said, the Secretary of State initialled the letter of intent three weeks ago. Therefore, all the facts have been known to the Government.
  But instead of British Shipbuilders or the Department of Industry making a comprehensive statement about the deal, details have been dribbled out piecemeal through Questions and Press articles.
  This morning the Secretary of State was entertaining industrial correspondents at the Department of Industry. For weeks, having known the main details of this transaction, the Government have had a rotten Press, brought derision on themselves and on this country, and what is worse, have been indirectly responsible for advertising all over the world the problems of Swan Hunter.
  If I may make a personal comment, I quite understand the problems of Swan Hunter. They are serious industrial relations problems about parity between two groups of workers. This situation was known to the Government many months ago. But, by not actually making a comprehensive announcement, they ensured that all this rumour and innuendo about the deal would go on and on.
  The truth of the matter is that thousands of banks throughout the world have the Hambros placing document, which is £36 million worth of the deal. This has been circulating around the world for weeks. If one goes to the City for lunch—hon. Gentlemen are often asked and they often go; indeed, many Labour hon. Members are frequently asked more often than members of the Conservative Party, for they need convincing—one finds that the amount of money that is going in from the intervention fund has certainly been talked about for weeks. Even the fixed charter terms between the joint company and the Polish shipping company are said for the bulk carriers to be about $133,000 a quarter.
  So all the main facts of the deal have been dribbled out in bits and pieces and there are literally hundreds of people who know most of the facts of this deal. There is not, certainly, a Japanese, nor a Norwegian, a South Korean, a Brazilian nor a Filipino official concerned with shipbuilding in the world who is not able to piece together the main facts of this deal. Yet here in the House of Commons we
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  are denied a simple, comprehensive statement on what the deal is all about because of "commercial reasons". But the Government say that they have already cleared this deal with the EEC Commission. So all the civil servants in the EEC know the facts. The bankers know the facts. Why cannot the House of Commons be told? It is the House of Commons that will have to find the money.
  It is no use the Minister saying, "We cannot announce this until the contract is signed". The letter of intent has been signed and all this innuendo and rumour would have ended long ago if we in this House could have been told before today what the main bones of the deal were.
  Let me say what facts I am going to take for the purpose of assessing the merits of the deal. I hope that I have got them more or less right. I should like to assume that the Japanese would have bid roughly 30 per cent. below the British yards for this deal, and that therefore the intervention fund has put in around £28 million to bring the price down to £115 million price to the joint company. That is roughly the order of things—a price of £115 million, probably about 30 per cent. below what the Japanese would have quoted. That is where the intervention fund came in and the intervention fund has put in about £28 million.
  ECGD has advanced £80.5 million at 7½ per cent. over seven years, which is strictly in accordance with OECD rules. I believe that the prudential limits for the Poles under Section 2 have had to be hastily raised to meet the £80 million of the ECGD credit.
  The Eurobond issue of $65 million appears to have funded the balance of the 100 per cent., and something extra, because there has been a partial refunding of early repayments of capital and interest. I understand the whole of the Hambros loan has been passed straight through to the joint British-Polish company which is buying the ships and so we are talking of a credit of just over 100 per cent. Perhaps the Secretary of State will confirm that.
  In arriving at the full cost to the taxpayer it is necessary to take not just the £28 million in intervention money but the difference between the prevailing rate

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  of interest at which the money is borrowed by ECGD and the rate at which the ECGD lent that money at its present discounted value. We must take the cost of the exchange cover, because the shipyards are taking a sterling risk and Hambros's loan was in dollars, so there is the cost of the exchange cover to be considered. We must take the differential interest also in terms of the dollar-sterling rate. If we take the present value of all these additional subsidies, the interest rate and the exchange cover, the figure amounts to roughly £10 million. I shall be delighted to show the right hon. Gentleman my figures.
  Therefore, we are talking in my view of a taxpayers' subsidy for this deal of roughly £38 million—a figure of £28 million is involved in the intervention fund and the rest relates to the calculation of the present value of the interest differentials and so on. The effective subsidy is anyhow over £35 million, and then there is also the 100 per cent. credit. I add in nothing for the possible cost of meeting any penalties that might arise.
  The most pernicious part of this deal is the Eurobond issue. It was a wholly private financing, raised in the market by British Shipbuilders, with British Shipbuilders then lending the money to the British-Polish company. Therefore, that did not conflict with the OECD rules.
  Furthermore, it will be said that the funding of such a joint company is an option which the Government would have offered to British ship owners.
  That argument is not only spurious but dishonest. What are the facts? It is known throughout the international markets that the credit and standing of the Poles is inadequate for them to raise 15-year money in their own name. Indeed, Guinness Mahon was asked to try to raise that money for the Poles and could not do so, so that the matter had to go back to the Government to find a way round this problem.
  The Government devised a means of indirectly guaranteeing the Poles. What happened was that the Eurobond issue was placed round the world and involved a figure of $65 million. There was no formal guarantee given by the British Government, but it is certainly a British
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  Government credit. It is that credit that has enabled British Shipbuilders to raise this money. There is no doubt that this loan was raised on the credit of the British Government, even though there was no formal guarantee. That British Government credit has been provided to enable the Poles to use their ships in competition with our own.
  What will happen if the Polish ships default on their charter? That is a proper banking question, and it is of great importance to this House. The lenders have not lent against the proceeds of the charter, even though the charter may match the borrowing. The lenders have lent against the credit of British Shipbuilders. Presumably, British Shipbuilders has the first mortgage on the ships. We do not know whether it is a British or a Polish mortgage, but we know that a Polish mortgage would not be bankable in the international community.
  However, we must presume that British Shipbuilders has the security on its loan to the shipping company which will own the ships and will have the first mortgage on them. But if there were to be a default, the British taxpayers would be left with the full financial liability of repaying the £36 million loan and would have on their hands bulk carriers which are almost worthless in the international shipping market.
  What happens if the Poles default on their charter? First, the British taxpayers will have to find £28 million and will face an extra burden of £10 million. They will then have to meet a default payment of £36 million in respect of the British Shipbuilders' loan.
  This is not just an academic question. At present there is an interesting case taking place involving the Czarnikow Sugar Company, a firm of London sugar brokers. It entered into a contract with Rolimpex, the Polish State purchasing agency, at a certain price, whereupon the price of sugar rose substantially. The Polish Government instructed Rolimpex not to deliver and claimed force majeure. So far the courts have upheld the claim, but the substance of the case is that when circumstances went against the Poles, the sugar contract became unattractive to Romlimpex. However, the Polish Government did not back up the Polish company

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  but sheltered behind the force majeure ruling. Therefore, the British organisation finds itself in a situation of having no recourse to the Polish Government at all. The case now going to the House of Lords and will be fought on the force majeure point, but I wish to emphasise that in that case the Polish Government did not even support one of their own agencies.
  Let me say to the Treasury—because we are always being told that it is the Chancellor of the Duchy of Lancaster who concots these awful financing deals—that I believe that this is all a little too clever. It is the knd of avoidance, if not evasion, of international rules and obligations that would bring down a massive heap of criticism upon private citizens who indulged in such practices. The Hambros loan of £36 million is a pure contrivance, engineered by the Government to evade the spirit of the OECD rules and it involves substantial risks for the British taxpayer which should be wholly unacceptable to this House.
  It is possible that the Government would be prepared to match these terms for a British shipping company—although that is not the basis of my argument—through Section 10 of the Industry Act, the intervention fund, capital allowances and all the rest of it, and even by financing through a joint company. That is possible, but on this occasion we are doing something different. We are not assisting the British shipping industry. The Government through British Ship-builders, are entering an alliance with those who are opposed to NATO to embarrass our friends.
  This is financing by the use of our credit—the reputation of the House of Commons is at stake—and the taxpayers' money. The credit is being given to a COMECON nation that is already a party to putting our seamen out of work by undercutting freight rates all over the world. We are acting in alliance with the Soviet merchant fleet, which is using its merchant ships all over the world to spread Communist subversion.
  The Government are lending not to a British company but to a Polish company. British seamen will not be hired. The ships will not fly the British flag. Although the ships will be financed 100 per cent. by Britain with a large taxpayer subsidy, they will not be available
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  to us in time of war as are all British merchant ships.
  It must be said that the Chrysler financing—that is going wrong now—at least assisted our allies to compete against the British motor industry. All that the Polish financing is doing is assisting the Poles, who are undercutting the British shipping industry and freight rates throughout the world. We are assisting the Poles and making it easier for them to undercut.
  Mr. Gordon A. T. Bagier: Does the hon. Gentleman agree that Polish shipping yards are now building about 100,000 gross registered tons of shipping for British-based ship owners?
  Mr. Nott: I know they are. If the Poles wish to offer attractive terms to British shipping companies, it is right for the companies to take them.
  I am complaining that we are offering greater credit than has ever been offered before in the international market. I have done my best to ascertain whether there has ever been an offer in the world shipping market that has involved so much credit. It is true that the Norwegians have done some 100 per cent. financings, but they have done that only when part of the 100 per cent. has come from United Nations aid funds, which is within the OECD rules. The Japanese have advanced 70 per cent. credit, but never 100 per cent. credit.
  I have consulted many international shipping companies and I have not been able to find one example of a Government offering 100 per cent. credit plus a subsidy, and the credit and subsidy are being given to a COMECON country, not a less developed country.
  I turn to the Prime Minister's part in this affair. The Sun today carries the caption
  "Varley is in the doghouse".
  The Minister of State, Department of Industry (Mr. Gerald Kaufman): Perhaps the hon. Gentleman will turn the page.
  Mr. Nott: The caption on page 2 states
  "Varley is in the doghouse"
  [Interruption.] The House seems to be more amused with page 3. That leads

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  me to say that we all know that for the love of one Labour marginal seat the Prime Minister will ski down Mount Everest in the nude with a carnation in his mouth. I am sorry to say that that was provoked by page 3. I am sure that the Government Front Bench will understand.
  It was the Prime Minister's foolish statement at the Labour Party Conference that undermined the position of our negotiators. The Prime Minister virtually committed the country to the order, and the Poles have taken us for one big long ride ever since. If "Varley" is in the doghouse, he is the wrong fellow. It is the Prime Minister who has lost most of the orders that we could have obtained by blurting out the news on the platform at the Labour Party Conference before its time.
  If we are to fill our yards with uneconomic orders, at least let us do so with vessels that are equipped with British parts and engines. In fact, 10 of the marine engines are going to Poland. The catalogue of protest from the marine engineering industry is building up very quickly. I shall refer only to two or three examples before I conclude.
  In its letter Stone Manganese Marine Ltd. states that the company is the principal propeller works in the world. It says that its Greenwich propeller foundry has closed and that its Birkenhead propeller works and the Dennystown Forge Co. Ltd. in Scotland are in jeopardy as a result of the Government having negotiated a deal with the Poles in which half of the engines will go to Poland, as well as the propellers and shafts.
  I quote from the letter of the managing director of Norbrit-Pickering Ltd. The managing director writes to Mr. Casey:
  "Our company has a factory in Coatbridge, Lanarkshire, which is entirely devoted to the manufacture of stud link chain cable and accessories."
  The letter continues:
  "In some of the larger sizes of chain we are the only producer within the UK … and we are dependent on the British shipbuilding industry for a very high proportion of our total chain output. Consequently the contract terms of the Polish order, whereby the chain and anchors will be of Polish manufacture, could have very serious consequences in our group.
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  "Coatbridge is already an area of high unemployment, and with the removal of this slice of our market there will be considerable strain on preserving employment."
  The decks are going to the Norwegians. According to Lloyd's List, the Poles have specified that the decks should be built in Norway and not by British yards. The firm of W. L. Byers of Sunderland has been informed that all the anchors are to be made in Poland. I have 20 letters from British manufacturers in the marine engineering sector.
  We protest that a large proportion of the subcontracting orders are going to Poland. If we are to take on these uneconomic orders for our yards for employment purposes, one imagines that it would be insisted that the marine engineering industry, which is a considerably larger employer than the shipyards, would get the orders.
  We recognise that several social problems would arise on the Clyde and the Tyne if more redundancies arose at this stage, but the order buys only a little time. It does so by supporting two particular yards at the expense of shipyard workers in many other yards. It will merely contribute to lower freight rates than would otherwise obtain.
  The Government are extending the credit race, and this will lead to an undermining of our shipping industry, which employs 100,000 people throughout the world. As the Secretaries of State for Industry and Trade know very well, the industry has already been threatened by COMECON competition. As for the suggestion that the bulk carriers will be used by the Poles only in the Baltic, let us remember that the Baltic is open to the British shipping industry and that if the carriers are used in the Baltic, that will mean, indirectly, less work for the British shipping industry.
  In the end it all comes back to the fact that we must separate the social problems from the economic problems, as the German Government and the German trade unions are doing now, and as the Government propose. We have to retain a slimmed-down but viable shipbuilding capacity, not least for defence reasons. It is bound to be smaller and slimmer than it is now. It is no use Mr. Parker, the marketing director of British Shipbuilders, saying on "Panorama" that there are no plans to reduce capacity,

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  that that is for others and that we must await the corporate plan of British Shipbuilders, which will not be available until April. That sort of statement will make the handling of these problems all the more difficult.
  Mr. Eric S. Heffer: The hon. Gentleman seems to be saying that the slimming down of the industry must take place immediately. I have heard nothing from him so far about what his party would do to overcome the immediate problems that exist in the industry. It is all very well having sympathy for the shipyard workers, but those from areas such as mine and the North-East will know that it is not sympathy that they want but jobs.
  Mr. Nott: I believe that I am right in saying that the hon. Gentleman represents one of the major shipping ports in the world. A great concentration of his constituents are seamen who work in the shipping industry. Throughout his constituency there are many firms working in the marine engineering business. The shipbuilding industry, the shipping industry and the marine engineering industry are brothers and sisters. We cannot take action to help out one if there are damaging repercussions for the others.
  Mr. Heffer: They are not complaining to me.
  Mr. Nott: I must tell the hon. Gentleman that the unions in the shipping industry are complaining strongly about the threat from the COMECON countries. If he has not heard what the National Union of Seamen and the officers' union have said about the way in which COMECON countries are under-cutting freight rates, I am sorry. The hon. Gentleman has obviously missed out. But it has been said by those unions on several occasions.
  Our shipping industry is contributing almost the same amount to our balance of payments as North Sea oil. It has weathered the slump in freight rates pretty well. Its ships are modem. This year 93 per cent. of our requirements for new ships are being built in British yards. But the industry's future is threatened—[Interruption.] I repeat, 93 per cent. of our requirements this year have gone to British yards. The fact of the matter is that the shipping industry is threatened by the very group of nations—the Soviet
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  bloc—to which the Government now bring comfort with a subsidy of about £38 million, credit of over 100 per cent., underwriting of financial risks up to £36 million, and penalty liabilities of an unknown kind.
  Where are these huge industrial subsidies going to end? Chrysler, British Leyland, British Steel, and now we are going into business of assisting Communist nations. All these subsidies will have to be paid for by our successful companies, by the shipping industry and by the marine engineering industry. Is this part of the Government's industrial strategy? If so, we do not understand it, nor, I hope, does the Secretary of State for Trade, who is always going on about the Japanese. I hope that, as part of his trade policy, he is not in favour of the British Government advancing 100 per cent. credit and giving subsidies of this kind. It is no use the right hon. Gentleman lecturing the Japanese if his own Government are to give these credit rates for shipbuilding.
  Sir Harold Wilson: The hon. Gentleman referred to the fact that British shipping companies were now placing 93 per cent. of their orders with British yards. Is he aware that two years ago there seemed little probability that they would be placing even 50 per cent. or 60 per cent. of their orders with British yards? Will he give credit to my right hon. Friends for the pressure that they have put on and the inducements that they have given to get those ships into British yards?
  Mr. Nott: Yes. I am delighted that the British shipping industry is building in British yards. But I also see no reason why, if overseas yards are offering attractive terms, the British shipping industry should not take advantage of them. I see nothing wrong in the fact that the British shipping industry was building ships elsewhere. In many cases British shipping companies would have built in British yards in the past if they had been offered the same penalty clauses as the Secretary of State is now offering to the Poles. British shipping companies have never been offered similar penalty clauses to those being offered by British Shipbuilders.
  Mr. Robert Hughes: Will the hon. Gentleman give way?
  Mr. Nott: No. I must conclude now.
  Vickers, Vosper Thorneycroft, Yarrow and Swan Hunter are engaged on work for the Ministry of Defence. If the Prime Minister wanted to look after Govan and Swan Hunter until the next election—I can understand what he feels about this matter—would it not have been better to have spent the subsidy—between £28 million and £38 million—on building a few more fisheries protection vessels or a few more ships to defend our oil rigs? If it was necessary to spend this money to keep the Govan and Swan Hunter people employed—this is very much a short-term measure—would it not have been better to have spent the money on the Royal Navy? At least the Royal Navy is on our side.
  Mr. Deputy Speaker (Sir Myer Galpern): Before calling the Secretary of State for Industry, I remind the House that this debate must conclude at 7 o'clock. I should add that any references to page 3 of the Sun will be out of order.
  5.4 p.m.
  The Secretary of State for Industry (Mr. Eric G. Varley): We have just listened to a speech from the hon. Member for St. Ives (Mr. Nott) which was characteristically full of sour and unjust remarks. The hon. Gentleman spent 40 minutes addressing the House, but he did not tell us whether he supports the Polish deal and the work that it will provide. The truth of the matter is that the Opposition do not give a fig about the work in British shipyards and they do not give a fig for British shipyards either.
  The hon. Gentleman's remarks caused no surprise to my right hon. and hon. Friends. It is nice to know that the British Navy is on our side. I only wish that we could say the same of the Opposition. We know that they are not on our side or on the side of those who work in British shipyards. That causes us no surprise. We all remember the hon. Gentleman's remarks on 1st December last year when he made some most disgusting and squalid personal attacks on members of the Organising Committee for British Shipbuilders. I think that probably the hon. Gentleman was ashamed of that speech and that it will probably come to pass that he will be ashamed
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  of the remarks that he has made today, because we know how much good will he has for the shipbuilding industry.
  As to the hon. Gentleman's attack on trade with Communist countries, I shall leave that to be dealt with by my hon. Friend the Minister of State in winding up. I do not know whether that accords with the remarks made by the right hon. Lady the Leader of the Opposition, who has spent a good deal of time during the past few months in various Communist countries.
  Last week my right hon. Friend the Prime Minister said that if the Opposition chose to have a debate on this Polish deal, they could have all the figures that it was appropriate to produce. So they shall. But first we need to set the whole question of the Polish contract in its context.
  When my hon. Friend the Minister of State announced the introduction of the intervention fund on 24th February, he warned that, without swift action by the Government, much of the merchant shipbuilding industry in the United Kingdom would close within two years. That danger arose because of a catastrophic slump in the shipbuilding market.
  In 1973, new orders for ships throughout the world amounted to over 72 million gross tons, of which 54 million tons was for new tankers. Then came the Yom Kippur war and the oil crisis.
  In 1975, cancellations exceeded new orders by 19 million tons. Orders placed in British shipyards with a capacity of over 1¼ million tons totalled only 73,000 tons. The shipbuilding market has not recovered from that disastrous slump, and will not do so for many years. New orders worldwide have now been running at only 13 million tons annually for the past three years.
  Against this background it is not surprising that all the world's traditional shipbuilding countries have been fighting by every means possible to stave off collapse. Every major shipbuilding country in Western Europe has introduced subsidies or other aids to shipbuilding. That is the market in which our industry has to compete. My hon. Friend's statement on 24th February set out very clearly the types of action that we would take to help our industry in these market conditions.

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  Throughout the past 10 months that budget of £65 million has been kept to strictly. Commitments from the fund, including commitments for assistance for the Polish deal, amount to £50 million. The fund was submitted to the Commission of the EEC and received its formal approval. Every single use of the fund has had to be submitted to the Commission, and every single use of the fund has been approved by the Commission. That includes the Polish contract.
  Our financial advisers—among them, Hambros Bank—with their skilled advice and services helped British Shipbuilders put together an ingenious financial package.
  That is what private industry does. That is what our foreign competitors do. That is what our nationalised industries are constantly being urged to do. That is what selling abroad is all about. Without this approach we could never have won the Polish order, because we had to fight very hard to win the Polish order.
  The hon. Member for St. Ives said that it was without parallel. In certain respects, it is not without parallel. I shall not go into this matter in detail, because I should have to reveal commercial confidences. The hon. Gentleman was not a Minister in the then Department of Trade and Industry. However, I suggest that he should advise some of his hon. Friends to look at some of the deals which were concluded when they were in office.
  The financial package which has been devised accords with what private industry does. That is what our foreign competitors do and that is what our nationalised industries are constantly being urged to do. That is what selling abroad is all about. Without this approach we should never have won the Polish order. We had to fight very hard to get it.
  The Opposition want to wreck this deal. That is clear from the remarks of the hon. Member for St. Ives and from the remarks that some hon. Members have been making in the last few days. They seem to think that the Polish order was dreamed up out of thin air. But there was always going to be a Polish order, for the simple reason that the Poles need the ships. The question was: where were the Polish ships to be built? Were
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  the Poles going to buy them from Japan, Norway or elsewhere? That seems to be what the Opposition would have liked.
  British Shipbuilders went out and sold aggressively. It fought to bring the orders to Britain. It is stupid to imagine that big export orders can be won in fiercely competitive market conditions without providing credit. The Export Credits Guarantee Department exists to enable our exporters to provide satisfactory credit. In order to bring home the largest shipbuilding order for years we had to provide credit arrangements which met the customer's needs and which were strictly within the requirements of the EEC and OECD. Contrary to what the hon. Member for St. Ives said, the arrangements into which we have entered do not violate OECD conditions. That is what we have achieved and it should bring tributes to British Shipbuilders and to the City banks. It should not become an issue of malevolent slander as it has from the Dispatch Box today.
  We have to go and fight for orders. We shall do that because we want to secure a future for our shipbuilding industry. We are determined to do that. We have the third largest merchant shipping fleet and one of the largest navies in the world. We cannot let our shipbuilding industry be destroyed. We must not—in my judgment and, I hope, in the judgment of the majority of hon. Members—become the permanent captives of foreign suppliers.
  There is another reason why we must protect our shipbuilding industry. About 90 per cent. of our industry is centred in areas with historically high rates of unemployment such as Tyneside, Clyde-side, Merseyside, Wearside and Northern Ireland. These are the places that we have been helping by means of the intervention fund and other measures.
  Our major success has been to win orders from British owners. In 1975 only 10 per cent. of orders for United Kingdom registration was placed with British yards. In the first nine months of this year, almost three-quarters of the orders were for United Kingdom registration. That did not happen by accident. It was the result of a major campaign in which we won the co-operation of the General Council for British Shipping.

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  Before the Polish deal, 20 out of the 24 orders that were won with the assistance of the intervention fund were for British registration. The orders that we have gained so far, including the Polish deal, amount to 403,000 gross tons, representing a total of 21,000 man years of work.
  In Clydeside, Tyneside, Teesside, Wear-side, Dundee and Aberdeen men are at work today who would be drawing the dole if it had not been for these orders. I suppose that that would have pleased the Opposition. If I had come here today and announced that 8,000 redundancies were taking place the hon. Member for St. Ives probably would have cheered. His comments will be noticed in the shipbuilding areas.
  Not only are we building the ships but the engines and components. The hon. Member for St. Ives referred to the marine industry. A total of 88 per cent. of the work involved in the Polish deal is work for Britain. The Polish order means vital work for workers in the North-East and Greenock, and our hard-pressed steel industry will be providing about 50,000 tons of steel.
  Mr. James Dempsey: Can my right hon. Friend comment on the reports that the firm of Norbrit-Pickering of Coatbridge is not to be considered for any of the chain making involved in the Polish contract? This firm has an enormous skill which has been built up over the years by the management and work force. I should be most grateful if the Secretary of State could say that this matter will be examined.
  Mr. Varley: I shall ask British Shipbuilders to look into what my hon. Friend has said. It is not uncommon for ship owners to specify that certain requirements should be built in a particular country. That occurs when British owners place work overseas.
  A total of 88 per cent. of the work on these ships will take place in Britain. There is no doubt about that. If we left it to the Opposition none of this work would come to Britain.
  In 1975 Britain was fifth in the table of international shipbuilding output. This
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  year, on the basis of orders won, we have shot up to second place. That is a measure of the success of our policy. In getting the orders we have committed £50 million of the £65 million in the fund. But even with these major successes, our yards are still hit hard by the crisis that affects the whole world industry.
  The orders that we have taken this year, including the Polish order, are equivalent to less than two-thirds of our present level of output. What we have done is to ward off a disaster. We have not found a cure. We must go on discussing this with British Shipbuilders within the framework of its corporate plan.
  Far too many hon. Members opposite are not interested in families, communities and job security. All they care about is looking for mud to throw and hoping that some of it will stick. That is the motivation behind their attack on this Polish deal.
  The Polish order is by far tthe largest single call on the fund—which is not surprising because it is by far the largest single order. I have not previously thought it right to provide information about the size of grant from the shipbuilding intervention fund for the Polish deal.
  As was explained to the House last February, assistance from the fund is tailored flexibly to the circumstances of each prospective ship order, to enable the shipbuilder to quote a competitive price. This price is a matter for commercial negotiation between shipbuilder and customer. The more the customer knows about the size of grant to other customers for previous orders the more his hand will be strengthened for his negotiation.
  Publication of grants is thus liable to increase the cost to public funds of supporting the shipbuilding industry, and to reduce the amount of orders which can be secured from the fund. Equally, to publicise all the other financial arrangements would be likely to make the job of selling ships to other customers still harder.
  Mr. Michael Grylls: Will the right hon. Gentleman give way?
  Mr. Varley: The hon. Member for Surrey, North-West (Mr. Grylls) is the last person to whom I would give way.
  Mr. Grylls: Give way.
  Mr. Deputy Speaker: Order. If the Minister does not give way, he does not give way.
  Mr. Nicholas Ridley: On a point of order, Mr. Deputy Speaker. The Secretary of State has told my hon. Friend the Member for Surrey, North-West (Mr. Grylls) that he is the last person to whom he would give way. Is not that a personal attack on my hon. Friend, particularly since my hon. Friend the Member for St. Ives (Mr. Nott) gave way each time he was asked, with one exception? Should not the Secretary of State apologise to my hon. Friend.
  Mr. Deputy Speaker: The question of giving way is entirely in the hands of the individual who is addressing the Chamber.
  Mr. Varley: I shall not give way to the hon. Member for Surrey, North-West. On 19th May he sent a letter to the Prime Minister in which he made an attack upon me which he subsequently learned to be wrong. The hon. Member sent me a tatty, squalid little apology. I refuse to give way to him. I wish to get on with my speech since we have so little time.
  My right hon. Friend the Prime Minister said last Thursday that all the figures that are appropriate to produce will be given. I shall therefore give the facts about the subsidy on this occasion. But I want to make clear that to do so more generally would be likely to damage the interests of both the industry and the taxpayer, and I strongly advise the House not to press me to do so for other deals.
  I should also remind the House that nationalised industries are responsible for their own commercial actions. Sponsoring Ministers have always, and rightly, been unwilling to answer to the House for the commercial decisions and arrangements which the corporations make in the ordinary way of business. The House has always recognised that to have such management decisions always open to
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  discussion in the House would be damaging to the efficiency of the industries.
  The ships to be supplied to the Poles will be sold by British Shipbuilders to a company to be established in Poland which will be jointly owned by British Shipbuilders and the Polish Steamship Company—PZM. It was made clear in the joint communiqué last December that the necessary financial arrangements for the establishment and running of the joint enterprise would be made by the British side of the partnership. That was done more than a year ago.
  The joint venture company will bare-boat charter the ships to the Polish Steamship Company for periods of 13 to 15 years. In order to secure the business, the Government have agreed to give a subsidy from the intervention fund of not more than £28 million. There have been allegations that much larger amounts of public funds will be spent to subsidise this order. That is simply not true. There is of course a guarantee of export credit by ECGD, but that is a normal part of any export transaction. The amount of the guarantee meets the normal EEC and OECD requirements—that is to say, it is not more than 70 per cent. of the export price. British Shipbuilders will provide finance to the joint venture company, but it will do this not with public funds, but with funds borrowed on the commercial market, and a loan of $65 million has been raised from a consortium of banks without Government guarantee.
  The £28 million subsidy comes out of the £65 million budget that was announced for the intervention fund in February. After allowing for that commitment there still remains around £10 million uncommitted from the fund. The fund has been used frugally and with prudence to secure orders for 48 ships. The balance will be similarly used and other orders are in prospect.
  Furthermore, I can assure the House that one British shipowner was offered the same percentage subsidy as for the Polish deal, rejected it and placed an order abroad instead.
  The EEC Commission is fully satisfied that the arrangements for the deal meets its rules. The Accounting Officer of my Department is also satisfied.
  It should be borne in mind that in due course the PAC, through the Comptroller

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  and Auditor General, will have full access to all relevant papers.
  The attacks on this deal by Conservative Members are typical of their double standards—
  Mr. Nott: I am grateful to the Secretary of State for confirming the figures that I gave the House, but will he answer the question I put to him? What mortgage does British Shipbuilders have in return for its advancing of this $65 million to the joint British-Polish company? Does it have a British or a Polish first mortgage on the ships as security for the money which Hambros has lent to it and which it will lend to the joint company?
  Mr. Varley: I do not have precise information on that, but if the information is available it will be provided by my hon. Friend the Minister of State in his winding-up speech. This is an important matter. The other factors about the repayment of the money from the charter have been fixed and do not depend on the charter or the amount of charter that will take place.
  The attack on the deal by the Conservatives is typical of their double standards. Every Question Time they make an issue about the level of unemployment and they often have the brass neck on occasions to stage debates about unemployment. In some respects they are quite right because the level of unemployment is far too high. Yet every time the Government act to save the jobs of British workers, and in this case to preserve from collapse a vital and strategic industry for Britain, they attack us for it, and look for dirt to throw. The motion before the House is to reduce the Secretary of State's salary. The real target of the right hon. Lady the Leader of the Opposition and those who have signed the motion is not a Minister's salary, but the livelihood of every shipbuilding worker in England, Scotland and Northern Ireland. That is why the House will throw out the motion.
  5.15 p.m.
  Mr. David Hunt: Soon after I arrived in the House I heard a speech by the present Prime Minister promising to sustain a period of open government. It is a reflection on this deal that
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  most of the information has been kept under wraps and has not yet been revealed even in this debate. Apparently, we must await the speech of the Minister of State when he winds up the debate to discover more information, but I hope that at some stage during that speech he will seek to respond to the very valid questions put forward by my hon. Friend the Member for St. Ives (Mr. Nott).
  It is not just the terms of the Polish contract so far as they involve shipbuilding aspects that give rise to concern. What is to be the liability of the British taxpayer when the ships come to trade? They will be trading in direct competition with British ship owners. What will be the liability to the British taxpayer when those jointly owned ships seek to trade directly in competition with our shipowners?
  There has been no denial from the Government in the debate that these ships will compete with British ships. The trade by British ships in carrying Polish coal to Southern Ireland is one such example. I understand from those who ply that trade that they are quite clear in their minds that these ships will be used in direct competition on that route. I give an example of one route, but I know of others. May we have some information from the Minister of State as to whether my suspicions are correct?
  We have an assurance from British Shipbuilders that these ships will not be trading directly in competition with British ship owners. May we have that assurance repeated in this debate? Will the Minister of State ensure that no point will be taken on whether the competition is direct or indirect? We want to know whether these ships will be used in any competition with British ship owners.
  Mr. Heffer: I am against the attitude expressed by the hon. Member. Whether or not the ships will compete with British owners, the hon. Member appears, like his hon. Friend the Member for St. Ives (Mr. Nott), to be against the decision of the Government. Is he aware, however, that his hon. Friend the Member for Wallasey (Mrs. Chalker), who is seated just behind him, actually demanded, after the difficulties at Swan Hunter, that some of the vessels should be build on Merseyside? The Conservatives had better make up their minds where they stand on these issues.
  Mr. Hunt: I usually have a tremendous amount of respect for the hon. Member for Liverpool, Walton (Mr. Heffer), but he has interrupted me too early in my speech. I shall be dealing with the points he is making about the future of the British shipbuilding industry.
  Much of our concern is to know the effect of the deal on British shipping. There are still unknown terms and unseen conditions which will almost certainly make life more difficult for British shipping at a time of serious world overcapacity and intense world competition. The Minister must respond to these points. What about the long-term future of British shipbuilding? This is surely one of the key questions in the debate.
  I now seek to respond to the hon. Member for Walton. British shipbuilding employs 82,000 people. In this country we have some of the best and most efficient shipyards. Cammell Laird, for which many of my constituents work, which is within the constituency of the Secretary of State for Trade, the right hon. Member for Birkenhead (Mr. Dell), builds ships better than anywhere else in the world. We have a fine shipbuilding industry.
  What we really should be discussing is the way in which we can maintain and improve our shipbuilding capacity. We ought to be discussing the way in which we can meet the demands of the 1980s and 1990s. Instead we have what appears to have been a short-term expedient at great cost to the taxpayer, perpetuating an uneconomic situation and no long term policy.
  Mr. Robert Hughes: Will the hon. Gentleman give way?
  Mr. Hunt: Perhaps I may finish answering the hon. Member for Walton.
  When British Shipbuilders came into being, in July, one of its major priorities was said to be to work out a plan for a slimmed-down industry with a capacity more in line with the United Kingdom's likely share of a greatly reduced world market. Yet the announcements and comments that have been coming out of British Shipbuilders have not been in accordance with that announced objective. Mr. Michael Casey stated in The Times on 1st July:
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  "I would like to make it clear that we have no plans for redundancies in British Shipbuilders or for closures. Our policy is for an all-out drive for orders."
  I would try, in as constructive a manner as possible to plead that this is surely Cloud-cuckoo-land. The truth is that at a time of serious world over-capacity, world shipbuilding capacity is three times the demand for new ships. Therefore, perhaps one of the most important and urgent things that must come out of British Shipbuilders is a clear and definite long-term policy for British shipbuilding.
  Mr. Robert Hughes: I appreciate entirely the hon. Gentleman's point that British Shipbuilders ought to be looking into the 1980s and 1990s at a plan for a viable and worthwhile industry. But if we allow the industry to collapse and disappear in the next two or three years, how can we have a long-term plan? That is a contradiction that the hon. Member will have to resolve.
  Mr. Hunt: There is no contradiction, because the alternative to perpetuating uneconomic yards with this deal is not "collapse". There must surely be a medium-term policy that will seek to preserve the expertise that we have in our shipbuilding yards without causing a collapse in shipbuilding and at the same time without causing serious competition for British ship owners.
  I believe that our objective must surely be to exploit and to increase our shipbuilding expertise in readiness for the demands of the 1980s and 1990s. My hon. Friend the Member for St. Ives, towards the end of his speech, started to make quite clear exactly where that longterm policy could lie.
  Mr. E. Fernyhough: Perhaps the hon. Member does not recall, as I recall, that 40 years ago British Shipbuilding Securities did exactly what he said should happen to the industry now. As a consequence, when the war broke out we had to scour the country to get the boilermakers, the fitters and all the rest of them who had been sacked, because they were no longer available to do the jobs the nation needed to be done. Does the hon. Member not realise that, as a maritime nation dependent upon our food imports and upon our exports of manufactured goods, and upon our Navy,

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  sometimes it may be necessary to carry shipyards as we carry the fire brigade?
  Mr. Hunt: What I am suggesting is a way in which we can preserve the expertise in our shipbuilding yards. I should like to expand on that point. If we were—I do not expect it from the present Government—to recognise the need to increase our naval and merchant strength, many of the problems in our shipbuilding industry would be met. We should also be preserving the very expertise to which the right hon. Member for Jarrow (Mr. Fernyhough) has referred, which we need to preserve if we are to keep our shipbuilding capacity for the 1980s and 1990s.
  That shipbuilding capacity will not be needed for building iron hulks. It will be for building more sophisticated ships. That is quite clear. Therefore, to build that sort of expertise into our capacity for the future means of necessity that a constructive policy would be to increase our naval strength.
  Mrs. Margaret Bain: Will the hon. Gentleman give way?
  Mr. Hunt: I have given way far too many times already. I shall not give way again, because many hon. Members wish to catch youur eye, Mr. Speaker.
  Not only should we be able to preserve our capacity, but we should be able to improve it if more orders were placed for British frigates, warships, submarines—both conventional and nuclear—fishery protection vessels and vessels to protect our North Sea oil rigs. I am sure that many hon. Members would far prefer, as I would, a bolstering and a preserving of our shipbuilding capacity in that way to giving to a rival nation part of the Soviet bloc which is seeking to erode our place as one of the world leaders in shipping, a very generous deal at great cost to the British taxpayer.
  Building naval vessels, as many hon Members with naval yards in their constituencies will know, is a great discipline. What is needed in British shipyards is more expertise and less unskilled labour. The voluntary redundancy scheme will be a help but there must be in addition a positive direction in policy—
  Mr. Heffer: That is an indication that the hon. Member knows absolutely nothing about the industry.
  Mr. Hunt: We must, in addition, have a positive direction in policy. We need from the present Government a long-term policy for British shipbuilding instead of, as is happening at present, the short term expediency of the Polish contract and the buying of time with a totally uneconomic order, which will help the Poles considerably to compete with our own ship owners.
  When the Minister responds to this debate, will he widen it beyond the terms of the Polish deal and refrain from personal jibes? The Secretary of State referred to my hon. Friend the Member for St. Ives making "sour remarks". I think that most of the Secretary of State's remarks were unacceptably personal. The Secretary of State gave us very little by way of constructive policy for British shipbuilding. What the 82,000 people in British shipyards want to know is what is the Government's long-term policy for shipbuilding. We have a right to expect an answer in this debate.
  5.30 p.m.
  Mr. Frederick Willey: The Opposition are obviously trying to wreck this agreement. That is shown by the fact that we are having a debate today. The debate could well have been held after Christmas. It has been held today because there is the opportunity, as I see it, to wreck this contract.
  On the contrary, I think that I am speaking for the shipbuilding industry generally when I say that we welcome this contract. We believe that there has been a justifiable expenditure of public money to buy time at a critically important point for the shipbuilding industry. Incidentally, no one can deny that in competing for work in the present heavily subsidised world market we are in a better position to negotiate with British Shipbuilders representing us than we would have been under private enterprise. There is no doubt about that.
  I accept the allocation of the orders. But the Government should make it clear that it is on social and not economic grounds. I would have preferred the allocation to be done under Section 4 of the Act. In Sunderland—I do not want

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  to prejudice the order—we regard the Indian order for six ships, complementary to the Polish order and we understand that over the next few days there will be the announcement of a British order. We can fit in both these orders.
  I want to deal primarily with the difficulties currently arising from industrial relations. We in Sunderland have been involved through Austin & Pickersgill. On the Wear we have pay parity in each of the yards—we have no difficulty about that. Austin & Pickersgill did not seek an allocation of the Polish order. Indeed, it said that it did not want an allocation. I want to explain why.
  First, the men said "The work is in dispute." That is a traditional ground for not taking an allocation of work. Secondly, they said that the terms were not acceptable. They said that they might be acceptable for Iron Curtain countries, but they were not acceptable here. For example, they said, if it be the fact, that there was provision for unlimited overtime, and they found that unattractive in an area with heavy unemployment. They pointed out that in any case Austin & Pickersgill has a magnificent record for delivering on time, and has consistently made a profit. They said that the responsibility for any conditions such as these lay with the management, which must bear it. That again seems to be a reasonable point of view.
  It was because I anticipated these difficulties that I suggested that Polish orders for the North-East should have been given to a consortium. If that had been done, we might have resolved this sort of difficulty. Altogether, I am far from satisfied with the progress made by British Shipbuilders with industrial relations, so critical to the present situation.
  In April, after a considerable time since we had suggested a feasibility study concerning Doxfords, we approached the Minister of State with constructive suggestions about Doxfords. As always, he met us sympathetically but said that it would be primarily a matter for British Shipbuilders. He added, by way of assurance, that he would use his good offices to bring about an early meeting between British Shipbuilders and management and workers' representatives. So far, we have had no response to that proposal.
  On 21st June, at the request of the Wear Confederation, I asked the Chairman
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  of British Shipbuilders to use his good offices to promote an inaugural meeting between management and men. As the Confederation expressed its objective it wanted to ensure that the management and unions should
  "co-operate fully, and take advantage of the new opportunities"
  afforded by nationalisation. I got no reply. I met the Chairman with other Northern Members to discuss shipbiulding generally. He apologised and next day I got his reply. He gave a general assurance that he would be "delighted to see anyone"—incidentally, we were not asking him to see anyone but to inaugurate a meeting—but added the important qualification that he would do so "whenever appropriate".
  I took the matter up with him again. I said that I appreciated that there were discussions at national level, but I emphasised, as I have done many times, that it was no good in British shipbuilding asking for things to be agreed nationally. They have to be agreed at district level. I assured the Chairman that our sole purpose was to ensure that nationalisation got off "on the right foot, and to encourage a co-operative effort in the yards". He replied on 5th August, that he could
  arrange a meeting some time in September.
  Just before September, the Deputy Chairman intervened. He said that there were national discussions and they had to await results before, to use his own picturesque language
  "continuing our exercise of meeting the workforce."
  I am still awaiting a reply.
  So, in the case of Doxfords, we have been waiting nine months; in the case of the Wear yards we have been waiting six months. It is not surprising that, in the meantime, industrial relations have deteriorated. It is not surprising that the men now say that Section 5 of the Act, on which we spent a good deal of time, is being sabotaged. Many are even saying that one cannot expect a retired admiral with a couple of civil servants to run this industry. That is their colloquial way of expressing their dissatisfaction with the progress so far made.
  But progress in industrial relations is essential to the industry for two reasons.

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  First, it is still a relatively labour-intensive industry, dependent on good relations. Secondly, it is threatened by massive redundancies, and everyone knows that there have to be good relations between management and men if one is even to consider the question of redundancies. Industrial relations, which we spent so long discussing in Committee, have not been afforded the top priority that they should have been given, and we are suffering accordingly. It is a familiar position, certainly in the North-East.
  I hope that British Shipbuilders will realise the situation. We have at any rate now a recognition that good relations have to be promoted from district upwards and not imposed from the centre downwards. This matter is very urgent. I think that all those concerned with the industry are upset by what has occurred in the last few weeks, and we want to see these matters sorted out. The only way to sort them out is by improving industrial relations and avoiding the belief that this newly-nationalised industry is not going to be as flexible and responsive as we all hoped it would be.
  Several Hon. Members rose—
  Mr. Speaker: Order. May I appeal to the House? There are now 40 minutes left for Back-Bench contributions to the debate. I earnestly hope that we shall have brief speeches, because I want to call as many hon. Members as possible.
  5.48 p.m.
  Mr. Michael Grylls: After what you have said, Mr. Speaker, I shall pass over the rather bad-tempered and petulant remarks made by the Secretary of State for Industry when I tried to intervene in his speech. I want to concentrate on the more serious point that he concluded with—the question of unemployment.
  Most of us on this side of the House will treat with scorn his remarks about unemployment, coming as they do from a member of a Government who have raised unemployment on the Tyne by 20,000 since February 1974 and on the Clyde by 25,000. Let not this Government rub our noses in the unemployment issue. They are the guilty ones. They have created unemployment.
  On this Opposition Supply Day the Secretary of State has at last told us what
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  the level of the subsidy is in the Polish order. He would have had to tell us any way. It would have had to appear in the Industry Act report. He could still have given us more detail than he has. In the last Industry Act report there was detail of the £5 million grant to Lithgows, so why could we not have detailed figures about this Polish order?
  There has been widespread discussion about the rôle of the House of Commons and its control over expenditure. It is a depressing fact that the House of Commons has been treated with what I would call supreme contempt. As my hon. Friend the Member for St. Ives (Mr. Nott) said in his excellent speech. the shipping industry around the world seems to know more of the details than are known by ourselves, and so do the Press and the shipping industry.
  The Prime Minister made some remarks about the subject at the Labour Party Conference. I think he misled the conference, although no doubt he did not intend to do so. He talked of a sale of 24 ships. He would have been more frank if he had spoken of the leasing of 22 ships, 11 of which would still belong to the British taxpayer.
  Thanks to an Opposition Supply Day, at least we have the chance to put to the Government the questions which need answering, but it is the greatest impertinence for the Secretary of State to come to the House in a bad-tempered mood, thoroughly cross at having to come at all, to tell us what is going on—
  Mr. Robert Hughes rose—
  Mr. Grylls: I will not give way as there is so little time available. Since all this has been going on there has been no statement to the House, although, as I have indicated, there have been remarks made about it at the Labour Party Conference. There was the agreed communiqué, signed and issued by the Secretary of State, about a new era of economic co-operation, which was said to be the successful conclusion of long and complex negotiations, but the Government have failed to communicate to the House of Commons the information that we need.
  The communiqué ended by saying that work on these ships would begin immediately. We now know that that is

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  certainly not true. It would have been more usual, following this very important agreement—if it is so important—for the Secretary of State to have the courtesy to come here and tell us what was going on.
  We censure the Secretary of State very strongly this afternoon for his conduct. If he criticises any part that I have played in this matter, I can tell him that I have been endeavouring on behalf of the House of Commons to get some of the facts before us. If we have managed to get some facts today, I am glad about that. But there are so many questions left open and so little time in which to debate them that I believe the Trade and Industry Sub-Committee of the Expenditure Committee will have to get going very quickly in order to it looks as though the deal is not a deal with them.
  After the probing that we have done, very good one. Indeed, when we look at the terms which have been extracted from the Government by the Polish Government, some might say that the British Government have been taken to the Polish cleaners. It is supreme folly to subsidise the merchant fleet of the Communist world so that it may compete against our own fleet. It may please the Tribune Group, but I doubt whether it pleases many others in this House of Commons or, perhaps even more important, those who work—
  Mr. Heffer: Why will the hon. Member not grow up?
  Mr. Grylls: If the hon. Member for Liverpool, Walton (Mr. Heffer) were to go round his constituency and ask the many people who work in the shipping industry and the many sailors what they think—
  Mr. Heffer: I know them. The hon. Member does not.
  Mr. Grylls: Let him ask them what they think about this sort of competition. These ships—which are being almost given to the Polish Government—will operate completely outside all the financial disciplines under which the British merchant marine has to operate. The Poles do not operate under a market economy. They do not have to make a profit at the end of the day This has
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  to be recognised in considering a deal of this sort.
  I like the way in which it has been called a deal. It started off as an order. Then someone rumbled that it was not an order, so the word "deal" was used. That is more honest. The best comparison that I can make is that it is rather like selling tanks to Rommel.
  Mr. Bagier: Whose ships are being built in Poland?
  Mr. Grylls: There are at present 14·8 million tonnes of bulk carriers laid up. If the Secretary of State, or the hon. Members who have intervened, would go to the Norwegian fjords, they would see that they are chock-a-block with bulk carriers that have been laid up by Western fleets. When it is said that British owners could have the same terms for the building of similar ships, it can be seen that is a totally phoney offer with such a surplus of bulk carriers throughout the world.
  We accept, of course, that in relation to unemployment in the short term in British yards the deal is useful. My criticism is that the Government have totally failed to use the deal in order to establish a strategy for the running down of the British shipbuilding industry.
  Mr. Robert Hughes: That is the point—the hon. Member wants it to be run down.
  Mr. Grylls: Does the Minister agree with the figures of the EEC Commission showing that the capacity for shipbuilding in the EEC has to be reduced from 4·4 million deadweight tonnes to 2·4 million deadweight tonnes by 1980? Have the Government agreed—
  Mr. Robert Hughes rose—
  Mr. Grylls: I hope that we shall get the answer from the Minister later on The West Germans have reduced their capacity in the shipyards over the past two years to the extent of 9,000 people. This has been achieved by giving generous redundancy terms and by retraining. These are sensible measures with which Conservatives agree. What have the British Government done?
  The Secretary of State referred to the Official Report of 24th February 1977 and to the statement by the Minister of State about the need for swift action by

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  the Government. It was right to say that there should be swift action, but what has been done about it? It has taken 10 months to produce a three-clause Bill. It was produced only a few weeks ago. That is evidently what the Government regard as swift action.
  If swift action was needed, why was it not taken in February 1977? The Government have been sitting around for the past 10 months. The Bill will not become law, presumably, until the New Year at the earliest. The Government have totally failed to come to grips with the problem. They could have used this order—which obviously will go through—to help the industry in a more effective way.
  The strange details of the joint venture company would have baffled Sherlock Holmes. It is a most extraordinary setup. No wonder the Prime Minister did not mention it in his speech at the Labour Party Conference! He kept that under wraps. If he pretends that he did not know about the joint venture company on 4th October, when he spoke, I can only say that that is odd, because the Secretary of State told me in a Written Answer that he had approved the setting up of that joint company two days earlier. Surely that was not just dreamed up overnight.
  Why is this deal regarded as commercially confidential? I do not think that anyone in the shipping industry really believes that the details of the joint company need to remain confidential. I ask the Minister why there was not a straight sale to the Polish shipping company. Would not that have been less risky to the British taxpayer? Or is the truth of the matter that the Poles have no money and therefore we have had to have this leasing agreement? I hope that the Minister will tell us why this joint company was set up. Is it perhaps, as my hon. Friend the Member for St. Ives suggested, simply an arrangement to get round the rules of the Organisation for Economic Co-operation and Development?
  The Secretary of State this afternoon still does not seem to know about the question of a mortgage. He has not taken the trouble to find out. I hope that the Minister of State will deal with this question. Will half the mortgage be
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  guaranteed by the Polish Government? Presumably, it will. Will it be by Bank Handlowy, which has a representative in the City of London? Have the Poles enough money to guarantee the mortgage—if there is a mortgage?
  What details are there of the charter-hire arrangement? Will payment be in zlotys, dollars, or pounds? Will there be an exchange risk?
  I appreciate that the Minister cannot hope to answer all these questions in the short time available tonight, but I hope that I have shown that the House of Commons, through one of its Select Committees or in some other way, must somehow get to the bottom of this deal.
  What will happen if the charter-hire arrangement does not hold up? What will happen if the income is not sufficient to pay for the capital which has been borrowed by this joint company? It appears from a report in the Financial Times that the Poles think it will not be. They think that the charter-hire income will be $126,000 a quarter whereas, according to the report, they will not be able to finance the deal for under $131,600 a quarter. Can we have the details of that, or is it too difficult for the Secretary of State to carry these figures around in his head? Perhaps the Minister can tell us.
  What about the British sailors? Why do we not have some British sailors on these ships, particularly if the ships are half British-owned and will continue to be half British-owned? Why has not the hon. Member for Kingston upon Hull, East (Mr. Prescott), who is a leading light in the National Union of Seamen, come here to demand that British seamen should be on these ships? Is it because Polish seamen are paid half the rate and thus the Poles will be able to compete with our own companies?
  Because of the shortage of time, I shall now sit down. I believe that at the end of the debate there will still be a lot of questions to be answered. I believe that the House of Commons will want to follow them up. The Secretary of State and the Prime Minister have only themselves to blame for bringing this cloud of suspicion over this rather peculiar deal.
  The Secretary of State has not lifted that cloud completely today. I do not believe that the Government will. I believe

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  that their scurrilous behaviour deserves to be severely censured tonight and that the House of Commons, in one way or the other, will want to return to investigating this deal.
  6.2 p.m.
  Mrs. Margaret Bain: Before I come to the main points of my speech—I fully appreciate the request for brevity—I must pass some comments on the conduct of the official Opposition so far. First, it ill suits the official Opposition to complain about lack of time since this is their Supply Day and it was their decision to restrict the debate to three hours.
  Second, no alternative strategy has been forthcoming from the official opposition. One hon. Member has suggested that we continue to expand the naval programme, no doubt up to the level where we can hire a destroyer for a day's outing down the Clyde. However, that hon. Gentleman made no reference to the public expenditure implications of this, or to the competition that this would place on other priorities in society.
  Third, not one Conservative Member from Scotland has signed the motion. No doubt this reflects the fact that they yet again have sunk to third place in the polls in Scotland and have recognised the implications of what they are doing to the West of Scotland.
  No member of the Official Opposition has pointed out that the country which was second in this particular tender was Norway which has 0·1 per cent. unemployment. If we had not won this contract for the United Kingdom it would have gone to a country where there is limited unemployment, and unemployment is surely the crux of this matter.
  I ask my hon. Friends to support the Government in the Lobby tonight. This is fundamental, because the Scottish shipyards are the training grounds for the skills of future generations. We must recognise the service that is given to the community by Govan Shipbuilders in particular and by the Strathclyde training section of that yard.
  I would refer to the most fundamental matter which is put forward in the book "Scotland 1980" by Mr. John Firn. He is not a member of the SNP, but he has pointed out the implications for the whole
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  of Scotland with regard to the manufacturing base. In West Central Scotland that means the shipyards. He pointed out that:
  "By mid-1976, manufacturing's share of total employment had fallen below 30 per cent. for the first time in living memory, and well over 110,000 manufacturing jobs had been lost since the mid-1960s.
  If manufacturing is less than 30 per cent. of total employment in 1980—and by mid-1977 it is already well below trend—and if the indigenous share of that manufacturing remains about the level of the mid-1970s, then it could mean that only about 12 per cent. of total employment was in the private manufacturing sector. This is a truly insignificant level, and much bigger below that of the United Kingdom as a whole, and of the other small countries such as Norway, Sweden, Finland or Denmark, with which Scotland is often compared. Indeed, there must be grave doubts about the ability of a sector that size to play a major part in the type of strong, export-orientated, industrial growth strategy that is required in Scotland."
  With regard to the need to maintain the manufacturing base, it is shocking that not one Conservative Member from Scotland has come along today to speak in the debate or has bothered to sign the motion.
  In purely human and social terms it is wholly desirable that we accept this contract even though the financial returns will be less spectacular than they will be in the employment sector. There is a desperate need for this work in West Central Scotland and other areas like Dundee. Robb-Caledon, in the constituency of my hon. Friend the Member for Dundee, East (Mr. Wilson), is now in the position of having its jobs guaranteed till the middle of 1979.
  I should like briefly to refer to the attitude of the shipbuilders in Scotland with regard to this deal. They have accepted it with reservations because they see no alternative at the moment. No other jobs were in the offing. Although competitive with the whole of Western Europe, Govan Shipbuilders cannot compete with the kind of subsidies that are given to the Far Eastern countries in particular.
  From speaking to representatives of the shipbuilding industry over the weekend I know that there are various questions that they would like to put to the Government. Why were the yards themselves not allowed to deal directly with the Poles, rather than through British Shipbuilders, particularly in view of the

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  fact that Govan Shipbuilders has no representation on the board of British shipbuilders? Second, what happened to the large-sized vessels originally included in the contract? My understanding is that three vessels were originally nominated in the tender of 4,500 tons, 16,500 tons and 34,000 tons. Those vessels disappeared from the contract and the ships allocated to the Scottish yards, particularly to Govan, are below the size with which those yards usually deal.
  Although the Secretary of State referred to the situation in the steel industry, can he, perhaps, delineate the implications for the Scottish steel industry, because we are interested in this aspect throughout the whole of west central Scotland?
  We have been told that 12 out of 22 of the engines are to be built in the United Kingdom, if we are to believe the reply given by the Government on 29th November. Can we have an indication of how many of these engines will be built in Scotland?
  Can the Secretary of State outline to us what kind of difficulties our yards might find themselves in if the Poles fail to come up with the necessary equipment in order to allow the Scottish yards to fulfil the contract? Would this include penalty clauses in respect of Govan Shipbuilders? That yard is concerned that it should not be victimised as a result of any failure of the sub-contractors to produce the goods on time.
  Another question of more general interest is: has the Secretary of State reached the situation where he can give us a definite figure in terms of the European dimension with regard to the rundown in the shipbuilding industry in general, particularly over the next decade. My understanding is that the European Community has projected a cut-back of 45 per cent. and that OECD has projected a cut-back of 60 per cent. The most recent figure suggests that the British Government are contemplating a fall of 30 per cent. These are matters of general interest to the shipbuilding industry and they must be answered in this debate.
  Much play has been made of the rôle of the ship owners and the effect on them. I would be a great deal more sympathetic with the British ship owners, and the
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  action of the Conservative Party, if the record of the ship owners in placing orders in our yards had been much better.
  I want to quote from "British Shipbuilders—What Next?", a study commissioned by the Amalgamated Society of Boilermakers. It is a statistical and useful document for anyone interested in British shipbuilding and the shipping trade in general. Page 15 states that the share of contracts from British ship owners to United Kingdom shipyards has fallen steadily since the 1960s. Between 1961 and 1966 the average was 67·6 per cent., between 1967 and 1971, 32 per cent. and from 1971 to 1976, 28·1 per cent.
  I for one was pleased to learn from the Secretary of State today that a great deal more of the tonnage is being placed in our own yards. We are particularly glad about this since it was our party which advocated the concept of an intervention fund long before it was adopted by this Government. During the passage of the Aircraft and Shipbuilding Bill we pointed frequently to the Norwegian example: the importance was in terms of giving orders rather than the overall administrative running of the industry.
  However, there is one final reservation that I make about this deal. It affects specifically Govan, in which I have a fairly high constituency interest in that many of my constituents travel to Govan to work. It is in connection with what has happened at Swan Hunter and industrial relations generally in our shipyards. I am surprised that the Government have not pointed out to the people of Swan Hunter that the kind of dispute happening there at the moment is very similar to the one that we had in Govan in 1972. We reached a solution at that stage, and it has given the Govan shipyards one of the best industrial relations records in the United Kingdom. It was achieved by deciding that all trades should be paid the same basic rate, with special additional allowances being awarded to the steel workers. I suggest that this is one way of solving the Swan Hunter dispute.
  The solution of the Swan Hunter dispute has implications for Scotland. Govan has already accepted two of the ships rejected by Swan Hunter during the dispute. If we do not solve this dispute at Swan Hunter and more ships are sent to

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  Govan, it means that Govan, along with Smith's on Teesside, will find itself in extreme difficulties should there be any possibility of contracts similar to the Kuwait-type contract awarded by the Arabs to Govan. I am sure that I do not have to point out just how impressed the Arabs were by this design. If Govan is placed in the situation of having to build a very substantial number of ships which are smaller in size than those with which it normally copes, it will be placed in extreme difficulty, along with Smith's on Teesside, in not being able to tender for further contracts. It would be tragic for the whole of West Scotland if we lost substantial orders in this direction, because the kind of technical expertise that we have built up in West Central Scotland is aimed spcifically at this type of ship. The alternative is for foreign owners to place their orders with the Hyundai yard in Korea, which does not have the technical expertise of other yards.
  Dr. M. S. Miller: The hon. Lady is putting forward an interesting argument, and indicating that there are industries which require expertise and economic developments surrounding the whole of the United Kingdom. She is not merely relating them to one area. Does she think that this should be carried on in other areas, or does she still maintain that only Scotland should build Scottish things?
  Mrs. Bain: Everyone appreciates that unemployment is an international problem, and I do not at this stage intend to debate the Scotland Bill with the hon. Member for East Kilbride (Dr. Miller).
  Mr. Heffer: Will the hon. Lady give way?
  Mr. Speaker: Order. For Back Benchers, this debate will be finishing in 11 minutes, and I am hoping to get in another two speakers.
  Mrs. Bain: Any Scottish Member of Parliament who sees fit to vote against this contract is voting for further unemployment in Scotland, and that is already a scourge on our society.
  6.14 p.m.
  Mr. William Small: This debate is about Greek meeting Greek. I am surprised that the
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  Scottish National Party should put up the hon. Member for Dunbartonshire, East (Mrs. Bain) to be its spokesman when the hon. Member for Dundee, East (Mr. Wilson) spent 58 days discussing the Bill. The trouble with the SNP is that its members see a potential swan in every duck egg.
  I turn at once to the speech of the hon. Member for Surrey, North-West (Mr. Grylls), the Sophocles of the Conservative Party. Certainly he tries to be the greatest Athenian tragedian since Sophocles died in 1459 B.C. Those who did not serve on the Standing Committee will recall Herodotus. He listened to all the important people but, at the end of the day, he made up his own mind and decided that his own script was the best.
  In terms of this order I can assure my right hon. Friend that people on the Clyde are delighted that the Government have gone in for a form of economic stimulation in a way which will be good for the souls of those men who make our ships.
  Mr. David Lambie: My hon. Friend appears to think that all the people on the Clyde are happy that the Government have accepted this order. However, I can tell him that my people in Ailsa are not happy because, despite ministerial assurances, we have not yet received an order. My hon. Friend the Member for Glasgow, Garscadden (Mr. Small) does not speak for the people of Troon.
  Mr. Small: I take on board what my hon. Friend said. However, I speak against the background of the loss of dignity which occurred in the old days. I had the misfortune to walk the streets for two years, and I know something about it. As long as a man has a roof over his head, he has a chance. However, there is no mobility on the river. Once a boy has served his time and started in shipbuilding, he cannot go anywhere else. A young man today has to train himself in metrication and decimalisation. Those are the tools of the trade. When I went into maths, engineering and drawing, they were the requirements for me. So those who are disfranchised as young apprentices are lost souls in terms of the future of the trade. Their job is to keep their expertise in modern technology based on the river.

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  I take the point of the hon. Member for St. Ives (Mr. Nott), who said that we should have better redundancy payments. The Government propose a voluntary redundancy scheme. I am not happy about it; indeed, I never endorse redundancy. Instead, we may have to consider early retirement and better benefit schemes rather than straight redundancy.
  I do not want to detain the House but I assure the Treasury Bench that the Government have my 100 per cent. support, and I think that I speak for those on the Clyde whose future will depend on repeated orders such as this.
  6.17 p.m.
  Mr. Nicholas Ridley: I want to ask the Minister of State whether he will reveal the nature of the penalty clauses. That has not yet been revealed, and it cannot possibly be secure commercially.
  However, my main concern is with the deal itself, and I begin with the economy of Poland. The total Polish indebtedness in hard currencies is now running at 2.7 times the annual hard currency earnings of that country. The annual interest in hard currencies on those borrowings is running at £400 million a year. The interest is increasing rapidly. On the other hand, the foreign earnings of Poland are decreasing sharply. It means that the chances of Poland being able to finance further debts in hard currencies are very slim. That is why serious question marks have been drawn across the credit-worthiness of the Poles.
  On top of that, this country subscribed to a meeting in June last year of the seven major exporting nations which agreed to keep to certain minima terms for loans, as regards both interest and maturity times, to the Eastern bloc as a whole and to Poland especially. We realised that not only were we putting more capital into the country than perhaps we could afford but that we were landing more debt upon the Poles than they could probably service.
  It was against this background of all the exporting nations agreeing that Poland was hardly a country to which more credit could be extended that the Prime Minister rose at the Labour Party Conference and announced the Polish
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  ships deal. Little did we know at the time that he had certainly made the Poles an offer which they could not refuse, an offer which was so good that there was no way in which the Poles, in their parlous economic situation, could turn it down.
  The Poles have not been asked to put one single zloty on the table. Apart from the £28 million grant, there is £116 million on loan from this country. The whole cost and perhaps a little more is falling on the British, whether the taxpayer or the private sector. In the end, as my hon. Friend the Minister for St. Ives (Mr. Nott) has said, the debt is guaranteed by the British taxpayer through British Shipbuilders or through the Export Credits Guarantee Department.
  In effect, we are spending a mixture of loans and grants totalling about £150 million on giving this order to the Poles so that this group of ships can compete against us. The House should ask itself one simple question. It is not whether this is a good commercial deal, because it clearly is not; nor whether it is necessary to beat the competition. It might well have been, but for the Prime Minister's hamfisted intervention in the deal, thereby making the terms worse by his premature announcement. Nor should we ask whether the deal is necessary to fill the shipyards. The question that we should ask is "Is this the best way to deploy £150 million of our money in order to help the industry and employment in the industry?"
  It would be better if the money had been used in other ways, which I shall list in order of ascending desirability. First, it would have been better to pay wages to 8,000 men on condition that they did not go near the shipyards. That would have done less harm. At least we should not have had this fleet competing with our merchant fleet. Secondly, it would have been better if we had taken the ships out to sea after they were completed and solemnly sunk each one of them in the deepest part of the Atlantic. That, too, would have done less harm, because the ships could not have competed, but it would also have provided a little employment for the steel industry, because we should have sunk 50,000 tons of steel.

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  If we had spent the money on ordering ships for the Royal Navy, for oil rig protection, fishery protection, or any other public purpose for which ships are required, we should at least have made a useful investment. If we had persuaded British shipowners to take this contract and this money we should have strengthened our investment in British ships. Best of all—this is where the Government have really gone wrong—we would have done better if we had taken this money and invested it in more modern ship-building capacity, in redundancy payments to surplus shipyard workers, in new equipment and new advances in technology. I do not know how many hon. Members have visited the Japanese shipyards. I have not done so, but I have seen drawings, pictures and photographs of them, and I know well the shipyards on the Tyne, Clyde and Wear from personal experience at one time as a builder of shipyards.
  If we want to secure orders in the slump times and take advantage of the boom times, it is vital to spend our scarce resources on making our shipbuilding capacity up to date, not squandering the money to buy time or to buy votes, as the Prime Minister has sought to do, not squandering it by providing a fleet which will be of advantage only to our competitors. That is to mistake the difference between investment and subsidy; the difference between doing something which will possibly lead to commercial viability and long-term jobs and mortgaging the future in order to make the situation secure for a few months only, until the next election. How cynical can a Government be, and how corrupt can one get in politics?
  6.25 p.m.
  Mr. Norman Lamont: The phrase "commercial confidentiality" featured consistently throughout the Secretary of State's speech. Without being unduly provocative, I may perhaps begin by observing that it is curious that a political party that is such a strong supporter of that favourite theme of the Secretary of State for Energy, open government, should have been so coy until today. It is strange that from a party so many of whose members get their knees jerking at the mere mention of the words "public accountability", "bringing government
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  closer to the people" and "full disclosure" there has been a deafening silence about the details of the deal until today's debate.
  The Secretary of State's criticisms of my hon. Friend the Member for Surrey, North-West (Mr. Grylls) were unjustified. It is now six months since Lord Winter-bottom assured the House of Lords that the full details of the deal would be made available to Parliament. We have repeatedly received stonewalling answers to Questions, and my hon. Friend quite rightly went on demanding that we should have those details.
  Of course, as my hon. Friend the Member for St. Ives (Mr. Nott) said, in one sense the deal has not been secret at all. The details have been common knowledge in the City. The newspapers all appear to know. How is it that my hon. Friend the Member for St. Ives was able to read out the details before the Secretary of State had spoken? He gave rather more details than the right hon. Gentleman did. Everybody knows. The EEC and OECD have been given the details. Everyone has been given them, except those who should have had them first—the Members of this House.
  The lesson is that if the Government insist on intervening and meddling with public money, they must expect to be held accountable. As long as they refuse to answer reasonable requests for information about deals of this kind involving public money, they must expect people to believe, as I still believe, that all the talk of commercial confidentiality was just a shibboleth, a cloak to hide incompetence and bungling.
  Mr. Robert Hughes rose—
  Mr. Lamont: I shall give way a little later.
  We did not hear much from the Secretary of State today. Considerable question marks still remain against the deal. We do not know what the charter rates will be. It was astonishing that the Secretary of State could not give us details about the mortgages on the ships. We hope that the Minister of State will give those details, as promised, because in a deal of this kind there is a danger of default by the Polish buyers of the ships. We have been told by my hon. Friend of a Polish State trading corporation that defaulted on its obligations,

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  so that the guarantees had to be called. We seem to be moving to a situation in which there can be bankruptcies in Communist economies but not in capitalist ones.
  What we heard from the Secretary of State this afternoon in no way allayed our anxieties. Whatever way one looks at the deal—whether from the point of view of British Shipbuilders, British shipping, the national interest or the considerable international problems—there are grave anxieties about
  it.
  Some hon. Members may not be fully aware of the desperately serious international position. I am referring not merely to the over-capacity of ships in the world, but to Governments' tremendous competitive ploughing of money into shipyards. Governments in competition with other Governments are putting more money into shipyards to build ships that the world does not want. That drives down charter rates and puts pressure on the ship owners, who cannot then place more orders with the shipbuilders, which leads the Governments to intervene more and more. We have a whirlpool that could eventually turn out to be like our secondary banking crisis on a world scale.
  It is estimated that over the next seven years Governments will pour £58,000 million into supporting shipbuilding industries throughout the world. All Governments are desperate to do it. They are doing it in the hope that other people's industries will collapse before their own. The more they do it, the more they drive down charter rates and the fewer orders there will be to be placed in yards in Britain or anywhere else.
  Mr. Arthur Blenkinsop: How would it help our shipping industry for the orders to be placed in South Korea or somewhere else?
  Mr. Lamont: I shall deal with that point later, but I would say that it is up to the Government to work for international action to limit the credit race. It is also certainly up to them not to indulge in backhand deals which make the position much worse.
  Everything we have heard today indicates that the deal adds a new dimension to the credit race. It is clear that it is
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  an unprecedented credit at 100 per cent. When we also take into account the exchange rate cover, the direct subsidy and the interest subsidy, we see that the cost to the taxpayer is about £38 million. All that is before we count the penalties for late delivery, which every hon. Member knows are certain to be invoked. [Hon. MEMBERS: "Rubbish."] They will be an addition to the Government's liability.
  The Government deny that they are doing anything new in the credit race. I prefer to take the views of those who have less of a vested interest—for example, the Norwegians, who turned down the contract because the credit terms were too onerous; the Germans, who have criticised the deal; the British shippers, who have consistently made clear their reservations; or Commissioner Davignon.
  The Secretary of State said that the EEC had approved the deal. Perhaps Commissioner Davignon had little option but to approve it. But his views were made very clear in The Times of 3rd December. According to The Times, he
  "gave a strong hint that the commission would not approve again the kind of subsidized credit deal that made possible the recent British sale of ships worth £115 million to Poland."
  He added—and this is significant in the light of the Secretary of State's denials—that
  "the…deal would directly threaten the competitive position of EEC merchant fleets by enabling a rival to equip itself at excessively cheap rates."
  The Government may fool themselves, but they certainly do not fool us.
  There is only one possible defence of subsidies on the scale that the Government propose. That is if the Government were proposing to use the time bought to reorganise our yards, to put them on a basis on which they were providing the sort of ships likely to be able to be supplied in the future. But that is not being done. The management of British Shipbuilders says that there will be no closures, that there will be no redundancies. In Brussels the Government opposed the plans put forward by Commissioner Davignon. Labour Members may convince themselves that they are saving jobs, but they can believe that only if they are totally blind to everything except the immediate present.
  One cannot save jobs by subsidising over-capacity, driving down charter rates

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  further, so that fewer and fewer orders will be placed in British yards. One cannot save jobs by subsidising at £4,000 a head traditional bulk carriers which, alas, will be built in the future much more competitively by the Koreans and people in the Third world.
  How much better it would have been if the Government had spent these sums on retraining, on encouraging new industries or perhaps restoring some of their defence cuts! The House may like to be reminded of the cuts that they have made in destroyers, frigates, conventional submarines and anti-mine vessels. The Under-Secretary of State for Defence for the Royal Navy recently said:
  "The average age of the major units of the Fleet … is about 12 years.'—[Official Report, 8th November 1977; Vol. 938, c. 474.]
  The assessment has been made that 40 out of 180 of this country's warships are now obsolete. Of course, we do not believe that all yards can do defence work, but there is no doubt that much of the over-capacity could have been taken up by restoring the cuts that the Government have made needlessly and irresponsibly.
  The shipping aspect of this deal is also crucial and nothing that I have heard has deflected me from my view that the deal is thoroughly against the interests of British shipping. We are not saying that this country should not sell ships to Poland, but that we should not sell them on terms that will enable the Poles to undercut British shippers.
  The British shipping industry is of vital importance to this country. British shipping will contribute to our balance of payments next year an amount equivalent to the whole of North Sea oil in one year. It is one of our most profitable and competitive industries and the Government seem determined to damage the interests of a competitive industry and to shore up one that cannot survive in its present size and form.
  I turn lastly to the wider national interest and the use of public resources. I do not believe that bought business is ever good business and that is exactly what this deal is. We are bribing the Poles to place their orders in British yards. The Poles have not had to put up a single zloty. We thought that we were bribing them to buy British, but now it appears that we are bribing them to buy British,
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  Swedish, Polish and goodness knows what else as well.
  Will the Minister say whether those ships that are meant to be built at Swan Hunters could be reallocated to any other British yard? Will credit be used to subsidise the wholesale building of ships somewhere else?
  One wonders what reason can have brought the Government to this madness. They seem desperate to protect their own infant industry and to go to any lengths to get it orders. British Shipbuilders is not yet the British Steel Corporation, but the way that we are going on, it soon will be an equal drain on national resources.
  The Secretary of State made a remark with which I thoroughly agreed. He said that had we not had the yards brought together and had the industry not been nationalised, it would not have been possible to secure this order. That is the greatest indictment of the nationalisation of the shipbuilding industry.
  Some civil servants and former employees of Crown Agents could be forgiven a little cynicism when they contemplate Parliament's discussion of this deal. If we have had three inquiries into Crown Agents, we should surely have one inquiry into the conduct of the Prime Minister in this matter. We do not know—and I do not suppose that we shall—what the intervention fund contribution would have been had the Prime Minister not come along. We do not know and shall never know what the import content was before the right hon. Gentleman arrived on the scene, but there is no doubt that his flag-waving exercise has cost this country dear and has immeasurably strengthened the position of the Poles and enabled them to drive a harder bargain at the expense of the British taxpayer.
  This all has a familiar smell. It is all the old style from which. I thought we had got away: if something is announced in the papers it is a fact; as long as it gets applause at the Labour Party Conference, that is all that matters. I now understand a remark of Roy Jenkins quoted in the Crossman diaries. It was a reference to the present Prime Minister:
  "All the qualities that Harold is accused of having, Jim really has."
  This deal is a sorry escapade. The House of Commons has been abused. The

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  taxpayer has been abused, and nothing but damage has been done to the national interest. I have no hesitation in urging my right hon. and hon. Friends to vote with me in the Lobby tonight.
  6.40 p.m.
  The Minister of State, Department of Industry (Mr. Gerald Kaufman): The decision by the Tory Opposition to stage this debate today has been reckless by any standards, even by their own standards. During this unparalleled international shipbuilding slump all our major European competitors have found it essential to bring in special schemes to defend their shipbuilding industries from under-priced Far Eastern competition. But the Tories want our industry to weather the storm unaided, even if it capsizes as a result. For them it is good enough for our competitors in France, Italy, Holland, Norway and Sweden to protect their industries, but it is too good for Britain. The Tories used to claim to be the party of the Union Jack. Now they seem to prefer the label "Made in Japan". We disagree. We are taking action to safeguard the industry.
  We reject the across-the-board cuts feared by the hon. Member for Dunbar tonshire, East (Mrs. Bain) and we have told the European Commission that. As for what was said by the Opposition spokesman about everything being cured by placing defence orders all around the country, I must point out that his hon. Friends who served on the Committee on the Aircraft and Shipbuilding Industries Bill specifically and repeatedly asked me for assurances that naval ships would not be built in non-naval yards to protect those yards. They asked me to repeat what were known as the "Carrington assurances", and I gladly did so.
  We are having greater success than any other shipbuilding nation when it comes to winning orders. Only one competitor has a longer order book than ours. The Tories are reckless, too, in their callous disregard for the unemployment problems in the shipbuilding areas. Today we have heard several speeches from them. No one has paid even perfunctory attention to the need to save jobs in areas which suffer from chronic unemployment, areas like Clydeside, Tyneside, Wearside and Belfast.
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  Maybe the debate would have been different if hon. Members opposite who represent shipbuilding areas had caught your eye, Mr. Speaker. Certainly outside this House these hon. Members have joined in the scramble for a share of the Polish order. The hon. Member for Wallasey (Mrs. Chalker) has written to me putting in a claim for propellers for Poland to be made on Merseyside.
  Mrs. Lynda Chalker: The Minister knows full well that the reason that I wrote about the propeller order was that the one propeller manufacturer in this country will go without work twice over because the Prime Minister, by prematurely announcing that order at Brighton, forced the Poles to come back and say, "No, we shall make the propellers in Poland". Will the Minister now answer and say what will happen about the earlier propeller order, because propellers can be made in Poland only under licence from SMM if the propellers are for ships built for the Polish State organisations, and that does not include this Anglo-Polish company?
  Mr. Kaufman: Will the hon. Lady vote with us for the order tonight? If not, surely she does not want to soil her hands with any of it. The only change that has occurred since the Prime Minister's announcement of the order to the Labour Party's Conference in October has been that we have won more work for Kincaid's at Greenock. That is the only change that we have brought about.
  The hon. Member for Tynemouth (Mr. Trotter) has appealed to the outfitters at Swan Hunter for a truce in their overtime ban. The Sunderland Echo reported him last week pleading with the outfitters to "Keep this order for Britain". Will he vote tonight to keep the order for Britain?
  Mr. Neville Trotter: Do not the Government realise that one cannot keep the industry going by paying £100 million a year out of the taxpayers' purse? Is it not extraordinary that this is the first debate on shipbuilding—apart from the one on nationalisation—that has been held in the four years of this Government, and that the Government have no policies whatsoever on this?
  Mr. Kaufman: Now the workers on the Tyne know that the hon. Member

  105
  for Tynemouth wants them on the dole. He adds his voice to those of the hon. Members representing cosy constituencies in Surrey, Cirencester and Tewkesbury and St. Ives, who recklessly whipped up this storm in a samovar.
  Mr. Nott rose—
  Mr. Kaufman: May I proceed? I have given way several times, and I shall give way later if I have time.
  The Opposition are reckless in their sheer ignorance. Reading their statements during the past few days and listening to their speeches today we could be forgiven for believing that the arrangements for this deal have startled them with shocking suddenness, that they have been so shrill in demanding information because they have been kept in the dark for so long.
  But the basic facts about this deal have been known for almost a year—ever since my right hon. Friend the Prime Minister signed his joint communiqué with the Polish Prime Minister in London precisely 12 months ago this week. I quote the communiqué:
  "The two Prime Ministers agreed on the establishment of a joint Anglo-Polish company which would build, in British yards, in co-operation with the Polish shipbuilding industry, up to 22 cargo vessels to be owned and managed by the Polish side of the partnership. The necessary financial arrangements for the establishment and running of the joint enterprise would be made by the British side of the partnership."
  The arrangements outlined in that communiqué are similar to techniques employed by many of our competitors in the battle for orders. This time British Shipbuilders won because they had the benefit of a sophisticated financial package constructed with the skilled services of Hambros Bank. The basic arrangements have been public knowledge since December 1976, yet it is only in the past four weeks that the hon. Members for Surrey, North-West (Mr. Grylls) and Aberdeen, South (Mr. Sproat) have assumed their rôles as the Starsky and Hutch of the Tory Party and flooded the Order Paper with Questions about the deal.
  Mr. Nott: The hon. Gentleman has referred to "cosy constituencies". Is he aware that in Cornwall unemployment is double what it is in any of the shipbuilding areas and that the regional
  106
  development grant to Cornwall is about a quarter of the subsidy going into this deal? That is because Labour seats are involved.
  Mr. Kaufman: I shall be coming to the question of Labour seats, but if the hon. Gentleman wants to make an appeal for increased public expenditure, he had better sort out the matter with the right hon. Member for Leeds, North-East (Sir K. Joseph).
  What members of the Tory Party say interests them are the financial details—the pounds, the pence and what the hon. Member for Surrey, North-West so beautifully pronounces as the zlotys. That is what they want to know about. They reject all Government arguments about the importance of commercial confidentiality. The hon. Member for Kingston upon Thames (Mr. Lamont) called that a shibboleth.
  What Conservative Members are demanding is that the Labour Government should set a precedent that Tory Governments have always rejected, because all Governments, and particularly Tory Governments, find it necessary to guard confidential commercial information which could handicap our industrialists and exporters if made public. During their last period of office, Tory Ministers at the Department of Trade and Industry put up this defence again and again.
  Asked about financial details concerning Concorde, the then Secretary of State, the right hon. Member for Knutsford (Mr. Davies), stonewalled. He said:
  "It would not be in the best interests of the project to give further details of the commercial elements of the pricing formula."—[Official Report, 17th January 1972, Vol. 829, c. 1.]
  Questioned about the location of factories in Scotland, Mr. Christopher Chataway, as Minister for Industrial Development, responded:
  "It is not the practice to reveal details of confidential discussions with individual firms."—[Official Report, 24th July 1972; Vol. 841, c. 211.]
  At least as addicted to this formula as any of his colleagues—at at rate, during his brief period in office—was the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). This was his reply to a Question about pipeline steel:
  "This is a commercial matter."—[Official Report, 7th February 1972; Vol. 830, c. 236.]

  107
  His response to a question about steelworks scrap was:
  "This is a purely commercial matter."—[Official Report, 11th February 1972; Vol. 830, c. 471.]
  Knowing the fastidious reticence of members of the Tory Party about revealing financial information, all this is hardly surprising. After all, it took them 86 years and the threat of legislation to bring themselves to publish their own party accounts.
  Mr. Grylls rose—
  Mr. Kaufman: In a moment. I still have to deal with the hon. Gentleman. If he will rise in due order, I will give way to him.
  Now the Tories have dreamed up a fresh reason for their new-found addiction to the slogan "Publish and be damned". While they care nothing, as they have shown today, for the jobs of British shipbuilding workers, they are suddenly deeply concerned about the jobs of British merchant seamen. The hon. Member for Cirencester and Tewkesbury spoke movingly last week in the House about the danger from the Polish deal. He warned in the most ominous terms that the transaction
  "threatens the jobs of thousands of British seamen who will be forced to go out of business if the ships are ever built."—[Official Report, 7th December 1977; Vol. 940, c. 1402.]
  Those were his words, and the hon. Gentleman nods to confirm them.
  But that statement showed the same recklessness as all the other Tory attacks on this contract, because it is very interesting that not once since the Polish deal was announced have the Government received a single protest from the National Union of Seamen—and presumably it cares more about its members' jobs even than Conservative Members do. Perhaps the trade union leaders know something that Tory Members do not know. Perhaps they know that the total number of crew on all 24 ships for Poland will be little more than 500 men.
  Mr. Norman Lamont: The hon. Gentleman may have received no representations from the National Union of Seamen, but will he confirm that he has received many representations from the General Council of British Shipping? We
  108
  certainly have, and I cannot believe that the Government have not.
  Mr. Kaufman: But the hon. Member for Cirencester and Tewkesbury was talking about the jobs of thousands of sailors. As for the representations of the General Council of British Shipping, I believe that when the Council knows the facts it will be less disturbed than it is, because some of the ships are to replace very old ships now in service which will go out of service and, therefore, there will be no expansion of the Polish fleet. The small ships are likely to be used in Polish coastal trade where there is not likely to be a large number of British ships, and the large ships have been specially designed for Baltic ports, which reduces the likelihood of their competing with British ships.
  So why are the Tories so anxious to wreck this deal? We waited to find out, and the hon. Member for St. Ives gave us the answer. He said that we were going into the business of assisting Communist countries. That is what they are worried about. But the right hon. Lady the Leader of the Opposition spends much of her time visiting Communist countries. This year she has been to China and Yugoslavia, and not long ago she was in Communist Romania. There she will have heard about the mutually beneficial Anglo-Romanian deal on the BAC111 aircraft, a deal that was lauched by the last Tory Government and was made possible by financial underwriting by the present Labour Government.
  There is another even bigger BAC111 deal being negotiated with Communist Romania. Its value could be over £200 million. If it comes off, it will be very largely due to underwriting from the British Government. While the British Aircraft Corporation was still in private ownership, its top executive came to see me at the Department of Industry and asked my help in making the credit terms more attractive. I was happy to oblige.
  The men in ultimate control of BAC at that time were Lord Robens and Sir Arnold Weinstock. Are the Tories writing off those two gentlemen as Communist lackeys of the same villainy as Admiral Sir Anthony Griffin, Chairman of British Shipbuilders? The Anglo-Romanian BAC 111 deal will bring work not to Labour shipbuilding areas but to a factory just

  109
  down the road from the constituency of the hon. Member for Surrey, North-West.
  When the right hon. Lady the Leader of the Opposition was in Communist Yugoslavia last week, she visited a plant at which diesel engines are being produced under licence from Perkins of Peterborough. She paid tribute to those arrangements—and I quote—as
  "an excellent example of British-Yugoslav industrial co-operation".
  She said that she would like to see more of this activity taking place.
  The right hon. Lady and the whole House will applaud another development which was encouraged by the meeting between the British and Polish Prime Ministers a year ago. On Wednesday of this week, there will be a ceremony in Warsaw to launch the new Warsaw air terminal—a £50 million deal. A British company has won the contract. That company is Cementation Ltd., which, like the Daily Express, is a subsidiary of Trafalgar Investments. I am sure the House will be glad to know that that important project in Communist Poland, undertaken by a subsidiary of Trafalgar Investments and a partner of the Daily Express, was handsomely assisted by ample credit facilities provided by the British Government. I cannot reveal further details because, to take up the words of the hon. Member for Cirencester and Tewkesbury on an earlier occasion, it was a purely commercial matter.
  Mr. Grylls: Is the Minister saying that on the grounds of commercial confidentiality he will not give any further information on this deal either to the House of Commons or to a Select Committee of the House? Will he answer the question put to him about the mortgage to which he promised to reply?
  Mr. Kaufman: On the question of mortgage, I am assured by British Shipbuilders that no difficulties have been raised by PZM as to the provision of adequate security for British Shipbuilders
  in relation to these ships. I hope that that will dispose of the hon. Gentleman's misgivings. It clearly has. All details will be revealed that are not damaging to the commercial confidentiality of which the hon. Member for Cirencester and Tewkesbury was such a conscientious guardian.
  We all know that many major export deals rely heavily on Government credit facilities. Opposition Members may protest that there is a crucial difference between all these other deals and the Polish shipbuilding deal. Their protests may arise because of the fact that we are subsidising the Polish deal. I do not understand what makes that so novel or shocking. The House has known since February that we stand ready to subsidise shipbuilding orders, if need be. That was when I announced the £65 million intervention fund that is subsidising the Polish deal as it has subsidised orders for 24 other ships, most of them for British ship owners. When I made that announcement, only one Opposition Member criticised these subsidy arrangements. I refer to the hon. Member for Surrey, North-West, who asked me:
  "why has he wasted three years when he could have used the Industry Act 1972 to help the shipbuilding industry from the first day on which his Government came into office?"—[Official Report, 24th February 1977; Vol. 926, c. 1660.]
  The hon. Gentleman's complaint was that we should have put more money in sooner.
  The Tory attack on this deal today is their latest cynical example of the opposition of opportunism. The intervention fund launched by the Labour Government has the objective of saving jobs—and we are succeeding in our objective. The intervention fund preferred by the Tories is called the dole. I ask the House to throw out this motion.
  Question put, That the salary of the Secretary of State for Industry should be reduced by half:—
  The House divided: Ayes 246, Noes 295.

  Division No. 47]

  AYES

  [6.59 p.m.

  Adley, Robert

  Awdry, Daniel

  Biffen, John

  Aitken, Jonathan

  Baker, Kenneth

  Biggs-Davison, John

  Alison, Michael

  Bell, Ronald

  Blaker, Peter

  Amery, Rt Hon Julian

  Bennett, Sir Frederic (Torbay)

  Body, Richard

  Arnold, Tom

  Bennett, Dr Reginald (Fareham)

  Boscawen, Hon Robert

  Atkins, Rt Hon H. (Spelthorne)

  Benyon, W.

  Bottomley, Peter

  Atkinson, David (Bournemouth, East)

  Berry, Hon Anthony

  Bowden, A. (Brighton, Kemptown)

  Boyson, Dr Rhodes (Brent)

  Hastings, Stephen

  Page, Rt Hon R. Graham (Crosby)

  Braine, Sir Bernard

  Havers, Rt Hon Sir Michael

  Page, Richard (Workington)

  Brittan, Leon

  Hayhoe, Barney

  Parkinson, Cecil

  Brocklebank-Fowler, C.

  Heath, Rt Hon Edward

  Pattie, Geoffrey

  Brooke, Peter

  Heseltine, Michael

  Percival, Ian

  Brotherton, Michael

  Higgins, Terence L.

  Peyton, Rt Hon John

  Brown, Sir Edward (Bath)

  Hodgson, Robin

  Pink, R. Bonner

  Bryan, Sir Paul

  Holland, Philip

  Prentice, Rt Hon Reg

  Buchanan-Smith, Alick

  Hordern, Peter

  Price, David (Eastleigh)

  Buck, Antony

  Howe, Rt Hon Sir Geoffrey

  Prior, Rt Hon James

  Budgen, Nick

  Howell, David (Guildford)

  Pym, Rt Hon Francis

  Bulmer, Esmond

  Hunt, David (Wirral)

  Raison, Timothy

  Burden, F. A.

  Hurd, Douglas

  Rathbone, Tim

  Butler, Adam (Bosworth)

  Hutchison, Michael Clark

  Rees, Peter (Dover & Deal)

  Carlisle, Mark

  Irving, Charles (Cheltenham)

  Rees-Davies, W. R.

  Chalker, Mrs Lynda

  James, David

  Renton, Rt Hon Sir D. (Hunts)

  Churchill, W. S.

  Jessel, Toby

  Renton, Tim (Mid-Sussex)

  Clark, Alan (Plymouth, Sutton)

  Johnson Smith, G. (E Grinstead)

  Rhodes James, R.

  Clark, William (Croydon S)

  Jones, Arthur (Daventry)

  Ridley, Hon Nicholas

  Clegg, Walter

  Jopling, Michael

  Ridsdale, Julian

  Cooke, Robert (Bristol W)

  Joseph, Rt Hon Sir Keith

  Rifkind, Malcolm

  Cope, John

  Kaberry, Sir Donald

  Roberts, Wyn (Conway)

  Cormack, Patrick

  Kershaw, Anthony

  Rossi, Hugh (Hornsey)

  Costain, A. P.

  Kimball, Marcus

  Rost, Peter (SE Derbyshire)

  Critchley, Julian

  King, Evelyn (South Dorset)

  Royle, Sir Anthony

  Crouch, David

  King, Tom (Bridgwater)

  Sainsbury, Tim

  Crowder, F. P.

  Kitson, Sir Timothy

  St. John-Stevas, Norman

  Davies, Rt Hon J. (Knutsford)

  Knight, Mrs Jill

  Scott, Nicholas

  Dean, Paul (N Somerset)

  Knox, David

  Shaw, Giles (Pudsey)

  Dodsworth, Geoffrey

  Lamont, Norman

  Shelton, William (Streatham)

  Douglas-Hamilton, Lord James

  Latham, Michael (Melton)

  Shepherd, Colin

  Drayson, Burnaby

  Lawrence, Ivan

  Shersby, Michael

  du Cann, Rt Hon Edward

  Lawson, Nigel

  Sims, Roger

  Durant, Tony

  Lester, Jim (Beeston)

  Sinclair, Sir George

  Dykes, Hugh

  Lewis, Kenneth (Rutland)

  Skeet, T. H. H.

  Eden, Rt Hon Sir John

  Lloyd, Ian

  Smith, Dudley (Warwick)

  Edwards, Nicholas (Pembroke)

  Loveridge, John

  Smith, Timothy John (Ashfield)

  Emery, Peter

  McAdden, Sir Stephen

  Speed, Keith

  Eyre, Reginald

  McCrindle, Robert

  Spence, John

  Fairbairn, Nicholas

  Macfarlane, Neil

  Spicer, Michael (S Worcester)

  Fairgrieve, Russell

  MacGregor, John

  Sproat, Iain

  Farr, John

  MacKay, Andrew (Stechford)

  Stanbrook, Ivor

  Fell, Anthony

  Macmillan, Rt Hon M. (Farnham)

  Stanley, John

  Finsberg, Geoffrey

  McNair-Wilson, M. (Newbury)

  Steen, Anthony (Wavertree)

  Fisher, Sir Nigel

  McNair-Wilson, P. (New Forest)

  Stewart, Ian (Hitchin)

  Fletcher, Alex (Edinburgh N)

  Madel, David

  Stokes, John

  Fookes, Miss Janet

  Marshall, Michael (Arundel)

  Stradling Thomas, J.

  Forman, Nigel

  Marten, Neil

  Tapsell, Peter

  Fowler, Norman (Sutton C'f'd)

  Mates, Michael

  Taylor, R. (Croydon NW)

  Fox, Marcus

  Mather, Carol

  Taylor, Teddy (Cathcart)

  Fraser, Rt Hon H. (Stafford & St)

  Maudling, Rt Hon Reginald

  Tebbit, Norman

  Fry, Peter

  Mawby, Ray

  Temple-Morris, Peter

  Galbraith, Hon T. G. D.

  Maxwell-Hyslop, Robin

  Thatcher, Rt Hon Margaret

  Gardiner, George (Reigate)

  Mayhew, Patrick

  Thomas, Rt Hon P. (Hendon S)

  Gardner, Edward (S Fylde)

  Meyer, Sir Anthony

  Townsend, Cyril D.

  Gilmour, Rt Hon Ian (Chesham)

  Miller, Hal (Bromsgrove)

  Trotter, Neville

  Gilmour, Sir John (East Fife)

  Mills, Peter

  van Straubenzee, W. R.

  Glyn, Dr Alan

  Mitchell, David (Basingstoke)

  Vaughan, Dr Gerard

  Godber, Rt Hon Joseph

  Moate, Roger

  Viggers, Peter

  Goodhart, Philip

  Monro, Hector

  Wakeham, John

  Goodhew, Victor

  Montgomery, Fergus

  Walder, David (Clitheroe)

  Goodlad, Alastair

  Moore, John (Croydon C)

  Walker, Rt Hon P. (Worcester)

  Gorst, John

  More, Jasper (Ludlow)

  Walters, Dennis

  Gow, Ian (Eastbourne)

  Morgan, Geraint

  Warren, Kenneth

  Gower, Sir Raymond (Barry)

  Morgan-Giles, Rear-Admiral

  Weatherill, Bernard

  Grant, Anthony (Harrow C)

  Morrison, Charles (Devizes)

  Wells, John

  Gray, Hamish

  Morrison, Hon Peter (Chester)

  Whitelaw, Rt Hon William

  Griffiths, Eldon

  Mudd, David

  Wiggin, Jerry

  Grist, Ian

  Neave, Airey

  Winterton, Nicholas

  Grylls, Michael

  Nelson, Anthony

  Wood, Rt Hon Richard

  Hall, Sir John

  Neubert, Michael

  Young, Sir G. (Ealing, Acton)

  Hall-Davis, A. G. F.

  Newton, Tony

  Younger, Hon George

  Hamilton, Michael (Salisbury)

  Nott, John

  Hampson, Dr Keith

  Onslow, Cranley

  TELLERS FOR THE AYES:

  Hannam, John

  Oppenheim, Mrs Sally

  Mr. Spencer Le Marchant and

  Harvie Anderson, Rt Hon Miss

  Page, John (Harrow West)

  Mr. Michael Roberts.

  Haselhurst, Alan

  NOES

  Abse, Leo

  Ashton, Joe

  Barnett, Rt Hon Joel (Heywood)

  Allaun, Frank

  Atkins, Ronald (Preston N)

  Bates, Alf

  Anderson, Donald

  Atkinson, Norman

  Bean R. E.

  Archer, Rt Hon Pater

  Bagier, Gordon A. T.

  Beith A. J.

  Armstrong, Ernest

  Bain, Mrs Margaret

  Benn, Rt Hon Anthony Wedgwood

  Ashley, Jack

  Barnett, Guy (Greenwich)

  Bennett, Andrew (Stockport N)

  112

  113

  Bidwell, Sydney

  Grant, John (Islington C)

  Morris, Rt Hon J. (Aberavon)

  Bishop, Rt Hon Edward

  Grimond, Rt Hon J.

  Moyle, Roland

  Blenkinsop, Arthur

  Grocott, Bruce

  Murray, Rt Hon Ronald King

  Boardman, H.

  Hardy, Peter

  Newens, Stanley

  Booth, Rt Hon Albert

  Harrison, Rt Hon Walter

  Noble, Mike

  Boothroyd, Miss Betty

  Hart, Rt Hon Judith

  Oakes, Gordon

  Bottomley, Rt Hon Arthur

  Hattersley, Rt Hon Roy

  Ogden, Eric

  Boyden, James (Bish Auck)

  Hatton, Frank

  O'Halloran, Michael

  Bradley, Tom

  Hayman, Mrs Helene

  Orbach, Maurice

  Bray, Dr Jeremy

  Healey, Rt Hon Denis

  Orme, Rt Hon Stanley

  Brown, Hugh D. (Provan)

  Heffer, Eric S.

  Ovenden, John

  Brown, Robert C. (Newcastle W)

  Hooley, Frank

  Padley, Walter

  Buchan, Norman

  Hooson, Emlyn

  Palmer, Arthur

  Butler, Mrs Joyce (Wood Green)

  Horam, John

  Pardoe, John

  Callaghan, Jim (Middleton & P)

  Howells, Geraint (Cardigan)

  Park, George

  Campbell, Ian

  Hoyle, Doug (Nelson)

  Parker, John

  Canavan, Dennis

  Huckfield, Les

  Parry, Robert

  Cant, R. B.

  Hughes, Rt Hon C. (Anglesey)

  Pavitt, Laurie

  Carmichael, Neil

  Hughes, Robert (Aberdeen N)

  Pendry, Tom

  Carter, Ray

  Hughes, Roy (Newport)

  Penhaligon, David

  Carter-Jones, Lewis

  Hunter, Adam

  Perry, Ernest

  Cartwright, John

  Irvine, Rt Hon Sir A. (Edge Hill)

  Phipps, Dr Colin

  Castle, Rt Hon Barbara

  Irving, Rt Hon S. (Dartford)

  Price, William (Rugby)

  Clemitson, Ivor

  Jackson, Colin (Brighouse)

  Radice, Giles

  Cocks, Rt Hon Michael (Bristol S)

  Jackson, Miss Margaret (Lincoln)

  Rees, Rt Hon Merlyn (Leeds S)

  Cohen, Stanley

  Janner, Greville

  Reid, George

  Coleman, Donald

  Jay, Rt Hon Douglas

  Richardson, Miss Jo

  Colquhoun, Ms Maureen

  Jeger, Mrs Lena

  Roberts, Albert (Normanton)

  Conlan, Bernard

  Jenkins, Hugh (Putney)

  Roberts, Gwilym (Cannock)

  Cook, Robin F. (Edin C)

  John, Brynmor

  Robinson, Geoffrey

  Corbett, Robin

  Johnson, James (Hull West)

  Roderick, Caerwyn

  Cowans, Harry

  Johnson, Walter (Derby S)

  Rodgers, George (Chorley)

  Cox, Thomas (Tooting)

  Johnston, Russell (Inverness)

  Rodgers, Rt Hon William (Stockton)

  Craigen, Jim (Maryhill)

  Jones, Alec (Rhondda)

  Rooker, J. W.

  Crawford, Douglas

  Jones, Barry (East Flint)

  Roper, John

  Crawshaw, Richard

  Jones, Dan (Burnley)

  Rose, Paul B.

  Cronin, John

  Judd, Frank

  Ross, Stephen (Isle of Wight)

  Crowther, Stan (Rotherham)

  Kaufman, Gerald

  Ross, Rt Hon W. (Kilmarnock)

  Cryer, Bob

  Kelley, Richard

  Ryman, John

  Cunningham, G. (Islington S)

  Kerr, Russell

  Sandelson, Neville

  Cunningham, Dr J. (Whiteh)

  Kilroy-Silk, Robert

  Sedgemore, Brian

  Davidson, Arthur

  Kinnock, Neil

  Selby, Harry

  Davies, Bryan (Enfield N)

  Lambie, David

  Sever, John

  Davies, Denzil (Llanelli)

  Lamborn, Harry

  Shaw, Arnold (Ilford South)

  Davies, Ifor (Gower)

  Lamond, James

  Sheldon, Rt Hon Robert

  Davis, Clinton (Hackney C)

  Latham, Arthur (Paddington)

  Shore, Rt Hon Peter

  Deakins, Eric

  Leadbitter, Ted

  Short, Mrs Renée (Wolv NE)

  Dean, Joseph (Leeds West)

  Lee, John

  Silkin, Rt Hon S. C. (Dulwich)

  Dell, Rt Hon Edmund

  Lestor, Miss Joan (Eton & Slough)

  Sillars, James

  Dempsey, James

  Lever, Rt Hon Harold

  Silverman, Julius

  Doig, Peter

  Lewis, Ron (Carlisle)

  Skinner, Dennis

  Dormand, J. D.

  Lipton, Marcus

  Small, William

  Douglas-Mann, Bruce

  Litterick, Tom

  Smith, John (N Lanarkshire)

  Duffy, A. E. P.

  Loyden, Eddie

  Snape, Peter

  Dunlop, John

  Luard, Evan

  Spearing, Nigel

  Dunn, James A.

  Lyon, Alexander (York)

  Spriggs, Leslie

  Dunnett, Jack

  Lyons, Edward (Bradford W)

  Stallard, A. W.

  Eadie, Alex

  Mabon, Rt Hon Dr J. Dickson

  Stewart, Rt Hon M. (Fulham)

  Edge, Geoff

  McCartney, Hugh

  Stewart, Rt Hon M. (Fulham)

  Ellis, John (Brigg & Scun)

  MacCormick, Iain

  Stoddart, David

  English, Michael

  McDonald, Dr Oonagh

  Stott, Roger

  Ennals, Rt Hon David

  McElhone, Frank

  Strang, Gavin

  Evans, Fred (Caerphilly)

  MacFarquhar, Roderick

  Strauss, Rt Hon G. R.

  Evans, Ioan (Aberdare)

  McGuire, Michael (Ince)

  Summerskill, Hon Dr Shirley

  Ewing, Harry (Stirling)

  MacKenzle, Rt Hon Gregor

  Swain, Thomas

  Ewing, Mrs Winifred (Moray)

  Maclennan, Robert

  Taylor, Mrs Ann (Bolton W)

  Fernyhough, Rt Hon E.

  McMillan, Tom (Glasgow C)

  Thomas, Dafydd (Merioneth)

  Fitch, Alan (Wigan)

  McNamara, Kevin

  Thomas, Jeffrey (Abertillery)

  Flannery, Martin

  Madden, Max

  Thomas, Mike (Newcastle E)

  Fletcher, Ted (Darlington)

  Magee, Bryan

  Thomas, Ron (Bristol NW)

  Foot, Rt Hon Michael

  Mallalieu, J. P. W.

  Thompson, George

  Ford, Ben

  Marks, Kenneth

  Thorne, Stan (Preston South)

  Forrester, John

  Marshall, Dr Edmund (Goole)

  Thorpe, Rt Hon Jeremy (N Devon)

  Fowler, Gerald (The Wrekin)

  Marshall, Jim (Leicester S)

  Tierney, Sydney

  Fraser, John (Lamceth. N'w'd)

  Mason, Rt Hon Roy

  Tinn, James

  Freeson, Rt Hon Reginald

  Maynard, Miss Joan

  Tomlinson, John

  Garrett, John (Norwich S)

  Meacher, Michael

  Tomney, Frank

  Garrett, W. E. (Wallsend)

  Mellish, Rt Hon Robert

  Torney, Tom

  George, Bruce

  Mendelson, John

  Tuck, Raphael

  Gilbert, Dr John

  Mikardo, Ian

  Varley, Rt Hon Eric G.

  Ginsburg, David

  Millan, Rt Hon Bruce

  Wainwright, Edwin (Dearne V)

  Golding, John

  Miller, Dr M. S. (E Kilbride)

  Wainwright, Richard (Colne V)

  Gould, Bryan

  Molloy, William

  Walker, Harold (Doncaster)

  Gourlay, Harry

  Moonman, Eric

  Walker, Terry (Kingswood)

  Graham, Ted

  Morris, Alfred (Wythenshawe)

  Ward, Michael

  Grant, George (Morpeth)

  Morris, Charles R. (Openshaw)

  Watkins, David

  114

  115

  Weetch, Ken

  Willey, Rt Hon Frederick

  Woodall, Alec

  Weitzman, David

  Williams, Rt Hon Shirley (Hertford)

  Woof, Robert

  Wellbeloved, James

  Williams, Sir Thomas (Warrington)

  Wrigglesworth, Ian

  Watkinson, John

  Wilson, Alexander (Hamilton)

  Young, David (Bolton E)

  Welsh, Andrew

  Wilson, Gordon (Dundee E)

  White, Frank R. (Bury)

  Wilson, Rt Hon Sir Harold (Huyton)

  TELLERS FOR THE NOES:

  White, James (Pollok)

  Wilson, William (Coventry SE)

  Mr. Joseph Harper and

  Whitlock, William

  Wise, Mrs Audrey

  Mr. James Hamilton

  Wigley, Dafydd

  Question accordingly negatived.

  EUROPEAN ASSEMBLY ELECTIONS BILL
  Considered in Committee [Progress, 1st December.]
  [Mr. Oscar Murton in the Chair]
  7.15 p.m.
  Mr. J. Enoch Powell: On a point of order, Mr. Murton. You, in common with a number of your predecessors, have customarily met the convenience of the Committee by intimating before the commencement of a sitting which of the amendments on the Amendment Paper you had provisionally selected. I am sure I am right in saying that this has been found to be of almost universal help. However, so far as I have been able to ascertain, there has been no list of your provisional selection of amendments available in the "No" Lobby or elsewhere. Therefore, I wondered whether you would indicate to the Committee, if that is the case, the reasons for the departure from custom.
  It will be observed from the marshalling of the Amendment Paper that you have been prophetically moved to conclude that the motion standing in the name of the Home Secretary may meet with the approval of the Committee. I think that it might be helpful to hon. Members, as under you it so often is, if they were made aware that the absence of a list of your provisional selection of amendments is an indication that some similar prophetic breath has conveyed to you that a motion to report Progress might be moved immediately after the motion in the name of the Home Secretary has been disposed of.
  I hope that you will not feel it impertinent that this inquiry, which I am sure is in the minds of many hon. Members, should be addressed to you.
  The Chairman: It is always extremely dangerous for the Chair to prophesy, but the right hon. Member for Down, South
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  (Mr. Powell) is correct. When the Committee reaches the Secretary of State's motion, I suggest that we see how we proceed as a result of it. Thereafter there are contingencies, again prophesied, which I hope will meet the convenience of the Committee, whatever decision may be reached on the motion.
  Before the Committee begins its deliberations, I should like to make a statement which refers specifically to something that happened on 1st December relating to the resumption of debate in Committee and who has the Floor.
  Hon. Members will recall that on Thursday 1st December, when the Committee resumed after the interruption at 10 o'clock to dispose of the business motion, I ruled that a Member who was speaking at the time when proceedings in Committee were interrupted did not have an automatic right to be called when the proceedings were resumed.
  In so ruling I was relying upon my knowledge of the practice, which is nowhere stated in general terms in the text of "Erskine May". If, however, hon. Members will look at the passage on page 610 of the current edition of "Erskine May", which deals with the reporting of resolutions from Committee of the whole House, it will be seen that there are certain circumstances in which it is stated to be the case that
  "a Member cannot claim to speak first on the renewal of a debate in Committee, on the ground that he was in possession of the Committee when the chairman reported progress."
  While the later references in footnote (h) appended to this passage are specifically related to the particular circumstances to which the text refers, the earlier ones are of more general application. The ruling of 1915, in particular, lays stress, as I did, on the right of a Member to speak more than once in Committee. I think I should also reaffirm that when the Member in charge of a Bill rises to speak and he can properly be called, it is the usual practice of the Chair to call him.
  Having said that, however, I cannot but fail to give considerable weight to

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  the suggestion made by the right hon. Member for Down, South at cols. 853 and 854 that it is unlikely that this practice has ever before been applied when a Committee has been resumed after a formal interruption at 10 o'clock. I certainly know of no such instance. One is always, I hope, ready to learn from experience. If such a circumstance were to arise again, I should be most strongly inclined to give precedence to the hon. Member who was speaking at the moment of interruption.
  Mr. Powell: On that point of order, Mr. Murton, as one of the hon. Members who raised the matter of order with you at the last sitting of the Committee, I should like to thank you for the action that you have taken in giving the matter your careful consideration and giving guidance to the Committee in the form of a considered statement.
  Perhaps I may, without presuming to suggest that a ruling of the chair could be other than valid and authoritative, say that your ruling accords with what, at any rate, we younger Members thought was the prevailing practice. Since in the nature of things it is not uncommon, when we are in Committee of the whole House, for a Committee stage to be interrupted at 10 o'clock for the business motion in the middle of an hon. Member's speech, it appears that your ruling will generally be to the convenience and satisfaction of hon. Members.
  Mr. Ian Mikardo: On that point of order, Mr. Murton. As I, too, was involved in the incident to which you have referred, perhaps I may add my thanks to those which have been expressed by the right hon. Member for Down, South (Mr. Powell). I speak, as he said that he did, on behalf of the younger Members of the Committee. I offer sincere thanks to you, Mr. Murton, for having given further consideration to this matter and for the ruling that you have been kind enough to give.
  The Chairman: I am greatly obliged to the hon. Gentleman.
  Mr. Nigel Spearing: On another point of order, Mr. Murton. On 1st December you were very helpful to hon. Members by giving certain reasons why particular amendments were not in order. In particular, you referred to the
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  scope of the Bill. The current edition of "Erskine May" goes into this matter on page 521, and in particular refers to the precedents in footnote (e). I believe that there are 19 precedents this century for certain amendments being ruled out of order. Hon. Members may be interested to know that in 1914 Mr. Keir Hardie tried to move an amendment to the Army Bill to exclude the Army acting in industrial disputes. That was said to be beyond the scope of the Bill.
  Another hon. Member tried to move an amendment to exclude the Crown Agents from bidding for harbour contracts in East Africa, and that was ruled out of order. That was an uncanny lack of foresight into future difficulties.
  That is the point of order that I wish to raise. In looking at those precedents, I can find no Bill which created a new statutory person—in this instance a Member of the Assembly of the European Communities. I put it to you, Mr. Murton, perhaps for future guidance for those of us who wish to table amendments on other occasions or on Report, that when the Bill specifically creates a new statutory person, and when we are told that it is beyond the scope of the Bill to add duties, obligations, and requirements of that new statutory person, it calls into question whether the precedents in footnote (e) cover future amendments to the Bill. I hope that you will be able to help the Committee on the question of new amendments which come within the scope of the Bill.
  The Chairman: The hon. Member for Newham, South (Mr. Spearing) was kind enough to give me notice of the matter that he has raised, and I have carefully considered it.
  I cannot follow the hon. Gentleman in his contention that the Bill has the effect of creating a new category of statutory individual. It certainly does not create the European Assembly, which is one of the organs of the EEC Treaty of which statutory notice was taken in the European Communities Act 1972. Such an Assembly cannot exist without a membership, however those Members may be designated.
  The sole effect of the Bill—in other words, the scope of the Bill—is to provide a new and elective method of appointing those Members. I have, I

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  hope, already made it clear that, in my view, disqualification is an essential part of the elective process and that this can be incurred after election as well as before, as indeed the Bill provides. Ishall have this fact well in mind when considering any amendments which might be offered.

  EUROPEAN ASSEMBLY ELECTIONS BILL
    Clause 1

      ELECTION OF REPRESENTATIVES TO THE EUROPEAN ASSEMBLY
      Question proposed [1st December], That the clause stand part of the Bill.
      Question again proposed.
      Mr. Powell: The remarks I shall address to you on this question, Mr. Murton have a curiously close relationship with your ruling on the point of order you have just dealt with. In that ruling, which I am not of course in any way challenging, you based yourself upon the proposition that not only did the Assembly of the European Economic Community exist already as a fact but the membership of that Assembly existed already as a fact and that this Bill was not creating a new membership but merely providing for a different method of obtaining individuals to fill that membership. If I have correctly apprehended that that is your view, Mr. Murton, I suggest that we are in considerable difficulties in understanding what it is that Parliament is invited to do by this Bill; and Clause 1 in its wording emphasises the nature of these difficulties.
      You are of course aware, Mr. Murton, that the membership of the elected Assembly, if it comes into existence, will be different numerically from the membership of the existing Assembly. It will be very different indeed. It will be between two and three times as large; and if we had not had your assistance, Mr. Murton, we might have found it difficult to conclude that an Assembly of between 100 and 200 Members was identical with an Assembly of more than 400 Members.
      A more significant characteristic of the membership, to which we here should be specially sensitive, is whom they are representing. The shoulder to this clause refers to
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      "Election of representatives to the European Assembly".
      I shall not detain the Committee with the grammatical question whether "representatives to" is part of the English language—I personally doubt whether it is correct English—but the shoulder title does not tell us whom these representatives represent. In order to find an answer—I shall argue in a moment that it is a very puzzling and unsatisfactory answer—we must read the clause, which says that these elected members are to be
      "The representatives of the people of the United Kingdom."
      We in the House of Commons are used to the meaning of "representatives of the people". We have had a whole series of Acts of Parliament, ending in our present constitution of universal adult suffrage, which were entitled "Representation of the People Acts". By "representing the people" we mean being directly elected by the people to speak on their behalf in an Assembly—being entrusted by the people in their respective constituencies with powers to grant, to agree and to decide on their behalf—receiving a direct commission from the people. Indeed, long before universal suffrage, that was the nature of the Members of the House of Commons from the beginning: they were men who came here with power given to them by those who sent them here to do things bindingly on their behalf.
      7.30 p.m.
      It is not at all clear that that is the meaning of direct elections, to the European Assembly. There are three possibilities—at least three possibilities. One can never be quite sure of exhausting the range of possibilities—a fruitful source of human error—and so I say there are at least three possibilities. One is that such representatives night be representatives of their respective nations. If the words "of the people" did not stand in this clause, we should read that we were going to elect people to represent, not their respective constituencies, not the people as an electorate, but the United Kingdom as a nation vis-a-vis the other nation States of the European Economic Community.
      The second possibility was provided for in the Treaty of Rome, and,

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      indeed, exists at present, again creating a difficulty in regarding the present Assembly as being the same as the Assembly which will come into existence if and when this Act is in force, is that they will be representatives of their respective Parliaments. That was the initial form of the Assembly, and it is as such that the House of Commons has partially sent its quota of representatives to the European Assembly hitherto: they have been representatives not of the United Kingdom, on the one hand, nor of the electorate of the United Kingdom, on the other hand, but of the House.
      There has been one convenience about that, and it is one of which we should painfully feel the lack if the Bill were to be passed: it is that the representation of the people in the House of Commons, as expressed by the party composition of the House, could be reproduced in microcosm in its representation in the European Assembly. So the second possibility, that which is currently in existence, is that the representative, sovereign elected bodies—if I dare by habit and perhaps by anticipation so describe the parliamentary bodies of the countries of the Community—are represented at the Assembly of the EEC.
      The third possibility is that which appears to be conveyed by the wording of the clause. It is that there is to be a new heaven and a new earth, and instead of the Assembly comprising representatives of the national Assemblies, still less representatives of the component States as States, there are to come from all the corners of the European Economic Community elected representatives of the people in exactly the same sense as we 635 who come here are representatives in Parliament of the people of the United Kingdom.
      Perhaps, incautiously some of us might have concluded that that was what we were doing today. We should have been confirmed in that incautious and mistaken conclusion by noticing that this extraordinary proposal before Parliament purports to be in partial fulfilment of the aspiration in Article 138 of the Treaty of Rome—that Members of the Assembly should be "directly elected by adult universal suffrage". The natural conclusion from the Decision of 20th September
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      last year was that the Treaty of Rome envisaged an Assembly which would stand to the electorate of the Community as a whole as the House of Commons stands to the electorate of the United Kingdom.
      Alas, that theory does not survive scrutiny of the Decision itself. The Decision itself sets out the number of representatives to be elected in each member State—what are described in article 1 of that Decision as:
      "representatives in the Assembly of the peoples of the states brought together in the Community."
      If we examine those numbers of representatives, we find that a certain principle which is implicit for us in representation of the people and which—however imperfectly we fulfil it from time to time in the United Kingdom—we cannot for the last 150 years separate in our minds from representation of the people, is not only absent but has clearly been deliberately affronted.
      I need take only one example. Luxembourg has six Members. If the Assembly were to be the representation of the peoples of the States brought together in the community in the sense in which we understand representation of the people, it would need a very much larger Assembly than this for Luxembourg to rate six representatives. When we study the numbers which are to be sent from the respective peoples, we see that this is still to be an Assembly of the representatives of nations. It is only if this is an Assembly of the representatives of nations that it begins to make sense that the Republic of Ireland is to send 15 representatives, Belgium 24 or Denmark 16, as against 81 from the United Kingdom. These are the balances which are built into the Community of nation States.
      Thus, if anyone imagined that in enacting the Bill we should be obeying any of the principles of parliamentary democracy to which we have been accustomed in the last 150 years in this country, he would be gravely mistaken. The idea of one man, one vote, one value—the idea that, within reason but as a general objective, constituencies should be roughly equal in size, so that as far as possible the people as a whole in the respective constituencies may be fairly represented in the House of

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      Commons—does not apply to the Assembly to which what are called the representatives of the people are to be sent.
      We therefore have an anomaly and contradiction which lies at the heart of what we are doing. It is not too early—arguably, it may be too late on the Question, "That the clause stand part of the Bill"—to seek some elucidation. So far as I am aware—and no man can say that he has heard every word that has been spoken in the House on this topic over two Sessions—those who have proposed the measure and put the Bill twice before the House have at no time referred to this more than puzzling, indeed self-destructive, contradiction which lies in the nature of the Assembly.
      Out of doors, those who ask us to support the Bill are loud in their protestations that if we pass it we shall democratise the Community. They want the electorate to believe that the same principles upon which they consider us in the House to be elected to represent them will now be applied, by a kind of parity of reasoning, to the Assembly of the EEC. That is not so. Therefore, what we are doing is electing representatives of the member States on a ratio which is related to the intended importance of those member States relative to one another in the counsels of the Community. Yet we are doing it on a system which is intended to be the same simultaneously in all of those States and which is intended to be everywhere on the basis of universal franchise.
      There is no sense in this, because if we are electing representatives of the United Kingdom, as clearly we are from the composition of the new Assembly, it is our business, and the business of no one else, how we decide to nominate, elect or arrive at those representatives; and equally validly and logically, each of the other member States could elect and secure those who were to represent their respective States. Instead of that, however, we are told to do this under a prescription, and in accordance with rules, which would be logical only if membership in the European Assembly were proportionate to the population of the respective territories and constituencies from which the representatives are to come.
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      So the very wording of the first line of the Bill reveals a profound and unresolved contradiction in what we are doing. I am tempted to say that we could easily slip into prostituting that which is the basis of our authority and pride in the House of Commons, namely, to be the elected representatives of the people, in order to form a body which in no way resembles the House but a congress assembled from the respective member States of the Community.
      I am glad that the Minister of State, Foreign and Commonwealth Office is to be at the Dispatch Box, because he made a very important statement—I know that he was not making it for the first time, but he made it in lapidary fashion—just as we were moving temporarily 10 days ago from consideration of the Question again proposed to the Committee this evening. He said that in the concept of the Government the European Economic Community
      "is of a Community in which independent and sovereign states collaborate together for the common good".—[Official Report, 2nd December 1977; Vol. 940, c. 858.]
      I cannot express to the Minister what music, at any rate to my ears, that formulation was. It is a formulation with which I would have not the slightest difficulty in associating myself. If the United Kingdom is to be after all—if we were mistaken and all that has happened from 1972 on has been an ugly dream, as if there were no Section 2 of the 1972 Act—an independent sovereign nation, that is to say, not legislated for or managed in any respect of our affairs by any external authority, the more closely we co-operate with our neighbours on the Continent the better it will be for this country, and I give my heart to participating in that and urging it on. But we are not furthering that cause by what is in the Bill. By this Bill, as Clause 1 tells us, we are creating a monster, a constitutional monstrosity in terms of this country, and a contradiction at the heart of the European Community itself which should be clearly resolved before we do what is proposed in the Bill.
      We ought to know whether the Assembly is to be a congress of the component States. If so, we need not tear ourselves to pieces tomorrow or after Christmas deciding whether we are to abandon our

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      ordinary methods of electing representatives if we wish to do so. Nor need we puzzle our heads, as I fear we shall be doing from clause to clause of the Bill, how one representation of the people of the United Kingdom is to be kept in any reasonable co-ordination with another representation—no mean difficulty. We should find that all we were logically, by our membership of the Community, required to do was to provide a representation of the United Kingdom.
      7.45 p.m.
      Those who went on that basis would not go as individuals. They would not go, as we come here, as individuals. They would go as a representation of the United Kingdom as a whole. That is to say, they would go as a representation which, like the House itself, comes to its decisions as best it can by the counting of heads, by a majority; for a nation, through its representatives, cannot by definition have two voices. If a nation is to be represented, it must say one thing and speak with one voice.
      It is a contradiction of that essential representation of the nations in the European Assembly that they should be elected as is proposed in this Bill, as if they were to be, indeed, in the sense in which we always mean those words—we have not been told that they are not so meant in this clause—the
      "representatives of the people of the United Kingdom".
      Therefore, I would not give my voice to the passage of this clause until we have resolved, if we can resolve, what is the nature of the EEC. If it be, indeed, according to the Government's view as stated by the Minister of State, Foreign and Commonwealth Office, this is not the Bill by which we ought to provide for the representation of the United Kingdom in the Assembly of the European Economic Community.
      Mr. Michael Stewart: I would like to try to reply to that part of the speech of the right hon. Member for Down, South (Mr. Powell) in which he contended that the Assembly and the proposed Bill were illogical and anomalous because of what he regards as the over-representation of the smaller States in the Community. He argues that, because they have that disproportionate representation, therefore the representatives
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      are representatives of States. But how can they be representatives of States if they at any time speak with a different voice from us as representatives of the United Kingdom?
      The right hon. Gentleman played with this apparent anomaly and inconsistency for some time. He argued, as always, with powerful logic in a context in which logic will not alone provide the answer. [HON. MEMBERS: "Oh."] I should have thought that most hon. Members would have grasped that. Occasionally in politics imagination is required. Let me give an example.
      The Charter of the United Nations lays down that there is no right to interfere with the internal affairs of other countries. It then lays down that all countries are to observe certain human rights. Therefore, if one ever protests against any Government oppressing their own subjects, one can say that one is standing on that part of the Charter which talks about human rights, and one can be given the answer "Yes, but you are transgressing against that part of the Charter which says that you must not interfere with the internal affairs of other countries".
      On the basis of pure logic, there is a hopeless contradiction here. The reason why that occurs is that in politics things do not stand still. They do not remain the same for ever. In geometry a triangle is always a triangle and a circle is always a circle, and certain conclusions can be drawn from that as to their properties. In politics, things are always in process of turning into something else. We are living in a world in which in the main we are organised into sovereign States, but it is a world in which we know that there are certain ideas—ideas of right and wrong—that ought to, but, alas, do not always as yet transcend sovereign States.
      That is why we have this apparent anomaly in the Charter of the United Nations, which says that we must not interfere with the internal affairs of any country but then gives us a right to do so by laying down a Convention on Human Rights which every State, however proud in claiming sovereignty over its internal affairs, is expected to respect.
      I hope, therefore, that I have made clear what I mean by saying that there are certain political problems in which mere logic will not provide one with the

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      answer. That is because the development of human affairs politically is a moving and not a static thing.
      Mr. Bryan Gould: I do not wish to dispute the basic thesis of my right hon. Friend, but I think that the example which he has chosen is ill chosen. The fact is that an international lawyer, at any rate, would say, that, if a State fails to provide human rights to its citizens in such a way as to breach the principles of international law, it is no longer entitled to claim the exemption of domestic jurisdiction.
      Mr. Stewart: In that case, the exemption ought not to be stated in the absolute form that it is. That is exactly the point that I am making. A lawyer would point out that in the end one of these principles ought to prevail over the other, but we state them at the moment both in apparent contradiction, because the world is in a state of transition. It is mainly organised on the basis of sovereign States, but we recognise that for certain purposes and ideals that is not an entirely satisfactory way of organising it.
      In the same way, the European Economic Community is a collection of nine sovereign States, but they are sovereign States which have come together more closely and have created more closely meshed machinery for their jont action than any other group of nations has done before. That creates, therefore, entirely new problems. One cannot disprove the validity of the concept of a European Assembly elected as it is proposed to be elected by saying that there has never been anything quite like it before.
      That, I fear, is the tendency of the right hon. Gentleman—to assume that there are certain categories of fact and that, if one cannot fit a new idea into these categories, there must be something wrong with the idea. I do not believe that that is so.
      First, it cannot be argued that it is wrong in itself for a group of nine sovereign States to come together in very close co-operation in certain matters. There cannot be an objection if they then decide, as one of the pieces of machinery, that for this purpose they will have an Assembly. It is open then for them to decide collectively how that Assembly shall be chosen.
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      As to the particular point of objection, the exceptional representation of Luxembourg, one could say that the Isles of Orkney and Shetland are virtually over-represented in the House of Commons. After all, why do we accept what would otherwise be a gross overrepresentation? It is because we feel that if they were put in as part of a larger constituency in the North of Scotland it would be so difficult for their Member to speak up for their needs that they would suffer from a real injustice, and that the rest of us are quite willing to accept what is an over-representation of them considering that the alternative would be to inflict on them a real injustice.
      Mr. Dennis Skinner: Will my right hon. Friend accept that the main reason the Orkneys and Shetlands and some other disparate areas within the United Kingdom have a Member of Parliament for, let us say, fewer than 30,000 constituents has little or nothing to do with the argument that is before us now but has very much more to do with the geography of the place? On that basis, my right hon. Friend's choice of Luxembourg is a very bad one, because Luxembourg is like one of the inner constituencies of London.
      Mr. Stewart: Perhaps my hon. Friend will be patient with me for a little. I accept that the reason why the Orkneys and Shetlands and certain other areas have what might be called over-representation is a geographical one. But if we then ask "Why is geography relevant?", the answer is that the effect of the geography is such that, if one did not give them over-representation, in sheer mathematical terms their interests would suffer. They would not be properly represented, which was the reason I gave.
      Mr. Powell: I have been following the right hon. Gentleman's argument very closely. I can see his argument that it would be extremely inconvenient for Luxembourg to have two-thirds of a Member. But the difficulty that the right hon. Member has to face is that it is not proposed to give Luxembourg as much as one Member, rather like the Orkneys and Shetlands, but to give it six.
      Mr. Stewart: I appreciate that. I am establishing so far that we are quite

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      familiar here with the situation of what one might call, in pure mathematics, the over-representation of certain parts of the United Kingdom. I say "overrepresentation in pure mathematics", but I have tried to argue that it is, in common sense and justice, the right representation that they should have. Now we come to the Community, and here again I remind the Committee of what I said earlier. We are dealing with an institution that is changing and that is growing. It is at present an institution of nine sovereign States, and, in deciding how its Assembly is to be elected, it has to take account of that fact.
      One will find that, whenever units have come together to form a federation, some degree of kindness has always been shown to the smaller members of the federation. Every State of the United States is entitled to elect two senators, whatever its population may be. There are many other examples.
      Mr. John Lee: Surely my right hon. Friend is defeating is own argument. This is an election to a unicameral Assembly. The position of the smaller units to which he has referred is confined to the Senate, which was established especially for that purpose. That is the principle which one finds in other places. But he cannot reconcile it with the election of a single-chamber Assembly.
      Mr. Stewart: The point I am making is that, when various units have come together to make one entity, they have always sought to show some special regard for the rights of the smaller members. I quoted the United States as an example. It is true that in the United States the particular special regard that is shown is to provide for equal representation in the Senate, but that is not necessarily the only way it can be done. We do it in the House of Commons by ensuring a fixed representation for Scotland and Wales, so it could be argued again in mathematical terms that they are over-represented.
      Mr. Powell: I am grateful to the right hon. Gentleman for giving way. He is being very patient. Some of us have been more closely concerned than others with the history of the representation in the House of Commons of parts of the
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      kingdom. The over-representation—if I may use shorthand—of Scotland and Wales, and of Ireland in the 30 or 40 years before Home Rule, was an adventitious result. In fact, all these parts were, if anything, under-represented at the time of the Union and for long afterwards.
      Mr. Stewart: But the decision taken by the Parliament of the United Kingdom shortly after the war about representation in the House of Commons, laid down particular safeguards for Scotland and Wales. The reason was that they were the smaller members of the United Kingdom.
      I draw attention to the fact that the European Assembly itself does its work largely on a committee system. The nation from which only one representative came would have great difficulty in keeping in touch with all that was going on. The advantage that one gives to a very small State by increasing its membership—say, from two or three to six—is very great indeed, because that enables it to man committees and be aware of all that the Parliament is doing. The advantage given to that smaller State is very much greater than the theoretical injustice which might be inflicted on the larger States.
      Mr. Mikardo rose—
      Mr. Stewart: I am anxious not to take up too much time.
      Mr. Mikardo: I am grateful to my right hon. Friend. There is no great hurry about this. We are all looking forward to hearing him develop his argument further. May I put two points? Of course, there is great validity in what he has just said, but will he address his mind not to the over-representation of Luxembourg but to the under-representation of the United Kingdom? He cannot compare the position of Scotland and Wales in the House of Commons with the distribution proposed, because here we have disparities of about one and a half to one or, at the worst, perhaps a little less than two to one. But we are being asked to agree to a disparity in the Assembly which goes up to 10 to one. The great advantage that Luxembourg and Ireland will have is that their Members will represent a reasonably-manageable number of constituents. Ours will not. What shall we do with Members with nearly

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      500,000 constituents each? That is the point to which my right hon. Friend should address himself.
      8.0 p.m.
      Mr. Stewart: I was replying to the point made by the right hon. Member for Down, South. My hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) mentions the number of people that a British Member will represent, but I do not see why British Members of the Assembly should be regarded as less capable and competent than Members of the United States House of Representatives, who also have very large constituencies.
      It is true that what is sometimes called the over-representation of Luxembourg could inversely be called the under-representation of the United Kingdom, but we must see the matter in proportion. If Luxembourg were forced down to one Member and all the other States had Members in proportion, we would have an Assembly unworkably large and Luxembourg almost deprived of the power to do any work properly in it. In order to prevent that, one gives Luxembourg and the other small countries a greater representation. Suppose that Luxembourg were cut down to one Member and the other five Luxembourg seats were added to our total. Luxembourg would suffer very greatly, while the extra advantage to the United Kingdom of having 86 Members instead of 81 would not be of any real significance.
      I say again that we must look not at what we have been used to in the past, and what is the theory of representation, but simply at what is the most workmanlike way of creating an elected Assembly for the European Community as it now exists and as it may exist in the future. That is the job that we are engaged on.
      Several Hon. Members rose—
      Mr. Stewart: I cannot give way any more. I am taking up too much time in the Committee. [Interruption.] I am aware that many of the arguments advanced by opponents of the Bill are meant not as serious arguments but merely to delay the passage of the Bill.
      Mr. Mikardo: Disgraceful.
      Mr. Stewart: I remind hon. Members that we have never debated Community matters in the House of Commons without those of us who support British membership being accused of bad faith and trickery. It has happened time and again. I ask hon. Members to listen in silence for a little.
      Our job is to provide a workmanlike way of electing the Members of the Assembly. I have suggested before that one great advantage of Members directly elected by the whole people and not by the House of Commons is that it will give them greater time to apply themselves to the work and to make known in the Community what has never been emphasised sufficiently before—the voice of the consumer. That is one of the great drawbacks of the Community at present, and it is particularly one of the jobs which a directly-elected Member can do.
      The argument, then, is that we have the Community, and we are not going to come out of it.
      Mr. Skinner: We shall see.
      Mr. Stewart: I am sure that my hon. Friend the Member for Bolsover (Mr. Skinner) would like to come out of the Community. He does not like international affairs. But we have got to make the Community—if my hon. Friend does not like the word "democratic", I will simply say more responsive to the wishes and feelings of ordinary people. One of the ways in which that can be done is by a directly-elected European Assembly. Granted that, one has to find the most workmanlike way of electing it.
      The arguments that we have had so far have not really been helping to secure a more workmanlike way of electing the Assembly but trying to prevent it from being elected at all. The approach of the right hon. Gentleman falls down, as his approaches so often do, because he tries to fit into categories that he already has in his mind something that is new, something that is changeable and something that requires a greater effort of imagination than he is prepared to make.
      Mr. Alan Clark: Here we are discussing these representatives for the European Assembly when we have not any idea what they will do

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      when they get there other than draw their enormous salaries.
      The right hon. Member for Down, South (Mr. Powell) has described the anomalies and inconsistencies in the terms of reference by which they will be deemed to be representatives, but, passing that aside, they will represent the people of England, or Britain. The question is what they will do when they are there. Will they all speak with one voice and see things only in terms of British interests? Obviously, some of them will be Conservatives and some will be Socialists. Some will be M6 murderers, or whatever the odds and sods who come in on a proportional list are likely to be. [Interruption.] Every time there is a by-election, one of the candidates has something to do with the M6 murder, so I understand that statistically that is a possibility.
      There will be only 81 of these representatives and even if they were all elected on precisely the same ticket and with precisely the same allegiance, I do not see that they could make the slightest difference to what went on in the Assembly. As things stand, they will not even be unanimous.
      As to their status, to whom are they to be responsible ultimately? From whom will they take their orders? Are they to be an adjunct of this place? Are they to be subordinate to this place? Are they to respond to their party leaders in this place, or are they to be independent, with their own leadership structure? Will they represent the people of this country in terms of some kind of Euro-pact, some kind of broad-ranging alliance with other European political parties, or will they respond to and take their orders from party leaders and political platforms in this country?
      Here we are, sailing along with this cumbersome great Bill, but without any idea of what these people will do if they ever get to the Assembly. No one has ever explained this in any specific terms. There is a good deal later in the Bill about their expenses—if we ever deal with that—but what are they actually to do in the Assembly?
      Mr. Gwilym Roberts: Is not the position even more complex than that? It is not a question of what these ladies and gentlemen will do when they get there. It is a question of what the
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      Assembly itself will do. No one has yet determined that basic question.
      Mr. Clark: I am grateful to the hon. Gentleman for his intervention. This is the finally ludicrous aspect of the question. The Assembly cannot construct Governments. It cannot support Governments. It cannot dismiss Governments. The only conceivable excuse that I have heard in its favour is that it may save us from some of the work that we do here.
      Mr. Nick Budgen: Does my hon. Friend believe that the loyalty of Members of the Assembly will be to the EEC institutions or to the British nation State?
      Mr. Clark: It is very agreeable to get to these prompts from all round the House. As we all know, their loyalties are very unlikely to remain for long with the political party under whose nomination they arrived in the Assembly. They might, if the regional list system is chosen, get there by some obscure selection process devised in the smoke-filled rooms of their respective party headquarters.
      But, however they get to the Assembly, those loyalties are unlikely to last for long. They will become more and more de-nationalised; the political equivalent of the multinational corporation, in the hothouse atmosphere of wherever this Assembly will sit. They will be completely detached from their real national identity, and they will inevitably start wheeling and dealing with the parties of the other member States, which will probably have nothing like our political standards and concepts. All the national instincts of the Members from this country will gradually be subordinated to the concept of being good Europeans.
      The essential question of what they are to do, what they are to scrutinise and on what matters they are to deliberate, has never been explained to the House, as far as I can recall. Would it not be better if at this stage we were to take another look at the whole question? I recognise that we in this House are limited and obstructed on every side by Governments of whatever party and by the whole of the Civil Service, but at any rate there are some things that we can do. Would it not be better if the things

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      that these representatives are to do were left in our hands here?
      Mr. Gould: There is, I believe, a fundamental misapprehension at the heart of the debate and, indeed, at the heart of the whole debate on direct elections. It was touched on briefly by my right hon. Friend the Member for Fulham (Mr. Stewart) when he introduced the concept of democracy. We who oppose direct elections are accused by Opposition Members of resisting democracy and of not being true to our traditions. Then, on the other hand, we are assured by the Government Front Bench that of course we can extend democracy by means of direct elections, although that will not actually change anything very much. It certainly will not diminish our powers and it will not even extend the powers of the European Assembly.
      I believe that implicit in all this is the assumption that democracy is really just a matter of holding elections, that all one has to do to produce democracy is to hold elections, quite apart from whether those elections produce any change of any sort at all in the way in which we govern ourselves. But it makes sense only if we use the terms "democracy" to describe a form of government and a way in which we make our governmental decisions.
      It is a form of government, and its peculiar feature is that those who exercise the powers of government are actually elected and are therefore responsible to those who elect them. But, unless they exercise the powers of government, however often they are elected, they are not a democratic form of government at ail.
      Mr. Spearing: I intervened in the speech of a Conservative Member earlier and mistakenly accused these representatives of not being responsible. I was reminded that they are responsible to their electorate, which is true, but will my hon. Friend agree that they are not responsible in the real sense of the word? When it comes to any positive decision-making in the Community, they cannot be held responsible for the decisions which are made. In some respects they may be accountable for their actions but they are not responsible, and therefore they are irresponsible in the strict sense of the word.
      Mr. Gould: My hon. Friend is right. What we are having offered to us, at least by the Government Front Bench, is a class of person who is elected but who has nothing to do with the process of government.
      Mr. Kenneth Clarke: Most elected representatives do not actually govern anything themselves. Democracy is a system of electing representatives to whom the Executive, which has powers, is answerable. The present position in the European Economic Community is that the Council of Ministers has considerable executive and legislative powers and is not answerable as a body to any directly elected representatives. If the European Assembly is directly elected, we shall be injecting the very essence of democracy into a system that at present lacks it.
      Mr. Gould: I shall deal with the Council of Ministers in a moment, and I am sure that the hon. Gentleman will find what I have to say enlightening. Government, however, is a shorthand term for a range of functions certainly including the power to make laws and to control, check and challenge the Executive. That seems to me to be the major functions of this House of Commons, for example.
      8.15 p.m.
      If I am right in suggesting that democracy is not simply a matter of elections but is a form of government, when we come to consider the position that might arise if we were to have direct elections to a European Assembly two conclusions follow—at least from the viewpoint of those who agree with me on this matter. First, it would follow that in opposing these elections we are not opposing democracy in any sense. We are simply opposing one step towards a system of government which may or may not be democratic, but which, if it were to be democratic, would have to be supranational and operated on a European level.
      If one were simply concerned for democracy and about current ways in which governmental powers were used—I agree that this is particularly true of the Council of Ministers—there is a much simpler way of democratising the procedure. It is to make those who are members of the Council of Ministers responsible and accountable to elected representatives in this House of Commons.

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      There is a second consequence. It is that if direct elections were to produce—as is argued by hon. Members opposite—a truly democratic form of government, that could happen only if the powers were transferred to the directly elected Assembly. Since the powers of government are not infinite—they are strictly limited in number and type—those powers could be transferred only at the expense of those who exercise them at the moment—in other words, ourselves. For that reason I believe that the issues arising on this clause are crucial to the whole concept of direct elections.
      We are, of course, entitled to be extremely suspicious in the context of the logic which runs that direct elections are needed to establish democracy but that that democracy will make no change of any sort in the shape of the government of the Community. We are also entitled to be suspicious because we hear from all sides and among our partners in the Community that direct elections are about the transfer of powers to the European Assembly. Indeed, even our own former colleague, Lord Thomson—a former Commissioner—has warned us that, come direct elections, those directly elected representatives will be rivals who will want to take powers from us and exercise them themselves.
      Our record in resisting this sort of pressure and argument is not at all encouraging. Pure political expediency has, after all, produced this Bill. The Bill is directly contradictory to the logic of the view of the Community which is set out in our own Prime Minister's letter. The only reason for bringing forward this Bill is the twin political pressures put upon the Government by the Liberals on the one hand and by the rest of our European colleagues on the other.
      If political expediency can produce this Bill, what guarantee do we have that in the end political expediency will not also produce the extension of powers implicit in the whole concept of direct elections?
      Mr. Lee: Is it not made even worse by the fact that in the final analysis the interpretation of these matters is bound to fall to the court of the Community? If one is to go by the examples of other federations in their embryonic stage these have always had a centrifugal effect, such as happened in the case of the United States.
      Mr. Gould: My hon. Friend is right to draw attention to the crucial rôle of the European Court of Justice. That is a rôle that we sometimes overlook to our cost.
      But even if hon. Members do not recognise the responsibility that history and their constituents place upon them, an instinct for survival might at least lead them to devote some attention to this question of the transfer of power. We shall eventually face the claim that directly elected democracy should be made good by increasing the powers of those directly elected representatives.
      The amendment, which was unfortunately voted down, at least tried to safeguard us by guaranteeing what our response would be to such a demand when it is made, as inevitably it will be made. When the Government offer a new clause, that new clause must likewise provide such a guarantee if we are to take seriously the Government's resistance and opposition to the whole concept of European union. If the new clause is fit for this purpose it will reveal direct elections as being unnecessary and unwanted and an expensive piece of window-dressing which has nothing at all to do with democracy. That is a small price to pay for at least adhering to the Government's view of the way in which the Community ought to develop.
      If, on the other hand, the new clause is not fit for this purpose, we shall find that direct elections will simply be the springboard to ceding the powers that will go with those elections and, therefore, to completing the process of creating a new supra-national tier of government.
      Mr. Kenneth Clarke: The hon. Member for Southampton Test (Mr. Gould) took us back to the core of the debate which has featured in this prolonged discussion on the clause. Most of the participants have been those who are opposed to the Bill. They oppose it basically because they fear the extension of powers to which they believe that it will eventually lead. They fear that those powers will be won at the expense of this Parliament.
      I personally feel that those fears are groundless. I am one of those hon. Members who disapprove of what is in the Prime Minister's letter and who is

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      somewhat suspicious of the Foreign Secretary's assurances during the course of the debate when he tried to reassure hon. Members who share the opinions of the hon. Member for Southampton, Test. On the whole, I support working in as pragmatic and sensible a fashion as possible towards European union.
      It is important that we have a more powerful European Parliament. I feel that that would inject an element of democracy into the Community in an area where it is missing at the moment. I feel that the strongest point ever made against our entry into the Community at the time of the referendum was made by those who said that it was not democratic enough for us. My answer was that we should try to make it more democratic once we were in. As long as we have the Council of Ministers exercising greater executive powers, I feel that the case is made even stronger for having a directly-elected body to whom it is responsible.
      I do not share the view that democratic control of the Council would be made more effective if Ministers were more accountable to the different national Parliaments from which they came. That is no substitute, and can be no substitute, for the Council of Ministers as a body being directly responsible to a European Parliament elected for the purpose of scrutinising its powers. I feel that we need a more powerful European Parliament, and I see such a body which is directly elected rather than nominated as paving the way to a more powerful European Parliament.
      Mr. Ron Thomas: The hon. Gentleman said that he would like to see a situation in which the Council of Ministers was answerable to the European Parliament. Given that situation, can he tell us what would then be the relationship between our representative on the Council of Ministers and this Parliament?
      Mr. Clarke: Our representative on the Council of Ministers can only serve on that body if he is a Minister in the national Government. As a Minister in the national Government, he would obviously be answerable in the House of Commons under our present procedures. I do not think that there is
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      such a great gulf between us, because the hon. Gentleman does not think that it is adequate, and I agree with him. It is not adequate. There has been this continuing debate since we entered the Community about the way in which Ministers are answerable here for decisions to which they have assented in the Council of Ministers that have had a directly applicable effect upon our law.
      I know that hon. Members both for and against the Community talk about improving our arrangements upstairs for scrutinising legislation from Europe. I am all in favour of that. I am saying that I agree with the hon. Member for Bristol, North-West (Mr. Thomas) that this has its limitations and that it would be an improvement, and a democratic one, if in addition the Council of Ministers as a body was answerable to a European Parliament.
      I want to explore a little further the different fears about the powers of the European Parliament which have been expressed in the debate. Different groups of people are expressing fears about the powers of the Parliament. One group of hon. Members who are against our membership of the Community—a position which I respect but disagree with—are therefore against the existence of the Parliament and certainly are against its having its existing powers, let alone more. There is a slightly more perplexing group of hon. Members who say that they are in favour of our membership of the Community but are against any increase of the powers of the European Parliament which might encroach upon those of this Parliament in the House of Commons. That position is one that I do not share.
      In trying to reassure that section of opinion, the Foreign Secretary added confusion to the debate rather than assistance. He made what necessarily had to be a brief appearance, because he has to be one of the more absentee Members from the Chamber. He floated in and gave a woolly undertaking that there would be provision in the Bill to deal with any increase in the powers of the European Parliament which might encroach on the powers of this Parliament and might require an amendment to the Treaty. He seemed to say that, to implement such an amendment to the

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      Treaty, a full Act in this House would be required.
      The Minister of State intervened in our debate on the clause and produced an even more peculiar answer to those who fear a growth in the powers of the European Parliament. He has always been against our membership, so whether he was reading from a brief or had devised an ingenious one of his own I am not sure. He said that direct elections to the European Parliament would direct so much attention to what was going on there that it would make it easier for this Parliament to control it. That was about the daftest argument for direct elections to the European Parliament that I have ever heard.
      Mr. Mikardo: The hon. Member for Rushcliffe (Mr. Clarke) has not faced the challenge of the point put to him about the dichotomy that he has created. He said that a Minister who was a member of the Council of Ministers would continue to have the same accountability to the House of Commons as he has now, but then he said that the whole thing would be more democratic if, in addition, he was responsible and accountable to the European Parliament. Let us suppose that the House of Commons says to a Minister "We want you to reduce taxation" and the European Parliament says to members of the Council of Ministers "We want to increase taxation". What does the Minister do?
      Mr. Clarke: Taxation is a very long way ahead. At the moment, neither body has taxing powers. However, I shall answer the hon. Gentleman in this way on his general point. The weakness is in our present situation. The dichotomy exists. It is a weakness which the hon. Member for Bethnal Green and Bow (Mr. Mikardo) and his hon. Friends complain about frequently after 10 o'clock at night when Ministers come back here.
      As a necessary part of our entering the Community, the House has abandoned some legislative powers already. In 1972, when we passed the European Communities Act, we had the debates about the position of Ministers when it came to the Council of Ministers enacting directly applicable legislation. We have made it clear that no Minister goes to the Council of Ministers with his hands tied by this Parliament because he needs a
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      negotiating position there. In the Council of Ministers he agrees to regulations which, by an Act of the House in 1972, are directly applicable in this country and form part of our law without any further parliamentary steps. When he comes back here, all that he can do, as one member of the Council of Ministers which took that decision, is to answer to individual Members of Parliament.
      When we look at the fears about the powers of the European Parliament, we should bear in mind the important starting point that the House has surrendered to the Council of Ministers the key power of all—legislative power—for what the vast majority of right hon. and hon. Members in 1972 accepted were good reasons. The House is now taking the democratic step of going on from that and saying "Because we have surrendered that power to the Council of Ministers, we ought to have a directly elected body to which the Council of Ministers is responsible". That is a view that I should like to see extended. If the Foreign Secretary manages to put his new clause in order and got it selected for debate, I hope that it will not do anything to inhibit that view.
      8.30 p.m.
      I shall discuss with my hon. Friend the Member for Plymouth, Sutton (Mr. Clark) what the Assembly does and what its powers are. It has a weakness in the field of legislation which should be closed. It is consulted on regulations at an early stage and submits amendments to the Commission. It cannot insist on those amendments, but the Commission normally accepts them. It has no powers and is not consulted again over the final draft which the Commission puts to the Council, which the Council can enact without further recourse to the Parliament. I should like to see the European Parliament have stronger legislative powers.
      An additional legislative step that the Community will have to have is that, when the Council has agreed on a regulation which shall be directly applicable, it should not be enacted unless a majority of the European Parliament, acting as a second House, also approves it. I do not see what we have to fear from that. The House of Commons does not have any rival powers of this sort, since it gave them up under the 1972 Act.

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      It would mean that a body of people, elected as we are and representing their constituents, would be a constant check on the powers already exercised by the Council of Ministers. Therefore, I do not understand the fears that have been expressed. I should have thought that those taking part in the debate would be more fearful than I am of the power exercised in Strasbourg and Brussels. By suggesting more legislative powers for the Parliament, we are providing an extra democratic check on the Community's institutions and making sure that the power of the Council of Ministers is confined.
      The assurance that has been given is that if we move in that direction an Act of Parliament will be required. I cannot understand that. It has not been the Government's policy until very recently. Very important changes have already been made in the powers of the European Parliament since we joined the Community. It has been given all the budgetary powers it wants as a result of the 1975 Treaty. Those provisions went through this House on an order after 10 o'clock at night under the present Government.
      The only people who want an Act of Parliament comprise that body of right hon. and hon. Members who attend every debate on the EEC and who want to overturn the whole of the 1972 Act and our membership of the Community. The same hon. Members continually turn out. I cannot understand why, merely as a result of the Delphic letter from the Prime Minister to the Labour Party, Ministers suddenly feel it necessary to say that we should have another Act, when the one significant change that might require minor amendment of the Treaty is the provision of extra legislative powers to the European Parliament. The same arguments were advanced during debates on the 1972 Act, which had a huge majority on Second Reading, as did this Bill. If we have another Act of Parliament every time the Parliament seeks an extension of its powers, we shall only be giving an opening to those hon. Members who wish to put another spanner in the works, such as the right hon. Members for Down, South (Mr. Powell), and Battersea, North (Mr. Jay) and the hon. Member for Newham, South (Mr.
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      Spearing). They are clearly capable of speaking at interminable length and using every outdated device of the House to stop any legislation being passed.
      I do not see anything fearful in increased powers for the European Parliament. This is an opportunity to try to improve the democracy of the European Community. I am sorry that this matter is being handled by a Government who are in such a mess with their supporters, the Parliamentary Labour Party and the party conference, that they so mishandle things and disappoint our partners in Europe who are waiting for direct elections.
      Mr. Spearing: The hon. Member for Rushcliffe (Mr. Clarke) is a consistent speaker. I will at least say for him that he has openly set out his views about European union. He believes that the important powers should go to the European Assembly, the so-called Parliament, from this place. He believes that the Assembly should have powers of legislation and powers over the budget, and that this House should be only the second check on the Council of Ministers. I suppose that we should acknowledge a new kind of Unionist here, a European Unionist. The hon. Gentleman is a European Unionist. He has made no bones about it.
      The hon. Gentleman has every right to express his views, but he might not do so for too long, for every potential voter in his constituency will know that they are his views, and I am not sure that everyone who has already voted for him would go with him down that road. The hon. Gentleman asked why, when we have had only definition of treaties orders, the Government must pledge themselves to a new Act to provide further powers for the Assembly. It is because although the Government are trying to say "The Assembly is only a talking shop. It does not really forward European unionism, and to guarantee that it does not we shall tell the House that there will be an Act of Parliament before any future powers are given.", they are having to yield to the pressures of people inside the EEC to move towards that very thing.
      I want to take up what the hon. Gentleman said about the powers of the Assembly and to answer some of the questions

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      of the hon. Member for Plymouth, Sutton (Mr. Clarke). I do not intend to speak for hours, but I want to give the Committee some information that it has not yet had. So far in the Bill we are not allowed to write in the responsibilities of those elected under its provisions. I make no comment on the Chair's rulings, Mr. Murton, because you can only go by precedent. But if the Bill has been drafted in such a way that the insertion of clauses about the duties and responsibilities of elected Members has been deliberately excluded by those who drafted it, that matter should be noted.
      I wish to speak about the powers of the representatives of the people, who are mentioned in the clause. Money and the budget are the centre of power. One of the powers that the new elected Assemblymen will have is over the budget of the European Communities. As we know from our own history, power over the budget means power of bargaining over a whole range of other matters, in particular the informal and de facto procedures that are adopted in relation to the Executive.
      The hon. Member for Rushclitie said that the Assemblymen did not have power of taxation. The budget is produced by the Commission and passed by the Council, and if they enlarge the Communities budget, the Communities must find that money from somewhere. Therefore, in effect the powers of taxation are very much with the existing Council and within the powers of the Assembly.
      The new powers of the Assembly in relation to the budget are in the new Article 203 of the Treaty of Rome, which was debated in the House on 8th and 9th December 1975 as part of Cmnd. 6252. In it are set out at fair length the new powers of the Assembly over the budget. I am tempted to read it into the Official Report in full, because it is clear from answers to questions that I have put to the Government that the new Article 203 is not being sent to Government Departments to stick in their copies of the treaty. To the best of my knowledge, it has not been altered in the Library of this House either.
      Anybody wanting to know what were the powers of the Assembly—or the "no existing powers" of the Assembly as
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      the Prime Minister put it in his speech last summer—would not be able to find them in existing books of reference, but only by looking at Cmnd. 6252 and 6282, which did not appear on the Order Paper of the House and which do not appear in the Journals although they were approved by the House on 7th, 8th and 9th December 1975.
      8.45 p.m.
      We are not dealing with trickery—and I say this particularly to my right hon. Friend the Member for Fulham (Mr. Stewart)—and we are not accusing anyone of such a thing. It is just that all these things happen to be clandestine in a most unfortunate way. The same thing will happen tonight, because we have two Command Papers before us, Command 2619 and 2911, which refer to Greece and Turkey, but the matter will not appear on the Order Paper of the House. Will the Leader of the House do something about that?
      I return to the budget. Paragraph 8 of this new Article 203 states:
      "However, the Assembly, acting by a mapority of its members and two-thirds of the votes cast, may if there are important reasons reject the draft budget and ask for a new draft to be submitted to it."
      That is put in to follow all the backwards and forwards procedure between the Assembly and the Council on the first draft budget. There are seven paragraphs on the provision referring to this conciliation procedure, which has been adopted informally, for use in arbitration in disputes between the Council and the Assembly when they cannot agree on the Budget. My hon. Friend the Member for Bolsover (Mr. Skinner) has asked me to explain. Paragraph 4 says:
      "The draft budget shall be placed before the Assembly not later than 5 October of the year preceding the year that in which the budget is to be implemented."
      Paragraph 5 says:
      "After discussing the draft budget with the Commission and, where appropriate, with the other institutions concerned, the Council shall act under
      the following conditions".
      There follows a whole lot about the qualified majorities that the Council can use to modify suggestions from the Assembly and modifications proposed by the Assembly with the effect of increasing the total expenditure of an institution. The Council may, acting by qualified majority,

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      accept those proposed modifications. In the absence of a decision to accept a proposed modification, the Budget shall stand as rejected. After 15 days, if the draft budget has been placed before the Council and has not been modified by the Council, it shall be deemed to have been adopted.
      The Chairman: I know of the great enthusiasm of the hon. Member for Newham, South (Mr. Spearing) in this matter but he is going deeply into detail in his explanation of it.
      Mr. Ron Thomas: It is important.
      The Chairman: I agree, but I do not know whether the Committee would wish to hear it in such detail as the hon. Member for Newham, South has propounded.
      Mr. Spearing: I take the point, but I shall proceed because it is important that people should know—and that it should be put on the record—of these powers which, for reasons of procedure, are clandestine and unknown. They refer to the very things that an elected Assemblyman will be able to do, and that is what the hon. Member for Sutton was asking about.
      We are fortunate in having a document which has been produced by the Directorate-General for Research and Documentation of the European Commission. Sub-paragraph 5 on page 18 says that if this procedure has been completed,
      "the President of the Parliament declares that the budget has been finally adopted unless the draft budget as a whole has been rejected by the Parliament acting by a majority of its Members and two thirds of the votes cast."
      In other words, in an official document of the European Parliament we are told that, after all this complicated backwards and forwards procedure, the Assembly could still reject the budget acting by a majority of members and two-thirds of the votes passed.
      Up to now people have said "What sort of sanction is that? It is no real sanction at all because, like this House not passing a Finance Bill, no Assembly would do that." It would mean that the machinery for the following year could come to a halt. It would be a blunderbuss, like dismissing the Commission, and no Assembly would dare to use it. That has always been my interpretation of the matter.
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      Not long ago another booklet was produced by the London information office of the European Parliament. It was called "Powers of the European Parliament". That went further and I must quote what it says, because it may be wrong. If it is wrong, I hope that the Minister will tell us, but, as it comes from such a source, I suspect that it is not It is said:
      "Parliament has the power to reject the whole budget, compulsory and non-compulsory, 'if there are substantial reasons for such rejection'. This power is often considered of little value, particularly as its use would merely mean that expenditure was 'frozen' at the previous year's levels".
      I emphasise the words "merely mean", because it is not a question of "merely" at all. It means that if the Assembly rejects the budget under the new Article 203—and clearly it has power to do so—instead of stopping the whole thing, as would happen if we failed to pass a Finance Bill and the Government fell, the Community would simply go on spending as under the previous budget.
      In other words, this is a sanction which the Assembly, elected or even as it is today, can wield very effectively, because it can say to the Council "We can control the change from last year's budget to this year's budget, and if you and the Commission do not do what we want, as long as we get a two-thirds majority of the votes cast, we will throw out every budget until we get what we want in other respects, either in respect of the budget or of any other powers".
      8.45 p.m.
      This is perhaps a new element in the argument, because the Prime Minister has told us time and again that the existing powers do not amount to very much—providing opportunities for comment, perhaps dismissing the whole Commission at once, which is the blunderbuss, since it can be reappointed the next day by the Council. However, if we are to take the statement of the information office of the European Parliament at its face value, there is a new weapon which the elected Assembly would have.
      Clearly Lord Gladwyn thinks that such power would be important. He wrote a letter to the Daily Telegraph on 14th October saying:
      "I see the new Assembly, in fruitful co-operation with the Commission, submitting by

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      the requisite majority, sensible and constructive proposals in all spheres to the Ministers who will, in the nature of things, find it increasingly difficult to turn them down."
      If they have the veto over the budget and can use it effectively, they will say to the Council of Ministers—perhaps not openly, but we know how things happen in politics—"If you do not pass this proposal of the Commission, we will see whether we can stop the budget and freeze it at last year's amounts". I can think of half a dozen hon. Members who would use such a power very effectively, indeed.
      Can my hon. Friend the Minister confirm that that is the power which the Assembly would have? If he can, does he think that the purpose of the Prime Minister's phrase "the existing powers" is to encourage us to go ahead? It is felt that there will be the emergence in the Assembly not of national groupings but of national parties. I am sorry that the right lion. Member for Devon, North (Mr. Thorpe) has left the Chamber, because there was a cutting from Agence Internationale D'Information pour la Presse giving reports of Liberal and Democratic parties' conventions. It refers to the Liberal convention agreeing a European union and having
      "a democratic constitution based on the division of powers, majority decisions, and the protection of minorities".
      Apparently the convention of Liberal Parties in the Community agrees with that. Under the headline
      "Tindemans leads new EEC party",
      The Guardian stated on 9th July 1976 that the European political parties—note that—had a task to perform consisting in bridging
      "the gap between the hopes … of public opinion"
      and the powerlessness of Governments to transform such hopes into concrete political policies.
      Finally, I wish to quote Mr. Max van der Stoel, speaking at the ceremony attending the signing of the so-called decision in December 1976. He said:
      "For the first time, the people of Europe will be called on to elect their representatives, to choose between the differnt forms of society put before them and hence to give impetus to the development of Community action…It is a logical extension of the democratic principles adhered to by our peoples that the citizens of Europe themselves should indicate
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      the manner in which these objectives are to be achieved."
      If we agree to Clause I so that we may elect the so-called representatives of the people, we shall put in the hands of those elected representatives an exteremly effective weapon over any expansion or change in the budgets of the European Communities and we shall also project them into an arena in which the emergence of a European party is not only a probability, but is already happening.
      I hope that the Minister will say why he believes that the election of representatives to an Assembly with the existing powers is not a step towards a new unitary State.
      Mr. Roger Moate: The hon. Member for Newham, South (Mr. Spearing) commented on the constituency and clarity of the arguments put forward by my hon. Friend the Member for Rushcliffe (Mr. Clarke). I concur in that view. For my hon. Friend the situation is simple, because he openly and clearly espouses the federalist cause, to put the matter in the shorthand, if inaccurate, form. My hon. Friend said that he regarded direct elections as a stepping stone towards a stronger Parliament, a European union and a federal Europe. He put the matter clearly and nobody could fail to understand or appreciate his argument. For anybody who believes in the federal cause and a stronger Europe, direct elections are an essential stepping stone towards that goal.
      What is harder to understand is the argument advanced by those who do not see the matter in those terms, but who support the basic principle that we should have direct elections. I have not heard from those who represent the majority in this House the fundamental reasons why that argument should be put forward. I have not heard one convincing reason how this will benefit the British people. We have heard some arguments, but they have not dealt with the benefits, if any, to the British people.
      The general argument is shat we should uphold the commitment entered into by the Heads of Government. That is not a convincing reason for major constitutional change. It has become clear that there is no fundamental treaty obligation in respect of our proceeding to direct elections. Furthermore, there is no

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      electoral reason, because it was not a specific promise or contained in the mandate secured in the referendum.
      The only continuing argument put forward is that we should upset our Community partners if we did not proceed and that we should somehow dishonour the Prime Minister's commitments. I do not find that argument convincing. It is up to the supporters of this proposition to explain to the British people how they will be better off if we have directly elected Members of the European Assembly.
      We are constantly told that such a system will be more democratic. My understanding of democracy is that in some way it gives power to the people. It might be that it is only periodically that they can exercise that power, but it is one that they can exercise. There are very few hon. Members who are not deeply conscious of the fact that at a certain time they will return to their electors and ask for a renewed mandate. That mandate is by no means secure.
      In my view, that will not be the position of a Member of an elected Assembly who represents perhaps half a million electors if we have the first-past-the-post system, or a Member who is one of 12 or 14 Members who represent many millions of electors. The individual Member will be almost unknown to his electors and there will be no sense of direct responsibility to the individual elector.
      I think that the position was best explained by the Prime Minister. I have a quotation from the speech that he made at Portsmouth in 1971. I am glad to see that the Minister of State, Foreign and Commonwealth Office is on the Government Front Bench, because the hon. Gentleman will probably remember the speech. It might even be that he agreed with it when it was made. I hope that he agrees with it now, but his position is somewhat different. The Prime Minister said:
      "It will be no use British electors coming to the candidates for a Westminster parliament and complaining about prices or unemployment. Those candidates will reply that it has nothing to do with them. They would have no more control over these matters than does the present Hampshire County Council.
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      'Take it up with the European Parliament' they will say, 'and the best of British luck, because our representatives are in a permanent minority there.'
      'Federalism will mean the surrender of vital decisions to a parliament the British cannot dismiss'."
      That is a significant quotation in a number of ways. It is significant because at that time the Prime Minister saw a Parliament only in the context of a federal Europe. That is the first and significant point.
      The other significant point is the use of the phrase "the British cannot dismiss". All that the creation of an elected Assembly will do is to create a sense of impotence among the British people, a sense of frustration. If that Assembly should take some decision with which we disagree, our Members will be in a permanent minority. What use will it be for electors to say "I shall reject the Member"? That will make not a scrap of difference to the make-up of the total Assembly.
      If one believes in a unitary State of Europe, a federal Europe, that is no problem. In that case one is prepared to accept the global decision of the European States collectively. However, we have been told by many distinguished Members of this place, Members on both sides of the Chamber, that we are not moving towards a federal Europe.
      That brings me to what I regard as a fundamental dilemma. My hon. Friend the Member for Rushcliffe argues for federalism. My hon. Friend might feel a little disappointed and dismayed to sense that he is in a small minority in the House as hon. Member after hon. Member from positions of power and responsibility have said that they are not interested in a federal Europe. However, I suspect that he does not feel at all disappointed. Although the argument might be going against him, the vote goes with him. Every time that hon. Members say that we are not moving towards a federal structure, we still take the necessary steps towards it. That is the dilemma.
      The Prime Minister says that on no account shall we move to a federal Europe. He says that on no account shall we allow the European Assembly extra powers with a specific Act of this Parliament. However, while those things are being said the necessary pre-requisite towards the creation of a federal Europe

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      is taking place. My hon. Friend the Member for Rushcliffe and those of my hon. Friends who agree with him are happy. They should be quite content.
      What will happen? It is possible that in a year or two we shall receive another proposal for an Act of Parliament to extend the powers of the European Assembly. No doubt we shall be told the same story. We shall probably be told "All this was implicit. Why do you think that we set up the Assembly if we were not to give it more powers?" Later we shall be given the same story about economic and monetary union. We move forward step after step regardless of the assurances that we receive from the Front Benches.
      That is the problem that many of us face. We sense in the debates that there is a general acceptance of our membership of the Community. Some might like it and others might not, but we are arguing in this way simply because direct elections have now been brought forward. Were it not for that, I believe that the Common Market argument might well have almost disappeared in this country, at least for the time being.
      9 p.m.
      Mr. Skinner: Is the hon. Gentleman aware that only a few months ago, before Second Reading of the Bill in the last Session, opinion polls were taken in South-West England and in the Gloucestershire area the results of which indicated not only that there was great opposition to direct elections but that an overwhelming majority wanted Britain to be taken out of the Common Market? The hon. Gentleman should bear in mind that there will always be a large percentage of people in the United Kingdom who, irrespective of what happens to this Bill, will be battling to get Britain out of the EEC, and I shall be one of them.
      Mr. Moate: The hon. Gentleman is welcome to his view. We shared opposition to the Community. But there was a referendum, and some of us feel that we must accept the result of it.
      Mr. Skinner: On that point—
      Mr. Moate: I shall not give way. I must continue. I was about to say subject, as the Government have said, to the continuing assent of Parliament.
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      We now have opportunities to mould the future of the Community. It can change its nature. Enlargement of the Community could ensure that it is a community of nation States. We could extend our powers of scrutiny to exercise greater control over the Community and make it more to our liking. But the possibility of getting a consensus and of shaping it as I believe the British people would want it is being sabotaged by the introduction of Bills such as this.
      Legislation to introduce direct elections is an essential step towards a federal Europe. It will revive arguments about federalism. Therefore, it will revive old arguments about membership of the Community. I believe that would be destructive of British membership in that sense.
      The Government have said that they will introduce a clause which might be helpful, but it will be a very modest step. I should be more convinced if we had seen the Government's proposal to exercise real power of control over Community legislation.
      My hon. Friend the Member for Rushcliffe made a great point about our inability to control Community legislation. Indeed, he said that he joined forces with those who thought that it was unsatisfactory. My hon. Friend implied that there was nothing that we could do about it and that therefore we had to extend the powers of the Assembly to exercise the control that we could not exercise.
      We can exercise that control. We could tie our Ministers' hands and feet in most matters, if we so wished, except perhaps with regard to pre-accession obligations. We have the power to exercise tighter scrutiny, to control the Executive and to control our Ministers in the Council of Ministers.
      At the moment we do not choose to exercise that power. I think that my hon. Friend the Member for Rushcliffe is perhaps deceiving himself over these matters. I am sure that he knows that, by exaggerating our difficulties regarding the exercise of control, he is thereby trying to justify direct elections. It is not necessary. This Parliament ought to have power to exercise proper jurisdiction over all Ministers and it should have the will to do so.

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      The Government have promised certain proposals. Let us see those proposals. If we can exercise proper control from Westminster, I do not believe that we shall need directly elected Members of the Assembly.
      The present system might be slightly inconvenient to hon. Members who are sent to the Assembly. However, we do not detect any lack of willingness on their part to go there. The present system is better than the proposal for directly elected Members of the Assembly. If we have Members going to Strasbourg, or wherever, who are deeply rooted in this Parliament, I believe that they will more truly represent the people of this country than would directly elected Members under any other system. I do not think that we have yet heard a true justification of direct elections. On that basis, I hope that Clause 1 will not stand part of the Bill.
      Mr. Ron Thomas: I hope that the hon. Member for Faversham (Mr. Moate) was not suggesting that, irrespective of the consequences which flowed from the referendum, the British people for ever and a day must automatically, by the law of God or some power greater than God, remain in the European Community.
      I shall not develop a long argument about the conduct of the referendum and the consequent distortions. It was suggested that if we did not stay in the Common Market we would suffer from inflation, unemployment, lack of capital investment in British industry and so on. I shall not even comment on the vast sums that were paid out by big business in a form of bribery during the referendum.
      I understand that the hon. Member for Faversham means that this is simply a matter of degree. He does not say as I do that membership of the Common Market has been an unmitigated disaster for the British people but simply that it has been a disaster. The British people do not accept that there will not be another opportunity to decide whether to stay in or come out.
      The hon. Member also hinted at something else. He hinted that the pro-Europeans are trying their best to focus our attention on the direct elections issue for two reasons—first, to hide the clear, unmitigated
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      disaster that membership has meant to the British people and, secondly, to suggest that it would not be the unmitigated disaster that it has turned out to be if we had had the proposals in this legislation.
      The hon. Member for Faversham said that the hon. Member for Rushcliffe (Mr. Clarke) had been honest to the Committee in saying that he wanted to see a federal Europe. I do not believe that he was sufficiently honest with the Committee, because those who believe in a federal Europe should be honest enough to say that one can give power to a European Parliament only at the expense of the power which is already exercised by all the national Parliaments. The hon. Member attempted to ride two horses. To say that the Council of Ministers can be answerable both to an elected European Assembly and to the House of Commons is unacceptable, and the hon. Member knows it.
      Let us take value added tax, for in-instance. Is the hon. Member suggesting that a Minister could discuss an increase in VAT with the Council of Ministers, having borne in mind the views of our Government and the House, and then go to the Assembly, which might suggest a different line? What would he do? Would he trot between each of these institutions? Would he be like some kind of conciliator in an industrial dispute? The hon. Member for Rushcliffe was not being honest about federalism. However we juggle the figures, there is a total amount of power that can be exercised, whoever exercises it. If more power is exercised in an elected European Assembly, ipso facto less power can be exercised in the House of Commons.
      A federalist believes that less power should be exercised here and more power in the European or federal institutions.
      Mr. Kenneth Clarke: I do not wish to go into the question of whether I am a federalist. Does the hon. Member realise that a Minister could, if he wished, go to the Council of Ministers and agree to a harmonisation of VAT without reference to the House of Commons? If he agreed to a directly-applicable regulation, the House would have no powers, but I am sure he would not agree unless he felt safe about the response that he would

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      receive from the House. If such an agreement were made, the Council of Ministers would have to go to the European Parliament for its consent.
      Mr. Thomas: I go so far as to say that there has been a mixed form of control over Ministers who have gone to the Council of Ministers. The Minister of Agriculture, for example, has taken careful note of what the House has said and on the majority of occasions has pursued the line advocated by the House. But if the hon. Member wants real democratic control over the Council of Ministers, let us have it here. I will support that. Let us unite and ensure that our Ministers who go to Europe are mandated in a proper fashion by the House and are made to carry out its policies. That would be far better than handing the whole issue over, as the hon. Member for Rushcliffe is suggesting, to some kind of European federal Parliament.
      Mr. Kenneth Clarke: The German and Italian Ministers of Agriculture can never be made answerable to this House in the way in which the hon. Member wishes. Any Minister going from the House of Commons must make concessions in the agreements he reaches with Ministers from other member countries. Equally, they must make concessions too. But they disperse and return to their respective Parliaments after they have agreed to binding regulations. They then come under pressure. But that can never be as effective as having all the Ministers answerable as a body to one Parliament.
      Mr. Thomas: If a Minister goes from the House of Commons to the Council of Ministers and is adamant in advancing the view of the House, major decisions will not be taken against us. Our Minister has the power to veto those decisions.
      Mr. Budgen: Will the hon. Member reconsider his remark that any power taken by the European Assembly would be at the expense of national Parliaments? It might not be at the expense of national Parliaments. It might be at the expense of national individuals. We might find that we have not only too much government from Westminster but too much government from the European institutions.
      Mr. Thomas: I agree with the hon. Member only to the extent that I do not believe that we have enough of the right kind of government from Westminster.
      My right hon. Friend the Member for Fulham (Mr. Stewart), in response to a comment by the right hon. Member for Down, South (Mr. Powell), seemed to say that what we are discussing in terms of how representatives to the Assembly will be weighted in accordance with the country from which they come is a matter partly of logic and partly of imagination. It reminded me of the theory and knowledge of Leibnitz, who devised a wonderful theory of knowledge but then found that he had a gap. He filled that gap with God and the circle was completed. It is dangerous to say that logic can take us so far and that our imagination enables us to complete the circle. It is dangerous to say "If you have not got the same imagination as I have, that is just too bad." That is hardly the kind of thing that I could go along with.
      9.15 p.m.
      Mr. Skinner: It could be said about the Vietnam war as well.
      Mr. Thomas: Indeed. One of the important aspects raised by the right hon. Member for Down, South, which was not answered by my right hon. Friend the Member for Fulham, was in terms not so much of the logic as of the democracy of the way it has been decided that the countries will have a particular weight of representation in the European Assembly. As the right hon. Member quite rightly pointed out, the myth has been created that at some stage we shall be going into a system of democratic elections. That myth is being created by the pro-Marketeers.
      It seems to me that these particular weights do not flow from any kind of democracy or from any attempt to inject democracy. As far as I can judge, they flow simply from the same kind of weighting as we had under the customs union, where one had qualified majorities or unanimous majorities and so on and the different countries were given different numbers of votes. I think that they were arrived at simply so that one juggles around with the figures, so that three of the countries which have 81 votes stand together as against one of the countries

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      with 81 votes and some with a number of other votes and so on. They have simply been weighted for that particular purpose. But they owe nothing to democracy whatsoever.
      My hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) was absolutely right when he said that if Luxembourg is to have six representatives the United Kingdom should have about 800. That would be the logic in terms of democracy.
      Mr. Neil Marten: At £225,000 a year.
      Mr. Thomas: It would seem that we have got to give up logic in terms of democracy and use a bit of anti-democratic imagination. One could trace a nice bit of Hegel or someone else in that.
      My hon. Friend the Member for Southampton, Test (Mr. Gould) demolished the other points that were made about democracy. He was absolutely right, in my judgment, when he said that democracy is about exercising power. But perhaps, at a lower level, I would question how one can have democratic elections or how one can call them democratic elections when one cannot tell the people who are involved in those elections what will be the functions and responsibilities of those elected. What kind of democracy is that? Could my hon. Friends here imagine a trade union branch saying "We are going to elect"—we can think of a title—"a secretary/chairman or secretary/chairman/treasurer." Somebody says "What exactly are his powers and responsibilities before we seek nominations?" We say "Sorry, we cannot tell you what they are. We do not know what they are." If that is a form of democracy, heaven help us.
      The Minister of State, in his speech on 1st December, kept telling us that these people are going to do nothing. So that is our answer. We have got to go to our constituents and say "This is a bit of democracy that you are going to have. You are going to elect people to do nothing, and we are going to pay them £500 a week for doing it." I wonder what our constituents would make of that.
      Let us make up our minds. Certainly the members of the European Movement have made up their minds. They are not
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      advocating, as the right hon. Member for Down, South was emphasising,
      "representatives of the people of the United Kingdom."
      The European Movement does not think in those terms at all. Facts, which is its journal, which is a euphemism for being Euro-fanatics says in the December issue:
      "we must secure the return of candidates who are wholehearted believers in European unity."
      It goes on to make the point that it wants to see European parliamentarians and not representatives of the national States. We are embarking on an exercise to elect either the most expensive talking shop ever devised or, as the European Movement honestly proclaims, a group of people who will gradually extend the notion of federalism and a United States of Europe. That is what it is all about.
      My hon. Friend the Minister of State, speaking to the amendment to Clause 1, failed to see the distinction that we want to see in the Government's new clause. Or perhaps I should say that he saw it but was not prepared to admit it. We were saying that it was not a question of assurances about encroachment on or erosion of the sovereignty of this Parliament. That, to some extent, has already taken place. In terms of the Community budget, we are suddenly told that the Council of Ministers, after discussion with the European Parliament, demands that we pay in the value added tax revenues even before we collect them. One can think of many other examples. But there is a complete distinction between the erosion of the sovereignty of the House of Commons and an extension of the powers of the European Assembly.
      We want to see in the Government's new clause clear and precise wording which says that there will be no extension whatever of the powers of the Assembly without a Bill being brought before the House to be debated and voted upon. I am surprised that the Government have not, over the past 10 days, been able to bring forward their new clause. It is strange that it is not on the Amendment Paper. There should be no difficulty about the wording. We could soon tell the Government that.
      Mr. Skinner: It is rumoured, not a million miles from here, that the main reason why the clause has not yet come

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      forward concerns the Liberal Party. We are shortly to take a decision on bringing forward Clause 3 before Clause 2. That was arranged secretly between the Government and the Liberals several days ago—indeed, on the very same day as the Government refused to give way on the amendment to Clause 1. Meantime, the Liberals are refusing to allow the Government—that is how much power they have—to deal with the matter to which my hon. Friend is referring. This is the real question that we have to face. The Liberal Party is dominating the Government on this issue. In addition, it is trying to dragoon Labour Members against the Common Market into the Lobby tomorrow behind the Prime Minister. That is how much power the Liberals have, and that is why my hon. Friend is in such a dilemma on this matter.
      Mr. Thomas: Is my hon. Friend asking me to believe that the Liberals, who have not been here for at least three or four hours, have that kind of influence outside the Chamber—some magical influence on the Government? If that is the situation, many of us feel that it is rather disastrous.
      Mr. Martin Flannery: Remote control.
      Mr. Thomas: As so many of my hon. Friends have emphasised time and time again, there was no mandate whatsoever for this legislation in either the "Yes" document or the other document that was put out by the Government at the time of the referendum. There has been no mandate from the British people for the direct elections Bill. There is no obligation under the Rome Treaty concerning direct elections or, indeed, for having direct elections by any particular date. Moreover, I remind the Government Front Bench that the Labour Party at conference after conference has made its position quite clear. It is opposed to the concept of direct elections and opposed to the development of a federal Europe which will flow from those direct elections.
      If my hon. Friend the Member for Bolsover (Mr. Skinner) is right in suggesting that a tiny hand-full of Liberals are able to persuade a majority of a Labour Cabinet to go
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      ahead with a piece of legislation which has no mandate from the people, which is not asked for in the Treaty of Rome and which, above all else, is in complete and utter contradiction to the will of the Labour Party and the Labour movement, then indeed we have reached a very sorry state of affairs.
      Mr. Stan Thorne: It is not my intention to repeat points already made by my hon. Friend the Member for Newham, South (Mr. Spearing) and the hon. Member for Faversham (Mr. Moate), but they both dealt with matters which caused me some concern on reading Clause 1.
      The first two words, for example, raise questions in one's mind. Some time could be usefully spent in considering what is meant by "representatives". Most hon. Members are in the same position as myself, representing about 38 per cent. of the electorate in their constituencies. The other 62 per cent. either voted for the other parties or failed to vote at all. Our representative character, therefore, is somewhat diminished in that regard.
      When we become Members of the House of Commons, we lean on certain other Members for their expertise in certain areas. This may be true on the subject of the European Economic Community, on which we have a tendency to rejoice from time to time in the words of my hon. Friend the Member for Newham, South. I take the view, therefore, that in certain matters we are representative, but not in any full sense of the word. I am not suggesting that we should substitute the word "delegate", but it is interesting to ask in what sense we would be representing the people of the United Kingdom in a European Assembly.
      When I consider that question, I am reminded of the events of only a few days ago in my constituency. There was a Lancashire County Council by-election in Preston. Presumably it took place on the basis of representative democracy, as envisaged in Clause 1, but when we consider adopting the concept of democracy, advanced by the hon. Member for Faversham, as being people's power, we have to ask certain questions. If only 29 per cent. of the electorate considered it appropriate to vote in that election, to what extent was power being exercised by the people? It was being exercised by a minority of the people. That

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      is one of the dangers which always exist in societies.
      When we use the term "democracy" we should talk about informed democracies and ignorant democracies. It seems to me that we cannot have democratic participation in politics unless the people are informed about the issues on which they are going to take a decision in some form of election.
      9.30 p.m.
      It is interesting to report that during the election for the Lancashire County Council I was able to spend some time canvassing. Most hon. Members will not be surprised to learn that not one single person asked me what I was doing to ensure that we had early elections to the European Assembly. Most of them raised the question of prices, the question of unemployment, and the question of the closing of the textile mill in the constituency, and what we were doing about that as their representatives in this body which they believe is responsible for taking decisions. They raised the question of housing because there is a major housing problem in Preston. They also asked about the Health Service and the inadequacy of the provisions that are made therein. They also pointed to the absence of certain community facilities.
      In all this one got the feeling that these people wanted to participate in decision making with regard to the sort of community in which they lived. They clearly could not see that community as part of a European situation. With regard to the problems that I have referred to—their community, their housing, their health, their schools and their unemployment—they are quite convinced that the decision makers are in this Chamber or in the local authority offices. Often they felt that both bodies were too far removed from them in terms of making representations about the decisions those bodies were making.
      Mr. Marten: Returning to the question of representation, and so on, does the hon. Gentleman recall the speech of my hon. Friend the Member for Bute and North Ayrshire (Mr. Corrie) in the European Assembly on 20th April 1977 when he criticised the present Minister of Agriculture for having stood up for the housewife and the consumer with regard to the
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      Price Review? In that speech my hon. Friend said:
      "The British Minister who is President of the Council is being nationalistic and narrow-minded in his thinking. It almost makes one ashamed to be British. We in this House are Europeans, we are not nationalists."
      This is a very important point when it comes to choosing representatives, because the first question on any selection committee in a European constituency will ask is "When you get there will you stand up for the British interests or not?"
      Mr. Thorne: That is a fair comment. I can tell the hon. Gentleman that there is considerable support for the actions of the Minister of Agriculture because the Minister was acting in defence of the consumer with regard to the prices of some foods which are paid in my constituency and in Lancashire generally. To the extent that he is pursuing what they consider to be their interests in terms of prices, they are represented.
      Mrs. Elaine Kellett-Bowman: Will the hon. Gentleman explain to a fellow Lancastrian why, when canvassing in a county council election, he should be discussing Europe, anyway? In my constituency, the services of the Labour member of the council in charge of education were dispensed with. That election decided how the people of Lancaster wanted their children educated. That election was not concerned with the European Parliament
      Mr. Thorne: The last thing that I want to get involved in is the politics of Lancaster, for obvious reasons. I am concerned about the implication in Clause 1 that we shall be establishing some sort of democratic representative body which will be in the interests of the people of the United Kingdom.
      In this connection, one might be forgiven for referring to the argument put forward by Jean Jacques Rousseau that Britain has a democracy once every five years. The electorate go to the poll, they elect Members on the basis of first past the post, and the majority party forms the Government. But, thereafter, the ability of the electorate to participate democratically in the decision-making which goes on is virtually non-existent.
      One of our major problems in Britain—it is one that we face continuously,

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      even in this Parliament—is to try to get people in the localities informed about the decision-making which is going on and to try to find ways to implement the decisions which they consider relevant to the problems which they face in the communities and localities.
      Hon. Members on the Back Benches find it almost impossible to gain a point in an argument about a decision to be taken by any member of the present Government. It is a virtual impossibility. Certainly I have not yet had that experience, although other lion. Members may have.
      I noticed that my right hon. Friend the Home Secretary glanced up when I said that. I have expectations of discussing with him certain matters in the future. I hope that it will be possible to change his mind about the implementation of the immigration policies pursued at the moment by this Government, which many people in my constituency do not consider to be the sort of decisions which should emerge from the kind of representative democracy under discus sion in Clause 1 of the Bill.
      We come back to the problem of who decides the policies to be pursued. I have admitted openly—I do not think that some of my hon. Friends will quarrel with me—that we have very little effect in trying to influence decisions taken in the Committee. We may be persuaded to go to a meeting of the Parliamentary Labour Party and listen to a Front Bench spokesman saying how things ought to be done, having already produced a White Paper saying how they will be done. That does not give us any sense of representative democracy.
      If that is the true picture of what happens in this Parliament, what prospects will there be of relaying the ideas, aspirations and expectations of the people of Preston, South to a European Assembly? In what way will that Assembly be able to respond to the demands of the people of Preston?
      Dr. Colin Phipps: I agree with the point that my hon. Friend is making, particularly in respect of this Parliament. Does he agree that the fact that the European Parliament will not have an Executive which is part of that Parliament will enable individual Members of that Parliament to be a good
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      deal freer than Labour Back Benchers are in the House of Commons?
      Mr. Thorne: The essence of what my hon. Friend is saying is that the European Assembly is completely irrelevant. It will clearly not involve Members in the decision-making process on matters of broad policy that will affect the people of Britain should we become a full member of the Community. [HON. MEMBERS: "We are."] The European Commission is the decision-making body on matters of policy.
      Mr. Eric Ogden: Surely my hon. Friend is aware that Britain is a full member of the Community and has been for many years and that the British people have decided that they want to remain full members.
      Mr. Thorne: It depends on how one interprets the word "full". The majority of people in Preston wish that it were empty instead of full. They are certainly not full members in the sense that my hon. Friend the Member for Liverpool, West Derby (Mr. Ogden) may be.
      The Government must explain how people in Preston, Lancashire and the rest of the United Kingdom are to be represented in the European Assembly in a way that will permit them to influence the decisions taken in the Assembly. I am sure that my right hon. Friend the Leader of the House of Commons could give us an extremely erudite explanation of how we in this Chamber can ensure that we fulfil our rôle as representatives of the people. However, I always find it almost impossible to influence the Leader of the House and the Government about what the people in my constituency consider to be priorities.
      I may not have the eloquence of the hon. Member for Lancaster (Mrs. Kellett-Bowman) or as loud a voice as hers. I do not know whether she has a greater impact on my right hon. Friend the Leader of the House than I have.
      In an informed democracy in which people participate in making choices—in this case electing representatives to the Assembly—the electorate must be informed about the issues that the Assembly will decide. Nothing in the referendum gave the electorate a clear exposition of the rôle of the Assembly

      167
      or details of the way in which the elections to the Assembly would be conducted. They were certainly not informed about how their lives would be affected by the Assembly on matters such as housing, health, jobs and economic prospects. Many promises were made.
      My right hon. Friend the Member for Huyton (Sir H. Wilson) indicated on many occasions that membership of the EEC in some way meant that a bonanza was not far round the corner. The people in my constituency are still waiting for that bonanza. All that they have had so far are increased food prices and the feeling that the inflation from which this country has suffered is in some degree a product of our membership of the EEC. There is an increasing recognition that the pricing policies that determine the prices paid in some supermarkets are fixed by some of the multinational companies that were so anxious for Britain to become part of the EEC. I hope that I am not distracting you, Sir Myer.
      The First Deputy Chairman (Sir Myer Galpern): I have been listening carefully to what the hon. Gentleman has been saying. Unfortunately, most of it was irrelevant and out of order.
      Mr. Thorne: I am sure that if what I have been saying had been out of order, Sir Myer, you would have pointed that out to me earlier, with your usual speed.
      The First Deputy Chairman: I am in a most benevolent mood this evening.
      Mr. Thorne: I only hope that some of my right hon. and hon. Friends on the Government Front Bench are also in that sort of mood, Sir Myer.
      I understand that the Whips wish us to proceed to another vote, but other hon. Members still wish to take part in the debate. Therefore, it is only right that I should finish my speech. The very notion of our being involved in representing the people through a European Assembly seems to me a total absurdity. I am sure that we shall succeed in mobilising a substantial vote against the clause.
      9.45 p.m.
      Mr. Lee: A chance remark of my right hon. Friend the Member for Fulham (Mr.
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      Stewart) prompted me to take part in the debate. My right hon. Friend pointed rather defensively to one of the dilemmas that he said confronted the makers of that extraordinary organisation, the European Economic Community. He said that the dilemma was that if the representation of this country was made adequate in relation to that of the smaller countries, such as Luxembourg, the Assembly would be too large, and that if one tried to scale it down to avoid that but still preserve the proper respective degrees of proportion as between the larger and smaller countries, the representation of such countries as Luxembourg would disappear or would be reduced to a fraction of a person.
      I see in the Statesman's Year-Book that:
      "The European Parliament consists of 198 members delegated by the 9 national Parliaments. The EEC Treaty provides for the direct election of its members, and on 20 Sept. 1976 the Council of Ministers agreed that direct elections should be held, if possible in May or June 1978, for an enlarged Parliament of 410 seats. The Parliament has to be consulted over the annual budgets of the 3 Communities and a wide range of other matters."
      It goes on to describe the way in which, for example, the Commission can be dismissed.
      Before we decide whether it is right to allow the clause to stand part of the Bill, it must surely be right to consider what the position would be if, amongst other things, all the other members of Europe in the geographical sense were to become affiliated to this organisation. For example, what would be the representation of the Soviet Union or, to take the other extreme, of Vatican City? That might be said to be a combination of Reds and, as the hon. Member for Antrim, North (Rev. Ian Paisley) would say, red socks.
      My right hon. Friend spoke about the imaginative representation of Luxembourg. What would be the position if we were to do justice to those very small communities that might one day choose to affiliate, if San Marino, Monaco, Lichtenstein or Andorra were silly enough to do so, to take just a few examples?
      That is not the only problem. At the other end of the scale there are still quite a number of sizeable countries whose representation would be bound to

      169
      diminish our influence within the Community as the years went by. It may be said that it is unrealistic to think of the affiliation of the Soviet Union, Romania, Poland or Hungary, at any rate for many years to come, but it is possible that a less wise electorate in Norway or Sweden might one day reverse the sensible decisions taken hitherto to have nothing to do with the EEC. They might be joined in time, perhaps, by Yugoslavia. One does not know, but it is a possibility. Austria, Switzerland and Iceland are all possible candidates and every time that there was an affiliation of a fresh body of persons—to say nothing of the present three likely candidates—our ability to influence the Assembly and the strength of our so-called representation would be correspondingly reduced.
      Not a word has been said by the Minister by way of a promise that in such an eventuality there would be an attempt to increase our representation to safeguard our interests. I suspect that the reason for that is that the Government know perfectly well that we would not get a look in and that nobody would listen to us if we attempted to increase our representation so as to safeguard ourselves against dilution.
      I mention all that by way of preliminary observations, but I now turn to something that has not been mentioned so far. I left the Chamber briefly after the abysmal speech of the hon. Member for Rushcliffe (Mr. Clarke)—and I must say that anyone who is of his view about this House, who wants to see our powers siphoned away, makes we wonder why on earth he ever wanted to be elected. I would not want to be a member of an Assembly that had been whittled down in the way that the hon. Gentleman was content to envisage. I hear an hon. Friend behind me say that I should therefore vote against devolution. I hope that he will join me in voting against this Bill. At least with devolution it would remain possible for Parliament one day—should there be a change in the climate of opinion—to revoke the Assemblies by statute. However, while we are affiliated to the European Community it may well be that the time will come when it will no longer be possible for us to leave. I hope that my hon. Friend will bear that in mind. I have no particular enthusiasm for the Scotland or Wales Bills, but at
      170
      least they are somewhat less irrevocably offensive than this piece of legislation.
      All this brings me to the subject of the right hon. Member for Newham, North-East (Mr. Prentice). I am sorry that the right hon. Gentleman is not here tonight, but he has gone through two Pauline conversions during the last two years and they are the principal reason for my intervention tonight. Until March 1975 the right hon. Gentleman was a fervent anti-Marketeer. I have had all his speeches on the subject collected by the Library and I intend to send them to any Conservative association silly enough to consider selecting him and, if he is selected, to his Labour opponents, too. They are useful and powerful speeches.
      In March 1975 the right hon. Gentleman went through a peculiar emotional convolution and found himself on the side of the right hon. Member for Sidcup (Mr. Heath) and others of his ilk. A few months ago, having gone through a transitory "Taverne" phase, the right hon. Gentleman went right over and joined the Tory Party—which he was fully entitled to do. It would have been more sensible had he done that some time ago and preferably before the October 1974 election.
      I ask what would be the position of a so-called representative. If one looks at the term "representative" in the clause, one finds that he would be representing possibly 250,000 to 600,000 people. What would happen if his political beliefs underwent the kind of Pauline conversion that afflicted the right hon. Member and he gave his allegiance to the other side?
      It has always been said that Members of the House of Commons are representatives in contradistinction to delegates and that we are not mandated. I am not sure that that is entirely correct, and I should have thought that there were limits to which the properties of the situation permitted it. There have been plenty of occasions when hon. Members, having changed their political affiliation, have thought it appropriate to resign. There is the celebrated example of that remarkable political chameleon, the late Lord Jowitt, who was elected as a Liberal in 1929 and within days had accepted the post of Attorney-General in the Labour Government—not a difficult task; we have had Shawcross since then, so

      171
      anything goes. Within days he had joined the Government.
      Mrs. Kellett-Bowman: What about the history of the present time?
      Mr. Lee: Loth as I am to stop the hon. Lady's solo cabaret performance, we had better get on with discussing this subject.
      Sir William Jowitt was elected as a Liberal on 30th May 1929 and within days he had joined the Labour Party. He performed the one honourable act in the whole of his tortuous political career by promptly resigning his seat and standing for re-election. The integrity of the Preston constituency was preserved. The electors of Preston, with their usual wisdom, took a step further to the Left, at least nominally, and elected him.
      There was the example of the father of my right hon. Friend the Secretary of State for Energy, who was an advanced Liberal in the 1920s. He represented, I think, Leith, or Aberdeen, North. When he decided to join the Labour Party, he, too, honourably resigned his seat. He was not re-elected immediately; he had to wait in the wilderness for some time until he obtained another constituency for which he was elected. Therefore, the basic representational character of the constituency was preserved; its integrity was intact.
      I want to know what the Government's intentions are concerning representatives in the European Parliament. What happens if they change sides? Is it not right that we should consider the position? It is one thing for a Member to be thrown out. That has happened to all sorts of good people, including the Leader of the House. Perhaps it will happen to me before I leave Parliament if I try hard enough. It is quite another thing for a Member, putting himself forward as a representative—
      The First Deputy Chairman: Order. The hon. Gentleman is going too wide. He is discussing the morality of individuals and whether they should remain Members having changed their political allegiance. The hon. Gentleman should not go into that matter in great depth, as he is doing.
      Mr. Lee: I am not making a personal attack on the right hon. Member for Newham, North-East. He is doing the same as many others have done. I am concerned about the effect of changed political allegiance on the mandatory principle as applied to the Assembly. Nothing has been said to enlighten us on that subject. Nothing has been said by way of amendment to the Bill. No new clause has been tabled to give us instruction. How can we take action in these matters?
      The First Deputy Chairman: Order. The hon. Gentleman can do so by simply tabling a new clause or an amendment, if he desires to do so.
      Mr. Lee: In due course I shall probably manage to do just that. However, let us deal with the situation as it stands. What will be the position if we adopt this system?
      It being Ten o'clock, THE CHAIRMAN left the Chair to report Progress and ask leave to sit again.
      Committee report Progress.

  BUSINESS OF THE HOUSE
  Ordered,
  That the European Assembly Elections Bill may be proceeded with at this day's sitting, though opposed, until any hour.—[Mr. Frank R. White.]

  EUROPEAN ASSEMBLY ELECTIONS BILL
  Again considered hi Committee.
  Question again proposed, That the clause stand part of the Bill.
  Mr. Lee: I was about to consider the position in which these rootless wonders, the list Members, would have no constituents to represent, let alone be deemed to be the representatives of something. I do not know whether they are to be selected by the regional organisations or by Transport House. I suppose that nominally they would be selected by some recognised party organ.
  What has distinguished the elections of the past few years from the situation as it once was is that political parties are now part of the constitution. In the

  173
  past few years since 1970 party labels have appeared on the ballot paper. For the first lime we have given statutory recognition to the concept of a political party.
  What will be the position of a person selected by the regional organisation, let us say the Labour Party in the West Midlands, when such a person hops over the fence and becomes a Conservative or a National Fronter, for that matter. Does that mean that others will have to vet him before he is received into that party? More to the point, since he has frustrated their representation, ought they not to be given the power to present a late petition to unseat him? I understand that under the electoral law any petition to unseat a Member—and there are restricted categories for unseating—must be lodged within 28 days of elections. There may be exceptions in the case of fraud or other irregularities.
  What is the situation about the unseating of such a Member? It is something we have a right to know from the Minister. If a representatives mandate is to be exhausted, what will be the machinery to replace it should he be replaced by the party receiving it? Is there to be a special provision under the list system for the party machinery or organisation to form itself into an electoral college? If a person elected under the list system changes his party machine and is unseated, is he to be selected by the party organisation of the party into which he is received, or should there be a totally new election on a constituency basis? It is reasonable to consider that.
  The right hon. Member for Down, South (Mr. Powell) interrupted my hon. Friend the Member for Berwick and East Lothian (Mr. Mackintosh) with what I took to be a slightly satirical intervention. The right hon. Gentleman asked whether we were to pay the list Members a different salary from those who would be representing their constituents in the sense of having constituencies to look after. It is a fair point and something that we shall wish to consider. We shall have to know what we are to do about differentials.
  What is the proper remuneration and what are the proper terms of service for the Members? We should consider these matters before we go on to consider
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  the electoral system by which Members are sent to the Assembly. As yet we have had no indication.
  Sir Anthony Royle: The hon. Gentleman says "Before we go on to consider the electoral system". Surely we have been considering the electoral system for the past 10 minutes.
  Mr. Lee: I am glad that my own representative—that is not by my assistance, but he represents the place where I live—has intervened. We should consider the terms of service of the Assembly Members. What do the firemen think of the proposed remuneration of £25,000 a year?
  Mr. Skinner: No, £35,000.
  Mr. Lee: I am sorry, I did them an injustice. I undervalued them. What do the firemen think about the remuneration that is proposed for those who will go to Luxembourg? What do the miners think? Arthur Scargill will have a bonanza at the next round of the NUM Executive. It will not help the Government's incomes policy—this is a rather more serious contribution—if they are to countenance the preposterous figure that is being suggested. Surely no one could need such a salary, however selfish, wasteful and greedy is his domestic life. I hope that my hon. Friend will take up this matter when he replies.
  I hope that we shall be considering the Bill for a long time to come. I hope that May and June of next year will pass and that May and June of the following year will pass. I hope that we shall give the Bill the sort of consideration that it undoubtedly deserves.
  Mr. David Howell: You have been generous, Sir Myer, in Committee by allowing the debate to range fairly widely over a number of issues. The Committee has been able to turn its attention to almost everything, from the meaning of democracy and imagination in politics to the works of Hegel and Rousseau. That has been useful in some respects, but perhaps not in all.
  The First Deputy Chairman: It has been a little more peaceful.
  Mr. Howell: Before the Minister of State intervenes for the second time in

  175
  the debate, I shall put one question to him. Obviously he has a great many more questions to answer. I am sure that those with good will towards the Bill as a whole—I appreciate that that does not include every member of the Committee at present—will wish to see Clause 1 stay in the Bill and will support any vote on that issue. I hope that shortly there will be an opportunity to show that support.
  My question arises from earlier debates and I believe it to be important. The Foreign Secretary undertook to bring forward a new clause that would satisfy the belief that any further extension of the Assembly's powers at the expense of national Parliaments and national Governments would be itself governed by an Act of Parliament. We are looking forward to seeing such a clause. We were looking forward to seeing it 10 days ago. It would be interesting to know how the Minister is getting on with its manufacture.
  I share the view of those who remain somewhat worried about considering the clause as a whole until we know what is in the Government's mind. I understand the feelings of my hon. Friend the Member for Rushcliffe (Mr. Clarke), but I do not go along with all that he said. My hon. Friend suggested that there was no need to worry on this score and that to do so would be offensive to the whole development of the Community. I do not share that view. It would be interesting to hear something about the new clause—for instance, when it is coming, where it is coming and how it will meet the needs of the Committee as expressed in earlier debates.
  The Minister of State, Foreign and Commonwealth Office (Mr. Frank Judd): This has been an extremely interesting and searching debate. It might be helpful if I now try to deal with some of the points that have been made by hon. Members on both sides of the Committee.
  Before turning to the matters that have been raised this evening, I should like to take up one important point made by my right hon. Friend the Member for Battersea, North (Mr. Jay) after my intervention on the last occasion when debating Clause 1. My right hon. Friend asked in more detail about the relationship
  176
  between the French Overseas Departments and Territories and the European Economic Community and the differences from the United Kingdom's colonies and dependencies.
  The position of Gibraltar, the Falkland Islands, Hong Kong and Bermuda is not really analogous to that of the French Overseas Departments. The four French Overseas Departments of Martinique, Guadeloupe, Guyane and La Reunion are regarded as integral parts of the French Republic, and many of the provisions of the Treaty of Rome, including the common fisheries policy, apply to them. Moreover, they send representatives to the French National Assembly, as do the French Overseas Territories, who do not, however, enjoy the provisions of Community membership other than those of association.
  Gibraltar, the Falkland Islands, Hong Kong and Bermuda are not directly represented at Westminster or in the present European Assembly. Frankly, it is not considered appropriate that they should be included in arrangements for direct elections when in no other State will an overseas territory which does not already participate in that member State's elections be participating in such direct elections.
  Mr. Jay: Will my hon. Friend give way?
  Mr. Judd: With respect to my right hon. Friend, whom I really do respect in his interventions on these matters, there are many points with which I want to deal.
  Mr. Jay: If it is true that French territories, such as Martinique, are an integral part of France, I presume that it follows that any sea area within 200 miles of those territories is part of the 200-mile ocean zone of the EEC and that, therefore, this country would have fishing rights in those areas.
  Mr. Judd: If my right hon. Friend will study in Hansard what I have just said, he will see that I have mentioned this evening that this includes the common fisheries policy.
  My hon. Friend the Member for Birmingham, Handsworth (Mr. Lee) referred to the contentious issue of salaries. I should make it absolutely

  177
  plain that the Government understand the strong feelings on this issue not only in this Chamber, but more widely in the country. In fact, it would be no exaggeration to say that some of the speculation has been quite obscene in terms of the amount that might be paid to those fulfilling the functions of members of the European Assembly. I assure the Committee that the Government fully share this anxiety and are determined that some of the exaggerated excesses that have been mentioned shall not come to pass.
  Inevitably, there has been a good deal of concentration on the powers of the European Assembly. Indeed, the hon. Member for Guildford (Mr. Howell) has just asked about the Government's position on these matters. I assure my hon. Friend the Member for Newham. South (Mr. Spearing), who made some important points about the budgetary powers of the Assembly, the hon. Member for Faversham (Mr. Moate) and my hon. Friends the Members for Bristol, North-West (Mr. Thomas) and Preston, South (Mr. Thorne) that the points that they have made tonight will be in the Government's mind in preparing their promised new clause limiting the powers of the Assembly.
  Mr. Mikardo: Does my hon. Friend recall that in the debate on 1st December it was pointed out—I do not think that anybody disssented from the view—that it was difficult to ask Members to make up their minds whether Clause should stand part of the Bill, since it was very much affected by the text of the proposed new clause, until they had seen that text? When we were told that the Committee was not to resume for 11 days, it was assumed that the reason for the delay was that the Government were proposing to table the new clause before asking the Committee to make up its mind on Clause 1. Why has that not happened?
  10.15 p.m.
  Mr. Judd: I understand my hon. Friend's anxiety. I understand the position of all those hon. Members who, not surprisingly, want to know what the Government propose to bring forward in the new clause. I also appreciate that hon. Members do not wish to buy a pig in a poke. However, it would be wrong for the Government to rush a new clause
  178
  which did not do its best to meet the genuine anxieties of hon. Members while at the same time overcoming some of the constitutional difficulties which would be encountered in such a new clause. I hope that hon. Members will be patient for a little longer and accept the undertaking that a new clause will shortly be tabled and that it will fully meet the Committee's genuinely expressed anxieties.
  Mr. George Cunningham: Since the only reason for delay in tabling the language is concern that it might not meet all the objections, presumably there will be no difficulties in Members who are interested seeing the text as it stands in provisional form.
  Mr. Judd: I am glad that my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) has been able to join us at this late stage in the debate. We shall certainly bear in mind the points which have been made by those who have been present throughout the debate.
  In what has been an interesting debate, I am sure all would agree that the high point has been the consideration of the nature of democracy. Concern with the quality of our political system is right at the heart of the feelings and attitudes of those who have genuinely held different views on this matter. It has been refreshing tonight, in the Committee at its best, to find some of those differing views honestly and candidly expressed.
  Mr. Spearing: About five minutes ago my hon. Friend mentioned my contribution to the debate. In saying what he did about my contribution, is he confirming that my view about the powers of the Assembly and the budget is correct? Does he confirm that, provided that two-thirds of the votes are cast, it is possible for the Assembly under the new article to stop any change of the budget in the succeeding year and that, therefore, the Community has to operate within the budget for the preceding year?
  Mr. Judd: It would be a brave man who took issue with my hon. Friend. I referred to honesty and candour in which he is second to none. I am having a close look at the pamphlet from which my hon. Friend quoted. I shall write to him about its accuracy or otherwise.

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  I was dealing with the question of democracy. The right hon. Member for Down, South (Mr. Powell) in his remarks, which were dealt with interestingly and effectively by my right hon. Friend the Member for Fulham (Mr. Stewart), dwelt on the phrase "representatives of the people". This phrase reflects the language used in Article 137 of the Treaty of Rome.
  In dealing with this issue, I am sure that hon. Members will forgive me for singling out one contribution. Characteristically, my hon. Friend the Member for Southampton, Test (Mr. Gould) faced some of the most crucial issues involved in democracy. I feel as deeply as any hon. Member and I wish to make a personal contribution. We should recognise that democracy is not simply about the technique of Government. It is a guarantee of human dignity. It is an expression of faith in the creative potential of society based on the principles of individual freedom and responsibility. It is essential not to become bemused by debate and not to regard institutions as an end in themselves.
  Our institutions will be judged in history by how they enabled politicians such as ourselves to contribute effectively to the qualitative improvement of society, based as it is on these concepts of freedom and individuality. But, in moving towards this fulfilment of the spirit of democracy, accountability is essential to the whole thesis, and tonight there has been a lot of talk about accountability.
  The hon. Member for Rushcliffe (Mr. Clarke) gave us his views as a committed
  federalist. It is clear that hon. Members on both sides of the Committee respect him in his position even if they do not agree with him. He committed the error, however, of over-simplification, because he did not have time in his speech to dwell on scrutiny and its part in the whole process of accountability. One of the undertakings that I and my right hon. Friend the Leader of the House have been able to give the House is that there is searching and meaningful work now under way about the ways in which we, together with the Committees responsible for scrutiny, can improve the methods of scrutiny for the House of Commons.
  I re-emphasise the point I have made in previous contributions on this theme, which is that we may have differing views but we respect each other. The view of the Government—and history will judge whether we are right or wrong—is that the European Assembly has certain strictly defined responsibilities. My hon. Friend the Member for Newham, South has referred to some of them. We have no desire to see the powers of the Assembly increased. My right hon. Friend has given his specific undertaking to the House in that respect. What we have said, and what we stand by, is that we believe that the way in which democracy will best work within the Community is on the principle of accountability by Ministers to their own domestic Parliaments, of which the House of Commons is an outstanding example.
  Question put, That the clause stand part of the Bill:—
  The Committee divided: Ayes 219, Noes 79.

  Division No. 48]

  AYES

  [10.23 p.m.

  Abse, Leo

  Brown, Hugh D. (Provan)

  Cunningham, Dr J. (Whiteh)

  Adley, Robert

  Brown, Robert C. (Newcastle W)

  Davidson, Arthur

  Amery, Rt Hon Julian

  Buchanan-Smith, Alick

  Davies, Denzil (Llanelli)

  Anderson, Donald

  Butler, Adam (Bosworth)

  Davis, Clinton (Hackney C)

  Archer, Rt Hon Peter

  Callaghan, Jim (Middleton & P)

  Dean, Paul (N Somerset)

  Armstrong, Ernest

  Campbell, Ian

  Dempsey, James

  Atkins, Rt Hon H. (Spelthorne)

  Carlisle, Mark

  Dodsworth, Geoffrey

  Bagier, Gordon A. T.

  Cartwright, John

  Doig, Peter

  Bates, Alf

  Chalker, Mrs Lynda

  Dormand, J. D.

  Beith, A. J.

  Channon, Paul

  Douglas-Hamilton, Lord James

  Berry, Hon Anthony

  Churchill, W. S.

  Douglas-Mann, Bruce

  Bishop, Rt Hon Edward

  Clarke, Kenneth (Rushcliffe)

  Duffy, A. E. P.

  Boardman, H.

  Cocks, Rt Hon Michael (Bristol S)

  Dunn, James A.

  Booth, Rt Hon Albert

  Cohen, Stanley

  Dunnett, Jack

  Boothroyd, Miss Betty

  Coleman, Donald

  Dykes, Hugh

  Boscawen, Hon Robert

  Conlan, Bernard

  Edwards, Nicholas (Pembroke)

  Bottomley, Rt Hon Arthur

  Cooke, Robert (Bristol W)

  English, Michael

  Bottomley, Peter

  Costain, A. P.

  Ewing, Harry (Stirling)

  Boyden, James (Bish Auck)

  Cowans, Harry

  Eyre, Reginald

  Bray, Dr Jeremy

  Craig, Rt Hon W. (Belfast E)

  Fairgrieve, Russell

  Brittan, Leon

  Crawshaw, Richard

  Fitt, Gerard (Belfast W)

  Brocklebank-Fowler, C.

  Cronin, John

  Fookes, Miss Janet

  Brotherton, Michael

  Crouch, David

  Foot, Rt Hon Michael

  Ford, Ben

  MacFarquhar, Roderick

  Shepherd, Colin

  Fowler, Gerald (The Wrekin)

  MacGregor, John

  Silkin, Rt Hon S. C. (Dulwich)

  Fowler, Norman (Sutton C'f'd)

  McGuire, Michael (Ince)

  Sims, Roger

  Fox, Marcus

  MacKay, Andrew (Stechford)

  Skeet, T. H. H.

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

  MacKenzie, Rt Hon Gregor

  Small, William

  Freud, Clement

  Maclennan, Robert

  Smith, John (N anarkshire)

  Gardiner, George (Reigate)

  Magee, Bryan

  Snape, Peter

  George, Bruce

  Mallalieu, J. P. W.

  Speed, Keith

  Glyn, Dr Alan

  Marks, Kenneth

  Stallard, A. W.

  Golding, John

  Marshall, Dr Edmund (Goole)

  Stanley, John

  Gourlay, Harry

  Marshall, Jim (Leicester S)

  Steen, Anthony (Wavertree)

  Gower, Sir Raymond (Barry)

  Marshall, Michael (Arundel)

  Stewart, Rt Hon M. (Fulham)

  Grant, George (Morpeth)

  Mayhew, Patrick

  Stott, Roger

  Grant, John (Islington C)

  Meyer, Sir Anthony

  Stradling Thomas, J.

  Gray, Hamish

  Millan, Rt Hon Bruce

  Strang, Gavin

  Hamilton, James (Bothwell)

  Monro, Hector

  Summerskill, Hon Dr Shirley

  Hamilton, Michael (Salisbury)

  Montgomery, Fergus

  Tebbit, Norman

  Harper, Joseph

  Moonman, Eric

  Thompson, George

  Harrison, Rt Hon Walter

  Morrison, Charles (Devizes)

  Thorpe, Rt Hon Jeremy (N Devon)

  Haselhurst, Alan

  Morrison, Hon Peter (Chester)

  Tierney, Sydney

  Hattersley, Rt Hon Roy

  Murray, Rt Hon Ronald King

  Tinn, James

  Havers, Rt Hon Sir Michael

  Neave, Airey

  Tomlinson, John

  Heath, Rt Hon Edward

  Nelson, Anthony

  Varley, Rt Hon Eric G.

  Hodgson, Robin

  Noble, Mike

  Vaughan, Dr Gerard

  Hooson, Emlyn

  Oakes, Gordon

  Wainwright, Edwin (Dearne V)

  Horam, John

  Ogden, Eric

  Walder, David (Clitheroe)

  Howell, David (Guildford)

  Page, John (Harrow West)

  Walker, Harold (Doncaster)

  Howells, Geraint (Cardigan)

  Palmer, Arthur

  Walker, Rt Hon P. (Worcester)

  Hunter, Adam

  Pardoe, John

  Walker, Terry (Kingswood)

  Hurd, Douglas

  Parker, John

  Ward, Michael

  Irving, Rt Hon S. (Dartford)

  Penhaligon, David

  Warren, Kenneth

  Jackson, Colin (Brighouse)

  Phipps, Dr Colin

  Watkins, David

  James, David

  Price, William (Rugby)

  Watt, Hamish

  Janner, Greville

  Pym, Rt Hon Francis

  White, Frank R. (Bury)

  John, Brynmor

  Radice, Giles

  White, James (Pollok)

  Johnson, James (Hull West)

  Rathbone, Tim

  Whitehead, Phillip

  Johnston, Russell (Inverness)

  Rees, Rt Hon Merlyn (Leeds S)

  Whitelaw, Rt Hon William

  Jones, Alec (Rhondda)

  Rees, Peter (Dover & Deal)

  Whitlock, William

  Jones, Barry (East Flint)

  Reid, George

  Willey, Rt Hon Frederick

  Jones, Dan (Burnley)

  Rhodes James, R.

  Williams, Rt Hon Shirley (Hertford)

  Judd, Frank

  Rifkind, Malcolm

  Wilson, Alexander (Hamilton)

  Kaufman, Gerald

  Roberts, Michael (Cardiff NW)

  Wilson, Gordon (Dundee E)

  Knight, Mrs Jill

  Roberts, Wyn (Conway)

  Wilson, Rt Hon Sir Harold (Huyton)

  Lawrence, Ivan

  Rodgers, Rt Hon William (Stockton)

  Woodall, Alec

  Le Marchant, Spencer

  Roper, John

  Wrigglesworth, Ian

  Lester, Jim (Beeston)

  Ross, Stephen (Isle of Wight)

  Young, David (Bolton E)

  Luard, Evan

  Royle, Sir Anthony

  Young, Sir G. (Ealing, Acton)

  Lyons, Edward (Bradford W)

  St. John-Stevas, Norman

  Younger, Hon George

  McCrindle, Robert

  Sandelson, Neville

  TELLERS FOR THE AYES

  McElhone, Frank

  Sever, John

  Mr. Ted Graham and

  Macfarlane, Neil

  Shaw, Giles (Pudsey)

  Mr. Thomas Cox.

  NOES

  Allaun, Frank

  Gould, Bryan

  Ovenden, John

  Ashton, Joe

  Heffer, Eric S.

  Parry, Robert

  Atkins, Ronald (Preston N)

  Hooley, Frank

  Pavitt, Laurie

  Atkinson, Norman

  Hoyle, Doug (Nelson)

  Pendry, Tom

  Bean, R. E.

  Hughes, Robert (Aberdeen N)

  Powell, Rt Hon J. Enoch

  Bennett, Andrew (Stockport N)

  Hughes, Roy (Newport)

  Richardson, Miss Jo

  Bidwell, Sydney

  Jay, Rt Hon Douglas

  Roberts, Gwilym (Cannock)

  Buchan, Norman

  Jenkins, Hugh (Putney)

  Robinson, Geoffrey

  Budgen, Nick

  Kerr, Russell

  Rodgers, George (Chorley)

  Canavan, Dennis

  Kilroy-Silk, Robert

  Rooker, J. W.

  Cant, R. B.

  Kinnock, Neil

  Ross, William (Londonderry)

  Carmichael, Neil

  Lambie, David

  Short, Mrs Renée (Wolv NE)

  Carson, John

  Lamond, James

  Silverman, Julius

  Carter-Jones, Lewis

  Latham, Arthur (Paddington)

  Skinner, Dennis

  Castle, Rt Hon Barbara

  Leadbitter, Ted

  Spearing, Nigel

  Clark, Alan (Plymouth, Sutton)

  Lee, John

  Spriggs, Leslie

  Clemitson, Ivor

  Lewis, Ron (Carlisle)

  Stoddart, David

  Cook, Robin F. (Edin C)

  Loyden, Eddie

  Thomas, Ron (Bristol NW)

  Crowther, Stan (Rotherham)

  McCartney, Hugh

  Thorne, Stan (Preston South)

  Cunningham, G. (Islington S)

  McCusker, H.

  Wigley, Dafydd

  Davies, Bryan (Enfield N)

  McNamara, Kevin

  Winterton, Nicholas

  Dunlop, John

  Marten, Neil

  Wise, Mrs Audrey

  Evans, Ioan (Aberdare)

  Maynard, Miss Joan

  Woof, Robert

  Fernyhough, Rt Hon E.

  Mendelson, John

  Flannery, Martin

  Mikardo, Ian

  TELLERS FOR THE NOES:

  Fletcher, Ted (Darlington)

  Miller, Dr M. S. (E Kilbride)

  Mr. John Ellis and

  Forrester, John

  Moate, Roger

  Mr. Max Madden.

  Garrett, W. E. (Wallsend)

  Molyneaux, James

  Question accordingly agreed to.
  Clause 1 ordered to stand part of the Bill.
  The Secretary of State for the Home Department (Mr. Merlyn Rees): I beg to move,
  That Clause 3 be considered before Clause 2.
  The Bill is of importance. It contains clauses of great importance to our future. The motion is simple and straightforward, and I indicate now that when the vote has been taken I shall beg leave to move "That the Chairman do report Progress, and ask leave to sit again".
  There are basically two reasons for our bringing forward the motion today. The first is that representations have been made in the House on various occasions in the last week or so that the House should have an opportunity before Christmas to consider and vote upon the electoral system to be used in the United Kingdom's elections to the European Assembly.
  As my right hon. Friend the Prime Minister and the Lord President have indicated, we wish to respond to the wishes of the House. If the Bill were considered in the usual order, it would be most unlikely that the House would have an opportunity to consider and vote upon the electoral system before we rise on Friday of this week. We therefore hope that we are meeting the wishes of the House in enabling the Committee to debate Clause 3 before Clause 2, and this will be done tomorrow.
  The second reason for the motion is that a decision this week on the electoral system for our elections to the European Assembly will be of great assistance to those who have responsibility for making the practical arrangements for the conduct of these elections. If the regional list system is chosen, there will be much to be done before the elections are held in the target period of May-June 1978. The political parties will wish to consider their arrangements for the selection of candidates. The Home Office and the Scottish Home and Health Department will need to consult—no more than consult—further with local authority associations about the necessary arrangements for the appointment of returning officers and the training of election staff. The same thing applies in Northern
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  Ireland. These discussions could also relate to other practical matters such as poll cards and election notices. If first past the post wins the day, the practicalities of election will follow the pattern that we have been used to over the years.
  I recognise as well as anyone that a vote on Clause 3 is not in any sense equivalent to Royal Assent to the Bill, but there are many important aspects of the Bill which will need to be carefully considered whether the regional list or simple majority system is chosen. If, however, the Government's recommendations in favour of the regional list system are accepted by the Committee, it will be of great advantage for all those concerned with the practical arrangements for the holding of the elections to know of the decision before Christmas.
  Mr. Powell: The right hon. Gentleman has very helpfully given an indication of his intention following the motion. I wonder whether he would go a little further. Suppose that the decision tomorrow on the question of the regional list or first past the post were taken, would he think it right then to proceed immediately to consider the other parts of Clause 3 or would he regard it as proper that there should be an opportunity to consider the implications of a decision upon the remaining amendments to Clause 3?
  Mr. Rees: That is quite correct. The right hon. Gentleman has saved my making that point.
  I wonder whether it will be for the convenience of the Committee if I indicate the procedures that will be necessary. As the Committee is now well aware, Clause 3 contains a procedural device which has enabled the one Bill to contain alternative electoral systems. We have the regional list system set out in the body of the Bill and the rival simple majority system set out in Schedules 1 and 2. Clause 3 (2) contains the procedural device of a resolution of the House to provide for the simple majority system with STV in Northern Ireland.
  I do not wish to trespass on the ground that will no doubt be covered by my right hon. Friend the Member for Sunderland, North (Mr. Willey) when moving Amendment No. 24. I should, however, point

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  out that, if carried, that amendment will remove the whole of Clause 3(1) and the reference to a resolution of the House in Clause 3(2). My right hon. Friend's amendment will therefore enable the Committee to come to a decision in principle between the regional list system and the simple majority system.
  If the regional list system is chosen, we shall in due course put down an amendment to delete the procedural device in Clause 3 (2), and at the appropriate time we shall move the deletion of Schedules 1 and 2. If the simple majority system is chosen, we shall need to give consideration to the detailed arrangements for this system that are set out in Schedules 1 and 2. That will no doubt also include discussion of Amendment No. 26 on the important question of STV for Northern Ireland, but that will be in the new year. We shall also need to come back to the question of the allocation of seats, also after Christmas. I accept, as was said by my hon. Friends, that the new clause that we shall discuss is also of great importance.
  The immediate question, however, is the order in which we should debate Clauses 2 and 3. For the reasons that I have given, it seems desirable that we should devote tomorrow's debate to the consideration of Clause 3 so that all concerned can know where they stand before Christmas. [HON. MEMBERS: "Why?"] If right hon. and hon. Gentlemen had been listening amid the hubbub at the beginning, they would know that I have dealt with that point.
  I am sure that this is the right course. I hope that tonight we can simply debate this motion and that tomorrow we can debate the amendment of my right hon. Friend the Member for Sunderland, North. This is a procedural matter tonight. The major debate will take place tomorrow. This is the intention of the Government.
  Mr. David Howell: As the Home Secretary has said, the motion appears simple. But perhaps some of the vibrations from around the Committee have indicated that it leads to some fairly complicated consequences. While some of my right hon. and hon. Friends—possibly the majority—welcome the intention behind the motion, nevertheless it raises many questions.
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  Before we vote on the motion, there are one or two questions to which we are entitled to a reply, first, to ensure that we have tomorrow's debate on the relevant amendment in the right context and, second, to ensure that that debate does not take place on a false basis.
  There are those hon. Members, who are more likely to be found on the Opposition side, who are worried that we might find ourselves proceeding to a debate which may not take place in a context that is entirely clear and which may take place in a context that is thoroughly misleading with regard to the major and important decisions that we shall wish to discuss about the system of election.
  We are entitled to question the Government and the Home Secretary as to why, after 14 months of delay in bringing forward the Bill and getting to the point where these matters can be discussed, the motion is now being brought forward by the Home Secretary with such great hurry. I am sure that that question will be answered with usual candour from the Government Front Bench. We should like to know what it is all about. Is it the Government's view—this was not made entirely clear from what the Home Secretary said—that we are set to meet the May-June deadline? Is this motion supposed to help in that respect?
  10.45 p.m.
  Is it the right hon. Gentleman's view—and we know that there are other views in the Committee—that the May-June deadline matters? The Prime Minister has said more than once that it will not be the end of the world if we do not make it. On the other hand, the Foreign Secretary was hard at work in Brussels the other day telling us that if we adopted the regional list system now proposed in the Bill we might make the deadline. I think that the right hon. Gentleman said it was difficult but not impossible. Is that the Government's view? If it is, it is not my view and it is not the view of a good many Opposition Members and, possibly, some Government supporters as well.
  We say that we want to meet the target date. I should like to see May-June 1978 met. If the Government had brought forward this Bill in the proper time, it would have been possible fairly easily to have met the target date with

  187
  either first past the post or the regional list system. That could have been done if the Government had not dragged their feet. As a result of their feet dragging, it is obvious that under either system it will be very difficult to meet the May-June date.
  I believe—and I think that some of my right hon. and hon. Friends do too—that it is erroneous to argue that in all circumstances, if we were to choose first past the post, that would take months and months and somehow delay matters whereas if we stuck to the proportional representation solution it would all go through like a dose of salts.
  Mr. Jeremy Thorpe: May we assume that, for the purposes of tomorrow's debate, the evidence that the Conservative Party put forward on 15th June 1976, signed by Lord Thorneycroft, still applies—namely, that the Boundary Commissioners are the only people who should be charged with the first-past-the-post system, that there must be local inquiries and, therefore, that that means option A, which takes a minimum of 30 weeks?
  Mr. Howell: All assumptions about the different views held by right hon. and hon. Members will have to be tested tomorrow. I believe that some of the arguments about the great length of time that would inevitably be taken if we had the first-past-the-post system have to be looked at again. Similarly, those who argue that the regional list system can go through quite quickly may have to think again when they see some of the complexities raised. Even with the regional list system, there is the problem of boundaries and the problem of planning regions.
  We should be thinking carefully before reaching a glib conclusion that one is on the fast track and the other is on the slow track. We should be careful before going into the debate tomorrow on that assumption, because I believe it to be false. To argue that the regional list system will go through very quickly and that the first-past-the-post system will not is, in my view, to twist the debate into a totally false perspective. One does not have to be for or against any system of for or against the purposes of the Bill to see that that is so.
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  If the Home Secretary would be more explicit than he and his right hon. Friends have been so far on the timing, we should be able at least to have a more genuine debate tomorrow than the one for which we appear to be being set up. We should be in a better position if the Home Secretary would say how he sees the timing under either system, what he believes the timetable will be, what goals he is aiming at and whether he wants to get everything through by Easter.
  Mr. Merlyn Rees: All that I am seeking to do is to prepare the ground for putting these arguments tomorrow. I am simply asking that we may discuss them tomorrow, not tonight.
  Mr. Howell: I am sure that that is right, but we want to make sure that the ground is prepared fairly and not in a way which will pose the Committee a bogus choice. If the right hon. Gentleman is prepared to state these matters clearly, there is a chance that we shall have a good debate tomorrow. If not, those who have argued all along that we need a fair choice of systems, and those who say that any question of changing the electoral system should not be bound up with, should not be confused with and should not be merged with the other important issues of the Bill, are right to have their doubts about how matters are proceeding.
  We should like to know more from the Home Secretary about how he sees the future timing. If he will not say that until tomorrow, we shall have to debate it then, but it would be much fairer if he would say before the Committee finishes this debate exactly how he sees the timing under the two different systems, so that when they are debated tomorrow they can be debated fairly and openly.
  Mr. Douglas Jay: I listened to everything that my right hon. Friend the Home Secretary said. What we are discussing is whether we should alter the procedure on the Bill—not regional lists, first past the post or anything of that kind.
  I was unconvinced by what my right hon. Friend said. He gave no sufficient reason for such a drastic change in the procedure. It is not exactly usual to

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  alter the order of the clauses in a Bill in the middle of our proceedings upon it. The only argument I heard from my right hon. Friend was that representations had been made to him to do this. Who made those representations? The only representations I have heard in the Chamber have been from the Leader of the Opposition. It is not usual for this Government automatically to accept any proposal from the right hon. Lady. Did my right hon. Friend accept it simply because the right hon. Lady made it? If not, from whom else did the representations come?
  The only other vestige of an explanation my right hon. Friend gave was that there were various reasons of convenience and that it would be easier for those who have to administer the elections to be told rather sooner which type of election we shall have. But the Government must have known that when they drafted the Bill. If that is the only reason, why did they put Clause 3 after Clause 2 in the first place? It is obvious that whenever the Bill came forward it would be easier for those who have to administer the elections to know sooner rather than later the form of those elections.
  Therefore, it seems to me that there is no substance in either of the reasons my right hon. Friend advanced. If he has some other reason, will he tell us what it is? If he has not, will he please answer those questions?
  Mr. Robert Adley: We are discussing the reasons for changing the order of the Bill, and we are in a great hurry. My hon. Friend the Member for Guildford (Mr. Howell) has already said that we have waited months and now the Home Secretary wants to get the matter through in half an hour.
  May I assume that the work is to be done by the parliamentary Boundary Commissioners? Are they to consult the local government Boundary Commissioners? Does not the right hon. Gentleman agree that the rather strange boundaries to be discussed under either system are not matters that would normally be considered only by the parliamentary Boundary Commissioners?
  My next question is so mundane as perhaps not to be worth asking, but will the Commissioners work overtime? Will
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  the Home Secretary say whether he really believes that the economic planning council areas are the right ones that should be used for the proposed constituencies?
  Mr. Mikardo: I shall be brief because I have only a single question to the Home Secretary to add to those that have been put by hon. Members. My right hon. Friend the Member for Battersea, North (Mr. Jay) said that the Home Secretary had given only two reasons for this reversal of order. However, my right hon. Friend's memory was at fault because there were three reasons. The third was that the Home Secretary thought that hon. Members needed to know before Christmas. What is the relevance of Christmas in this context? Why does the Home Secretary think that it is essential for the welfare and the peace of mind of right hon. and hon. Members and their capacity to enjoy and do justice to the festive season that they should know before it comes which of two different methods we shall use at some time between now and Christmas 1978 to decide these elections?
  I look at the Committee and gaze on the countenances of right hon. and hon. Members. I look at them one at a time and I try to see which of them will find himself unable either to enjoy or digest his Christmas dinner. Whichever one it is will be sitting there on Christmas Day, watching his wife cook the turkey, biting his nails and saying "I can't eat it, I can't eat. I don't know what method we are going to use." I look around at my colleagues and into their faces, one by one, trying to figure out which of them will find it impossible, because he is so worried about what method of election we shall use, to devote his mind, time and attention to the selection of Christmas presents for his children and grandchildren.
  What is the relevance of Christmas? Is it any more than a hit of flapdoodle verbiage, and it is not a fact that the so-called reasons given by the Home Secretary are devoid of any serious political substance?
  Mr. Hugh Dykes: The hon. Member for Bethnal Green and Bow (Mr. Mikardo) is fully justified in adding to the protests that have been made from both sides of the Committee about the

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  switch of procedure and the proposal by the Home Secretary to change the order of Clauses 2 and 3. It is quite wrong for the Government, the Home Secretary and his colleagues to look anguished and irritated when my hon. Friend the Member for Guildford (Mr. Howell) asks perfectly legitimate questions relating to the choice of systems to be debated tomorrow, and it is quite in order for us to ask these questions.
  It is no good saying that what we are considering tonight in isolation is Clause 3 in front of Clause 2, which will give a not necessarily cosy but well-structured and well-organised debate tomorrow on systems. Legitimate, strong and powerful protests are due and will be made repeatedly about the grotesque delays that the Government have deliberately inflicted on the House this year and since the autumn of last year.
  11.0 p.m.
  The Select Committee's report recommended that it would be feasible for the Second Reading of the Bill to take place as early as last February. Later it was proposed, with substantial agreement in the House, that there could be a Second Reading in May or June. We had a "phoney" Second Reading at the end of the summer and, in many ways, an equally "phoney" delayed Second Reading this Session.
  Now, at the eleventh hour, the Government say "It is not our fault. We did not create the delay. We ask that everybody should easily, superficially and without hesitation or undue delay change the order of Clauses 2 and 3." That is unreasonable. Many hon. Members on both sides of the Committee will wish to add their protest about the Government's proposal. The Government may feel, with some justification, that hon. Members will be obliged to follow this lamentable course of action and change the order of the clauses. The cogent point has been made that Clause 2 is in many ways relevant by way of prior consideration to Clause 3. But the Government are determined to have their way.
  It is interesting that the business has been rearranged with the co-operation of the Opposition, showing that we have consistently been ahead of any other party in prosecuting the Bill. That is a tribute
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  to the Opposition's determination to pass the legislation reasonably. That is consistent with our desire to record a protest about the Government's glibly proposing this course.
  We are considering a profound and significant procedural point. Some hon. Members may think it important to get Clause 3 through before Christmas. However, we register our protest while feeling reluctantly obliged to agree with the Government's suggestion.
  Mr. John Mendelson: The searching questions put to the Government by the hon. Member for Guildford (Mr. Howell) are of value only if he is prepared to carry out the Opposition's traditional rôle—that is, to safeguard the rights of the Committee. Without his determination to show that in the Division Lobby, the hon. Gentleman's questions are so useless that they need not have been uttered, and they will be taken as that by the country.
  We are facing a serious situation. Under the procedure, the Opposition, and the Opposition Front Bench in particular, are given special privileges and opportunities to safeguard the procedure. If they do not do it, the job goes by default. Many people in the country complain that the House of Commons is becoming less important and is losing its influence. The abdication of the Opposition on an important occasion like this is largely responsible if there is any truth in that allegation. Tonight we have witnessed a shameful example of the abdication of the Opposition's traditional rôle.
  We look forward with great interest to discovering how the Home Secretary will answer the questions put from this side of the Committee. The Government have put forward this proposal knowing that they are not acting on their own. We should hear from the Opposition or perhaps from my right hon. Friend the Home Secretary which Members persuaded him to bring forward this suggestion. The Committee and the country must be given that relevant information, and in some detail.
  I want to mention an important negative factor. Whoever the Home Secretary has consulted, hon. Members on the Government side have never been consulted. No formal proposition has been put to the Parliamentary Labour Party,

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  although there have been frequent meetings of that body. There has been many opportunities for such consultations to take place. I have always taken the simple view that the first consultations that a Government should have are with their supporters who make sure they form the Government after a General Election.
  I see that the Liberals are enjoying all this greatly, and I do not see why they should not enjoy themselves. Nobody knows how much longer they will be able to enjoy themselves. It seems that they have not urged this course on the Government—or, if they have, no doubt we shall hear from them. Certainly the right hon. Member for Devon, North (Mr. Thorpe) told the House on a previous occasion that he was not interested in the European Assembly. All he is interested in is a change in the system of elections in this country for domestic purposes.
  Mr. Thorpe: I am fascinated by what the hon. Gentleman says, but when was I supposed to have made that statement—on which date and in what column?
  Mr. Mendelson: In the Second Reading debate, the last but one—and the right hon. Gentleman has spent most of his time since then trying to get away from it. It is well known that he made that remark, and he cannot get away from it.
  Mr. Thorpe: I have the Official Report in my hand: it is not in there.
  Mr. Mendelson: It was said here in the hearing of hon. Members. If the right hon. Gentleman cannot get PR into the European elections, he is not interested in a Bill for such elections. That was what he said. I am prepared to go into court with him over it. I will repeat it outside. The right hon. Gentleman said it and is trying to get away from it. A rescue attempt was mounted by one of his colleagues who sits for a Scotttish constituency in trying to get away from it. It was a sordid manoeuvre by the right hon. Member for Devon, North. I choose my words very carefully and deliberately. He is interested not in European elections but in transforming the system for domestic purposes because the Liberal Party wants this country to be ruled permanently by coalition. That is the only hope the Liberals see ahead. If they had not asked for this change, we should
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  like to hear from my right hon. Friend the Leader of the House what rôle the had played.
  We should also like to hear whether the Government have any political reason for wanting this change. If the Leader of the House were awakened at 2 a.m. and asked "Is it logical to discuss the composition of the new Assembly first, or the method by which it is to be elected?" I am sure he would be the first to reply, since he is a logical man, "Of course one wants to know the composition of a body before one decides its method of election."
  We have a right to know what has moved my right hon. Friend to adopt this topsy-turvy procedure in this important debate. I appreciate that my right hon. Friend the Home Secretary has moved the motion, but we all know that it is my right hon. Friend the Leader of the Hous who is responsible for procedure, and he has an important constitutional role. We should be told what persuaded him to accept this procedure.
  This is no minor matter. On other occasions in the history of the House of Commons, many Members have not agreed lightly to change procedures without instituting a searching inquiry requiring a proper explanation. In these circumstances, unless the Government are prepared to change their mind, I call on all Members of the House of Commons, on whichever side they sit, to vote with contempt against the motion.
  Mr. Russell Johnston: It seems that the best word that has been used thus far this evening is "flap-doodle", which came from the hon. Member for Bethnal Green and Bow (Mr. Mikardo). There has been a certain amount of it flying around.
  The plain fact is that the hon. Member for Guildford (Mr. Howell), leading from the Opposition Front Bench, spent a great deal of time arguing that the form of the election should not be affected by the timing. He said that that was important. He then asked the Secretary of State for the Home Department at great length for more details about the timing. That seemed to be a contradictory posture.
  To our surprise, the right hon. Member for Battersea, North (Mr. Jay) opposed this change. He made it clear that if the

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  motion is passed it will not make much difference to the capacity of the House of Commons to examine the proposals in the Bill. As the right hon. Gentleman pointed out, it does not make much difference whichever way round the clauses are put. That did not tie up with the right hon. Gentleman's suggestion that it appeared to be an important matter.
  The Secretary of State has brought this matter forward because if it is determined before Christmas—Christmas is by chance the festival at this time of the year—and it is decided more quickly rather than later, it will be easier, whatever decision is made, for those who are concerned with setting up the various electoral procedures to go ahead and do it.
  11.12 p.m.
  Mr. Merlyn Rees: As my hon. Friend the Member for Penistone (Mr. Mendelson) noticed quickly, as ever, we are discussing a procedural motion that raises a number of issues. However, it is the procedural matter to which I reply.
  The timing will emerge in a full-day's debate tomorrow. There have been no negotiations. My right hon. Friend the Leader of the House has said that he will take into account what has been said. I shall return to the Government's view that we should proceed in this way.
  My right hon. Friend the Member for Battersea, North (Mr. Jay) pointed out the logic of a Clause 1, 2, 3 procedure, but against that is the reason that we shall come to tomorrow.
  The hon. Member for Christchurch and Lymington (Mr. Adley) asked about the parliamentary Boundary Commissioners and the relationship with the local government Boundary Commissioners and the planning regions. Those are matters for tomorrow.
  There are those who talk about delay and ignore the fundamental problems in the parties. There have been discussions and meetings for some Members of the Conservative Party. We believe that it is right to take this course with Clause 3. It will enable us to be more precise about timing tomorrow. It is right that this should be done at the end of this part of the Session, and it is on that that my case rests.
  Mr. Jay rose—
  Mr. Rees: My hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo talked about Christmas. I mean before the Christmas Recess. I shall not be thinking of these matters during Christmas dinner. I shall have other things on my mind as I read the book signed by a chap on a train who has gone around the country in recent days. As the right hon. Member for Sidcup (Mr. Heath) walked into the Chamber, I nearly handed him a copy of "Erskine May" to sign. The fact is that it is not Christmas but the Christmas Recess. It is right that the decision should be made tomorrow, and it is tomorrow that the debate can take place.
  Several Hon. Members rose—
  Mr. Skinner: It is well known among Labour Back Benchers that what my right hon. Friend the Secretary of State for the Home Department has to say is not very near to the truth. A week last Thursday, during business questions, the matter was raised, and I was able to overhear a conversation prior to business questions. It was suggested that there would be no business for the direct elections in the course of that week and, as a result, there would be a sort of protest by the Leader of the Liberal Party to indicate that he was dissatisfied with what was taking place. I note that my right hon. Friend the Leader of the House is getting disturbed. That is because he was the man responsible. It was said that the gesture would be made and that it would be all right in the end because the following week it would apply.
  Some of my hon. Friends may remember my intervention during business questions when I made it abundantly clear what would happen. It is only too obvious what is taking place. First, the Liberal Party in the House is worried about the problem of the Lib-Lab pact as it affects its own membership outside the House. It is concerned about the continuation of the pact. It wants to be able to give the impression that sooner rather than later it has been able to achieve something. The introduction of Clause 3 in front of Clause 2 has been done for that purpose.
  11.15 p.m.
  On the other hand, the Tories are in a bit of a dilemma too. They, as the European party, so described by the right

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  hon. Lady the Leader of the Opposition when she went to Rome recently, have somehow or other to convey to their supporters, particularly the CBI and their friends who provide the cash, that they are keen on getting the Bill through but at the same time attempt to give the impression that they are obstructing it in some way. That is why the hon. Member for Harrow, East (Mr. Dykes) said what he did about the motion. But we know that at the end they will not join those of us on the Government side who will vote against the motion.
  Those are the component parts of this issue: the Government Front Bench, the Tory Front Bench, Tory Back Benchers, with a few exceptions, and the Liberal Party, which is concerned about the effect of the Lib-Lab pact on its members in the country. This matter has nothing to do with Christmas. It has to do with trying to placate the Liberal Party.
  I do not know what the Government are playing at. The Liberal Party, pact or no pact, is in no position politically to fight a General Election. Even if it withdrew from the so-called formal pact and discontinued these negotiations which are constantly taking place with my right hon. Friends, it is not going to place itself in the position of carrying a vote of no confidence against the Government at this time. Recent by-election results have shown that only too clearly. Therefore, I suggest that we get rid of the Liberals. We do not need them. My right hon. Friend does not need to introduce Clause 3 before Clause 2 anyway.
  Finally, to those of my hon. Friends who are a bit worried about the pact, I say do not worry about proportional representation either. That does not matter. Members on the Liberal Bench have most to lose. They are merely concerned about getting involved in the latest job creation scheme—saving their own jobs.
  Mr. Eric S. Heffer: As my hon. Friend the Member for Bolsover (Mr. Skinner) was giving his explanation, I noticed that my right hon. Friend the Lord President was shaking his head and that Liberal Members were shaking their heads. Therefore, I assume that there is agreement between the Liberals and my right hon. Friend that that is not the explanation.
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  If that is not the explanation, what is the explanation? My right hon. Friend the Home Secretary gave the lamest explanation that I have ever heard in my life. In fact, he gave no explanation at all.
  The Lord President, when he made his announcement in the House recently, said that it was the result of representation. The Liberals say that they have not made any representation. Therefore, the representation must have come from the official Opposition. But, in listening to the speech made by the hon. Member for Guildford (Mr. Howell), I should not have thought that the Opposition made any representation either.
  Who has made representation? I should like to know. I am in great confusion over this matter. Labour Members have not made any representation. In fact, the only representation that many of us have made has been in the other direction. We said that we did not particularly want. Clause 3 to be taken before Clause 2. There is no logic for proceeding in this way.
  I do not understand the idea behind this motion. One suggestion is that if we have the debate on Clause 3 before Christmas and that is carried, the official Opposition, if most of them vote for first past the post, can be blamed for holding up the Bill. I tell my right hon. Friend that there are no great political medals to be gained from that. The working people of this country do not give a damn who is holding up the Bill, because most of them do not want it.
  It is a load of rubbish to waste our time, energy and money electing people to a European Assembly. There are no medals to be gained from bringing this forward in this way. I ask my right hon. Friends to listen to representation where it is genuinely made—not from the Liberals or the Tories, but from us. Our representation is to forget it. Let us have Clause 2 in the normal way and proceed with the Bill.
  Mr. James Lamond: This debate has been extraordinarily enlightening. It has restored my faith in the system of raising questions during business questions. The Home Secretary has told us that the representation to which such great attention has been paid

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  was not made officially by the Opposition or by the Liberals but was made during business questions. That means that all who raise matters during that time about the various motions that contain hundreds of signatures may have their faith restored that they will have an effect on the business of the House in future.
  The representation has been so successful that the planning that has gone into the Bill—which I am anxious to support—to put the clauses in a certain order is being overturned because of the representation to get the matter settled in good time for Christmas.
  This is a damning indictment of who, ever it was who planned the business of the House. We arrived back here after a long recess—not that I complain about that. I thought that it was good, but I was not particularly anxious to get the Bill on the statute book. If I had been anxious to do that, I should have had us called back earlier. I should also have seen to it that we sat until the normal time before Christmas and did not finish a week earlier than we expected. That would have given us ample time to go through the normal motions of discussing Clauses 2 and 3.
  After all, we are discussing a matter which arises from the Treaty of Rome, which was signed on 25th March 1957. That Treaty will be celebrating its twenty-first birthday in a few months' time. We have had all this time to think about direct elections. As my right hon. Friend the Prime Minister said in the House, we have had 20 years to think about them. Another year will not make much difference.
  I do not wish to be pushed into making a decision. It is not yet 24th December, the day before Christmas Day. Many people are wondering why we must start the recess on 16th December if that means overturning the careful planning that has gone into the Bill to enable us to make arrangements for elections. I wonder whether we should say that will will not support the motion because it only encourages very sloppy planning by those responsible for arranging the business of the House.
  Mr. Jay: Will my right hon. Friend the Home Secretary answer a question already put to him? He gave no sufficient
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  reason for monkeying about with the procedure of the House in this way. Will he say who made the representations to him which were responsible for these proposals?
  Mr. Merlyn Rees: All the representations were made openly in the House.
  Mr. Ron Thomas: We failed earlier this evening to ascertain from the Government what would be the powers and responsibilities of this elected Assembly. We are now moving on to alter the order of business so as to decide the method of electing the Members of that Assembly. But we still do not know what their powers and responsibilities will be. We do not know what its position will be in terms of representing the United Kingdom. We must therefore have some justification from the Government for the change that is now proposed.
  We are bypassing not simply Clause 2 but the whole range of amendments tabled to it. The whole position could be changed if any of those amendments were made. One seeks to increase England's representation from 81 to 112. The Government have no right to assume that that proposal will not be carried. If it is, those who have to plan for such matters will have been compelled to devise a plan for a certain type of election but without knowing the number of Members involved. It might be 81 or 112 for England, or eight or 16 for Scotland. There might be one Member for Gibraltar and another for the Falkland Islands.
  The Chairman (Mr. Oscar Murton): Order. The hon. Gentleman is out of order to discuss countries outside the United Kingdom.
  Mr. Thomas: Amendments tabled to Clause 2 seek, among other things, to provide for one Member to be elected for Gibraltar and one for the Falkland Islands. The Government have no right to assume that those amendments will not be carried. If they were, it would put those who have to plan for the elections in a ludicrous position. We do not know how many Members there will be for each of the different countries.
  11.30 p.m.
  Therefore, I appeal to the Leader of the House—I think it is his responsibility—to justify the motion. I. too, would like

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  to know what representations have been made by hon. Members to the effect that they want this business through before Christmas. If the representations were made some time ago, it is very strange that we have had a gap of about 10 days between one sitting of the Committee and the next. Whatever the representations were, they do not seem to have been so strong that we could not leave the matter until this evening.
  I tend to believe, along with my hon. Friend the Member for Bolsover (Mr. Skinner), that it is a majority—and, therefore, a handful—of Liberal Members who have exerted this pressure. Incidentally until about 10 o'clock this evening the Liberal Bench was deserted. That seems to be another indication that all that the Liberal Party is interested in is getting proportional representation in the United Kingdom. Liberal Members were not interested in Clause 1 a little earlier. There was not one Liberal Member present
  between about 7 o'clock and 10 o'clock, when we were discussing the fundamental clause.
  The point has been made, quite correctly, that the Liberals are not interested in European elections except as a way of introducing PR into the United Kingdom. It is a terrible state of affairs and it is indefensible that a majority of our Cabinet should be introducing a piece of legislation for which they have no mandate in the country and for which there is overwhelming opposition in our party and our movement, and they are altering the procedures of the House of Commons in order to placate three or four Liberal Members. I find that indefensible, and I think that the Leader of the House should reply to the point.
  Question put, That Clause 3 be considered before Clause 2:—
  The Committee divided: Ayes 180, Noes 56.

  Division No. 49]

  AYES

  [11.33 p.m.

  Adley, Robert

  Dykes, Hugh

  Lester, Jim (Beeston)

  Anderson, Donald

  Edwards, Nicholas (Pembroke)

  Luard, Evan

  Archer, Rt Hon Peter

  English, Michael

  Lyons, Edward (Bradford W)

  Armstrong, Ernest

  Ewing, Harry (Stirling)

  McCartney, Hugh

  Atkins, Rt Hon H. (Spelthorne)

  Fairgrieve, Russell

  McElhone, Frank

  Bagier, Gordon A. T.

  Fitt, Gerard (Belfast W)

  MacFarquhar, Roderick

  Bates, Alf

  Foot, Rt Hon Michael

  MacGregor, John

  Beith, A. J.

  Ford, Ben

  McGuire, Michael (Ince)

  Berry, Hon Anthony

  Fowler, Gerald (The Wrekin)

  MacKay, Andrew (Stechford)

  Bishop, Rt Hon Edward

  Fox, Marcus

  MacKenzie, Rt Hon Gregor

  Boscawen, Hon Robert

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

  Maclennan, Robert

  Bottomley, Peter

  Freeson, Rt Hon Reginald

  Magee, Bryan

  Bray, Dr Jeremy

  Gardiner, George (Reigate)

  Mallalieu, J. P. W.

  Brooke, Peter

  George, Bruce

  Marks, Kenneth

  Brotherton, Michael

  Glyn, Dr Alan

  Marshall, Dr Edmund (Goole)

  Brown, Hugh D. (Provan)

  Golding, John

  Marshall, Jim (Leicester S)

  Brown, Robert C. (Newcastle W)

  Gow, Ian (Eastbourne)

  Mather, Carol

  Butler, Adam (Bosworth)

  Gower, Sir Raymond (Barry)

  Maxwell-Hyslop, Robin

  Campbell, Ian

  Grant, George (Morpeth)

  Mayhew, Patrick

  Cant, R. B.

  Grant, John (Islington C)

  Millan, Rt Hon Bruce

  Carlisle, Mark

  Griffiths, Eldon

  Montgomery, Fergus

  Cartwright, John

  Harper, Joseph

  Morrison, Hon Peter (Chester)

  Chalker, Mrs Lynda

  Harrison, Rt Hon Walter

  Murray, Rt Hon Ronald King

  Channon, Paul

  Haselhurst, Alan

  Neave, Airey

  Churchill, W. S.

  Hattersley, Rt Hon Roy

  Noble, Mike

  Clarke, Kenneth (Rushcliffe)

  Havers, Rt Hon Sir Michael

  Oakes, Gordon

  Cocks, Rt Hon Michael (Bristol S)

  Heath, Rt Hon Edward

  Ogden, Eric

  Cohen, Stanley

  Hodgson, Robin

  Palmer, Arthur

  Coleman, Donald

  Horam, John

  Pardoe, John

  Conlan, Bernard

  Howell, David (Guildford)

  Pendry, Tom

  Cook, Robin F. (Edin C)

  Howells, Geraint (Cardigan)

  Penhaligon, David

  Cooke, Robert (Bristol W)

  Hunter, Adam

  Price, William (Rugby)

  Cowans, Harry

  Hurd, Douglas

  Pym, Rt Hon Francis

  Cox, Thomas (Tooting)

  Irving, Rt Hon S. (Dartford)

  Radice, Giles

  Craigen, Jim (Maryhill)

  Jackson, Colin (Brighouse)

  Rathbone, Tim

  Crawshaw, Richard

  John, Brynmor

  Rees, Rt Hon Merlyn (Leeds S)

  Cronin, John

  Johnson, James (Hull West)

  Rees, Peter (Dover & Deal)

  Crouch, David

  Johnston, Russell (Inverness)

  Rhodes James, R.

  Crowther, Stan (Rotherham)

  Jones, Alec (Rhondda)

  Rifkind, Malcolm

  Cunningham, G. (Islington S)

  Jones, Barry (East Flint)

  Roberts, Michael (Cardiff NW)

  Cunningham, Dr J. (Whiteh)

  Jones, Dan (Burnley)

  Rodgers, Rt Hon William (Stockton)

  Davidson, Arthur

  Judd, Frank

  Roper, John

  Davies, Denzil (Llanelli)

  Kaufman, Gerald

  Ross, Stephen (Isle of Wight)

  Davis, Clinton (Hackney C)

  Kitson, Sir Timothy

  Royle, Sir Anthony

  Dormand, J. D.

  Knox, David

  Sandelson, Neville

  Douglas-Hamilton, Lord James

  Lambie, David

  Sever, John

  Duffy, A. E. P.

  Le Marchant, Spencer

  Shaw, Giles (Pudsey)

  Shepherd, Colin

  Tomlinson, John

  Whitelaw, Rt Hon William

  Silkin, Rt Hon S. C. (Dulwich)

  Varley, Rt Hon Eric G.

  Willey, Rt Hon Frederick

  Small, William

  Vaughan, Dr Gerard

  Williams, Rt Hon Shirley (Hertford)

  Smith, John (N Lanarkshire)

  Wainwright, Edwin (Dearne V)

  Wilson, Alexander (Hamilton)

  Snape, Peter

  Walder, David (Clitheroe)

  Wilson, Rt Hon Sir Harold (Huyton)

  Stallard, A. W.

  Walker, Harold (Doncaster)

  Winterton, Nicholas

  Stanley, John

  Walker, Terry (Kingswood)

  Woodall, Alec

  Steen, Anthony (Wavertree)

  Ward, Michael

  Woof, Robert

  Stewart, Rt Hon M. (Fulham)

  Warren, Kenneth

  Young, David (Bolton E)

  Stott, Roger

  Watkins, David

  Young, Sir G. (Ealing, Acton)

  Stradling Thomas, J.

  Weatherill, Bernard

  Strang, Gavin

  White, Frank R. (Bury)

  TELLERS FOR THE AYES

  Summerskill, Hon Dr Shirley

  White, James (Pollok)

  Mr. James Hamilton and

  Thorpe, Rt Hon Jeremy (N Devon)

  Whitehead, Phillip

  Mr. Ted Graham.

  Tinn, James

  NOES

  Allaun, Frank

  Gould, Bryan

  Powell, Rt Hon J. Enoch

  Ashton, Joe

  Heffer, Eric S.

  Reid, George

  Atkins, Ronald (Preston N)

  Hooley, Frank

  Richardson, Miss Jo

  Atkinson, Norman

  Hoyle, Doug (Nelson)

  Robinson, Geoffrey

  Bennett, Andrew (Stockport N)

  Hughes, Robert (Aberdeen N)

  Rodgers, George (Chorley)

  Bidwell, Sydney

  Jay, Rt Hon Douglas

  Rooker, J. W.

  Buchan, Norman

  Kerr, Russell

  Ross, William (Londonderry)

  Canavan, Dennis

  Kilroy-Silk, Robert

  Skinner, Dennis

  Carmichael, Neil

  Kinnock, Neil

  Spearing, Nigel

  Carson, John

  Lamond, James

  Spriggs, Leslie

  Castle, Rt Hon Barbara

  Latham, Arthur (Paddington)

  Thomas, Ron (Bristol NW)

  Clemitson, Ivor

  Leadbitter, Ted

  Thompson, George

  Craig, Rt Hon W. (Belfast E)

  Loyden, Eddie

  Thorne, Stan (Preston South)

  Dunlop, John

  McCusker, H.

  Watt, Hamish

  Ellis, John (Brigg & Scun)

  McNamara, Kevin

  Wigley, Dafydd

  Evans, Ioan (Aberdare)

  Maynard, Miss Joan

  Wise, Mrs Audrey

  Fernyhough, Rt Hon E.

  Mendelson, John

  Flannery, Martin

  Mikardo, Ian

  TELLERS FOR THE NOES

  Fletcher, Ted (Darlington)

  Moate, Roger

  Mr. Max Madden and

  Forrester, John

  Molyneaux, James

  Mr. David Stoddart.

  Question accordingly agreed to.
  To report Progress and ask leave to sit again.—[Mr. Shape.]
  Committee report Progress: to sit again tomorrow.

  EUROPEAN COMMUNITIES (TREATIES)
  [Commission Documents Nos. S/799/77 and S/1151/77]
  11.46 p.m.
  The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. John Tomlinson): I beg to move,
  That the draft European Communities (Definition of Treaties) (No. 6) Order 1977, which was laid before this House on 14th November, be approved.
  The schedule to the order contains two financial protocols between the European Economic Community and Greece and Turkey respectively.
  Hon. Members will be aware that the (No. 3), (No. 4) and (No. 5) Orders of 1977 have recently been approved by the House after consideration by Standing Committees on Statutory Instruments. These were the first orders to be considered since April last, when, during a debate on these orders, Members expressed
  204
  concern about the difficulties which they had experienced in considering the draft orders then presented and also the manner in which they were, put to Parliament. I gave an assurance to the House at that time that the Government would take note of the views which were expressed and consider how best to respond.
  I apologise to those who were members of the Standing Committees which considered the (No. 3), (No. 4) and (No. 5) Orders for repeating this information. I do so, however, for the benefit of Members who may not have had the opportunity to read the report of the debates held in Committee.
  It was decided that the most suitable manner in which information about the contents of the Treaties contained in the draft orders could be given to Members would be via an expanded version of the explanatory memorandum which is produced for the Joint Committee on Statutory Instruments. The memoranda now include the Government's opinion on the articles of the Treaties which might be held to be directly applicable in the United Kingdom as well as background information and a summary of the content of the Treaties. Arrangements have been made for the memoranda to

  205
  be available for hon. Members at the Vote Office together with the draft order.
  I hope that, as a result of the Government's action, Members will have been able to come to tonight's debate with the information they require and which they complained they lacked last time we debated these orders in April. As the purpose and scope of the Treaties is already set out in the explanatory memorandum, I shall not take the time of the House to deal with the details of the Treaties but will set them in their political context.
  The first of the Treaties listed in the schedule to the order is the protocol between the Community and Greece. There is a long-standing link between the Community and Greece which began with the signing of an association agreement in 1961. The agreement provides for economic harmonisation which will lead to a complete customs union by 1984.
  The agreement also holds the prospect of eventual membership of the Community. Greece, indeed, submitted an application to join the Community in June 1975 and negotiations began in July 1976. These negotiations are progressing steadily and have reached the stage of the exchange of information on particular economic sectors. When the Community has considered the information, it will be in a position to draw up its detailed negotiating mandate.
  The House will be aware that the Government have welcomed Greece's application for Community membership. The Government attach great importance to the Community's relations with Greece and consider that membership of the Community will be a great assistance to the continuation of a democratic regime in that country.
  The association agreement of 1961 allowed for the provision of a financial protocol to the agreement to encourage the development of the Greek economy. Under the first EEC/Greece financial protocol of 1961, loans of up to 125 million dollars were provided. During the period of dictatorship in Greece, the allocation of funds under this protocol was halted and the small remaining balance was quickly used after democracy was reestablished in Greece in 1974. This second financial protocol was agreed with the intention of further assisting development of the Greek economy. The assistance
  206
  provided under the protocol will help to bring Greece economically closer to the Community while at the same time assisting in the reduction of barriers to trade.
  Projects provided for under the terms of the protocol will be proposed by Greek development agencies. They will be specifically aimed at building up economic infrastructure, including industrial processes and redevelopment. Some 280 million units of account are provided for under the terms of the protocol. Of this, some 225 million will be in the form of loans provided by the European Investment Bank and the balance will be in the form of grants and special loans for a long period with a low rate of interest.
  The Government look forward to closer relations between the Community and Greece both through the association agreement and the associated financial protocol which we are considering tonight and later as a result of Greece's application for full membership.
  I now turn to the financial protocol between the EEC and Turkey. This protocol also follows on from the association agreement signed in September 1963, as a result of which a first financial protocol signed at the same time provided for loans of up to a total of 175 million units of account. A second financial protocol with Turkey, signed in 1970, provided further loans of up to 195 million units of account. This was further increased by 47 million units of account on the accession of the United Kingdom, Denmark and Ireland to the Community. A supplementary internal financial agreement covered that further contribution and was considered under the Section 1(3) procedure in this House in April of this year.
  The protocol with Turkey which we are discussing tonight provides for a total of 310 million units of account, of which 90 million would be from the European Investment Bank and 220 million would be special loans over a long period with a low rate of interest.
  Hon. Members may note that there is a difference in the terms of the assistance being given to Greece and Turkey. While the agreement with Greece provides for the majority of loans to be from the European Investment Bank with an element of interest rate subsidy, the Turkish

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  protocol provides for the bulk of the loans to be in the form of special loans at low interest over a long repayment period. The difference in terms is due to Turkey's level of economic development being lower than that of Greece. Great importance is attached by the Government to the Community's relationship with Turkey, and we look forward to progress under the terms of the association agreement and related financial protocols.
  I hope that hon. Members will endorse the Government's belief that the Community is providing valuable assistance to these two countries through the medium of the financial help that it is able to give them. Due to its membership of the Community the United Kingdom is able to contribute to this assistance, which should lead to the development of stronger economic and political links between the Community and Greece and Turkey. I hope that the House will tonight approve the order.
  11.55 p.m.
  Mr. Malcolm Rifkind: This is the sixth order of its type to come before Parliament during the course of 1977. The frequency of these orders gives added justification to those who press upon the Government the need to provide detailed explanatory memoranda in order that the bare bones found in the orders themselves can be given some elucidation, so that hon. Members and the public at large may understand their purpose.
  The Government have responded by providing very detailed information, and compliments have been paid on another occasion to the Minister for this. But it would be appropriate if tribute were paid this evening to those right hon. and hon. Members on both sides of the House but for whose persistence in representations to the Government this important reform would not have been made.
  The explanatory memoranda give detailed information. I hope, however, that the Minister will forgive me if I put one matter to him about the method by which the Government have decided to give information to the House on these matters.
  It has been pointed out on a number of occasions that when the House is dealing
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  with orders of this type it is not simply giving its advice or views to the Government. It is acting as a legislature and, therefore, the decision that it takes is of major importance. On this basis, I put it to the Minister that the use of explanatory memoranda as being the sole way in which future generations may understand the background to orders of this kind is not the most satisfactory way of dealing with the problem.
  On a previous occasion, my right hon. Friend the Member for Crosby (Mr. Page) put an interesting suggestion to the Government. He suggested that, as at the time that the orders were considered the Government tabled Command Papers giving details of the protocols concerned, those Command Papers might be a useful way of indicating the Government's views on the protocols and their likely effects on United Kingdom legislation. By being put into Command Papers rather than explanatory memoranda, those views would be given greater authority and would be a permanent record rather than the informal method of using explanatory memoranda.
  I do not know whether the Government have considered my right hon. Friend's proposal. If they have, I hope that the Minister will tell us why they felt it necessary to reject what I thought was a very constructive suggestion. If they have not considered it, I hope that the Minister will promise to do so.
  I wonder whether the hon. Gentleman can give greater clarification about why the procedure for designation under Section 1 (3) of the 1972 Act is being used in this case. The hon. Gentleman indicated on previous occasions that this designation procedure was required when the order in question might affect United Kingdom law and might have to be dealt with in the United Kingdom courts. It was necessary, therefore, to protect the rights of United Kingdom citizens to go to courts of law on these matters. How ever, in this explanatory memorandum the Government make it clear that, so far as they are able to decide these matters they do not believe that there is any effect on United Kingdom law and that designation is required to enable disbursement of the funds provided for in the protocols to be made.
  This is a new reason for designation, and perhaps the Minister will say what are

  209
  the general criteria applied by the Government in deciding whether the procedure in Section 1 (3) of the 1972 Act is necessary. Clearly, it goes beyond whether there are implications for United Kingdom law. In these protocols we have the question solely of disbursements requiring this procedure to be applied.
  On previous occasions, comment has been made about lumping together various orders concerning widely separate countries. I do not think that any proper criticism could be made in this case. In the view of most people in the United Kingdom, it is not unusual to lump Greece and Turkey together as being countries with common interests. In passing, I might say that I am not convinced that the Greeks and Turks themselves see it as being necessarily appropriate that they should be associated with one another as having a common harmony of interests which would require matters affecting them to be dealt with jointly by this House.
  I turn briefly to the contents of the protocols themselves and to the matters which the House is being asked to approve. According to the protocols, these two sets of provisions will expire on 31st October 1981. It is clearly no coincidence that the same date has been provided for both countries, although the nature of the agreements is different and although the other factors are quite separate. Could the Minister elucidate the significance of 31st October 1981 and the reason why exactly the same date has been provided in respect of both countries?
  Secondly, there is a substantial difference between the aid being provided for Greece, which is primarily in the form of loans from the European Investment Bank, and the aid for Turkey, which is primarily in the form of special loans. The Minister said that the reason was the lower level of economic activity in Turkey, but he did not indicate why this should lead to the change provided for by the Government. Did the Turks request a different form of aid to be provided, or was this something that the Community felt to be appropriate?
  Thirdly, the memorandum states that at the time it was prepared the total British contribution to the funds to be made available to Greece and Turkey
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  under the protocols was not known. Can any information on the British commitment now be provided? There is an implication in the protocols that there is no information yet as to whether Greece and Turkey intend to take up the full amount of aid to which they are to be entitled as a result of the protocols. What is the likelihood of the full amount being allocated before 1981?
  Greece and Turkey are both countries of substantial interest to the United Kingdom. They are both allies in the North Atlantic Alliance and they are both drawing closer and closer to the European Community. If Greece in particular is to join the Community, it is very important that at the time of its accession its agriculture and other economic conditions should be as close as possible to those of the other member countries. The protocols will help in some small way towards that end, and for that reason they deserve to be welcomed.
  12.2 a.m.
  Mr. Nigel Spearing: I give a qualified welcome to the additional memoranda provided by the Government. It is qualified because they are available only to Members of Parliament and not to members of the public. Therefore, I commend to the Government the suggestion made by the right hon. Member for Crosby (Mr. Page) that their explanations should be in a foreword to the appropriate Command Paper.
  It is there that my encomiums of the Government cease, because the Command Paper, under the procedure still being adopted by the House, is not referred to in the motion, and is not even mentioned in italics underneath. We very properly have references to Commission Documents S/799/77 and S/1151/77, the typescript Community draft recommendations, which have been converted into Command Papers, but until now Cmnd 6917, relating to Greece, and Cmnd 6981, relating to Turkey, have not been mentioned in the debate. Therefore, I believe that my adjective "clandestine" still applies, because there is a reliance on Back Benchers to put these matters on the record. The Government have room to improve still further. I understand that our decision on the Question which is put at the end of the debate is our means of ratifying the Treaties.

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  In respect of Greece, article 1 of the financial protocol in the case of Greece refers to
  "the accelerated development of the Greek economy and the complementarity of Greek agriculture with that of the Community."
  It may be that the Minister can give us some guidance on how the Government or the EEC Commission see the complementarity of Greek agriculture with that of the Community. I should have thought that some traditional Greek products would be in direct competition with certain products of Southern France, and certainly with those of another possible applicant, Spain, as well as with some of the associated Maghreb countries with which Treaties have already been signed.
  "Complementarity" is not a happy expression, but much investment will be based on it. The criteria are hazy to say the least. That is also true of article 4, which refers to
  "detailed rules, conditions and procedures laid down by the Bank's Statute."
  That refers to the European Investment Bank. Can we hear more of the criteria upon which these significant sums will be invested? We heard about 280 million European units of account—that is, new units of account—and 310 million units. What is that in sterling at current exchange rates? Some of us are confused by the change in the units of account. I believe that the documents say that this will be based on the new unit.
  Article 6 of the protocol relating to Greece talks about the need for exemption of these repayments from national and local taxes. From reading the documents, which refer to the investments of the European Investment Bank in terms of 3 per cent., it seems that soft interest rates are to be paid which, together with freedom from national and local taxes, will put the investors and prospective investors in a position of advantage and privilege in both these countries, which will mean, presumably, that the Community will have some political clout or interest in the Governments of both countries. This has happened in respect of Third world countries in receipt of soft loan conditions and there could be political difficulties in the future, particularly concerning different views of existing members of the Community in relation to, say, Turkish policy in Cyprus. This raises all sorts of implications for
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  Commonwealth countries, particularly Cyprus, where there are differing interests between the two countries concerned in these documents. There are political implications in these Treaties.
  I have mentioned some of the pressures and advantages that could arise. This puts the Community collectively in a political position that might be of some complexity when member States' individual interests, particularly in relation to the Cyprus question, are under discussion. I therefore hope that the Minister will have some words to say about that, because it may be that in the future he will have to look at some of the problems that may result from the Treaties that the House is now going through the procedure of ratifying.
  12.9 a.m.
  Mr. Roger Moate: I wish to make some points briefly. I add my thanks to those which have already been expressed to the Government for having made progress with the documentation that is placed before the House on these occasions. The documents are full and helpful and we owe thanks to those who have taken part in late-night debates, particularly my right hon. Friend the Member for Crosby (Mr. Page), whose work on the Select Committee on Statutory Instruments has had some influence in this matter.
  The explanatory memoranda are clear and helpful. Nevertheless, we could make even further progress by adopting the suggestion that we should have a White Paper. Brief though it would be, it would be a very sensible development, and I am glad that my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) made that suggestion. I hope that the Government will take it on board.
  The Government have taken note of the objections raised earlier to the grouping of a large number of often disparate Treaties in one order. I do not think one would object to these two Treaties being dealt with in the same order. The proposals are similar, although I cannot see any great objection to having separate documents for each. It would not involve that much extra bureaucracy, paperwork and cost. That might be a logical approach. However, the Government have

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  been helpful and have made progress, and we should express our appreciation.
  I welcome the order on its merits. Those of us who want the Community to be enlarged must welcome the preparatory assistance to Greece. The same applies to Turkey. I hope that before long Turkey will apply for membership. I hope that this type of assistance will help to pave the way towards that development.
  I am interested in one or two technical points. Why is the order made under Section 1(3) of the European Communities Act 1972? I understood from previous debates that we had to have such a procedure when there were implications for United Kingdom internal law. It is not immediately apparent why this legislative form is required for an external aid matter unless the funds we are contributing do not come from the Community budget. Perhaps the Minister could clarify that matter.
  Paragraph 1 of the explanatory memorandum relating to Greece states:
  "The Community has agreed in principle that Members States' shares of the grants and special loans will be provided from the reformed Community budget."
  I assume that it would come out of the sums we have contributed to the Community and would not require separate United Kingdom enactment.
  Paragraph 2 states:
  "The UK contribution to the grants and special loans will be attributed to the Aid Programme."
  It should be made clear that we are not being asked to authorise spending over and above the contributions we already make to the Community budget. I suspect that we are not doing so, but if that is not so I wonder why a separate instrument is required.
  Another technical point concerns the question of the 2.5 per cent. If we are involved in giving external aid to third countries, should not we be in a position to compare the terms on which we are offering these loans with loans granted to other countries throughout the world? I wonder how the figure of 2.5 per cent. has been decided. It is such a low figure that one might say it is not worth charging. It is not a commercial rate. How does the 2.5 per cent. compare with the rate for loans we normally grant to Third world countries?
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  The Minister mentioned the progress being made on the negotiations for Greek accession. I understand that the next step in the negotiations is that the Commission must produce an opinion. There has been some talk that the Commission might be dragging its feet in this respect. Will the Minister say whether we can still expect, in February or the spring of 1978, a Commission opinion on the question of Greek accession? That is the next crucial turning point in this matter, which is virtually important not only to Greece but to the question of how the Community develops.
  I should be grateful for the Minister's comments on those points.
  12.15 a.m.
  Mr. Tomlinson: In this brief debate we have considered some limited aspects of the Community relationship with two countries, with both of whom we have long associations. Through its financial protocols the Community has been able to translate into monetary terms the good intentions set out in the original association agreements.
  Hon. Members have asked a variety of questions on different aspects, and I shall try to deal with them individually. The hon. Member for Edinburgh, Pentlands (Mr Rifkind) made some welcome observations on the new procedure, and I join him in saying that the House is grateful to all those hon. Members who on previous occasions have pressed for improved procedures—improvements which have been widely welcomed.
  The hon. Gentleman asked, as did my hon. Friend the Member for Newham, South (Mr. Spearing), why we use explanatory memoranda rather than give more authority by using Command Papers. After the extensive criticism about the procedures expressed in all quarters in the debate in April, the Government considered the various proposals put forward in that debate, those considerations included the proposals put by the right hon. Member for Crosby (Mr. Page). But after considering all the suggestions we decided that the explanatory memorandum was the most appropriate form and the Joint Committee on Statutory Instruments accepted it as the appropriate means. The decision was welcomed on all sides. It, however, hon. Members think that there is room

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  for improvement, I undertake to reexamine the matter. It is in everybody's interests to find the most appropriate and satisfactory means of resolving the difficulties in which Members find themselves.
  Mr. Rifkind: I am grateful for the Minister's constructive response. When the Government considered the possibility of using Command Papers as suggested by my right hon. Friend the Member for Crosby (Mr. Page), what led them to decide to give preference to explanatory memoranda?
  Mr. Tomlinson: I cannot say at this stage. Until tonight I was not aware of any particular difficulty in the use of explanatory memoranda.
  Mr. Spearing: Ah.
  Mr. Tomlinson: My hon. Friend says "Ah", but I must tell him that an embarrassing amount of praise was heaped on the Government from all quarters in the Joint Committee on Statutory Instruments. I shall examine the difficulties and if there are any particular difficulties I shall ensure by appropriate means to inform hon. Members.
  I was asked—this was a point mentioned by the hon. Member for Faversham (Mr. Moate) in particular—about the reason for specifying the (No. 6) Order under Section 1(3) of the Act. Direct applicability is one of the criteria, but it is not the only one. Paragraph 8 of the explanatory memorandum on page 4 makes clear that the Government are specifying these matters because of the association agreements on Community Treaties under the European Communities Act 1972 and the protocols that follow from those agreements. This is necessary to allow action to be taken in the United Kingdom, and that is why the Government decided that this should be specified.
  The hon. Member for Pentlands asked whether Greece and Turkey will take up the full amount. All one can say is that in the case of previous financial protocols the full amount has been taken up; but it is impossible to speculate on the situation between now and 1981.
  I was asked about the expiry date of 31st October 1981 and why there was a
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  common expiry date. The reason is that this is part of a package of financial protocols agreed by the Community with Mediterranean countries, and all the protocols are dated to expire at the same time.
  The hon. Gentleman asked about differences in aid between Greece and Turkey, and, in particular, at whose request the differences occur. I do not know, but I shall write to the hon. Gentleman. As I explained, the main thing is that the terms in connection with Turkey are more generous. There was a Community feeling that the Turkish economy was such that Turkey needed the greater assistance. I shall be in touch with the hon. Gentleman on that matter.
  The hon. Gentleman asked about the total British contribution. I cannot add anything to knowledge about that. It has to be decided as part of our contribution to the total Community budget. Until that is resolved. I cannot go any further into the total British contribution. I think that that covers the hon. Gentleman's specific questions.
  My hon. Friend the Member for Newham, South referred to the Command Paper. I shall consider that matter further. It was important to hear him remark that we have improved, but we could do better. I take my hon. Friend's remark as a compliment on an improved procedure. I accept the implied need to go further.
  My hon. Friend asked about the current exchange rate of the European unit of account. The rate used is one unit equalling 65p. If we translate the figures for the EEC/Turkey third financial protocol, it comes out at approximately £202 million. For the EEC Greek second financial protocol it comes out at appproximately £182 million. However, if my hon. Friend uses the present exchange rate of 65p to one unit of account, that is very close.
  My hon. Friend asked about Cyprus. He was right to draw the attention of hon. Members to the particular problems of Cyprus. The Community has made provision for a separate financial protocol with Cyprus. The Community decided that that should be to the benefit of both communities on the island. I do not anticipate that the financial protocols that we are discussing will do

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  anything to create further tensions on the island. We are considering the problems of Cyprus, and the Community has made provision for a separate financial protocol.
  My hon. Friend raised the question of the wretched word "complementarity" as regards Greek agriculture. He is right to have drawn the attention of the House to its significance. It may well be the most important problem when we have the substantive negotiations for the full membership of Greece. I do not want to go beyond that. That will be one of the major areas of the negotiations.
  The hon. Member for Faversham asked about the special loans and how they are financed. The interest rate for Greece is 2·55 per cent. and for Turkey it is 2·5 per cent. These special low interest rates are provided by the member States. The United Kingdom's contribution is attributed to the aid budget. As for Commission opinion, I am not sure what the position is in relation to that. I shall have to write to the hon. Gentleman.
  Mr. Moate: I still do not understand why any action is required in this country, as is implicit in the procedure we are discussing, when it would appear that the funds are coming from the Community budget.
  Mr. Tomlinson: It is not all coming from the Community budget. As I have said, the financing of the special low
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  rates provided by the member States is, in the case of the United Kingdom, directly attributable to the United Kingdom aid budget. That raises a specific example for which the hon. Gentleman was looking.
  Mr. Moate: I am sorry to interrupt again. Is the Minister saying that the moneys we are authorising tonight are additional to our Community contribution and that we do not know exactly what money we are being asked to authorise because the precise figure is not available?
  Mr. Tomlinson: If I am honest with the hon. Gentleman, I must say that I am not quite sure whether I am saying that. The EEC's contribution is not yet known because of the discussions that are now taking place on the Community budget. The part of the contribution relating to low interest loans and how they are financed will come from cash directly attributable to the United Kingdom aid budget.
  I think that I have answered the specific questions that were posed. I hope that the House will therefore approve the order.
  Question put and agreed to.
  Resolved,
  That the draft European Communities (Definition of Treaties) (No. 6) Order 1977, which was laid before this House on 14th November, be approved.

  LOCAL LOANS (INCREASE OF LIMIT)
  12.25 a.m.
  The Minister of State, Treasury (Mr. Denzil Davies): I beg to move,
  That the draft Local Loans (Increase of Limit) (No. 2) Order 1977, which was laid before this House on 10th November, be approved.
  This order increases by £2,000 million the amount available to the Public Works Loan Commissioners for lending to local authorities and other eligible authorities. The amount was originally fixed at £2,000 million in the Finance Act 1975, and the same Act gave the Treasury power to increase the amount by £2,000 million at a time on three further occasions. This power is exercised by order, subject to affirmative resolution of the House. This is the third and last such order under the Act. The second order was debated on 26th April this year. We are therefore debating this last order available under existing legislation somewhat sooner than had been anticipated.
  I should like to emphasise, as I have done in previous debates, that the order does not itself sanction any increase in local authority capital spending. Capital expenditure is controlled by the Government in other ways. The order does not therefore affect public expenditure. Nor does the extent to which local authorities borrow from the Commissioners rather than the market affect the size of the public sector borrowing requirement.
  During the debate on the second order I indicated that, although we might expect to request the House to approve the final tranche of £2,000 million in March or April 1978, this final tranche might be required somewhat earlier if borrowing by local authorities from the Public Works Loan Board exceeded our forecasts. At that time we expected that gross local authority borrowing from the Board might total some £1,900 million in 1977 –78. However, as of now, local authorities have already borrowed about £1,870 million. These are, of course, gross figures. They represent both new lending and re-borrowing in respect of debts which have become repayable. But net borrowing figures show a similar difference between forecast and outturn. Thus, while our budget estimate for net lending from the Board was £700 million, to date
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  local authorities' new borrowings from the Board total about £1,120 million.
  This marked increase in the rate of local authority borrowing from the Public Works Loan Board is partly a result of the sharp reduction in the general level of interest rates that has occurred since last April, but it is also in response to the provision of the new voluntary code of practice on the regulation of local authority borrowing.
  The House will no doubt recall that proposals for a code were under discussion with the local authority associations when we debated the previous order in April. The underlying reason for a code was the need to reduce the extent of local authorities' dependence on short-term borrowing. Since then the associations have drawn up a code of practice which is intended to lengthen the maturity of local authority debt. I should like to take this opportunity to express the Government's appreciation of the hard work and effort which the local authority associations have contributed to the formulation and introduction of the code. I am happy to say that, so far as we can see, local authorities, understanding the reason for the code, are doing their best to bring their borrowing into line with it.
  For our part, we have done what we can to help by raising PWLB quotas for the current year. This has been achieved by increasing the 5 per cent. the percentage of local authorities' reckonable capital expenditure that the authorities are entitled to borrow.
  Against this background we have felt it necessary to adopt a cautious approach to the question of when it might be necessary to provide the final tranche. As of today the Public Works Loan Commissioners have about £638 million available for lending. By previous standards this is a sizeable margin. None the less, the extension of the PWLB quotas to assist local authorities with the voluntary code means that the total potential entitlement under the 1977 –78 quotas is in excess of the funds presently available. Moreover, the flexible drawing arrangements available to local authorities means that the Board might be faced with demands for unexpectedly large sums of money at quite short notice. This factor has led us to the conclusion that

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  in future it would be unwise to let the margin of unused statutorily approved funds fall below £250 million-£300 million. In view of this, and the general difficulty of forecasting the level and timing of local authority demand for PWLB money, I consider that it would be prudent to ask the House to approve this order before rather than after the Christmas Recess.
  Section 55 of the 1975 Finance Act and the orders that can be passed under it are purely a mechanism to allow local authorities to borrow a proportion of their financing requirements—according to their quota entitlements—from the Public Works Loan Board if they so wish. As recent experience has shown, it is difficult to forecast accurately how long the new tranche will last, particularly as the size of next year's quotas has yet to be considered. Nevertheless I would expect that the new tranche will last well into the financial year 1978–79.
  Finally, I am sure that the House will join me in expressing thanks to the Public Works Loan Commissioners for the services that they render with much skill and dedication, and on an entirely voluntary basis.
  12.31 a.m.
  Mr. Nigel Lawson: The Minister of State has told us why he is bringing forward this order rather earlier than he had expected. It might be helpful to remind the House what he said at the end of the debate on the second tranche. He said:
  "If the House refused the order it would force local authorities into the market at higher interest rates with the effect on ratepayers of the authorities having to recoup the interest rates through higher rates or on Government in providing larger grants for public expenditure."—[Official Report, 26th April 1977; Vol. 930, c. 1190.]
  It seems to me that when any order comes before the House it is certainly a good question to ask what will be the effect if the House does not agree to its passage. That is one way of finding out the substance of the order. What the Minister said in April was strange, and cannot be wholly true. I should like him to comment on that. I hope that he will be able to answer the various questions that I propose to put to him when he winds up the debate, with the leave of the House.
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  It cannot be the case, particularly when we are under a regime in which the rate support grant is cash limited—for example, forcing the authorities to go to the market for more capital rather than going to the Public Works Loan Board—that that should automatically require higher Government grant for public expenditure. Nor, indeed, can it be automatic if they go to the market. If the cost is higher, they may go for less.
  Although what the Minister said is not wholly true, and is false in an important way, it has a kernel of truth, and it shows the highly unsatisfactory nature of the parliamentary scrutiny of public expenditure. What he was really saying was that it does not matter whether we pass this order or not. He was saying that if we do not, what will happen is simply that there will be more Government expenditure in another form and that the House really has no control over the matter.
  This has been shown in a number of cases recently. We have seen the lack of parliamentary control over the Crown Agents, and there are less dramatic examples. It is nonsense that the parliamentary control that we are supposed to be exercising tonight covers the funds that go to the PWLB but that we have no control over the use of these funds. The funds are used to finance capital expenditure by local authorities and these we know, are controlled by the Government, not merely by the loans sanctions scheme but, more importantly, by the various cash limit blocks on local authority expenditure. Yet we have no debate on cash limits and the Estimates are not even presented to the House of Commons in a cash limit form, either in the financial terms or in the same blocks. This re-emphasises the overriding need for an improvement in the way that Parliament attempts to scrutinise—even if control is too ambitious a word—public expenditure of all kinds.
  We are debating a very large sum of money, even though it is late at night, and if The Times had not been in bed long since it might have had a table on its front page showing how relatively few hon. Members were present. The sum concerned is £2 billion, which is a relatively large sum of money even in these inflationary days. It is part of an even bigger sum—the total amount of local authority indebtedness. The interest

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  alone on this indebtedness runs to well over £3 billion a year and accounts for one-fifth of total local authority current expenditure.
  The Minister pointed out that he is now asking for the third and last tranche under the 1975 Act. What he did not say was what he is to do when this tranche runs out. I assume that there will be a clause in next spring's Finance Bill, going through the process all over again, with a certain amount of money and further tranches, just as the section in the 1975 Act repeated the section in the 1972 Act.
  There was a doubling in the amount between those two Acts. In the 1972 Act the amount of each tranche was £1,000 million and in the 1975 Act it was £2,000 million. I hope that the Minister can give an assurance that he does not intend to double it up once again and provide in the coming Finance Bill that the tranches should be £4,000 million, even if the basic system is to remain unchanged.
  As the Minister said, the last tranche was approved in April. He said that he expected it to last about a year. In the event, it has lasted about eight months, but he did not fully explain why this was the case. It is because of a greater recourse to the Public Works Loan Board by the local authorities. That is clear enough, but it would be helpful to have figures showing the extent to which that growth has been in quota loans and the extent to which it has been in non-quota loans, in which case the Board acts as a lender of last resort. Are any figures available of non-quota loans? I do not recall having seen any, but if they are available it would be helpful to have them.
  In so far as this is due to voluntary recourse to the Board on interest rate grounds—because interest rates have fallen a little—that presumably has the curious implication that local authorities feel that interest rates are likely to rise in the future, otherwise there would be no incentive for them to borrow longer at existing rates. I suspect and fear that those local authority treasurers who are looking ahead to a likely rise in the rate of inflation and the rates of interest towards the end of the latter part of 1978 are wise to have formed that view.
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  The trend also developed to some extent as a result of the code to which the Minister referred. Will he say something about the progress that has been made in the implementation of the code? Will he give statistical evidence of the implementation of the code, and say what the cost to ratepayers has been? By borrowing longer instead of shorter, local authorities have obviously paid a higher cost in terms of interest rates.
  Another aspect of the code is that it contains two important paragraphs. 12 and 13, with which the Minister will be familiar, dealing with the monitoring of the code. They seem to me, at any rate, to be particularly important paragraphs. It would be helpful to know what progress there has been in the implementation of paragraphs 12 and 13, concerning monitoring.
  Finally, I want to make one or two comments about the quota. First, what proportion of the quota is currently drawn? The Minister mentioned again that the Treasury had increased the quota from 30 per cent. to 35 per cent. of capital expenditure, plus, I suppose, the 31 per cent. of debt. Will he say something about the rational grounds on which these figures are based? It seems to me to be something of a mystery. Are they plucked out of the air? Why is it 35 per cent. and not 40 per cent.? How is the right figure judged? There seems to be a very arbitrary basis. There may be principles. If so, it would be helpful to know what they are.
  When we had the debate on the last tranche, in April, the Minister said that the money that was lent to finance local authority capital expenditure was in blocks subject to cash limits. In 1976䀓77 the outturn of cash limits showed a great difference between these local authority blocks and central Government cash limit blocks. In central Government the underspending was about 21 ½ per cent.; in local authority blocks, there was a total underspending of 16½ per cent. It would be helpful if the Minister could explain the reason for that. He will see that those figures are correct if he looks at the out-turn of cash limits for 1976䀓77, published in the White Paper.
  It would be helpful to know the reason for this and what is happening this year, because this year we have recently been presented with a very obscure deposited

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  paper, quietly smuggled out of the Treasury and into the Library of the House the Friday before last. It shows that for the first half-year central Government cash limits were again currently being underspent by a very small amount—about 3 per cent.—but we had no figures for local authority cash limit blocks. Perhaps the Minister will use this occasion to comment on that, because it bears directly upon the purposes for which the money is borrowed from the Public Works Loan Board.
  One other thing that is a puzzle in the deposited paper to which I have referred is that it seems that there was a slight overspending of the rate support grant. I cannot see how there can be an overspending of the rate support grant. It seems to me that this is the one figure in the whole cash limit fielid which should be accurate to the last penny. But perhaps the Treasury has some gremlins in it, or worse—because I notice that of 100 cash limit blocks, over 11 were overspent and one of the 11 was the Treasury itself—not, perhaps, the best of examples to set.
  Also, perhaps the Minister would say something about house building. This is the biggest single item of local authority capital spending by far, which this year has been cash limited; last year it was not. How is this experiment working out? A large amount of this borrowing from the Public Works Loan Board is borrowing to finance house building.
  It seems to me that in the control of local authority spending, the real problem is really not capital expenditure but current expenditure. Indeed, it is striking that it is capital expenditure which has borne the brunt of the cuts—as the 300,000 unemployed in the construction industry know to their cost. This is a Government bias that has been severely criticised by the Opposition and by Parliament itself—by the Expenditure Committee, for example. I see the hon. Member for Chester-le-Street (Mr. Radice), who is a member of that Committee, sitting on the Labour Benches tonight.
  The logic of this seems to be that direct control of capital expenditure should exercise an indirect control over current expenditure. But in that case, are the Government insisting that applications for loan sanction from local authorities must be accompanied by a statement of
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  the implications for current expenditure and, in particular, for manpower levels, and, if not, why not? They certainly should be.
  If that is being done, is it being monitored, and what is the result? Of course, if it is not being monitored it is useless to put this requirement on local authorities. What is the monitoring system, and what is the result of that monitoring? Current expenditure, as I mentioned earlier, is also controlled, at least in theory, by cash limits on the rate support grant as a whole, but this is rather nonsensical, not just because it is much too big a block—the biggest cash limit block of all—but because it means that the sins of the spendthrift local authority and the virtues of the thrifty local authority will be visited on all local authorities equally, thus destroying the essential discipline of cash limits and making the whole system manifestly inequitable.
  The Government should seriously consider moving to cash limits for each top-tier local authority. Although this would mean in some respects a loss of local autonomy, it could be adequately compensated for by giving local authorities greater freedom within the cash limits—perhaps a bigger locally determined sector—and also by making the loan sanction system far less detailed than it is at present.
  I have asked a number of questions which, it would seem, have been greatly appreciated by those on the Benches behind me. I hope that the Minister will provide answers that we shall appreciate equally and will provide more answers than his colleague who answered the previous debate was able to provide.
  12.47 a.m.
  Mr. R. B. Cant: Having felt the cold hand of my Whip on my shoulder, asking me the rhetorical question "You are not going to speak in this debate, are you?", I propose to be very brief. There are one or two interesting points raised by this order and I shall ask one or two general questions and not get involved in all the technicalities that exercised the mind of the hon. Member for Blaby (Mr. Lawson).
  I accept the fact that the Government have been for some time concerned about the very large amount of short-term borrowing that local authorities have gone

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  in for. Last year, in a similar debate, the right hon. Member for Crosby (Mr. Page) revealed that about 75 per cent. of the borrowing of one of our most distinguished cities was of a short-term character.
  I have never been quite clear why this should raise so many question marks. Ever since, in 1956, the Opposition—they were then the Government—threw local authorities on to the money markets, all our county and city treasurers have exercised an amount of ingenuity in their borrowing that should be a cause for congratulation. Once they begin to do such sophisticated things as borrow in the Eurodollar market, and that sort of thing, the Government panic and introduce orders of this kind. I do not want to pursue that point, but I am not persuaded that short-term borrowing is quite such a heinous crime—even on the scale that some authorities go in for.
  Reference has been made to the question of cash limits. As someone now in his 25th year as a local councillor, I believe that the introduction of cash limits has had a more traumatic effect on local authorities than anything, in financial terms, that I can remember. I take the precaution of serving on committees which spend rather than raise money.
  The thing that always interests me is that although local authorities have an excellent financial reputation, when they go into the market, when they wish to raise money, as Hugh Stephenson says in The Times today, they are always charged a penal rate. As borrowers of money they do not rank in the same category even as second-class companies, let alone first-class companies. It has always amazed me why the central Government, who have much less control over their finances than local authorities have over theirs, should always by able to raise money at a much lower rate of interest.
  It seems to me that there is a tendency to think that every local authority is in the same sort of financial category as New York. That sort of image tends to stick to local authorities. But, on the whole, we should move rapidly to the point of view that local authorities should rank equally with the Government in
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  financial status, and therefore in the rate of interest at which they can borrow money.
  I was surprised that the hon. Member for Blaby did not raise a question that I know he is interested in and that is implicit in this change in borrowing by local authorities. In reducing the amount of short-term lending, the local authorities are borrowing from the PWLB, and my hon. Friend made reference to the fiscal consequences. But, as they are not necessarily borrowing a great deal more in the aggregate, they are rapidly reducing the amount of money that they are borrowing from the banking system. So I now ask a question that is really on behalf of the hon. Member for Blaby. What effect will this have on M3, or, perhaps in the new year, on M4 if we move towards that more sophistical money supply concept?
  Although the effect will not be great, it seems to me that it is something which is important at the margin. My right hon. Friend the Chancellor of the Exchequer panicked recently and raised the minimum lending rate by 2 per cent., perhaps because companies abroad were remitting their revenues homeward rather more quickly than they used to, and this built up the banks' assets. Or it may be that there was a little bit of arbitrage without tax reserve certificates, which increased the money supply somewhat, and the Chancellor reacted at the margin very quickly.
  Mr. Lawson: The hon. Gentleman has for some time been putting a question on my behalf. I did not put it because I understand that when we are talking about local authorities borrowing less short-term and more long-term from the PWLB, we are not talking about their reducing their borrowings from the banks. It is not their overdrafts that have changed; that does not follow. It is only to the extent that bank lending is increased or diminished that M3 would be affected.
  Mr. Cant: That is a technical point, with which I may not have been wholly familiar, but the authority of which I am a member borrows, quite rightly, from the banks to a very considerable extent, and if this money is now available from the Public Works Loan Board the bank borrowing will be diminished. I merely

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  express this sort of concern as someone who is interested, because I should hate a situation to arise in which, if M3 went down or went up, the Chancellor of the Exchequer reacted too quickly when there was really no reason to do so.
  Mr. Denzil Davies: A number of points have been raised in the debate. My hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) asked why local authorities have to pay so much more in the market than he thought was justified. I thing the answer is that this is a matter that the market has to decide in its wisdom or otherwise, but no doubt the market will take account of my hon. Friend's statement. In future it may take a different view. But this is really not a matter over which the Government have very much control.
  This brings me to the point made by the hon. Member for Blaby (Mr. Lawson), who asked at the beginning—he also read out a few remarks that I had made in the last debate—what would happen if the order were not passed. As I said last time, the local authorities would have to go into the market if they wanted to maintain their capital programmes. I accept that they could withdraw from part of those programmes, but I gather that the Opposition would not wish that to happen. Assuming that local authorities wanted to maintain their capital programmes, they would have to go into the market, and that would mean that increased interest charges would have to be paid somewhere by somebody at the end of the line. That would be the effect of not accepting the order.
  The hon. Member for Blaby, for a good part of his speech, asked questions about cash limits. I should be out of order if I were to discuss cash limits this evening, because the order has nothing whatsoever to do with them, as the hon. Member will recognise.
  Mr. Lawson: I quite understand if the Minister was unprepared and unbriefed for this, but the money that is lent to local authorities is on capital expenditure, and local authority capital expenditure is in cash-limited blocks. I quite understand the point. Perhaps the Minister would be kind enough to write to me with the answers to my questions on cash limits.
  Mr. Davies: It the hon. Gentleman tables Questions on cash limits I shall certainly answer those Questions, but this does not arise out of the debate. The debate is concerned not with cash limits or capital expenditure but with the way in which local authorities are to fund or borrow money for that capital expenditure which is, as he says, cash-limited. If the hon. Gentleman tables Questions he will get very satisfactory answers.
  The hon. Gentleman asked what we shall do next. As he knows, we shall have to bring forward legislation to reactivate this mechanism to enable local authorities to borrow from the Public Works Loan Board. I cannot give him the assurance that he required in relation to the tranches. It has not been decided yet. No doubt he and the House will be informed before too long.
  The hon. Gentleman asked about the growth in loans. I can tell him that all the growth has been in quota loans. There have been no applications for non-quota loans. As a comparison, in 1976 –77 aproximately 70 per cent. of the total quotas were drawn by local authorities from the board, and so far this year the figure is again 70 per cent.
  The hon. Gentleman asked me about the code and the monitoring. Our estimate is that so far about £1,200 million worth of temporary loans are being replaced or have been replaced by the longer-term debt. This is not entirely as a result of the code, because interest rates are also a factor. That is the order of the switch that is taking place.
  The hon. Gentleman also asked about the figures of 35 per cent. and 45 per cent. These percentages are arrived at after consultations with the local authorities in the light of what it is felt they will need to borrow from the Public Works Loan Board.
  Mr. Lawson: The Minister has rather skipped over the question of monitoring. Since he is clearly not familiar with the monitoring paragraphs, perhaps I can read them out, because they are brief. Paragraph 12 says
  "It is recommended that each local authority should make arrangements for the relevant committee of that authority to receive a report twice yearly on the pattern of borrowing and to give explanations for any variation in this pattern from that applicable under paragraph 10 of this Code."

  231
  Paragraph 13 says that
  "It is also recommended that local authorities incorporate the provisions of this Code in any Standing Orders or Financial Regulations adopted by a local authority for the purpose of financial management."
  I was asking to what extent these monitoring procedures have been carried out.
  Mr. Davies: I have no reason to believe that local authorities are not carrying out their obligations under the voluntary code. I hope that the hon. Gentleman will appreciate that this is a voluntary code. It is not a diktat from central Government. We negotiated this code thoroughly, and I am sure that local authorities will carry out their obligations under it.
  My hon. Friend the Member for Stoke-on-Trent, Central raised a very good point—I am surprised that the hon. Member for Blaby missed it—about the effect on M3. There is no effect on public expenditure or on the public sector borrowing requirement. Cash limits are irrelevant. My hon. Friend made a very good point, but it is difficult to know what would be the effect of switching borrowing from the market to the Public Works Loan Board. There would probably be a small effect on M3. If one were asked to put a figure on it, it would be less than per cent. There would be a minuscule effect on M3—not sufficient to create panic in the ranks of the monetarists, of which the hon. Member for Blaby is one.
  Mr. Lawson: What about the Chancellor?
  Mr. Davies: The Chancellor is not a monetarist. I believe that he is a neo-Keynesian.
  Mr. Cant: We should clarify the position of the Chancellor. I referred to him as a practical monetarist and he told me that I was quite wrong and that he was a monetary pragmatist.
  Mr. Davies: I am not quite sure what version of monetarism my right hon. Friend subscribes to, but as I understand it the hon. Member for Blaby is perhaps a Messianic monetarist.
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  I think that I have dealt with all the points that were raised—certainly those that were relevant to the debate. I again commend the order to the House.
  Question put and agreed to.
  Resolved,
  That the draft Local Loans (Increase of Limit) (No. 2) Order 1977, which was laid before this House on 10th November, be approved.

  HOUSE OF COMMONS (LIBRARY)
  Motion made,
  That this House doth agree with the Select Committee on House of Commons (Services), in their Fifth Report, in the last Session of Parliament, on Computer-based Indexing for the Library.—[Mr. Frank R. White.]
  Hon. Members: Object.

  Mr. LIDDLE TOWERS
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Snape.]
  1.3 a.m.
  Mr. Giles Radice: I am sad to have to raise the case of Liddle Towers on the Adjournment of the House. The brief outlines of the case are as follows. My constituent, Liddle Towers, was a 39-years-old electrician. He had no previous criminal record for acts of violence. Indeed, apart from motoring offences the only criminal record was for the theft of £3 worth of scrap metal.
  He died on 9th February 1976 at Dry, burn Hospital, Co. Durham, from injuries received at the hands of the police during the night of 15th-16th January. Towers was arrested outside the Key Club at Birtley, in my constituency, at 12.45 a.m on 16th January, by PC Goodner. After a struggle he was put into a dog van by six policemen and taken to Gateshead police station. Later, at 4 am, he was taken from the station to Queen Elizabeth Hospital because he complained of not feeling well, and, after an examination which apparently revealed no injury and nothing wrong with him, he was taken back to the cells. He was discharged later that same morning at 10 o'clock.

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  Both the taxi driver who took Towers home and his local GP, Dr. Powney, who saw him later that day at 2 o'clock, gave evidence that was consistent with Towers' own account of having been assaulted in the cells. Towers told his friend:
  "They gave us a bloody good kicking outside the Key Club, but that was now to what I got when I got inside."
  That was hearsay evidence, of course, which was not admissible at the inquest.
  On 8th October 1976, an inquest on Towers returned a verdict of "justifiable homicide". That was a very strange verdict. Taken literally, it would mean that the police intended to kill Liddle Towers and were justified in so doing.
  On 3rd May 1977, the Attorney-General, in answer to a Written Question from me, said that the DPP had decided that the evidence was not such as to justify the institution of criminal proceedings against any officer. Later, on 8th July, the Home Secretary refused to set up an inquiry under Section 32 of the 1964 Police Act. Tonight, I am asking my right hon. Friend to reconsider his decision.
  The case for a Section 32 inquiry is as follows. I believe that there should be an inquiry because there is considerable disquiet over the Liddle Towers affair, and concern over this affair is now threatening to bring the Northumbria police into disrepute in a more general way.
  Mr. A. J. Beith: I am sure that the hon. Gentleman agrees that the attempt in some quarters to widen the criticism of the Northumbria police far beyond this case is very undesirable but that it is to some extent promoted by the feeling that the Home Office is refusing an inquiry because the one narrow case is all that is involved. Does not it strengthen the case for getting this one cleared up?
  Mr. Radice: I agree with the hon. Gentleman. The case has been mentioned frequently in the Press since I met the Home Secretary with a deputation. There was a feature in the Sunday Mirror on 23rd October. There was a half-hour documentary on Tyne-Tees Television on 31st October. On 14th November there was a half-page article in The Guardian.
  234
  On 15th November there was an editorial in The Guardian calling for an inquiry into "the case that won't die". On 18th November there was a "Nationwide" film on television. On 20th November there was an article in The Sunday Times. On 28th November there was a "World in Action" programme. As the hon. Gentleman said, the "World in Action" programme, The Guardian article of 3rd November and the Sunday Mirror article all featured other cases of alleged police brutality—other cases, that is, apart from that of Liddle Towers.
  I have no means of knowing whether these cases are true or false, and I have no intention of raising them in this debate, but I point out that this more general concern has arisen from the widespread feeling that justice has not been done, and certainly has not been seen to be done, in the case of Liddle Towers. So, in a real sense, diquiet over this case has begun to reflect general public confidence in the Northumbria police force.
  Mr. Eldon Griffiths: How much Press publicity has there been of the 285 assaults on the police in Northumbria up to November of this year? There have been 285 cases, but very little publicity.
  Mr. Radice: There was not a great deal, but now there is Press publicity in any case of police brutality. This makes the point about Liddle Towers—that the concern is now spilling over into general concern about the Northumbria police as a whole, which is very undesirable.
  An inquiry is being pressed for by many local organisations, including political parties, trade unions, the Northumbria branch of the National Association of Probation Officers and the Liddle Towers Committee, chaired by a local magistrate, Mr. Bell. In addition, the solicitor acting on behalf of the Police Federation in the case said, on the Tyne-Tees Television programme of 31st October, that there was a case for a Section 32 inquiry. More than 50 Members representing a wide spectrum of opinion in the House have also backed the idea of an inquiry.
  My second reason for asking for an inquiry is that it is the best means of establishing all the circumstances surrounding the behaviour of the police that night.

  235
  As for a fresh inquest, the Broderick Committee concluded in 1971 that inquests were not suited to situations in which homicide is or may be alleged. Certainly, at another inquest the Towers family would not be entitled to have a prior view of witnesses' statements, to call evidence, to address the jury, or to have full rights of cross-examination, while the police concerned need not give evidence.
  Civil action is inappropriate, because Mrs. Towers has said that she does not want damages but wants only to see justice done. Given the DPP's decision not to prosecute, a private prosecution must be unrealistic. In any case, it is unfair to put the onus on the family.
  My own view, and that of other Members and legal experts, including experts on the Liddle Towers Committee, is that the only way to establish what happened is a Section 32 inquiry. The main argument of my right hon. Friend the Home Secretary against such an inquiry, used notably in his letter to my right hon. Friend the Member for Middlesbrough (Mr. Bottomley), is that it would offend against the principle of no double jeopardy. I have sent counsel's opinion to my right hon. Friend. Counsel takes the view that my right hon. Friend is incorrectly equating a Section 32 inquiry with possible action under Section 11 of the 1976 Act. That section and the Home Office guidance to chief officers of police establish that a police officer should not be liable to be proceeded against for an alleged disciplinary offence for which the evidence to be brought against him should be in substance that which had been held insufficient to justify a criminal prosecution. That does not refer to a Section 32 inquiry, which is concerned with finding out what has happened and not with disciplinary proceedings or punishment.
  In any case, as the DPP has decided not to prosecute, the police officers are protected from disciplinary action. I am also advised that it would be perfectly possible to grant the officers immunity from prosecution or disciplinary action, in which case the problem of double jeopardy does not arise.
  I urge my right hon. Friend to set up an inquiry. I assure him that the Towers case will not go away. On the
  236
  contrary, the continuing public concern about the case is beginning to undermine confidence in a whole police force, and that is something that I very much deplore. Therefore, it is now in the interests not only of the Towers family but of the Northumbria police force as a whole that justice should not only be done but be seen to be done.
  1.14 a.m.
  Mr. David Watkins: Recognising that time for this debate is very limited, I rise to speak only briefly in support of my hon. Friend the Member for Chester-le-Street (Mr. Radice) in his call for a public inquiry and to congratulate him on having brought this important matter before the House.
  Most Adjournment debates tend to be on constituency matters. It is true that this debate centres around one of my hon. Friend's late constituents, but it is not only a constituency matter. It is a matter of national concern, a vital matter about an individual who is dead as a result of homicide committed by the police, as has been found by a coroner's jury.
  I have the honour, in this Session of Parliament, to be the Chairman of the Northern Group of Labour Members and must confirm, in that position, that there is a major concern not just in the constituency of my hon. Friend the Member for Chester-le-Street but also in Northumbria and throughout the whole Northern Region, and that there is widespread support for such an inquiry. Indeed, it is clear that there is widespread support for that course of action not just in the North but throughout the whole country, and that support has been widely and publicly manifested.
  So long as the present situation lasts the police themselves are under a cloud, which has effected public confidence, and it is as much in the interests of the police as of anyone else that there should be an inquiry on this narrow issue. That was the point so ably put by the hon. Member for Berwick-upon-Tweed (Mr. Beith) in his intervention. I hope that the Minister will respond favourably to the call that has been made by my hon. Friend the Member for Chester-le-Street.
  12.17 p.m.
  Mr. Eldon GriffithsI intervene briefly to express my sympathy for the family of the dead

  237
  man and because it ought not to go out from this House that we are lending our authority to any generalised attacks against the Northumbrian police or any other police service. I absolutely acquit the hon. Member for Chester-le-Street (Mr. Radice) of any such intention, but having seen, the other night, a film purporting to suggest that the Special Patrol Group of the Metropolitan Police was guilty of brutality at Grunwick, and having seen some of the publicity that has unfortunately surrounded this matter, I can well understand that the police themselves believe that they are being unfairly got at in Parliament.
  The Minister will no doubt give us the Government's thinking on the question of an inquiry. I have an open mind on that. There has been an inquest and an investigation—a thorough one—by an experienced detective chief superintendent. The Director of Public Prosecutions has considered the matter carefully, and so have the Attorney-General and the Home Secretary. A formidable range of consideration has been given by responsible people to this matter and their conclusion has been unanimous, namely, that there is no evidence on which to found charges of improper conduct on the part of the police.
  No one can do anything other than regret the case of a man who has come to his death in this way, but it is right to record that in 1974 in the Northumbria police area there were 157 assaults on policemen that led to injuries sufficiently serious to be compensated by the Criminal Injuries Compensation Board. In 1975 there were 213 such injuries and in 1976 there were 210. In the first 10 months of this year that figure was close to 300. Many of these assaults resulted in serious injuries. I have a list of them here, with which I shall not now weary the House. I ask only that, while expressing our sympathy for this man, the Home Secretary should give earnest consideration to the request for an inquiry and that he should set that consideration against the background knowledge that the police are in the front line and that they suffer these assaults in defending the rest of us and maintaining public order.
  1.19 a.m.
  The Under-Secretary of State for the Home Department (Dr. Shirley Summerskill): I should like to say at
  238
  the outset that I very much regret the death of Mr. Towers and sympathise with his relatives in what for them must remain a lasting sorrow. A case such as that of Mr. Towers, who, as my hon. Friend the Member for Chester-le-Street (Mr. Radice) has said, died as a result of an encounter with the police, understandably gives rise to genuine concern, and it is essential that it should be the subject of full and thorough investigation and consideration.
  I assure the House that my right hon. Friend the Home Secretary has been in no doubt of the public and parliamentary concern about the case and has given full and anxious consideration to the representations which have been made, including the deputation my hon. Friend took to him, for an inquiry under Section 32 of the Police Act 1964, even though he has decided that in all the circumstances of this case it would not be appropriate to invoke that procedure.
  The death occurred in the Durham police area and, in accordance with normal practice, a full investigation for the coroner was carried out by the Durham police, who made a public appeal for eye witnesses of the arrest. The statements from all persons who offered them, the police officers concerned in the arrest and at the police station, other persons detained there and the doctors concerned, were supplied to the coroner. The coroner decided who should be called to give evidence and it would be wrong for me to comment on his decision in this matter, or on the inquest verdict. Salient evidence at the inquest was that of P.C. Goodrick's fall on Towers, and medical evidence that the nature of Towers' fatal injuries were such that a fall as described at the inquest was the most probable cause; such injuries from kicks were only a remote possibility.
  There has been some criticism of the fact that police officers other than P.C. Goodrick declined, on the advice of their solicitor, to submit to cross-examination. In this they were exercising the same right as is available to any witness at an inquest. Their full statements were, of course, included with those sent to the Director of Public Prosecutions as part of the case papers.
  As to the suggestion that incriminating evidence was available from other people who were at Gateshead police station but who were not called at the inquest.

  239
  I understand that the substance of their evidence was merely that they heard some scuffling and banging of cell doors. In his summing up, the coroner said that there was no evidence which he had heard of any violence which took place at Gateshead police station. It is true that the verdict is an uncommon one, but, as the Attorney-General indicated in his Written Answer in May, he had received no application on behalf of the family for a fresh inquest and I understand that he has received none since. The reopening of the inquest is not a matter in which my right hon. Friend has a responsibility; it is one for my right hon. and learned Friend the Attorney-General.
  The inquest was by no means the end of the matter. A report of the inquest was sent to the Director of Public prosecutions and the case was further considered by him. Before the inquest, a full report of the police investigation, which included all the statements taken by the police, had been submitted to the Director of Public Prosecutions. The Director decided that the evidence was not such as to justify any criminal proceedings. On 3rd May my right hon. and learned Friend the Attorney-General announced that the case had been the subject of a very full investigation, which included a thorough examination of the vital evidence by no less than three consultants, who were Dr. Ennis and Mr. Smiddy, both of whom gave evidence at the inquest, and, finally, Professor Donald Teare. They were all agreed that there was no medical evidence to support a contention that Mr. Towers' death was in any way attributable to wilful violence or rough handling by the police.
  The Attorney-General added that he had given those associated with Mr. Towers' family an opportunity of providing any further medical evidence or of applying for an order quashing the inquest but that no further medical evidence or such application had been received. He concluded, like the Director of Public Prosecutions and leading counsel, that in the light of the evidence, and particularly the unanimous evidence of the medical experts, this was not a case in which criminal proceedings should be instituted. The Attorney-General was in possession of the Towers' case document "The Case for a Public Inquiry"
  240
  The Chief Constable dealt with the question of possible disciplinary proceedings in his statement on 10th May. He concluded, and quite rightly in the view of my right hon. Friend the Home Secretary, that, having regard to the need to avoid double jeopardy, no disciplinary action should be taken against any of the officers.
  The principle of double jeopardy is important. Briefly, it means that a police officer should not, because he is subject to a disciplinary code as well as to the criminal law, be at risk twice in relation to allegations of criminal offences. If the Director decides that there is insufficient evidence to bring criminal proceedings against a member of the public, his decision—unless some new relevant evidence emerges later—is the end of that allegation. The principle of no double jeopardy, endorsed by Parliament in the Police Act 1976, means that a police officer in similar circumstances should not be liable to have the same allegation resurrected as a possible disciplinary offence. That principle protects police officers by ensuring that they are not liable to be proceeded against for an alleged disciplinary offence for which the evidence that could be brought against them was, in substance, that which had been held insufficient to justify a criminal prosecution.
  I come to the Section 32 inquiry. By May of this year the cause of Mr. Towers' death had been established. The Attorney-General had decided that there should not be criminal proceedings and the chief constable had decided that no disciplinary proceedings were warranted. The due processes of investigation and consideration of the case by the properly constituted authorities had been gone through by those responsible.
  My hon. Friends who want an inquiry are saying, in effect, that there has been no public investigation of the case, apart from the inquest, which in some respects they have seen as not fully answering allegations made against the police—and that despite the considered opinion of the Director that there should be an inquiry under Section 32 of the Police Act so that justice can be seen to be done.
  As my right hon. Friend the Home Secretary explained in July, when he

  241
  reached his decision that a Section 32 inquiry would not be justified, one of the relevant considerations that he takes into account is that a Section 32 inquiry should not be regarded as a substitute for the procedures already laid down in the Police Acts for the investigation and consideration of complaints, or for investigation into possible criminal offiences or into the outcome of criminal proceedings. Nor would it be appropriate to see a Section 32 inquiry as a means of challenging decisions taken by those responsible for such matters. It is true, of course, that Section 11 of the Police Act 1976 does not preclude a Section 32 inquiry. It is true also that for the purpose of a Section 32 inquiry police officers could he granted immunity from subsequent criminal or disciplinary proceedings.
  It is the opinion of the Home Secretary that it is a different matter to argue that he should appoint such an inquiry in this case. There is still the important consideration of the general principle, that is, of the protection of the position of individual police officers, which must clearly be considered a relevant factor in this case if it is in practice to mean anything at all.
  The stark fact is that allegations have been made against the conduct of the officers who arrested Liddle Towers. Those allegations amount to ones of serious criminal offences. It would be artificial from every point of view to hold an inquiry into the case that did not examine those allegations. Yet, even if an immunity from subsequent criminal proceedings were given, the officers would still in effect be standing trial on allegations that in the view of the DPP did not provide adequate grounds for bringing criminal charges and standing trial without the normal safeguards of a criminal court. I cannot believe the House would think that justified.
  My right hon. Friend the Home Secretary set out in his letter of 29th July the general considerations that are borne in mind in the consideration of requests for a section 32 inquiry. To set up such an inquiry, like the more general power to recommend to Parliament the use of the 1921 Tribunal of Inquiry (Evidence) Act, is a major step, and not one to be taken lightly. Successive Home Secretaries have taken the view that the power should be rarely exercised. Although no absolute
  242
  rules can be laid down, the view is taken that it should be reserved, for example, for circumstances in which there is a national scandal concerning a police force, where the whole efficiency of the force is called into question or where there has been serious public disorder.
  It is also relevant to consider whether a particular incident can be or should be dealt with in some other way. That is especially relevant in this case. It would not be right to view a section 32 inquiry as a substitute for the other statutory investigations and procedures that have already been gone through, which arrived at conclusions that do not satisfy those involved.
  It is said in respect of Mr. Spoor's television interview that he came out in support of an inquiry in a programme put out by Tyne-Tees. I am informed that Mr. Spoor said that the programme gave a misleading impression and did not reproduce all that he had said in response to questions asked of him at the interview. I am given to understand that he said in a full interview that he was sure that his clients would have nothing to fear if there were to be any further investigation of the case.
  It was also said in a Press statement that the Police Federation has called for an inquiry. Again, that statement is not correct. I am informed that in a letter last month the Federation's view is that nothing can be gained by another investigation into the case. The Federation also said:
  "It would appear that there has been no further new evidence to substantiate the claim for it."
  I am informed that the chief constable has given the authority a full report of the Liddle Towers case and that a special meeting was held. I understand that the authority resolved that the remarks made by the representatives of the Liddle Towers Committee be noted and that no action be taken to support their request for a public inquiry into the Liddle Towers case. I understand that the authority has passed a resolution expressing complete confidence in the chief constable and members of the Northumbria police force over the manner in which they carried out their duties.
  I assure my hon. Friend and those who have spoken in the debate that my right hon. Friend will be made fully aware of

  243
  all the points that have been raised. He will receive a full account of the case that has been put. For the reasons that I have stated, my right hon. Friend does not consider that a Section 32 inquiry into
  244
  the case, or more widely into the Northumbria police, would be justified.
  Question put and agreed to.
  Adjourned accordingly at twenty-eight minutes to Two o'clock.

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  Shipbuilding (Anglo-Polish Joint Venture)
  Shipbuilding
  Shipbuilding
  Dow Chemical Company Ltd.
  Dow Chemical Company Ltd.
FOREIGN AND COMMONWEALTH AFFAIRS
  "Morning Star"
  "Morning Star"
  Bermuda
  Bermuda
  Crown Agents
  Crown Agents
  Iranian Embassy
  Iranian Embassy
  Cyprus
  Cyprus
FOREIGN AND COMMONWEALTH AFFAIRS
  Broadcasting
  Broadcasting
EUROPEAN COMMUNITY
  Assembly Members (Pay)
  Assembly Members (Pay)
  British Youth Council
  British Youth Council
  Lomé Agreement
  Lomé Agreement
NATIONAL FINANCE
  Millionaires
  Millionaires
  Taxation
  Taxation
  Death Duties
  Death Duties
  Government Administration
  Government Administration
  Prices, Taxation and National Insurance
  Prices, Taxation and National Insurance
  Income Tax
  Income Tax
  Public Expenditure
  Public Expenditure
  National Economic Development Council
  National Economic Development Council
  Gross Domestic Product
  Gross Domestic Product
  Oil and Gas Revenues (Application)
  Oil and Gas Revenues (Application)
  £ Sterling
  £ Sterling
  Pay Settlements
  Pay Settlements
  Personal Incomes
  Personal Incomes
  Industrial Production
  Industrial Production
  Commodity and Retail Prices
  Commodity and Retail Prices
  Mortgages
  Mortgages
  Capital Gains Tax
  Capital Gains Tax
  Tax Liabilities (Interest)
  Tax Liabilities (Interest)
AGRICULTURE, FISHERIES AND FOOD
  Sheep
  Sheep
  Forest of Dean
  Forest of Dean
  "Morning Star"
  "Morning Star"
  Sugar
  Sugar
  Cattle
  Cattle
  Grants
  Grants
  Pigs
  Pigs
  Potatoes
  Potatoes
  Dow Chemicals
  Dow Chemicals
  European Community (Levies and Prices)
  European Community (Levies and Prices)
  Beef Imports
  Beef Imports
EDUCATION AND SCIENCE
  Kidney Disease (Research)
  Kidney Disease (Research)
  "Morning Star"
  "Morning Star"
  Archaeology
  Archaeology
  Handicapped Children
  Handicapped Children
NORTHERN IRELAND
  Criminal Law (Jurisdiction) Act
  Criminal Law (Jurisdiction) Act
  Crime
  Crime
  Police and Prison Services (Advertising)
  Police and Prison Services (Advertising)
  Trade Centre (Opening)
  Trade Centre (Opening)
  Offshore Oil and Gas (Exploration)
  Offshore Oil and Gas (Exploration)
  Potatoes
  Potatoes
WALES
  Llangollen (Roads)
  Llangollen (Roads)
  Zebra and Pelican Crossings
  Zebra and Pelican Crossings
  "Morning Star"
  "Morning Star"
  Brecon Bypass
  Brecon Bypass
  Ystradgynlais (Road Scheme)
  Ystradgynlais (Road Scheme)
  Brynwern, Newbridge (Bridge)
  Brynwern, Newbridge (Bridge)
  Road Construction Programme
  Road Construction Programme
  Dual Carriageways
  Dual Carriageways
  Bangor District General Hospital
  Bangor District General Hospital
  Factories
  Factories
SCOTLAND
  Rate Support Grant
  Rate Support Grant
  Employment (Strathclyde)
  Employment (Strathclyde)
  Public Expenditure
  Public Expenditure
  Legal Aid
  Legal Aid
  Small Businesses
  Small Businesses
  Sewerage and Drainage
  Sewerage and Drainage
  Construction Industry
  Construction Industry
  Bypasses
  Bypasses
  A77 (Monkton-Kilmarnock)
  A77 (Monkton-Kilmarnock)
  Oil Industry (Employees' Housing)
  Oil Industry (Employees' Housing)
  A75 and A76
  A75 and A76
  Student Grants
  Student Grants
  Slaughterhouses
  Slaughterhouses
  A74
  A74
DEFENCE
  Tyres
  Tyres
  Defence Codification Authority
  Defence Codification Authority
  Trade Unions
  Trade Unions
  Television (British Army of the Rhine)
  Television (British Army of the Rhine)
  RAF West Drayton
  RAF West Drayton
  Submarines
  Submarines
  Social Security
  Social Security
  Army Youth Teams
  Army Youth Teams

Preamble
The House met at half past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Southwark.

ROAD SAFETY AND WHEEL SPRAY
Lord DE CLIFFORD: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what progress has been made in the last two years in dealing with the problem of sheets of mud and spray thrown up by multi-wheeled vehicles travelling at high speeds; and whether road users can anticipate some relief from this dangerous nuisance in the coming winter.
Baroness STEDMAN: My Lords, during the past three years extensive research into this problem has been carried out in collaboration with Southampton University. However, I regret that, despite earlier hopes, no effective technical way of reducing spray by vehicle modifications has been found. Spray-reducing road surfaces are being evaluated, but it is not yet clear whether they will be found suitable for general use. Even if acceptable, they could be introduced only gradually as the need for resurfacing arises.
Lord DE CLIFFORD: My Lords, while thanking the noble Baroness for that reply, may I ask whether she is aware that this is a most serious problem and only in the last 10 days three people have been killed through such sprays of mud being thrown up, and in bad weather there is scarcely a day when we do not hear police warnings about spray and mud on motorways and on other roads? In view of the danger involved, does she not think that considerably more money might be spent on this rather than on other forms of research?
Baroness STEDMAN: My Lords, I accept that this is a very serious problem. As far as transport is concerned, there are financial restrictions on us as on every other Department. We are carrying out experiments on nine different road lengths on different aspects of possible surfacing which might eliminate part of this problem, but much of it depends on the drivers. Speed is the most important factor in producing spray. The speed at which a driver travels determines the amount of spray thrown up. Most of it is thrown sideways and not behind, and it is a question of common sense on the part of drivers in bad weather.
Baroness EMMET of AMBERLEY: My Lords, is the noble Baroness aware that I have asked Questions on this matter for three years running and got no further, so that I gave it up? Is she further aware that lorries abroad have to have flaps on their wheels, which are not obligatory here, and that these flaps save a great deal of spraying from mud? I have tried over and over again to get this matter investigated.
Baroness STEDMAN: My Lords, there are problems even with mud flaps and mudguards. In wet weather mud flaps help; in dry weather they tend to overheat the tyres or help to do so. We are sometimes accused of not doing as much as others do on the Continent. But that is not our information. The only country of which we have any firm information is Sweden, where there are regulations on the detailed design and fitment of mudguards and mud flaps. The problem there is associated with unsealed roads and the wider use of studded tyres, and it is a question of trying to stop studs, rather than mud, spraying on to passing vehicles.
Baroness EMMET of AMBERLEY: My Lords, if mud flaps overheat tyres, does not the noble Baroness think it strange that they should be used in hot countries in Europe and not here?
Baroness STEDMAN: My Lords, we can only act on the advice given us, and at the moment the advice is that the problem cannot be solved by mudguards or mud flaps. It rests with the drivers—they should drive much more carefully and slowly in wet weather.
Lord THOMAS: My Lords, is it not a fact that a great deal of the onus of responsibility lies on the drivers of the following cars? If they kept a respectable distance behind, if they were properly equipped with screen washers and screen wipers, used their commonsense and did not crowd and telescope the traffic, would not this difficulty be overcome?
Baroness STEDMAN: Yes, my Lords; I could not agree more. That is the advice that we give from the Department of Transport.
Lord DOUGLASS of CLEVELAND: My Lords, is the noble Baroness aware that it is not always a question of the car overtaking the lorry; it is often the lorry overtaking the car? If restrictions were put upon the speed of the lorries I would guarantee a technically efficient mudguard would be produced. It seems to me that a louvred mudguard would overcome the whole heating aspect of this problem because louvred mudguards would direct more cold air on the tyres than they normally get without mudguards at all.
Baroness STEDMAN: My Lords, I accept that lorries also cause problems when passing cars, but, as far as speed limits are concerned, the police are empowered to use the speed limit signs on the motorways if they think that conditions are bad and that drivers are travelling too fast.
Lord BOWDEN: My Lords, is the noble Baroness aware that the cut in the maintenance grants for roads has been so dramatic that the situation is likely to get worse before it gets better, and that some roads—for example, in Dorset—will be due for resurfacing, on average, once every 3·75 years? This is the worst example in England, but some of the roads in Wales are worse still. When is it to be hoped that some improvement will be made in the grants for maintenance of motorways as well as ordinary roads?
Baroness STEDMAN: As soon as our economic position improves and we are able to increase public expenditure, my Lords.

IMMIGRANTS: DETENTION IN PRISON
2.41 p.m.
Lord BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will reconsider the policy of keeping immigrants in prison for long periods while the Home Secretary decides whether they should be deported.
Lord WELLS-PESTELL: My Lords, every effort is made to keep to the minimum the time spent in prison by persons subject to deportation proceedings. But the reasons for long periods of detention are nearly always outside the control of the Home Office. A person cannot be deported while an appeal is pending. Prolonged representations may have to be considered. And there may be lengthy delays until documentation is provided by the authorities of the country concerned.
Lord BROCKWAY: My Lords, while respecting that Answer, may I ask whether it is not a denial of fundamental human rights that people should be kept in prison without a charge for these long periods? Is the noble Lord aware that a man was kept in prison for 347 days before being deported? Another man was kept in prison for 273 days and, at the end of that time, he was allowed to remain in this country. Surely this procedure can be speeded up.
Lord WELLS-PESTELL: My Lords, everybody agrees that it is a situation that we do not like. But the Home Secretary has to consider what is best for the community. When the Home Secretary initiates deportation proceedings for overstaying and orders detention, the person concerned will almost always have a history of flagrant disregard of immigration control. If such people are to be a liability to the community in the sense that they may go underground and the Home Office may lose sight of them entirely, it is necessary to have them in detention. My noble friend referred to somebody being kept in prison for 347 days. That is perfectly true. The person

1851
concerned renounced his citizenship and the exceptional delay was due to difficulties over the issue of a travel document by his national authorities. It was quite beyond our control and, as I say, was due to the fact that he renounced his citizenship and there were difficulties with his own national authorities. I will not refer to the second case—which again is true—because that was the subject of a Question asked by the noble Lord, Lord Avebury, and my noble friend replied very fully.
Baroness SHARPLES: My Lords, is it possible for the noble Lord to tell us how many immigrants are kept in prison each year?
Lord WELLS-PESTELL: My Lords, I do not know that I can give an exact number, but there were about 1,558 held up to 15th November this year in Prison Department establishments.
Lord BROCKWAY: My Lords, is it not possible to improve the conditions under which these people are held in prison for long periods? Is it not the case that, because they are not required to work, they are in effect in solitary confinement, some having only one hour's exercise a day and others two hours a day? Is it not possible to improve their conditions?
Lord WELLS-PESTELL: My Lords, the conditions of people in custody are being considered all the time. It is not unlike some of the conditions to which normal prisoners are subjected. We have to face the fact that there are far more people occupying our prisons than the numbers the prisons were originally built to contain.
Lord BARNBY: My Lords, there may be cases of long detention, but is it right to assume that the individuals have the right to leave the country without remaining in detention? Secondly, if and when there are cases of deportation, is any attempt made to recover the costs of the hospitality?
Lord WELLS-PESTELL: My Lords, the answer to the first question is, yes; and, in respect to the second question, no.
Lord SOMERS: My Lords, is it not true that it is an English principle of law that a person is innocent until proved guilty? If that is true, would it be possible for these people not to be imprisoned until they are finally proved to be illegal immigrants?
Lord WELLS-PESTELL: My Lords, the two things are not on a par. A person is not detained until such time as the authorities are satisfied that either he or she had no right to be here, had overstayed a work permit or was in some other way in this country without documentation. In the circumstances, it does not seem unreasonable.
Lord BROCKWAY: My Lords, arising from the reply to the noble Lord, Lord Barnby, is it not the case that in a number of these instances the people have offered to return to their own country and pay their own fare, but, nevertheless, they have been kept in prison under these deportation orders?
Lord WELLS-PESTELL: My Lords, I am not aware of that. It may well be that my knowledge of these matters is not very deep-seated. I will certainly raise this point with my noble friend.
Earl ALEXANDER of TUNIS: My Lords, is it possible that the noble Lord could persuade officials in countries like Pakistan and India to make sure that people's papers are in order before they embark on flights to this country?
Lord WELLS-PESTELL: My Lords, this is done so far as possible. We have representatives in every country; and, as noble Lords know, if anybody wants to travel abroad from this country a visa or some kind of authority is required. But it is not possible to force people who want to come here to go through that channel. A good many of them come here illegally.
Lord PARGITER: My Lords, in view of the fact that this appears to be a continuing problem, is it not possible to have a detention centre for these people rather than have them detained in prison?
Lord WELLS-PESTELL: My Lords, we have a detention centre at Harmonds-

1853
worth, but it cannot accommodate more than from between 35 and 40 people. We are dealing with a much larger number of people.
Lord WYNNE-JONES: My Lords, is it not true that we get very disturbed in this country when we learn of the conditions under which citizens of this country are held in foreign countries? Is it not rather disturbing that we should find the same long detention being adopted in this country?
Lord WELLS-PESTELL: My Lords, my noble friend is talking about conditions. I do not think that the conditions under which people are held in this country compare with some of the conditions we know exist in other countries. With regard to the length of time involved, I tried to point out that this is really beyond the control of the Home Office. As I said, it depends on a number of factors—on documentation, getting information and getting acceptance from other countries. It is sometimes difficult to get the other bodies moving as quickly as we should like.

CENTRAL POLICY REVIEW STAFF
2.51 p.m.
Lord CAMPBELL of CROY: 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 tasks the Central Policy Review Staff are at present undertaking.
The LORD PRIVY SEAL (Lord Peart): My Lords, the tasks of the Central Policy Review Staff continue as originally envisaged when the unit was set up. The noble Lord will find these set out in Cmnd. 4506. The issues with which the CPRS is concerned, and the advice given, must generally remain confidential.
Lord CAMPBELL of CROY: My Lords, I thank the noble Lord for that reply. Will the CPRS, which can make valuable contributions, concentrate in future on central policy, as was originally intended when it was set up? In the
1854
recent debate in your Lordships' House on overseas representation, most noble Lords who spoke with great knowledge and experience rejected the main recommendations of that Think Tank report. Has the Prime Minister's attention been drawn to that matter?
Lord PEART: My Lords, of course, the Prime Minister's attention has been drawn to it; but, after all, the noble Lord must remember that it was his Government who set this up. I see no reason why there should not be an examination of the Foreign Service. We had a very good debate here, and no doubt we shall, as a Government, take note of the views of noble Lords on this question.
Lord CAMPBELL of CROY: My Lords, to be more constructive and perhaps putting forward some helpful suggestions—since there seemed to be some matters on which the Government stand in need of some policy guidance—might the unit not be asked to consider whether the nationalised shipbuilding industry might in future give ships away free as good will gifts to Communist countries as an alternative to selling them for money? Perhaps they might also be asked to look into the ethics of recording interviews with members of the public for broadcasting as political broadcasts without informing the people concerned of the purpose.
Lord PEART: My Lords, the noble Lord asked a Question about the CPRS. I believe he is abusing his position with the questions he has asked now. I think it is totally wrong to attack an organisation in the guise of an attack on the Government over shipbuilding policy.
Lord CAMPBELL of CROY: My Lords, I was not attacking the organisation; I was merely making some suggestions about difficult problems which have to be considered.
Lord PEART: My Lords, I hope the noble Lord will regret what he said earlier.
The Earl of KINNOULL: My Lords, even if the contents have to be confidential, at least the subjects could be made public, could they not?
Lord PEART: My Lords, I accept that and I believe that this organisation, which was created following a policy decision of a previous Administration, can make a major contribution—
Lord CAMPBELL of CROY: My Lords, that is what I said.
Lord PEART: My Lords, the noble Lord should not ask questions sitting down. I believe that it has a major contribution to make.

MANUFACTURED FOODS: ECC REGULATION
2.55 p.m.
Lord MOTTISTONE: 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 is the latest position regarding the extension of the application of monetary compensatory amounts to certain finished food products beyond 31st December 1977.
Lord STRABOLGI: My Lords, a Commission regulation extending the application of these monetary compensatory amounts beyond 31st December 1977 for an indefinite period was published in the Official Journal No. 308 of 1st December. The Commission will, however, review the situation not later than 30th June 1978.
Lord MOTTISTONE: My Lords, while I thank the noble Lord for his Answer, may I ask him whether the Government opposed the regulation when it came up for discussion?
Lord STRABOLGI: Yes, certainly, my Lords. We strongly opposed the draft proposal when it was first presented to the Management Committee on 3rd November. We argued that the issue needed detailed consideration because of the risk to our exports of manufactured foods. As a result, the Commission postponed a vote until a later meeting to enable a review to be made. The Resolution was eventually put to the vote on 22nd November and, although opinion was divided, I regret to
1856
say that the result led the Commission to proceed with the proposal.
Lord SANDYS: My Lords, I wonder whether a copy of the Official Journal No. 308 is available in your Lordships' Library?—because these publications are sometimes difficult to obtain.
Lord STRABOLGI: My Lords, I will check the position and will see that a copy is put there if there is not one there already.
Lord MOTTISTONE: My Lords, taking the noble Lord on from his earlier answer, does he think it reasonable that, when there was a very doubtful vote, the Commission should in the first place have gone ahead with the regulation? Does he also think it reasonable that the Commission should have the power to do this when, as I understand it, the vote was very split, if I may use that expression, and when the majority were probably in favour of cancelling the regulation rather than continuing it?
Lord STRABOLGI: My Lords, certainly there was strong opposition, but not enough to constitute a negative opinion from the Committee. In these circumstances, the rules of the Community permit the Commission to go ahead without reference to the Council. I may say that any changes to these procedures would require major amendments to the Community's agricultural legislation and would not necessarily be in the interests of the United Kingdom overall.
Lord MOTTISTONE: My Lords, is the noble Lord aware that those people in the food processing industry who are affected by this are deeply grateful to the Government for the efforts they have been making to find a rational solution to this problem?
Lord STRABOLGI: My Lords, I am very grateful to the noble Lord.

ENERGY CONSERVATION
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, with the leave of the House, my noble friend Lord Kirkhill will, at a convenient moment after 3.30, repeat a Statement on energy conservation.

FISHING VESSELS (ACQUISITION AND IMPROVEMENT) (GRANTS) (VARIATION) SCHEME 1977
2.58 p.m.
Lord STRABOLGI: My Lords, I beg to move that the Fishing Vessels (Acquisition and Improvement) (Grants) (Variation) Scheme 1977, which was laid before this House on 24th November, be approved. The scheme before the House today contains only one substantive provision: that is to extend for a further year the existing arrangements under which the White Fish Authority and the Herring Industry Board may make grants towards the capital costs incurred in the construction of new fishing vessels and the improvement of existing ones. These grants are financed by the Exchequer and, since March 1975, have been paid at a standard rate of 25 per cent. of approved costs of all eligible projects. The arrangements themselves have remained substantially unchanged since 1967.
Noble Lords will be aware of the many problems facing the industry today by reason of the extension of fisheries limits and the uncertainties in the Common Fisheries Policy both as to access to waters and to conservation. It might be argued that prudence would demand a stop to the building of fishing vessels at the present time. Past experience has shown that an arbitrary step of that kind can cause real social and economic hardships, particularly where many self-employed people are involved. Moreover, there would be an unfortunate impact on shipbuilding yards. In practice, the fishing industry is showing no tendency to invest in a grossly expansionist fashion. No large distant-water vessels are under construction or on order. New building has been at a relatively modest level in recent years and, of course, the statutory authorities are also required, as part of the scheme before us today, to examine every grant application in terms of economic viability and in relation to the overall needs of the industry. At the moment, both authorities are restricting aid to modernisation and such construction as will replace vessels lost to fishing for various reasons. So I think that there is little risk of imprudent investment being encouraged by this scheme.
1858
I should like to mention one special point. As your Lordships know, new vessel safety regulations are being introduced gradually with the express purpose of safeguarding the lives of those who go to sea. In some cases, there have to be modifications to the vessels after the safety checks have been carried out. The cost of these modifications is subject to aid under this scheme, which thus constitutes substantial Government assistance towards the safety of lives at sea. Expenditure under the scheme during the current financial year is expected to amount to about £5½ million, and the Government are making provision for comparable expenditure in 1978–79. Noble Lords will appreciate that such a level of expenditure means that, despite the many uncertainties which exist, the industry's own contribution towards its future efficiency is running at nearly £17 million a year. Clearly, the availability of grant is an important investment consideration for the industry. However, until the future structural requirements become clear, we think it inappropriate to eater into any long-term commitments. For this reason, we propose to continue recent practice and extend the arrangements for a single year only; that is, until the end of 1978. My Lords, I beg to move.
Moved, That the Fishing Vessels (Acquisition and Improvement) (Grants) (Variation) Scheme 1977, laid before the House on 24th November, be approved—(Lord Strabolgi.)
3.2 p.m.
Lord CAMPBELL of CROY: My Lords, the House will be grateful to the noble Lord, Lord Strabolgi, for explaining briefly the reason for this order. I would say straight away that I advise the House to agree with this order, since it continues the present scheme for another year. It is timely, though, to consider very briefly the position of the British fishing industry today. It was almost exactly a year ago, on 16th December, that we had the Second Reading of the Fishery Limits Bill, and we managed to get it through both Houses before Christmas last year, in order that our fishing limits should be extended from 12 miles to 200 miles at the same time as the other principal maritime nations were extending theirs to 200 miles. It had been clear for some time beforehand—and the noble Lord,

1859
Lord Strabolgi, and I had been discussing it in this House—that the consensus that had been reached at the Law of the Sea Conference would lead to such a move even though the convention itself had not been signed.
Of course, it was the chief maritime countries acting together; Iceland had been trying to beat the pistol by unilaterally extending, and getting the advantages of doing so, before the other countries agreed to do it together. The United Kingdom industry has had to change and adapt during these recent years, as a result of the proposed change in fishing limits. We have lost a lot of traditional fishing in waters near the coasts of other countries, some in distant areas. But we still have important fishing—for example, off Norway, the Faroes and in the Barents Sea—which is not in the EEC's 200-mile zone.
In the past year, since that Act came into force, Russia, Poland and other countries outside the EEC which had fishing boats operating in the EEC zone have had either to move out of the EEC zone or to fish there by special agreement. But the British industry is still facing one great uncertainty, because the regime within the EEC zone has not yet been finally decided. The Ministers met only last week and it is clear that little progress has been made. The device has been used of "stopping the clock", as it is called, so that they resume on 16th January, but they still regard it as 47th December, with the same chairman and the same arrangements.
But no matter what the device, it is important that agreement should be reached and it should be an agreement which is satisfactory from the point of view of conservation. The EEC common policy, formulated when there were only six Members and when fishing limits were 12 miles, clearly has to be changed. There are difficulties because, to put it crudely, there are too many fishermen chasing a decreasing number of fish. Unless we are careful with effective conservation measures the EEC zone could be left with little or no fish at all.
So I would put four points to the Government. First, conservation is essential and the coastal State has the most important interest. We therefore
1860
support the view which has been taken by the Government, that there should be what is described as a dominant preference up to 50 miles within the EEC zone to be the property of the coastal State. The second point is that a quota system, by itself, has fallen into disrepute. It is not trusted by the fishermen and there have been mistakes and misunderstandings during the past months. I said that a year ago and I reinforce it now. All experience since shows that a quota system alone will not be observed and will not be trusted.
The third point is that industrial fishing should not be allowed to destroy quantities of edible fish, and by that I mean fish which could be destined for human consumption. So I would urge the Government to retain what is called the Norway pout box; that is to say, an area where fishing for pout by industrial methods is forbidden, because so many edible white fish are killed at the same time and not used for human consumption. By-catches—that is to say, the accidental catching of one species of fish when the intention is to catch another—must be carefully controlled.
The fourth point is that the Government should resist proposals which do not take account of the fact that about 60 per cent. of the present stocks of fish are in United Kingdom waters of the EEC 200-mile zone, and that the United Kingdom has lost more fishing elsewhere in other parts of the world, in more distant waters, than any other member of the EEC. The fishing industry is now united in a way in which it has never been in the past. In the past its interests have diverged. Distant water fleets have been interested in fishing as close as possible to the shores of other countries. Inshore fleets have had the opposite view and have wanted to keep foreigners away from our shores, particularly in sensitive areas. But now all parts of the industry are united and the Government will get full support from this Bench and, I am sure, from Parliament as a whole, if they work with care and consideration in negotiations with our EEC partners and take a robust attitude on the points which I have mentioned.
3.9 p.m.
Lord GLENKINGLAS: My Lords, I wonder whether I may add just a word

1861
or two to what my noble friend Lord Campbell so admirably said about the fishing industry as a whole. I welcome this order in so far as I hope that the bulk of it is meant to improve safety and, perhaps, to improve existing ships. Both of these objectives are at all times, but particularly at the present time, very valuable. With some knowledge of the Scottish inshore and middle distance fleets, I think it exceedingly unlikely that anybody in his senses would build new ships at the moment. The Minister suggested that there was possibly a lot of work for shipyards, but I rather hope that that does not happen, because only too often over the last 20 or 25 years I have seen valuable grants and subsidies given to fishermen who went to sea, found that the competition was too great and, thereafter, were in considerable financial difficulty. The situation today is certainly extremely grave, and I hope that both the White Fish Authority and the Herring Industry Board will look very carefully at any applications for new boats in relation to the number of fishermen who are chasing a very rapidly declining number of fish.
I agree wholeheartedly with what my noble friend said about quotas. I hope he is right—I have not the current knowledge to argue with him—that all fishermen are now acting as one single body. However, as a result of reading a certain amount of comment in the Press, I notice that the extremely efficient and go-ahead fishermen on the East Coast of Scotland tend to rush around, whenever they find there are no fish in their area, to the West Coast. I gather that a certain number of fishermen are also arriving in Cornwall and catching what the fishermen there thought were their fish. If all fishermen are working very closely together, that is fine. However, I am absolutely certain that if a lot of new vessels are added to the already very competitive and very much over-stocked number of fishing boats, the situation will be dangerous. I hope that the Minister will take note of this point.
Lord SHINWELL: My Lords, although the observations in detail presented by the noble Lord, Lord Campbell of Croy, might be more appropriate to a general debate on the plight of the fishing industry, and in particular its future because of restrictions which have been imposed in
1862
recent months and years, nevertheless, many of his questions appear to be most pertinent and to demand an answer. When orders of this kind are presented to your Lordships' House, very often one is baffled because very little detail is furnished. One hesitates to intervene because one is not fully acquainted with the subject. However, I happen to have some knowledge of the fishing industry. Perhaps I might explain that many years ago I assisted in the organisation, for trade union purposes, of the fishing industry. Therefore I know a little about it.
What baffles me this afternoon about the presentation of this order is what might be regarded as a simple point, and it is this. It is my understanding—although I am open to correction—that as a result of the restrictions that have been imposed and because of the difficulties that appear to have emerged on account of the operations of the EEC in this context, not so many fishing trawlers are employed as were in operation a few years ago. One concludes from what I have just said, if I am correct in my understanding, that there are many trawlers disemployed. If that be so, one finds it difficult to understand why the Government should be spending grants to the tune, as I understand it from what my noble friend Lord Strabolgi said in his opening observations, of rather more than £5 million.
May I ask whether these grants are for the purpose of providing new vessels, or for restructuring old vessels, and whether inshore shipping vessels are brought into consideration when grants of this kind are made? Is it necessary to provide grants of this kind when so many trawlers are not operating at all? Are we just spending money as a kind of gesture to the shipping industry because of the plight in which it finds itself? If it is a kind of charitable dispensation, I understand it. If it is a gesture in order to mollify those employed in the fishing industry, either the employers or the employees, I understand it. But let us get the facts of the case and try to understand why we spend money. After all, we have a right to ask about expenditure, particularly when there are demands for a reduction in public expenditure. Perhaps I may be corrected in some of my observations if I have failed to understand what

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it is all about, but if I am even remotely correct in my observations I think that an answer would be desirable.
3.16 p.m.
Lord STRABOLGI: My Lords, I am grateful to the three noble Lords who have taken part in this debate. I agree fully with the noble Lord, Lord Campbell of Croy, that this is a very important matter. He was quite right to extend the debate from the order which we have been considering. The noble Lord, Lord Glenkinglas, was perfectly right, also, when he said that the situation is extremely grave. I agree, too, with my noble friend Lord Shinwell that this is one of the most pertinent of problems and questions which is before us today.
I should like to say a few words on the general situation which has been raised, very properly, by these three noble Lords. Before doing so, however, may I answer the point made by my noble friend Lord Shinwell. The main reason for the order is because investment in new vessels has been at a relatively low level for three to four years, reflecting general uncertainties about future fishing opportunities and economic stringency. However, the improvement of existing vessels, especially as regards safety provisions, is a major justification for the continuation of the capital grants scheme.
With regard to the general situation, as noble Lords are aware, my right honourable friends the Minister of Agriculture, Fisheries and Food and the Secretary of State for Scotland attended a special three-day meeting of the Council of Fishery Ministers in Brussels from 5th to 7th December. The Council had before it a number of proposals from the Commission on the Common Fisheries Policy, including proposals of quotas, access and conservation. My right honourable friends have already stated in another place, and I can repeat today, that the United Kingdom could not accept the quota and access proposals and that the conservation proposals were inadequate, although they had some good features.
With regard to conservation, the Government have once again emphasised to the rest of the Community that a
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comprehensive and fully effective programme of measures would be an essential part of a future Common Fisheries Policy. There may now be a somewhat greater readiness than heretofore among our EEC partners to recognise this point. However, it remains the Government's policy that a Community conservation policy, which must include measures to allow coastal Member States to safeguard the stocks within their sovereignty or jurisdiction, cannot be adopted separately from decisions on access and quotas.
The question of the division of resources is more difficult. The basis of our position is well known. The United Kingdom is the Member State which has lost most in distant waters and contributes most to the fish stocks in the waters of Member States. But the present Commission proposals do not take proper account of these factors and in the view of Her Majesty's Government these must be changed. I am glad to say that at the Council meeting on the 5th to 7th December there appeared to be a more widespread recognition that any quotas need to take account of distant water losses, and the general position of the United Kingdom appeared to be better understood, although our contribution is not fully recognised even now. The crucial questions of access and coastal preference were not fully discussed, but the Government's position on these points remains unchanged.
The Council has agreed to "stop the clock" and to meet again on 16th January, and the Commission has undertaken in the meantime to reconsider its present proposals. The Council also agreed that existing conservation measures should continue unchanged until 31st January. These include the standstill on fishing effort adopted during 1977 and all other measures, whether they are Community measures or national measures. This is important because it means that the present North Sea herring ban and Norway pout box will continue.
The Government have three important objectives for the revised Common Fisheries Policy. These are: to permit the industry, with good management, to adapt itself to the new situation arising from the move to the 200-mile limit; to effectively conserve and manage the

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fish stocks, to enable them to form a continuing economic asset for the industry and the nation; and to effectively manage fishing effort and enforce the regulations. In particular, the Government consider it essential that the revised CFP should adequately reflect the contribution made by the United Kingdom's resources to the Community total and the scale of our losses of fishing opportunities in distant waters. With regard to the proposed zones, we have made proposals to meet these requirements. Lastly, in May 1976 we proposed a variable coastal belt out to 50 miles; and in June this year we indicated our willingness to consider an alternative solution based on an eventually exclusive 12-mile coastal belt with a significant degree of coastal preference in our 12–50 mile belt.
The Commission's proposals take no account of these access requirements and, with the exception of the Irish Republic, other Member States have not been willing to discuss these proposals. We have also made proposals in regard to quotas. The Commission has analysed the losses suffered by Member States in third country waters and has shown that the largest quantitative losses have been experienced by the United Kingdom. The United Kingdom has lost some 250,000 tonnes of fish and is seeking compensatory quota allocations of the species that it has lost.
The Government consider that it is desirable to adopt Community conservation measures where possible in order to protect stocks throughout all waters under the jurisdiction or sovereignty of the Member States. Nevertheless, the Government attach great importance to maintaining their powers to introduce non-discriminatory conservation measures on a national basis when the Community is unwilling or unable to adopt the necessary measures. The alternative would be to leave stocks unprotected in the absence of any measures.
The noble Lord, Lord Campbell of Croy, mentioned directed fishing. We attach great importance to two specific conservation measures: the ban on directed fishing for herring in the North Sea and the Celtic Sea and the prohibition on direct fishing for Norway pout, as the noble Lord mentioned, in a box off the North-East coast of Scotland.
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It may be asked, what is our policy for the North Sea herring? Our position on this is clear. We agree with the recommendations of the scientists that an extended prohibition on herring fishing in the North Sea is essential if the depleted stocks are to be preserved. The Government are firmly committed to an extended ban for the whole of next year. The existing prohibition has been carried forward to 31st January, as I said, pending further consideration by Ministers at the EEC Council in the middle of the month, at which the United Kingdom will continue to pursue the line which it has taken during the many meetings this year. I hope that that has made clear the Government's attitude on this very important matter.
On Question, Motion agreed to.

HOUSING (HOMELESS PERSONS) (APPROPRIATE ARRANGEMENTS) ORDER 1977
3.25 p.m.
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk)The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk) rose to move, That the draft Housing (Homeless Persons) (Appropriate Arrangements) Order 1977, laid before the House on 24th November, be approved. The noble Baroness said: My Lords, this draft order is about machinery. It is to establish the arrangements that are necessary to settle matters if, or when, a dispute arises between two housing authorities as to which of them should accept responsibility for securing that accommodation is available to certain homeless people. Your Lordships may be aware of the contents of the report made in respect of the draft order by the Joint Committee on Statutory Instruments. The points to which the Joint Committee draw attention are matters to which I would have referred anyway in introducing the draft order, and I will do so in the course of my remarks.
We are dealing with provisions introduced into the Bill in direct response to the wishes of Parliament. When the Bill was in progress considerable concern was expressed, both here and in another place, about the potential obligation on authorities to have secure accommodation for people who could demonstrate no reasonable connection with the

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area of the authority to whom they turned for help. Section 5 was therefore introduced into the Act to deal with this situation. This section provides that where an authority are satisfied that a duty arises under the Act to secure that accommodation is available for a particular homeless household yet they are of the opinion that no member of the household has a local connection with their area, but that a member of the household does have a local connection with the area of another authority and that no member of the household runs the risk of domestic violence in that other area, they may notify the other authority and the duty to secure accommodation may then transfer to that other authority.
I myself would hope and expect that most cases will be settled in just that way by agreement between the authorities. After all, the issues are essentially matters of fact. But the section goes on to provide that if any question has to be settled under Section 5, it is to be settled in accordance with the "appropriate arrangements" and that these are to be such arrangements as the Secretary of State directs. This draft order is about those arrangements. I may add at this point that the Act says nothing to require or suggest that the Secretary of State himself should be involved in those arrangements, but it does require that they are arrangements agreed by the associations of relevant authorities and enables my right honourable friend to bring forward arrangements of his own only in default of such agreement. He would not of course wish to bring forward arrangements which did not seem to him to be suitable, but the draft order that he has laid before this House gives effect to arrangements agreed by the associations and which he would wish to commend to this House.
At this point I should like to add my own tribute to the appreciation already expressed by my honourable friend in reply to a question in another place, by placing on record my own very warm appreciation of the contribution of the associations both in the development of the arrangements set out in the draft order we are discussing today, and also, secondly, in producing together what I may perhaps call a code of conduct for
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authorities for handling cases under Section 5—a code which they have already sent to authorities giving advice on detailed practical points, such as the detailed arrangements for making notifications about which authority should bear any cost of temporary accommodation.
What, then, the draft order does is to require the appointment of an "adjudicator" to determine any issue under Section 5. It leaves it open to the authorities concerned to agree a suitable person if the need arises; but it goes on to provide that if they cannot agree a suitable person themselves they should report the matter to the chairman of the relevant association. For example, where one of the authorities is a non-metropolitan district council, that authority would report their failure to agree an adjudicator to the chairman of the Association of District Councils. The chairman would then appoint an adjudicator who would be drawn from a panel appointed and maintained by the associations. When the authorities are both members of the same association then the chairman of that association will make the appointment; if they are members of different associations it will be for the two chairmen to agree who should be the adjudicator. In the highly unlikely situation that the chairmen could not agree, each will then nominate a candidate and the selection would be settled by lot.
The Joint Committee have suggested that these arrangements represent an unexpected delegation. They do not in fact represent delegation at all—and I believe that it was in the minds of Members both of this House and another place that the arrangements for settling disputes should be made by local government. I believe that that is right and is what Parliament wanted. I do not think there is any risk of bias. The associations see no risk that an adjudicator will favour one authority rather than another. They are currently discussing detailed arrangements for the proposed panel in the expectation that the draft orders will receive the approval of Parliament.
The associations are intending to appoint a small panel of people of standing and integrity who have a good understanding of local government and who will command confidence. Parliament entrusted

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the associations with the responsibility for agreeing the arrangements to be made, and surely Parliament will not now say that we cannot trust those same associations to appoint a fair-minded panel. I am reinforced by my knowledge that the associations are indeed producing guidance to give to adjudicators which ought to resolve any anxieties that may be felt about impartiality.
There is, of course, concern about the use of "lot". This is unusual, but it is not unique; I can mention two precedents which were in fact mentioned to the Joint Committee: one under the Representation of the People Act 1948, where after recounts there is an equality of votes between candidates either for Parliamentary or local elections; and another under the provisions of the Companies Act 1948 which deal with the question of which directors should retire. I very much doubt, however, whether a resort to lot will ever arise, nor do I see any danger that others will regard it as a precedent where suitable alternatives are available. It is only put in as a necessary long-stop. I expect that the associations' chairmen will be able to agree an adjudicator, and they regard that as their function. But, hypothetical though this case may be, we are advised that it is necessary to make some provision to cover a disagreement between the chairmen on this point, and that it should be a provision leading to a clear result that need not be disturbed unduly when the Act comes into force in all three parts of Great Britain.
We must remember that it may be necessary to resolve a dispute about the appointment of an adjudicator in a case involving the chairmen of associations in respect of authorities in England, Wales and Scotland. We had considered whether this could be a function of the Secretary of State. But we were advised that we could not specify in the order which Secretary of State this should be in the case, for example, of a dispute between a Scottish and a Welsh authority. We have considered other alternatives. The Lord Chancellor was considered and his office was consulted. But he has no functions in relation to Scotland.
The provision now contained in the order was proposed by the associations
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themselves as the best answer in the circumstances, and if the need ever arises they are content that their member authorities should rely upon the result of the lot in determining the adjudicator. There is, of course, nothing arbitrary whatsoever in the selection of the panel of adjudicators, all of whom will be people of integrity, or in the procedure that the adjudicator, once selected, has to adopt.
The order provides that the adjudicator's decision, whether he was appointed by agreement or by the chairmen, is to be binding on both authorities. We have, with the associations' agreement, sought to keep the procedure as flexible as possible. The issue indeed may be limited to a particular question of fact. It is for the adjudicator to determine how he should best proceed. This also has attracted comment from the Joint Committee, but I hope members of that Committee will understand my concern that the adjudicator should have regard only to matters that are relevant and proper. We must remember that during the course of a dispute the homeless household is, during that whole time, in temporary accommodation, anxiously waiting to know where accommodation is to be provided. Therefore, as far as possible, we want a quick and simple procedure, and not a great drawn out bureaucratic machine.
I appreciate the Joint Committee's concern about the opportunity for the household to participate in the procedure, and have indeed discussed that myself with officials in my Department, and the order contains provisions on this consistent with the main Statute. Parliament, let us remember, did not give the household a right of appeal in respect of decisions reached by the housing authority, nor did the Act give any right to make any representations where authorities agreed between themselves which should be responsible for securing accommodation under Section 5 without the intervention of an adjudicator. In the circumstances, I hope your Lordships will agree that the provisions of the order strike a very apt balance, by enabling the adjudicator to receive representations from any persons he thinks can help him, and by requiring him to take account of the representations of the authorities concerned, and to invite the household concerned to submit

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information—for example, about their circumstances and places of residence.
This order will apply in England and Wales only. The Act does not come into force in Scotland until 1st April 1978. The Convention of Scottish Local Authorities are being consulted about matters relating to Scotland. A fresh draft order with arrangements to deal with disputes with Scotland, and also disputes between English and Scottish or Welsh and Scottish authorities, will be laid before your Lordships' House in due course.
Therefore, my Lords, the draft embodies arrangements in response to concern expressed by Parliament; these arrangements have been agreed by the associations themselves. The draft order also embodies arrangements which enables disputes to be settled quickly and without unnecessary or protracted discussion. I hope this machinery will seldom need to be used, but it is necessary as a safety net. I commend the draft order to the House.
Moved, That the draft Housing (Homeless Persons) (Appropriate Arrangements) Order 1977, laid before the House on 24th November, be approved.—(Baroness Birk.)

ENERGY CONSERVATION
3.38 p.m.
The MINISTER of STATE, SCOTTISH OFFICE (Lord Kirkhill): My Lords, with the leave of the House, I will now repeat a Statement being made in another place by my right honourable friend the Secretary of State for Energy. The Statement is as follows:
Existing policies have contributed to energy savings approximately estimated to be worth some £2,000 million over the last four years. As was recognised at the London Summit meeting in May, energy conservation must play a major role in our future energy policies. I therefore set in hand a review of action to bring about a significant reduction in the future growth of energy demand, following recommendations made by my Advisory Council on Energy Conservation. Today I am announcing a substantial package of decisions.
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"First, the Property Services Agency will extend its existing programme in the civil and defence estates, at a cost of £5 million per year. This will make possible continued progress towards the eventual target of saving 35 per cent. of the fuel used at the start of the programme in 1972. This represents around £30 million a year at today's prices.
"Secondly, as part of a long-term programme for installing thermal insulation and heating controls in National Health Service buildings, it is planned to invest an additional £5 million in 1978–79 and £10 million in each of the succeeding three years.
"Third, as part of a similar programme in educational buildings it is planned to make available an additional £10 million in 1978–79 and £20 million in each of the succeeding three years.
"Fourth, the Government will discuss with local authorities the very substantial opportunities for energy savings in their non-domestic buildings, other than schools. We propose to make additional funds, of up to £7 million a year, available for the necessary staff to secure efficient energy management and for the installation of heating controls. The precise sums to be spent will depend upon discussion with local authorities.
"Fifth, the Government are launchign a 10-year programme to bring public sector dwellings up to a basic minimum standard of thermal insulation. This will involve treating over 2 million dwellings and will have major social benefits. Spending for this purpose will be made eligible for central Government housing subsidies. Provision is being made for expenditure over the next four years at an annual rate of £28½ million. In addition £2 million a year will be spent on improving the insulation of Ministry of Defence dwellings.
"The Department of the Environment has for some time been consulting outside interests on proposals for building regulations to prescribe thermal insulation standards in new non-domestic buildings, and regulations resulting from this consultation are expected to be made shortly. The Government have now decided on two further steps in this area.

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"Sixth, the introduction of building regulations requiring the provision of appropriate controls on heating systems is under consideration. The regulations would apply to the installation of heating plant in new non-domestic buildings and to its replacement in existing non-domestic buildings. A consultative document will be issued as soon as possible.
"Seventh, to promote efficient energy management in non-domestic buildings, a new Government advisory and training service will be set up. Half a million pounds a year has been made available for this purpose.
"Eighth, in addition the Government have allocated £4 million in 1978–79 and £5 million in each of the next three years to expand information and advisory services to industry.
"Ninth, the Government have allocated an additional £2 million in 1978–79, rising to £8 million in 1981–82, for an expanded programme of demonstration projects.
Tenth, more efficient motor vehicles could make a significant contribution to containing the growth in demand for oil for transport. The Government have opened discussions with the motor industry on possible targets for raising the average miles per gallon achieved by new cars and on methods of achieving those targets.
"Eleventh, the Government have allocated an additional half a million pounds a year over the next four years to an information and publicity campaign aimed at persuading motorists to see that their cars are well maintained and to drive in more economical ways.
"This reinforcement of our policies will require additional staff on energy conservation. In the Department of Enegry I am establishing a separate division, responsible solely for energy conservation. Conservation will now rank with the energy producing industries as an essential element in our energy policies.
"The measures I have described will involve additional public expenditure on energy conservation in the United Kingdom estimated at some £65 million (gross) in 1978–79, rising to over
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£80 million a year (gross) in the following three years. This will be spread over a number of programmes and will be financed as far as possible from savings elsewhere in those programmes, including in later years savings on energy consumption resulting from the investment made in earlier years.
"These programmes will take up to 10 years to complete and will involve expenditure, in the first four years alone, of some £320 million at 1977 survey prices. They offer satisfactory returns on the expenditure involved, even at today's energy prices, and they could lead to savings of up to 10 million tons of oil equivalent a year at the end of the 10-year period, worth some £700 million a year at current prices. They will also provide jobs in the construction industry. But energy conservation is not a matter for the Government alone. To achieve the potential savings in full will depend in large part on how far the private sector matches the steps we have embarked on in the public sector. Higher energy prices make conservation good sense for everyone.
"Our programme is a continuing one. We shall be bringing forward further measures in other areas, as and when necessary. We shall need to decide how far any further reinforcement of our policies should be achieved by mandatory measures, by fiscal action, or in other ways. However, the measures I have announced today represent an important stage in the development of our energy conservation programme. Despite Britain's ample energy reserves conservation is just as important here as in other countries less fortunately placed."
My Lords, that concludes the Statement.
3.45 p.m.
Lord CAMPBELL of CROY: My Lords, we thank the noble Lord, Lord Kirkhill, for repeating a Statement made in another place. From this Bench we welcome the Statement which the public and industry have been awaiting for some months. It deals mainly with the question of thermal insultation and control of heating in Government and non-domestic buildings. It is right that the Government should adopt policies to conserve energy and that, when those policies have been decided upon, they

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should be made fully known throughout the country. I am sure that the Government will meet co-operation generally throughout the country once the ideas, proposals and decisions are made known.
On the question of motor-cars, I hope that the Government will not lose heart from what appears to have been some failure in this area in the United States of America. After the 1973–74 crisis there was a move towards smaller motor cars, but I think that the idea of the family car in the United States is something which is very difficult to change. It is rather like asking Scots to give up whisky. However, I believe that it is different in this country and that, given encouragement, families and individuals will adopt petrol-saving motor-cars and smaller cars where they do not need the larger ones.
The question which will arise in the minds of the general public was raised towards the end of the Statement; namely, the Government's proposals concerning domestic buildings and the private householder. Nothing very much has been said about that, but we welcome the setting up of an advisory and training service which is the present suggestion in this area. I think that the public need every encouragement as regards saving fuel and it will save their own pockets if it is done properly.
However, in the last paragraph of the Statement it is said that mandatory measures are to be considered. I ask the Minister whether the Government can tell us of any plans concerning the domestic householder and the private sector, because there is a problem here. If it is thought that plans will be brought forward some time in the future—perhaps in two or three years' time—which will involve grants for insulation or for adapting heating systems, then the public may hold back and delay. On the other hand, if it can be made clear, either that if grants are available they will be available immediately, from the start, or else that advice, assistance and training as suggested by this new body will be available, then if everybody is given as much encouragement as possible the public are likely to go ahead straight away with the various methods of saving energy. Therefore, I ask the Minister whether
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the Government can at this stage say any more about the measures which are simply mentioned at the end of the Statement, but are in no way specified, relating to non-domestic buildings and heating systems.
3.50 p.m.
Lord TANLAW: My Lords, from these Benches we, too, should like to welcome the measures outlined by the noble Lord the Minister in his Statement. A number of noble Lords have been pressing for these over a period of years and I am delighted to see from the detail of this Statement the areas in which the Government are considering taking action. However, I seek clarification of one or two matters in the Statement, which may help everybody. For instance, does the basic minimum standard of thermal insulation, to which the noble Lord referred in the fifth paragraph of the Statement, refer to the existing standard or scales of thermal insulation?
It is very important for the building industry and, indeed, even for individuals, to know the Government's thinking as to whether or not they wish to raise the U values and the thermal capacities of buildings, or at least keep them in line with those in EEC countries which have a similar or comparable winter climate. I am not too clear about non-domestic buildings. Presumably that does not refer to industrial buildings. Are industrial buildings omitted for any specific reason? As a matter of interest, presumably the Palace of Westminster is a non-domestic building. I should be interested to know what the Minister has in mind for insulation here or, indeed, what he thinks the correct temperature should be for us to work in.
Finally, I want to take up a point made by the noble Lord, Lord Campbell of Croy, about the motorist. He referred to approaches made to the motor industry in order to achieve fuel savings through increased mileage per gallon. Does that mean that Her Majesty's Government are losing interest in exhaust emission controls, which, if implemented, must, I understand, on the latest technical advice, decrease the number of miles per gallon? Indeed, perhaps that would be helpful. I have no more to say and greatly look forward to hearing more of this subject at a later date.
3.53 p.m.
Lord WIGG: My Lords, I should like to ask the Minister two questions. Will he not agree that it is far better, in dealing with the British people, not to use words but to give an example? One that comes readily to my mind is that the Government should say that from 1st April next all Government cars which are bought for the purpose of conveying individuals will have a horsepower no greater than, say, 1,000 ccs. That would reduce the cost enormously; it would not detract from the convenience of those who ride in the cars, and it would have a quite remarkable effect on public opinion if the public knew that the top brass—be they civil or military—were going to ride much as the Government want them to.
Secondly, it will be in the recollection of many of us that some years ago a Government—I believe it was a Labour Government—moved over to a flat horsepower tax because they wanted to encourage the production of large horsepower cars for the foreign market. It is obviously true that for our own domestic reasons, and because the same policies will be required in other countries, a reversal of that policy would be highly desirable. I cannot expect the Minister to answer that question today, but will he recommend the Chancellor to come forward with an announcement—not necessarily in the next financial year, but perhaps the year after—that in future the horsepower tax will not be a flat rate, but that the lower the horsepower, the less will be the tax?
Baroness FAITHFULL: My Lords, there have often been debates in your Lordships' House on the insulation of the domestic properties of the elderly and the handicapped. Could the Minister say whether ultimately, there will be insulation in domestic buildings, and whether note will be taken in the first instance of the properties of the elderly and the handicapped?
3.55 p.m.
Lord KIRKHILL: My Lords, may I say at the outset of my brief reply to the remarks made in your Lordships' House, that I detect a general welcome from all sides of the House to the Government's proposals which I have outlined this afternoon. In specific response to the noble Lord, Lord Campbell of Croy, I
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would assure him that of course the Government have not set their face against mandatory or fiscal policy, but I think that I can say at this stage only that our policy for private dwellinghouses and the private sector is one of continuing evolvement. In particular we aim to encourage those energy-saving measures which are economic and which benefit the user as well as the nation. Therefore, in the Government's view the savings in the fuel bill should be sufficient incentive to the householder. As regards our policy to private householders, we wish to provide information on the costs of insulation and the financial savings that can be obtained. As to the latter part of the noble Lord's comprehensive question, I cannot this afternoon answer that clearly on behalf of the Government.
In response to the point made by the noble Lord, Lord Tanlaw, I confirm that insulation is at present standard. I will note his point about the EEC level. I confirm that we mean "commercial"; we talk of "domestic"; we do not speak of "industrial", mainly because the findings of an examination that we have made so far suggest that industrial undertakings are observing energy savings in a quite substantial way.
I shall certainly pass to the appropriate Department the observation made by my noble friend Lord Wigg about Government cars and military cars. I shall examine the point he made about a possible tax amendment, which is at least a possibility for the future, and will pass that suggestion to the appropriate Minister.
3.57 p.m.
Lord SHINWELL: My Lords, if, as I understand it, the Minister has been explaining the Government's energy policy, I would regard it as very inadequate indeed. However, this is not the occasion on which to debate it. I have tabled a Question, to be dealt with after the Recess, on certain aspects of energy policy and I shall refrain from dealing with them now.
However, I should like to ask two questions. First, how much of the expenditure is to be involved in providing thermal insulation in existing premises, and how much in premises which are presumably under the authority or decision of local authorities—that is, residential property and new property? Is it not the

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case that expenditure on thermal insulation for old property, with a view to the conservation of energy, is much more expensive than it is likely to be on new property, when one starts afresh?
Secondly, nothing has been said by the Minister in his Statement—and indeed, nothing has been asked by either of the noble Lords opposite—about experiments in solar energy. Is it the case that the Government have been informed of experiments in solar energy which, although it is impossible to operate throughout all 12 months in any one year, can be operated at certain times during the year? Has anything been done about that? Is it not the case that recently there was an energy conference at which several Governments were represented—including our own—and that nothing was said about the possibility of developing solar energy, as is being done in the United States of America and being subsidised by the United States Government?
4 p.m.
Lord KIRKHILL: My Lords, I should apologise to your Lordships' House in that earlier I failed to answer the pertinent point put to me by the noble Baroness, Lady Faithful'. I do not have the reply with me. The Department of Energy is not my prime responsibility, although from time to time I speak for it in your Lordships' House. I do not have that information with me today, but I shall examine the point and certainly write to the noble Baroness when I have the appropriate reply.
My noble friend Lord Shinwell poses two questions to me. As to his second question, I cannot give a reply this afternoon. I shall look into the point he raises about solar energy, and if I can be of assistance to him in that regard I shall certainly communicate with him. As regards the first point he makes, can indicate that the Department of Energy has investigated the potential of savings in the private sector and the estimate is that just under 1 million tons of oil equivalent per annum would be saved if all private sector housing was brought up to a basic level of insulation; that is, tank jackets, loft insultation and simple draught proofing. This would compare with a saving of about 10 million tons of oil equivalent per annum which
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the present package envisages, but this is a more comprehensive programme which is being talked of.
If I can reflect on and refer to the question of local authority housing, because I do not have the figures for existing private sector dwellings, about two-thirds of all local authority dwellings lack basic insulation, and the Department of Energy considers that local authorities are unlikely to have the necessary funds available for this work. The Government have decided to allocate funds for the insulation of council dwellings to ensure that progress is made in an area where the Government themselves have a measure of public responsibility. I hope that that at least in part answers the question.
Lord IRONSIDE: My Lords, I welcome this Statement. In connection with the saving of oil and oil equivalent, could I ask the Minister whether the Government will look into the question of the application and use of electric vehicles in a more serious manner than they are doing at the moment, because this would be a valuable contribution to oil saving?
Lord KIRKHILL: My Lords, this matter has, of course, been raised frequently in your Lordships' House. The Government certainly have no closed view of the position. I am unable to say that it is under active consideration at this time.
Lord LEATHERLAND: My Lords, can my noble friend satisfy me about the proposal for the thermal insulation of hospitals? Is it not a fact that, whereas this might make the wards warm and the patients comfortable in the winter, it might make the wards far too hot and the patients for too uncomfortable in the middle of summer?
Lord KIRKHILL: Not, my Lords, if you live in the middle of Aberdeen, as I do.
Lord LEATHERLAND: My Lords, what about if you live in London?
Lord ERROLL of HALE: My Lords, could the Minister say why the Statement referred only to energy conservation by private motorists and did not embrace the

1881
whole of the transport field, including heavy goods vehicles and other forms of road passenger transport? While on the subject, what about some savings by aircraft, and also by British Rail? Why only the private motorists to be induced to save energy?
Lord KIRKHILL: My Lords, I was at pains to point out that we could not claim this to be a totally comprehensive package, nor can we say that it is a package fully binding for all time. It is an evolving measure. This is the stage at which we feel we can put these postulates before your Lordships' House. We are, in the meantime, engaged in conversation with the AA, the RAC, and other transport organisations. Matters are by no means closed at this stage.
Lord LUCAS of CHILWORTH: My Lords, while welcoming the Statement, may I ask the Minister, in connection with points 10 and 11 dealing with transportation, why is there no mention of any monies being made available for research into transportation energy savings? My understanding is that road transport takes up some 25 per cent. of total oil consumption in the United Kingdom, but that the industry itself is unable to foresee any substantial savings in consumption until at least 1985. That is a long way away. It is also my understanding that there is no research being undertaken outside the industry itself to shorten this time so that there can be an encouragement into road fuel savings rather than the discouragement that comes through fiscal policies. In other words, the easiest way is to raise the tax on fuel and down comes consumption; but in fact it should work the reverse way, and I heard no mention of developments in this field.
Lord KIRKHILL: My Lords, I can only reiterate that we cannot claim this to be the totality of everything we shall ever do, or are going to do, in terms of energy conservation. We claim it to be a significant and major first step. Priorities are always a factor, and the limitation of public expenditure commitment is also always a factor, but I take note of the noble Lord's remarks.
Lord STRABOLGI: My Lords, we have now had over 27 minutes on this Statement. It is a very important matter,
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but I am sure that it would be the wish of the House that we should now return to the Housing Order.

HOUSING (HOMELESS PERSONS) (APPROPRIATE ARRANGEMENTS) ORDER 1977
Debate resumed.
4.6 p.m.
Lord SANDYS: My Lords, I should like to thank the noble Baroness for explaining in such detail the Housing (Homeless Persons) (Appropriate Arrangements) Order which has been before your Lordships. As the noble Baroness rightly said, it is an enabling procedure which took into account the views of both your Lordships' House and another place and, as the principal Act referred to only reached the Statute Book a short time ago, it will be within your Lordships' recollection what took place as recently as July this year.
There were three principal problems which we attempted to solve in your Lordships' House when the Bill reached us from another place. First, there was the definition of those who were going to be entitled to be rehoused; secondly, and most importantly, deciding which authority had the obligation to rehouse—a matter which this order refers to; and, thirdly, the question whether those who intentionally made themselves homeless would disentitle themselves from being rehoused. This order is an attempt to find means of arbitration between the authorities and as the noble Baroness rightly commented, she felt that it struck an apt balance, with which we agree on this side of the House.
It is noteworthy that the Association of District Councils agrees with this order and, as the noble Baroness said, has taken a prominent part in the discussions. But I think that the local authority association which has had the longest experience of this type of activity is perhaps the London Boroughs Association, the members of which have been working an agreed code of practice among themselves for a number of years. I think that it is true to say that it is thanks to the active and co-operative participation of all the local authorities that this order has been enabled to be brought to your Lordships' House today.

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There are a number of matters to which the noble Baroness referred, most especially the appointment of the adjudicator. Almost every permutation has been thought of at this stage, and from this side of the House we believe that the arrangements as set out in this order are acceptable. It may be that there will be some further need for alteration but, as your Lordships will recollect, very wide powers were left to the Minister under Section 2(3) under which the Secretary of State may amend, or repeal, any part of the foregoing subsections. In view of this fact, we may no doubt expect further orders which will be attached to this particular Act of Parliament. Meanwhile, we note that a determination under this order shall be final and binding—two very important words—on both parties, and we welcome it from this side of the House.
4.10 p.m.
Lord HENLEY: My Lords, my noble friends approve of this order. The noble Baroness touched upon one point—the question of delay. I am not sure whether she is satisfied in her own mind that, in the event of delay—and delay in appointing an adjudicator, et cetera, is an example of what I mean—the homeless persons or families will be adequately housed during what might be quite a long interregnum.
Lord JANNER: My Lords, I should like to add a few words to what my noble friend has said. The association of local authorities to which she referred has gone into this matter very carefully, and, as far as I can see—and, as your Lordships will know, I have myself been watching the proceedings and taking some humble part in them in relation to providing accommodation for the homeless—it seems to me that the matter is one of considerable urgency at present, and that some method has to be discovered which will make it possible for the procedure to be carried out in a quick, suitable and satisfactory way. I listened very carefully to what my noble friend said, and it seemed to me that she covered the position most adequately and very well indeed. On behalf of the Association of Metropolitan Authorities, of which I myself happen to be an honorary officer, I should like to say that they are very anxious to do what they
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possibly can for the homeless people, and they feel that these provisions should be brought into effect as soon as possible.
Baroness FAITHFULL: My Lords, I wonder whether I may ask the Minister two questions. The first concerns the fact that it must be a tremendous responsibility for local housing authorities to house the homeless when they have not the adequate accommodation. Can she say what is going to be done by those local authorities who have not got the accommodation and who are now using bed and breakfast situations, which are very bad for families and also very expensive? Secondly, I wonder whether I could have some clarification on the following point. If a family becomes homeless in one area, then that area is responsible; but suppose that, from the point of view of social conditions, it would be better for that family to be rehoused in another area where there are relatives and friends, particularly in the case of the elderly. Under this order, would it be possible for the two authorities to come to some agreement?
4.13 p.m.
Baroness BIRK: My Lords, perhaps I may first thank the noble Lord, Lord Sandys, who spoke for the Opposition, for his support in this matter. I am very grateful, because he appreciates, as I think does everyone who has spoken in this short debate, the great need to get this under way as quickly as possible. I am delighted that the arrangements set out are acceptable to him; and he has pointed to, the fact that, if there is any need for alteration, that is possible. Also, of course, we shall be looking at it again when we look at the arrangements for Scotland, when Scotland comes into this in April of next year.
The noble Lord, Lord Henley, asked me about homeless families being rehoused should there he any delay. They will be in temporary accommodation—I think this was the point also raised by the noble Baroness, Lady Faithfull—and it may indeed be bed and breakfast accommodation, or whatever accommodation they have. It is for this reason that it is so urgent that we should go ahead with this draft order, so that, where there are disputes between authorities, there is a means of dealing with them.

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On the question of which authority should rehouse these people, we are assuming here that it will rest between two authorities—the authority where the people happen to have been living, either temporarily or with relatives, and the authority where they have more places of residence. What we hope is that in the vast majority of cases this will be capable of being sorted out between the authorities without need for the adjudicator and all the other things. As has been pointed out, we have been through almost every permutation and combination to try to ensure that every situation is covered; but, with the goodwill and help of the associations, which in their turn will have an influential effect upon the authorities which are their component parts, we are hoping that few cases will need the use of the services of an adjudicator, and I should like to guess that probably none at all will need the lot. I am grateful to everyone who has taken part in this very short debate for their constructive support and agreement. I believe that we should now approve the order so that it can come into force as soon as possible.
On Question, Motion agreed to.

SOCIAL SECURITY (CONTRIBUTIONS, RE-RATING) (NO. 2) ORDER 1977
4.16 p.m.
Lord WELLS-PESTELL: My Lords, I beg to move that the Social Security (Contributions, Re-rating) (No. 2) Order 1977, a draft of which was laid before your Lordships' House on 1st December, be approved. My right honourable friend the Secretary of State for Social Services has carried out the review of National Insurance contributions which he is required to make each year under the Social Security Act 1975. He has had regard to the present level of the National Insurance Fund and the likely level of future expenditure from it, and in the draft order now before your Lordships he has proposed revised rates and levels of contributions from the 6th April 1978. I hope that in the years to come the 6th April 1978 will be seen to be a very significant date in the history of social progress in this country. This is when the Social Security Act 1975 takes effect, and employees will begin to build up for
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themselves on an earnings-related basis better provision for retirement, widowhood and chronic ill health.
An important feature of the new scheme is that there will be a partnership between good occupational pension schemes and the State whereby employees who are members of the occupational schemes may receive some of the new benefits from those schemes rather than from the State scheme. Thus, employees will build up for themselves greatly improved benefits, either entirely through the State scheme or by a combination of State and occupational pension provision. The new arrangements will mature in 20 years' time, and will then enable millions of employees to retire on more than half pay. These important developments in benefit provision had the general support of all Parties when the pensions Bill was before your Lordships' House in 1975. I hope there will also be general support for the draft order, which now sets out the contributions which will be levied for the first year of the new scheme.
The pensions Act recognised that contributions for employees who were not contracted out—that is, those whose rights to the improved benefits would be provided entirely by the State scheme—would need to be increased next year. The Act also provided for contributions of those who were contracted out to be at a reduced rate, in recognition of the responsibility for benefits which their occupational pension schemes had taken over from the State. The self-employed, unlike people who work for an employer, will not be covered by the new earnings-related pension arrangements. My right honourable friend has taken account of the different cover for benefits which these different types of contributor will have under the new scheme and has sought to set rates and levels of contributions for the next year which are fair to them all.
I will mention, first, the contributions for employees who are not contracted out of the State scheme. As I have indicated, there is statutory provision for their contributions to be increased from April 1978. The contributions may be set at rates which are not higher than 6·5 per cent. for the employees and 10 per cent. for their employers compared with the present rates of 5·75 per cent. for employees and 8·75 per cent. for employers. It

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has not been possible to set rates which are lower than the 6.5 per cent. for employees and the 10 per cent. for employers. Indeed, as the Government Actuary's report on the effect of this order shows, it is expected that, on given assumptions as to factors such as the level of unemployment and earnings, the National Insurance Fund will not quite break even in the year 1978–79. The deficit for that year is expected to be in the region of £25 million. The surpluses which have accrued in recent years make this deficit acceptable.
The upper and lower limits on earnings on which employees and employers pay contributions are also being raised for the coming year. They will then be £17·50 and £120 a week in place of the present limits of £15 and £105 a week. The effect is that a person who earns at least £17·50 a week will pay contributions on all his earnings up to £120 a week. These new earnings limits are not specified in the draft order because, under the pensions Act, they now are a matter for regulations. My right honourable friend has already made the regulations which are subject to the Negative Resolution procedure, but I must mention them for the sake of giving your Lordships a complete picture.
The new lower and upper limits are consistent with the requirements of the pensions Act, which is that they should be, respectively, about equal to and about seven times the amount of the basic rate of the retirement pension which, as your Lordships know, is at present £17·50. These changes mean that an employee who is a full member of the State scheme and who earns £80 a week (which is approximately the amount of average earnings for men employed full-time) will pay an additional 60p a week and his employer will pay an extra £1 a week. The maximum increase will be £1·76 a week for employees and £2·81 a week for employers and will be payable where employees earn £120 or more a week.
Increases at this level result, partly, from the increase in the percentage rate and, partly, from the increase in the earnings limit. As your Lordships will appreciate, increases in the limit result in people whose earnings are above the existing limits paying additional contributions from the start of the new tax
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year corresponding to the increases which lower earners face immediately they receive a pay increase in the course of the preceding tax year.
I will deal next with contracted-out employees. The pensions Act provides that employees and their employers will pay contributions which are initially at the rates which are 2·5 per cent. and 4·5 per cent. respectively lower than for other employees on earnings between the lower and upper earnings limit. Thus, on the first £17·50 a week of earnings—and I would remind your Lordships that I am referring to contracted-out employees—the rate will be 6·5 per cent. for employees and 10 per cent. for employers; but on earnings above that level, the rates will become 4 per cent. for employees and 5·5 per cent. for employers. As a result the contracted-out employee, for example, earning £80 a week will pay 96p a week less than at present. The maximum reduction will be £1·40 a week and will apply to a person earning £105 a week. These reductions relate only to contributions to the State scheme and do not take account of contributions at the occupational pensions scheme.
Your Lordships will wish to know whether there is to be any change in the rate of contribution payable by those married women and widows who retain the right to reduced contribution liability. The answer is that they will continue to pay the 2 per cent. of their earnings, subject, of course, to the new earnings limit, whether or not they are contracted out.
My Lords, I turn now to the position of people who are self-employed. If I may say so, this is a matter which I know from past experience concerns a good many of your Lordships. As you will know, the self-employed are not included in the new earnings-related pension arrangements although they will continue to be eligible for the basic retirement pension and other benefits currently available to them. My right honourable friend has given careful consideration to their position and has decided that, in fixing the level of their future contributions, it would be only right to take account of the changes being made for other contributors. If the self-employed had to continue to pay contributions on the present basis, this would

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seem unfair because employees who are contracted out and who, therefore, also get less than the full benefit cover of the State scheme, will pay reduced contributions under the new scheme. The new rates of contribution for the self-employed have therefore been calculated in the same way as those for the contracted-out employees; that is, by starting with the contribution payable for employees who are full members of the scheme and by reducing it to allow for the benefits which are not available under the scheme. As a result, the self-employed will pay lower contributions than they do now and they will be able to use this saving, if they so wish, to make extra pension provisions for themselves.
The draft order shows that the flat rate Class 2 contribution is being reduced from next April from £2·66 per week to £1·90 per week, a reduction of 76p. The rate of the earnings-related Class 4 contributions is to be reduced from 8 per cent. to 5 per cent. The lower limit of annual profits or gains at which a Class 4 contribution begins to be paid, is being increased from £1,750 to £2,000 a year. The upper profits limit is being increased from £5,500 to £6,250 a year, so that will be in line with the new upper earnings limit for employees. Because of your Lordships' concern in the past for the self-employed, may I give one figure. I have not selected it because it happens to be the nicest figure. I have been quoting the contributions that are going to be paid by employees earning about £80 a week—£4,000 a year. The self-employed person whose annual profits or gains amounts to £4,000 a year is paying at the present moment in contributions £318·32. From 1st April, he will be paying £198·80—a decrease in the year of £119·52. I mention this because at least my right honourable friend the Secretary of State has tried to be as fair as is humanly possible in matters of this kind.
At this point, I must add a further comment about the contributions of the self-employed so that there will be no risk of misunderstanding the future position. The substantial reduction proposed for next year is achieved, as I have already explained, by calculating contributions as for people who are contracted-out. However, contracted-out contributions can be expected to rise in
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real terms over the years. This is because the cost to occupational pension schemes of funding the pensions, which would otherwise be provided by the State scheme, will fall and it will then be right to reduce the extent to which contracted-out contributions are lower than full contributions. As contracted-out contributions rise progressively in real terms, so therefore will the contributions of the self-employed. However, let me make it quite clear that in our deductions—and I may be wrong—this is not expected to happen in the first five years. We expect it to be static, although there will doubtless be increases in Class 2 contributions rate, and the Class 4 profits limit, as a result of the rise in the general level of earnings.
I now come to the remaining changes which the draft order makes. First, the level of earnings below which a self-employed person can be excepted from liability for Class 2 contributions is being raised from £875 a year to £950. Secondly, the voluntary Class 3 contribution is being reduced to £1.80 per week in consequence in the reduction of Class 2 contribution to £1.90. Finally, I should like to mention something which is already established and not therefore in the order. This is that from April employees and the self-employed will not pay contributions for work done after they have reached the pensionable ages of 65 for men and 60 for women.
I have spoken at some length because this year the setting of the new rates and levels of contributions is of special importance since the contributions are those needed for the start of the new pensions scheme. In conclusion, all I need say—and there are Members of your Lordships' House who know this to be true—is that, in order to try to get the whole situation right, my right honourable friend has given a great deal of thought to this matter, and has seen a large number of people. As I say, a good deal of that consultation has gone into this order. I hope that, as a result, this draft order will commend itself to your Lordships and that you will pass it. I beg to move.
Moved, That the draft Social Security (Contributions, Re-rating) (No. 2) Order 1977, laid before the House on 1st December, be approved.—(Lord Wells-Pestell.)
4. 35 p. m.
Lord SANDYS: My Lords, the House will be grateful to the noble Lord, Lord Wells-Pestell, for describing the order which is before your Lordships because the background to it is particularly interesting and significant in both political, inflationary, and pension terms and even in the thinking of the Government. It is a metamorphosis. Let us go back to 1973, when the Social Security Act was placed on the Statute Book by the last Conservative Government. That Act included provisions for a second pension which we believe to be a very satisfactory one.
One of the very first acts of the present Government when they reached office in February 1974 was to overturn the pension provisions of the Act of 1973. As I shall describe in a few minutes, it has had a very important result, a very adverse result, and a deeply serious result to all those who wish to benefit from the pensions scheme. The reason of course is this. The Act of 1973, which would have come into effect in 1975, would have meant that a three year start would have been made on building up those very desirable benefits which the noble Lord, Lord Wells-Pestell, described. I admit that they were not the same benefits but they were parallel and somewhat similar.
Unfortunately—and we believe it is very unfortunate—the Government decided to overturn the whole scheme. As everybody knows who has had involvement in the insurance field, the first thing one does not want to do in an inflationary period is to overturn an existing scheme because it means that all the machinery, the checks and balances, the updating procedures—and the benefits themselves—are thrown out of gear; and, to coin a phrase, one has to "throw six and start again" if the policy is changed. The Government did change the policy and they changed it in a somewhat dramatic manner because when the noble Lord's right honourable friend Mrs. Barbara Castle assumed office as Secretary of State, in her very first speech (to which my noble friend Lady Young and I listened in another place on 10th April 1974) she said exactly what she was going to do. The misfortune is that we have lost three years. The noble Lord may well say that the 6th April 1978 is going to be significant. It will be significant;
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but those who understand what has happened will wring their hands rather than ring bells on that occasion because they will realise the Government have changed their mind on the situation.
I should like to put it to your Lordships that the Government have passed through a metamorphosis in their thinking, because during the course of 1974—the first year of office of the present Government—a decision was reached to make variations in the Social Security provisions in the Social Security Amendment Bill of that year. A very interesting debate took place in your Lordships' House on 2nd December 1974 at which the noble Lord, Lord George-Brown (whose absence we regret this afternoon) said that he believed that the new levels of contributions were going to be intolerable. How right he was! The new levels of self-employed contributions were raised from 5 per cent. to 8 per cent. It is very significant that the Government have now come to the same conclusion as the noble Lord, Lord George-Brown: that it would be much better to revert to the original decision of the previous Conservative Government to have a level of contributions set at 5 per cent. We welcome this; we were right in 1973. The Government have come to the same conclusion in 1977 but, alas, those three years have been lost.
Many other matters will be referred to, but I should like particularly to comment on the situation regarding the accumulated surplus in the Government Actuary's report. We welcome, of course, the publication of that report which comes, as usual, at the same time as the order. I should like to put one question to the noble Lord, Lord Wells-Pestell. He may not have the information beside him, but may I ask him whether he will bear in mind that a Written Answer to the same Question was given in another place on 23rd December last year as to what the surplus was? At that time, almost a year ago, it was stated that the accumulated surplus stood at £3,000 million. We believe that in April 1978, if we add the profits shown for this year, it would be £3,650 million. The significant point here is that this very large sum of money which is available within the insurance scheme appears to be used for one purpose only: the reduction of the public sector borrowing requirement.

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I should also like to put a second question. Was the Treasury—the Department which brought pressure to bear—suggesting that these reductions were made?—because we assume that that is the case. We believe, however desirable it is to accumulate these very large surpluses, that they should be devoted to the main purpose of the National Insurance Scheme rather than attributed to other matters within the Treasury remit. It may well be a matter which the noble Lord can explain very easily, but we should be most grateful for his guidance on this matter.
4.42 p.m.
Lord BANKS: My Lords, I should also like to thank the noble Lord, Lord WellsPestell, for the very clear way in which he explained the contents of this order. I should like to say at once that I very much welcome its content. Perhaps I might be permitted to make a preliminary observation. When we discussed last year's re-rating order, I drew attention to the considerable projected surplus in the National Insurance Fund to which reference has already been made, and I suggested either that contributions should be cut or benefits increased. I was told then that the accumulated surplus in the National Insurance Fund was only sufficient for three months' benefit. The implication was that the annual surplus could not be spent with safety. Now I see from the Government Actuary's report—and the noble Lord, Lord WellsPestell, has again pointed it out this afternoon—that a deficit of £25 million is projected for 1978–79. That is in spite of many imponderables; for example, the rate of increase in earnings, the level of unemployment and the number of employees who will be contracted out of the earnings-related scheme next April. However, I am not complaining and I am reassured by the fact that the figures for future contributions given in Table 3 of the Government Actuary's Report are estimated to give an excess of income over outgo throughout the period to the year 2008.
I am glad that the rates of contribution for employed persons by the employer and employee from next April are to be as originally forecast—because there was fear that they might be one-quarter per
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cent. higher on each side. I am glad that has not been found necessary. I welcome wholeheartedly the concession to the self-employed. In consultations I had with the Minister responsible for social security, as Liberal spokesman on the social services, I asked that since the self-employed did not receive earnings-related benefits and have a restricted range of other benefits, and since they will not benefit from the earnings-related part of the new scheme next April, they should have a corresponding concession. I suggested that the Government should contribute up to 3½ per cent. of earnings between the upper and lower limits, to match a similar contribution by the self-employed person towards a retirement annuity with an insurance company or friendly society. Three and a half per cent. from each side would have totalled 7 per cent., which is the same as the amount of reduction allowed for employees who have contracted out.
The Minister agreed to have the proposal carefully examined, and that was done. In the end, the Government decided that it would be better to give what is in fact a similar percentage concession to the one that I had suggested, simply by reducing the self-employed contribution. That has the advantage of involving no extra administrative cost, but it loses the incentive to save which my proposal provided. However, as the noble Lord, Lord Wells-Pestell, pointed out, the money freed by that reduction can be so used if the contributor wishes. It also has the advantage that the reduction is spread between the Class 2 flat rate contribution, which is helping the poorest, and the Class 4 contribution. I warmly welcome the reduction in the flat rate from £2.66 per week for a man and £2.55 per week for a woman to £1.90 per week for both, and also the reduction in the levy from 8 per cent. to 5 per cent. I have read with interest the Government Actuary's explanation of how those contribution rates are derived, and the noble Lord also made reference to those this afternoon. These are considerable reductions and a very welcome response to the representations which I and others made. I hope that the House will approve the order.
Baroness PHILLIPS: My Lords, I also should like to welcome the contents of this order. If I may say so, I thought it was

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a little ungracious of my noble friend from the Opposition Benches to suggest that the Government have had a change of mind. I would only remind him that during the time of the Conservative Government, when I had the privilege of sitting on the Opposition Front Benches where he is, I cannot recall any occasion when they had a change of mind in relation to social security, despite the pressures that we put upon them. Does the noble Lord wish to reject that? I think perhaps if he examines the matter he will find that it is so.
We have had a very limited welcome, which is rather sad, because it is not often that we have before the House a proposition that actually reduces contributions. I am sad to see that there are so few noble Lords here to commend the Government on this particular order. I would hope that the Press will give it banner headlines just as they would have if there had been an increase in the contributions. The fact is that there has been this concession to the self-employed which many of us, including noble Lords from this side of the House, advocated; and the Government have listened. I think we should congratulate the Government on that. This is a Christmas gift not only to the pensioners but to all contributors. We would like to give it a very warm welcome, and I hope that the word will go forth from this House.
4.49 p.m.
Lord WELLS-PESTELL: My Lords, I do not think it is necessary for me to detain your Lordships for very long. I cannot resist saying to the noble Lord, Lord Sandys, that I was delighted to hear him refer to the "last" Conservative Government. This is rather good news, I think, for the country as a whole, although I am sure he is going to tell me privately that he meant the previous Conservative Government.
In the last three years, if the noble Lord examines this scheme very carefully, I think he will find that there are not many people who are going seriously to suffer as a result of the Government's change of mind. On this occasion and on previous occasions, the noble Lord has made a good deal of the 8 per cent. which the Government fixed for the self-employed
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to pay. But I tried to point out then—obviously, not very successfully—that there was a very good reason for it.
What we tried to do on that occasion was to assess the cost of the benefits which the self-employed were getting, and are still getting, bearing in mind that it was costing at that time, and is still costing at the present moment, both the employee and the employer a total of 14½ per cent. The self-employed were to be called upon to pay 8 per cent. and they were getting, and are still getting, retirement pension, widow's benefits, sickness and invalidity benefits, maternity benefits, child's special allowance and death grants. They are getting all of the benefits that everybody else gets, with the exception of three—normal unemployment benefit, industrial injury benefit and earnings-related supplement to benefits.
I do not want to be unfair about this, but, if one costs what they were getting, the 8 per cent. then and now is not an unreasonable figure. I do not want to say anything more, but I did not want your Lordships to go away thinking that the self-employed were being soaked, although we realise that there was very strong feeling in this House and elsewhere about the 8 per cent. But we made a sincere and sustained effort to try to do it on the basis of what they were getting, in comparison with what other people were getting and for which they were paying a great deal more.
I do not know that I want to say very much more, other than that the National Insurance must be a self-contained system, but the effect on the economy must be borne in mind. In present circumstances, and bearing in mind past surpluses, Government as a whole, including the Treasury, accept that there will be a small deficit. But as the noble Lord, Lord Banks, said very clearly, all this was done on certain assumptions—the assumption of the number of people who would contract out of the scheme, which I believe is going into a good many millions; the number of unemployed that there may be; the restriction which there will be and has been, on earnings; and one must have a fairly substantial working margin to meet eventualities which may arise.
As always, I am grateful to the noble Lord, Lord Banks, for his contribution.

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I do not think that I need say a great deal, because the Secretary of State—and I mean what I say—has had the benefit of being able to discuss certain matters with the noble Lord, Lord Banks, and I know that the Secretary of State was anxious, so far as it was possible, to meet a number of these matters. But perhaps I may just repeat for the benefit of your Lordships that the Liberal Party, through the noble Lord, Lord Banks, proposed a scheme under which self-employed contributors who contracted with a life office for a retirement annuity would have their premium, up to a certain limit, matched by a State subvention allocated from their Class IV contributions.
The noble Lord, Lord Banks, was perfectly fair and pointed out the view of my right honourable friend, which was that there were two very considerable administrative difficulties—first, of staffing and, secondly, of procedures. I know that your Lordships have heard time and time before about this problem of staffing but more staff would be required to set up what would amount to individual accounts to prepare these issue vouchers, and it is probably a much more difficult process than many of us realise. There would also be technical difficulties flowing from the link with Schedule D tax; for example, delay in the agreement of earnings for tax purposes, adjustment of assessments and treatment of partners. We could see a good deal of difficulty and I hope that the noble Lord, Lord Banks, as well as your Lordships, will feel that perhaps the suggestion which the Government have made, and are asking your Lordships to accept in this order, really meets the situation, for it leaves the self-employed with a margin which he or she did not have before, which could probably be used for some kind of private insurance.
On Question, Motion agreed to.

NATIONAL COAL BOARD (RATEABLE VALUES) ORDER 1977
4.55 p.m.
Baroness STEDMAN Baroness STEDMAN rose to move, That the National Coal Board (Rateable Values) Order 1977, laid before the House on 23rd November, be approved. The noble Baroness said: My Lords, the order
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before the House concerns the rating of operational property occupied by the National Coal Board in England and Wales. Public utilities such as the gas, water and electricity supply industries, and the National Coal Board, are not assessed piecemeal for rates by valuation officers, like other occupiers, because the normal principles of assessment cannot be readily applied to each of their properties in turn. Instead, the Secretary of State has to come to a view as to how the rateable value of the whole undertaking should be determined, so as to give a value which is as close as maybe to that which would have been derived had the undertaking been rated normally. He has to take into account the views of the undertaking in question and those of the local authority associations, and, where there are differences of view he has, in effect, to act as independent arbitrator. In doing so, he is able to rely on the independent and expert advice of the Valuation Office of the Inland Revenue. The end product of all this is a formula for the rateable value of the undertaking which is laid down in a statutory instrument.
In 1973, it was decided to review the working of all the formulae used to value the various public utilities and industries and to make such changes as were necessary. It was thought that some of the formulae in use at that time had got out of line with the true values of the undertakings and that comprehensive updating was necessary. New formulae for several of the other undertakings have already been brought into effect. In some cases these have involved substantial increases in the rateable values of the industry in question to bring them up to date; in other cases there have been reductions or little change. The National Coal Board and the water industry are now the only two industries outstanding. The order before the House, if it is approved, will now introduce a revised formula for the coal industry, leaving only the water industry still to complete.
The order makes three major changes, together with a few minor and presentational ones. First, the value of deep mines occupied by the National Coal Board is increased to £11·5 million for the year 1977–78, compared with their present value of £6·8 million, which was derived from the current 1963 National Coal Board (Valuation) Order. This, we

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believe, fairly represents the total rateable value were it possible to assess each of the 300-odd colleries individually. Of course, as under the present order, the rateable value will vary with output in subsequent years.
Secondly, opencast mining is rated by reference to the amount of mineral extracted and a value per ton, known as the "tonnage factor". This tonnage factor is prescribed instead of being assessed, as is the case for minerals other than coal. The present tonnage factor as determined by the existing order is about 4·2p per ton, and the order before us provides for this to be increased to 12½p, giving a rateable value of £1·4 million at current output of 11 million tons. Thirdly, associated properties, as they are termed—and these are a defined list of some 415 properties which include railway lines, sales depots and the like—are taken out of formula rating and rated in the normal way.
As I have explained, the order before us is based on the existing 1963 order, but it might help noble Lords if I run through the main provisions and explain the changes that have been made. As noble Lords will have observed, there are one or two mathematical formulae in the order and I hope that these will not cause undue alarm. Surprisingly, they do, in fact, express in simpler form essentially the same concepts as were included in the previous order for updating and allocating the rateable value of the Coal Board's property.
Article 3 provides for the assessment by formula of mine properties and opencast workings and for the apportionment of values of properties which should be partly rated by formula and partly by normal rating principles. The only significant change is that associated properties—the ones which I spoke about on the defined list—will now be rated by normal methods. The 1963 order ties the rateable value of these properties—the railway lines, the wharves and so on which clearly contain no mineral deposits—to those of mineral producing hereditaments where the value is controlled predominantly by the value of the mineral deposits. The change is aimed at removing the anomalies which arise when there are changes of occupier.
Article 5 is the most significant part of this order. It sets the rateable value of deep mines for 1977–1978 at £11·5 million. As this represents a considerable increase over the current rateable value of £6·8 million, I will explain the reasons for this decision. The present value is derived from the total value of all the Board's mines as at 1st April 1962, updated in proportion to the value of other extractive hereditaments and to the output of coal. No account has been taken of the modernisation that has taken place in collieries, nor of the fact that production is now concentrated in half the number of mines. Yet a few efficient centres of production have a higher value than several less efficient centres having the same total output, and these changes in the Board's mines should be reflected in an increase in value. A study of a sample of the Board's mines suggests that this increase ought to be 15 per cent.
The simple comparison with the rateable value of other mineral producing hereditaments is weighted towards the annual rental value of sand, gravel and other aggregate minerals. It has not properly reflected the increased value of coal as a source of energy. In the period from 1963 to 1974, for example, the selling price of coal rose 140 per cent., whereas the weighted average price of other minerals rose only 82 per cent. How far this should be reflected in the value of coal mines is a matter of judgment, but, taking a conservative estimate, it was thought that the rateable value of the mines should be increased by 15 per cent. in respect of this factor.
A further increase arises from the results of the 1971 Mines and Quarries Valuation Order. This order provided for a reduction of that part of the rateable value of a mineral producing hereditament that represents the royalty value of the mineral, and coal mines secured a reduction of 39 per cent. of their rateable value accordingly. On further review it appears, however, that this reduction was too large, since a large proportion of the value of a coal mine lies in the shafts and machinery rather than in the coal itself. The reduction in value should therefore have been less—20 per cent. in fact rather than 39 per cent.—and it is proposed to put this right in the new order.
Having regard to these three factors, we have decided that the present rateable

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value of £6·8 million should be raised to £11·5 million for 1977–78. As I have already said, this value will vary with output in future years, as the present order provides, although this variation is specified by symbols and not in words.
I expect that noble Lords will be wondering what effect increases of this nature will have on coal prices. Although the extra rates will amount to around £5 million, rates form only a very small part of the National Coal Board's expenses. The increased cost per ton of coal from a deep mine will only be 3·9p. By contrast, the current cost of coal is typically about £16 a ton. That is less than one-half of 1 per cent.
The formula in Article 6 provides for the apportionment of the national basic rateable value between rating districts. The equation looks formidible but the principle behind the calculations is the same as under the present order. It is simplified by the assessment of a single national rateable value rather than one split between the old divisions. In effect, the formula provides, as under the present order, that some fraction of the rateable value is associated with the shaft and some with the mineral deposits which are worked. They may, of course, lie in quite another rating district.
Under the 1963 order, 60 per cent. of the apportionment was associated with the mine shaft and 40 per cent. with the value of the mineral deposits. Noble Lords may have noticed that the formula now refers to 75 per cent. and 25 per cent. I referred before to the decision in 1971 to reduce the value of the mineral element in the assessment of rateable values by half, and therefore the 40 per cent. should be reduced. The ratios should thus not be 60 to 40 but 60 to 20, or 75 per cent. to 25 per cent.
The other major change is that in the provision for assessing opencast workings, contained now in articles 9 to 14 of the order, the provisions here are somewhat more straightforward. Each working is assessed individually. Under the 1963 order, the tonnage of coal produced at each working in a year is multiplied by a "tonnage factor", which is calculated by a formula and is currently about 4·2p. The result is the rateable value. Rates are then levied in the usual way. The
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order before us provides for the "tonnage factor" to be increased to 12½p, to be comparable (after taking into account such matters as the scale of the operation) with figures which are derived from the assessments of coal sites being exploited privately.
While much of the order simply repeats the existing provisions, deciding the rateable values to be set by it has not been an easy task, as witnessed by the long time it has taken to do. We have sought agreement between the parties but this has not been possible, and I am aware not only that the Board has expressed the view that its rateable value should be lower, but also that the local authority associations have said that it ought to be a good deal higher. We have therefore sought a balance between these views, based on the disinterested advice of the Government's Valuation Office, with the sole aim of bringing the rates the Board pays into line with those paid by other industrial ratepayers. We believe that we have achieved this and I therefore ask noble Lords to approve this order.
Moved, That the National Coal Board (Rateable Values) Order 1977, laid before the House on 23rd November, be approved.—(Baroness Stedman.)
5.8 p.m.
Lord SANDYS: My Lords, the House will be grateful to the noble Baroness for explaining an intricate mathematical formula with her usual precision and technique. From this side of the House may I emphasise what the noble Baroness has said. Agreement was indeed sought but none was reached. I should like to express the case so far as the National Coal Board are concerned. The National Coal Board claim that neither the new valuation figure of £11.5 million nor the general rise of 15 per cent. in the National Coal Board's rates is justified. In their view, these figures bear no relation to reality today. In fact, to coin a phrase, they appear to be plucked from the air.
The reason why your Lordships are faced with the order this afternoon is that the Department of the Environment have accepted the chief mineral valuer's recommendation which was discussed but not agreed between the authorities concerned, the Board and the Government. First, it is appreciated that there

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are 415 properties taken out of formula rating, but these are of course still subject to their own revaluation on the normal basis and they are not agreed. In our view the chief mineral valuer has made a basic confusion between value and market price.
This story goes back quite a long way. The noble Baroness referred to as far back as 1963, but I will go two years earlier, to a debate in another place in the Standing Committee when the then Minister of Housing and Local Government, Mr. Henry Brooke—now, of course, my noble friend Lord Brooke of Cumnor—said this on the Rating and Valuation Bill.
"The clause would enable new systems of assessment to be brought into force by order if they were agreed between the local authorities on the one hand and the undertakings concerned on the other. There is no suggestion that obtaining the benefit of a formula method of assessment should be regarded as a privilege. It is not designed to enable the undertakings concerned to pay less rates than they otherwise would and it is not designed to impose on them a greater rate liability".
Further on in the debate he said:
"The points at issue will be purely technical because everything will be governed by the general statement I have made, namely that the new system must be agreeable to all concerned and must be designed neither to increase nor to diminish the total rate liability of the industry or the set of undertakings".
It appears that an undertaking was given by a Minister which was accepted and passed unanimously when it came to that particular clause. It is further pointed out by the National Coal Board in regard to their claim that the chief mineral valuer has over-rated the present value, that between the years 1964 and 1975 in real terms their rates were increased by no less a factor than 26 per cent. I think it can be said that there is a parallel between what has been said earlier this afternoon on a previous order, which was also concerned with the Department represented by the noble Baroness, namely, the housing of homeless persons order, in which all local authorities and the Government got together and reached agreement and produced an order which was satisfactory to all sides of your Lordships' House. The parallel I should draw is with this order, where no such agreement has been reached, where
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the Coal Board cannot possibly accept what the Government have in mind and the local authorities take a somewhat different view from the Government themselves. I ask the noble Baroness whether it would be possible to achieve a revision of what the Government have in mind.
5.14 p.m.
Baroness STEDMAN: My Lords, I note the comments made by the noble Lord opposite and I, too, have been looking up to see what the then Mr. Henry Brooke said way back in 1961. As I understood what he said, it was that the object of a rating formula was, as nearly as possible, to put the industry concerned in the same position as it would have been in if there had been no formula, and that the values were left to be determined in the ordinary way. This was our understanding of those assurances which were given by the then Minister responsible. But, quite obviously, there is still scope for considerable differences of view on what the total rateable value of an industry would be if there was not a formula. This is the sort of problem that we have been trying to resolve over the past months. It is not only the concern of the National Coal Board; the National Union of Miners are also working in harmony with the NCB and are complaining that we are rating their industry too high.
The purpose of the formula is to facilitate the making of rating assessments, not to cause the industry concerned to pay more or less in rates; or, if you want to put it another way, if the NCB pays too much in rates, it is unfairly being asked to subsidise other ratepayers, but at the same time, if it pays too little, then it is itself being subsidised by other ratepayers, which is not fair to them. Here I take some comfort from the fact that the local authorities complain that we have not rated them heavily enough. The NCB and the NUM complain that we are hitting them too hard and one tends to think that if both are squealing we may perhaps have got it somewhere near right. I take note of what the noble Lord has said; we will look at it and will see how it works as time goes on; but I hope the House will accept the order this evening.
On Question, Motion agreed to.

EEC: 50th REPORT—EXCISE DUTIES ON ALCOHOL
5.16 p.m.
Lord RAGLAN Lord RAGLAN rose to move, That this House takes note of the Report of the European Communities Committee on Excise Duties on Alcohol (COM(72)225) (Fiftieth Report of last session (HL 263)). The noble Lord said: My Lords, I have to say straight away that the scene has changed since this report went to the printers because the Commission have changed their tack. They wanted to get agreement among the Member States that Excise duties should be applied to only five products. They were mineral oils, manufactured tobacco, alcohol, beer and wine and they proposed what they called a "framework directive" which embraced a draft directive for harmonising the duty on each of those five products, plus the draft decision of the Committee which was set up to regulate the level of these duties. However, they found it much harder to get agreement than they had anticipated and they have now decided to tackle the products one at a time with nevertheless the same ultimate objective, namely a harmonised Excise taxation throughout the Common Market. They say that this harmonisation is long overdue, that all the different rates of duty distort competition, often severely, and that they hinder the free circulation of goods.
Just before I came into the Chamber this afternoon I was handed some comments on the Commission's proposals from the Scotch Whisky Association. I am sorry to say that I have not had time to imbibe all that they say in their memorandum although it appears to be full of information. But I see that in their conclusions they leave one in no doubt at all that they, at any rate, strongly support the Commission. They say that Scotch whisky faces widespread discrimination within the Community. They also support the Commission's proposals for credit in the payment of duty, which are better terms than they receive in the United Kingdom. But they are also strongly opposed to the Commission's present approach of endeavouring to obtain harmonisation of duties on spirits and fortified wines but leaving aside for the moment beer and wine, for they say that this will tend to enshrine the present inequitable pattern of taxation.
I think it will become a little clearer from what I am going to say later on why the Commission face a very difficult task, whichever approach they take, and they may indeed have to wait for monetary union before they can make any great progress at all. What they are trying to do is, first of all, to get agreement on the structures; that is, on the type of drink and the percentage of alcohol in it to which duty would apply, so that in time that will allow harmonisation of rates of duty. Your Committee decided that, although the Commission had changed their approach, they had not changed their goal, their policy, and that the subject was of sufficient interest and importance to be brought to your Lordships' attention in debate. It is all so intricate that when I came to ponder what I was going to say this afternoon to your Lordships I thought I might be in danger of making a speech that would never end.
Normally a subject like this would have come to the Sub-Committee on finance, but it happened that at the time this draft Directive came out the Agriculture and Consumer Affairs Committee, of which I was then chairman, had just reported on the Commission's proposal for a regime for industrial alcohol; this contained ingenious, but we thought unacceptable, ideas for helping to dispose of some of the wine surplus. It was hoped to be able to assist this by imposing what amounted to a tax on spirits. Just at that moment my noble friend Lord Brown said, "Do you realise that if the Common Market new Excise structures are agreed to, and the rates of duty are set by the Commission and not by our Chancellor of the Exchequer, the wine growers will try to get this Committee to favour wine at the expense of spirits?". It is indeed this fear which your Committee voice in their report. No doubt my noble friend Lord Brown will dilate upon that subject in a moment.
However, your Committee entirely exonerated the Commission from the charge that they embarked upon the harmonisation of Excise structures with any other objective in mind than to abolish fiscal frontiers. This purity of intention is demonstrated by the fact that, when the European Parliament—in a Motion which may strike a chord of sympathy among some of your Lordships—agreed

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that the best way to harmonise Excise duties on wines was to abolish them, the Commission decided to leave wine and mixed beverages alone for the moment, about which they had much disagreement, and to concentrate on the fortified wines where there is, they think, a good chance of getting agreement. Their proposed structure differs from the United Kingdom practice, in that, whereas we charge duty on fortified wines at a flat rate in two arbitrary bands, the Commission prefer treating a fortified wine as if it were a spirit and applying duty to it according to its exact alcohol content. This course seems commendable, if only because it is simple and easily understood. The United Kingdom structure just grew up and though it may be none the worse for having done that, I do not think it is well understood by the general public; the Commission's proposal seemed to us to be better.
If we abandoned our homegrown structure, we would be at the same time, abandoning the proof gallon as a measure of alcoholic strength, for which I, for one, would give much thanks, as I find it most confusing. We would be adopting what is known as the Gay Lussac scale, which sounds a bit romantic perhaps; it simply gives the percentage of alcohol by volume measured at a certain temperature; it is as simple as that. It is straightforward and we should know exactly what we are buying.
I should like to digress for one moment to take this opportunity of urging upon the Government that they should insist that all wine sold has its alcohol content displayed on the bottle, as is done in France. The old argument that people do not buy wine for its alcohol content may hold good for those who can afford the more expensive wines of certified origin, but it does not apply to the "plonk" trade. Certain good firms—including one in which a noble friend of mine who usually sits not far from here has an interest—are giving a lead in this matter. They are not ashamed of showing the strength of their wines, and if they can do it everybody can. If everybody were to do it, it would give the public confidence and protection from being sold watered-down rubbish.
Having digressed for a moment from the report, I turn to the Commission's
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proposals on beer. There are similar to the structure obtaining at the present time in Germany, where they drink more beer per head than we do, and are, I am told, just as discriminating. It has always seemed to me that this system of dutying in four discontinuous bands of strength of the final product is very much better than ours, once again for the reason that the consumer knows much more exactly what he is paying for and what he is getting. There are a lot of technical differences and difficulties to be worked on before agreement is reached throughout the EEC, and that will take a long time; but it seems to me an objective eminently worth pursuing. I hope our brewers will not allow our present tradition to deter them from co-operating.
Turning back to wine, which the Committee made the main subject of its report, I think for several reasons that here also it will be a very long time before agreement is reached on a common Excise structure and duty. For one thing, rates of Excise duty on wine and rates of VAT vary enormously throughout the Common Market. In this country over 50p of duty is charged on a bottle of wine, plus 8 per cent. VAT, and that amounts in total to about the same as is charged in Denmark. I guess that the United Kingdom Government and the Danish Government would be extremely reluctant to see any rates of duty lowered on alcoholic beverages. It is a lot of money that they get from alcohol.
To throw some light on this, I should like to ask my noble and learned friend Lord McCluskey whether he can tell me what percentage of gross tax revenue the duty and VAT on drink represents. The French charge hardly any duty on wine at all but they do charge a 17·6 per cent. VAT rate. Incidentally, Italy charges no tax at all, and Germany levies duty only on sparkling wines, and applies an 11 per cent. rate of VAT on wines as a whole. So one sees that there is this wide variation.
There will be enormous opposition among these countries to changing their excise duties, not only because it would go against their traditions but because the vineyards are large employers of labour and there are big financial interests in them. Any increases in rates in these countries will be seen by them as discrimination against wine producers, in

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exactly the same fashion as our spirits manufacturers saw the proposed EEC tax on spirits, which was suggested as a way of helping to reduce the wine surplus, as being discrimination against them.
If the Commission is right, and I believe that to be so, and it is necessary for the operation of a common market to harmonise Excise duties, there is a lot of hard talking to come. I think that the Commission's task will be made much easier if measures are, first of all, taken to reduce the wine surplus to a manageable size. Incidentally, I hope that we shall always manage to maintain a surplus of wine: a shortage would be horrifying. However, only if the surplus is reduced will the Commission be able to avoid the charge that it might manipulate, or might be open to pressure to manipulate, the rates of duty to ease the problem of the wine surpluses.
We tried to make the report informative without being prolix and I hope that readers of it have found that to be so. There are some gaps which, in retrospect, I should like to have filled, but as in the course of time we shall be returning to the subject we shall have the opportunity, I am sure, to revise it and fill it out a little more. Indeed, perhaps during the course of this debate some of your Lordships might indicate in what way that should be done. My Lords, I beg to move.
Moved, That this House takes note of the Report of the European Communities Committee on Excise Duties on Alcohol (COM(72)225) (Fiftieth Report of last session (HL 263)).—(Lord Raglan.)
5.32 p.m.
Lord BROWN: My Lords, I rise in place of the noble Earl, Lord Gowrie, who is unable to speak this evening. I understand that the noble Lord, Lord O'Hagan, will be following me. I hope that if his point of view differs from mine he will be generous to me if I raise one or two questions as he proceeds, but I do not know what his attitude will be.
I speak on these five Directives on the assumption that they will be followed—I do not know when—by other Directives. These Directives merely mean that the Government would have to change duties
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on wine, beer or spirits—according to the category in which they fall—by the same amount at any given moment. That merely means that one cannot dice about as between whisky and gin or as between one wine and another. However, there would seem little point to these Directives unless they are followed by other Directives, which are envisaged by the Commission, leaving the actual fixing of the rates of Excise duties on these categories to a committee based on a weighted majority. That seems to open up a very grave danger to this country. Therefore, I am here to try to persuade the Government to put up very stiff opposition to the passing of these Directives.
I have two main objections and I shall deal with the lesser one first, although it in itself is extremely serious; namely, that spirits like whisky and gin will have Excise duty levied on their alcohol content. As regards wines, the Excise duty will be based per gallon, or per continental measure, in three bands. In the case of fortified wines, where the percentage of alcohol is above 22 per cent., they will be taxed per gallon as though they are wines with up to 22 per cent. of alcohol, which almost inevitably means that the alcohol content up to that level will be Excise dutied at a much lower level than the alcohol in spirits. Moreover, alcohol content above 22 per cent. will be dutied at a rate between 20 and 50 per cent. of the rate which would be levied on all the alcohol in whisky, et cetera.
I do not know whether noble Lords have followed that but I have given them the data. It means that a drink like port or vermouth will be able to enter this country in competition with spirits, having paid a very much lower Excise duty if the second group of Directives come into force. As a result, I think that we shall find that those who wish to make merry on drinking wine or spirits will be able to do so very, very much more cheaply on fortified wines than on drinks indigenous to this country like gin and whisky. An entrepreneur's paradise is opening up. We shall see all sorts of special drinks, based on wine, but heavily fortified, coming to this country and underselling the traditional drinks which we produce here. That is an extremely serious measure of discrimination. That is my first argument.

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However, these Directives are much more serious than that. We are all aware that there is a wine lake in Europe. In the course of the next five, six, seven or eight years that lake will be much enlarged if Greece, Portugal and Spain join the Common Market, as I have no doubt they will. Therefore, it seems to me that the efforts to encourage the consumption of wine will be serious and continue for as long as the Common Market exists.
Within these Directives and those which I think will almost certainly follow, lies the ability of the Committee (to which I have referred) by weighted majority—which means that non-wine producing countries will always be outvoted—to keep the Excise duty on wines very low indeed in order to encourage consumption and the potentiality of keeping the Excise duty on spirits such as brandy, gin and whisky very high. Regardless of whether that happens, it is a very grave potentiality. I do not think that this House or the Government should willingly enter a situation with conditions under which alcoholic drinks produced in this country can be put in a gravely prejudiced position for the future. It may not happen, but I suspect that it will happen. I suggest that we should be quite wrong to pass Directives which let that happen in a situation where we would later be able to do nothing at all about it.
I am reminded of the deliberations by the EEC just prior to our joining the Common Market. They hastily rushed through certain provisions about fishing. Although protests were made at the time, we entered the Common Market without having these matters completely clear. Now, and despite the efforts of Mr. Silkin, I think that we are in the dirt. We did not take account of the potentialities. This is a not dissimilar case. I note that the Scottish whisky producers have said that they approve of these draft Directives. I understand why—at present the French Government are discriminating against whisky in favour of brandy. It seems to me that this degree of discrimination is, in any case, probably illegal but certainly outside the spirit of the Common Market and could be dealt with in other ways. However, even if this is the only way in which to deal with it, a consistency of duty in France for whisky and brandy is a very short-term and not a
1912
useful gain to put against the grave dangers of beginning the process of passing European legislation which will put us in a situation where the result will be ever-increasing imports of wine into this country and decreasing exports of whisky and gin from this country into Member States in Europe. It is a terrifying thought to me that, without thinking about it, we should put ourselves in that position. It seems to me that the Scotch Whisky Association is being extremely shortsighted in suggesting that these Directives should be hastened on their way.
There is only one proper basis for harmonising Excise duties on alcoholic drinks, and that is to base all Excise duties on the alcoholic content of those drinks—in bands, if you like. That is the only fair way. Any other way opens up the potentiality of the gravest sort of discrimination. By levying Excise duty on all alcoholic drinks—wine, beer and spirits—on the basis of their alcoholic content we would create a situation where we should be unable—as we are at the moment—to reduce the consumption of whisky by keeping the excise duty very high and at a lower level on wine. We should still be able to create that situation in the future by levying taxes of other kinds—perhaps VAT—on alcoholic drinks at different levels at the retail stage or in public houses. There is nothing to prevent us from doing that. However, it would be at our discretion here and not at the discretion of the Commission. That is the great difference between the two situations.
I am aware that at present the Excise duty on spirits is, per alcohol content, at a much higher level than on wine. We may want to keep it that way. We can do so even if these Directives are not passed. It would be on the basis of levying Excise duty on all alcoholic drinks on the basis of alcoholic content. That seems to me to be the only fair basis on which the Commission should proceed.
5.43 p.m.
Lord O'HAGAN: My Lords, while the noble Lord, Lord Brown, was making his interesting and complicated speech, which I followed as closely as I could, I was not wholly sure whether the kernel of his objection to the Committee to which

1913
he referred was that it was a management committee of the sort normally found in the Community. Am I right in thinking that the noble Lord was objecting to this Committee because it was similar to committees which manage other agricultural products in the Community?
Lord BROWN: My Lords, the noble Lord knows much more about these committees than I. My sole objection was that if this set and the next set of Directives go through, the decisions on Excise duty will be made by a body based on weighted majority, which would mean that we do not have the right to veto its decisions.
Lord O'HAGAN: My Lords, if that is so, I believe that the nature of this Committee is very similar to that of a management committee normally found in the Community's system of coping with agricultural products. I believe that the noble Lord, Lord Brown, has raised a most interesting point about the powers of such committees. I hope that this is something to which we can return; perhaps we could have a debate on it as the main subject of one of our EEC discussions because the role of these committees is most important.
I hope that the whole House will be grateful to the noble Lord, Lord Raglan. As a former member of the Sub-Committee of the EEC Scrutiny Committee of your Lordships' House I am particularly grateful to him. I am particularly honest in my thanks for the clarity of his report, which has enabled me to study it and comprehend at least a part of this highly technical problem at some short notice. I think that your Lordships owe a great deal to this Committee. This particular report is an example of what the Committee does at its best. Community proposals coming from the Commission are technical, complicated, and sometimes almost labyrinthine. The reports from the Scrutiny Committee light us through the Community's darkness.
I am sorry that we do not have more contributors to today's debate. I hope that it is not out of consideration to the teetotal vote that the Liberals have abstained from appointing a spokesman, because I believe that this particular set, series or group of Directives, whether they
1914
have changed or not, as described to us by the noble Lord, Lord Raglan, are a good example of the increasing subtlety with which the EEC attempts to deal with highly technical problems that have a great deal of political content.
I am sure that the Sub-Committee is quite right when it paid tribute to the fair-mindedness of the Commission in attempting its draft on this most intractable problem. The Commission is learning. It is learning to be more responsive and this series of problems concerning the harmonisation of internal taxation for alcoholic liquors is something about which every citizen in the Community has a view and upon which every political Party must take a stance.
Therefore, whether or not there are major flaws and objections to the actual proposals contained in the Commission's document, I hope that your Lordships will share with me a feeling that the way in which the Commission is approaching this problem is an improvement on some of its more remote and didactic efforts which we have debated in the past.
As someone who has taken an interest in the progress of the Community, I hope noble Lords will agree with me that a proposal from Brussels which increases the likelihood of a more liberal and general supply of good alcoholic liquor at a reasonable price is something which we should be grateful to the Community for suggesting. Indeed, it is the sort of Common Market in which I think many people would not find too much to object to. Looking at this proposal from a purely national and British point of view, it is extremely likely that what has been suggested by the Commission would be of considerable advantage to the British spirit trade, particularly the whisky producers, because we in this country now command 60 per cent. of the production of such liquors.
The noble Lord, Lord Brown, had a series of highly technical objections to the proposed system of taxation, although he did not object to the goal towards which these Directives are aimed. It may be that his objections to the system are valid. Nevertheless, a new way of achieving the same objectives may be brought into being and I hope that the noble and learned Lord, Lord McCluskey, will be able to comment on the fears

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expressed by the noble Lord, Lord Brown, which appeared to differ somewhat from the fears of those involved in the industry themselves.
Another advantage which those engaged in these activities in this country would derive would be the proposed credit period for payment of Excise tax because there is no such credit under current British legislation. This is not a problem which can be solved quickly. The noble Lord, Lord Raglan, told us that even since the publication of this report the Commission have had further thoughts because there had been setbacks in the tackling of these Directives. But this is a subject to which the Community is bound to return, if only because of the increasing growth in the wine lake in other Member States of the Community. That wine lake is not just an issue which involves a surplus of alcoholic drink—which sounds something of which it should be hard for us to disapprove—it is, of course, a most intractable and complex social problem for all those who are engaged in the growing of the grapes for the wine who, in many cases, have little alternative employment available to them in the areas in which they live.
This is not a problem that will go away. It is something which the Community will have to tackle even if it is not in the form as laid down in these Directives. I hope that the noble and learned Lord, Lord McCluskey, can give us an up-to-date briefing on the exact stage which discussion in the Council of Ministers, or in the working groups in that Council, has reached. What is the current state of play? How near are we to seeing any one, or part of any one, of these Directives being implemented and put into practice?
The noble Lord, Lord Brown, raised one other issue that I thought was of great importance; that was the question of the enlargement of the Community by the membership of Spain, Portugal and Greece. I hope that the difficulties that may come when those countries, all of them or some of them, become full—and I mean full—members of the Community will not act as a deterrent to the solution of the internal harmonisation problems that are now being discussed on the basis of these Directives. Even if those countries do join they may have a prolonged
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transitional period, or something equivalent to it, and if we are to wait until all those countries have joined and are all full members of the Community before we attempt to do something about the internal taxation of alcohol within the Community, then we may be waiting for a long time indeed.
Lord BROWN: My Lords, I was not in any way suggesting that it should be dependent. There is a wine lake already of growing proportions—I think the noble Lord will agree.
Lord O'HAGAN: My Lords, I was not disputing with the noble Lord, I was not criticising what he said. I am coming very near to the end of my remarks. Apart from giving us the current state of play on these Directives, could the noble and learned Lord, Lord McCluskey, give us some inkling of the difference between the annual income that the Government derive from tax on wine and the annual income they derive from tax on beer? The difference between the two is probably fairly large, because although the taxation that we levy in this country on wine is in fact the highest in the Community per gallon, very little wine is consumed in this country as compared with the amount of beer consumed. I raise this point because I want to ask the noble and learned Lord whether what I am now going to suggest is wholly beyond the bounds of possibility. I do not want him to say, Yes, I just want him not to say, No.
This Government have suffered a great deal in the EEC because of their refusal to bargain in a gentle and reasonable manner. Therefore, we have had the JET project endlessly and needlessly delayed from coming to this country. Would it not be possible for the Government to consider a concession to other Member States on the lowering of taxation on wine as something which would help deal with the wine lake, be fairly popular in many quarters in this country, and show the sort of constructive give-and-take relationship which is needed in the Community? That is not a formal suggestion I am putting forward. What I merely want to get on the record is that we have a great deal to gain from the sort of proposals suggested in this report,

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and I hope that the Government will not be too inflexible about our present system of taxation when it comes to be negotiated.
As I think the noble Lord, Lord Raglan, suggested, we shall need to return to this topic as events take us on, and as proposals about the harmonisation of internal taxation of the Community on alcoholic drinks change and develop. I hope that we can return in perhaps a year's time or so to look at this subject, and I hope that if I speak on that occasion I shall have more notice than I have had today.
5.57 p.m.
The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey): My Lords, I rise from a growing paper mountain to meet the points that have been raised in this debate. First may I say what a pleasure it gives me to acknowledge the presence on the Opposition Front Bench of the noble Lord, Lord O'Hagan, and wish him a long—and very long—time in that position. It comes as no surprise to me to find him displaying an instant expertise in this matter, because the last time we crossed swords in this Chamber he was more "bitter" than "mild" on that occasion. Indeed we had a "spirited" debate, and the subject was the taxation of cider. With his knowledge of these matters and the EEC it comes as no surprise to me that he should instantly display a competence which leaves me gasping.
I think that perhaps my noble friend Lord Raglan should have declared an interest, as indeed I now do, as a home brewer in these matters. But as he did not, perhaps I need not go any further into the matter. One point has just been made by the noble Lord, Lord O'Hagan, and that was a mildly critical point about the Government's attitude in EEC matters. I think that must not go wholly uncorrected. As I understand it and as I think many people in this country understand it, the Government's approach in EEC matters is that we must fight as hard for legitimate British interests as other Member States fight for the interests of their countries. If that is sometimes represented by a hostile Press as being all bitter and twisted, then that is the fault of the Press rather than of the Minister who has been mentioned.
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I might mention one small detail. We are sometimes criticised in a different context—indeed there is a debate in another place at the present time—for delaying in the matter of direct elections. In a very related field here, the value-added tax sixth Directive, and the obligation of Community countries to introduce a harmonised system by 1st January 1978, we alone of the Community countries are able to do that. Therefore, we are not always at the back; we are sometimes in the front. It cannot be wrong to press ahead with pursuing our legitimate interests at the stage when these matters are being discussed.
To turn to the subject matter of this debate, the documents which are referred to in the Committee's report are the documents which represent the original proposals of the EEC Commission submitted to the Council in 1972. At that time, of course, there was six Member States, and their attitudes and interests in relation to the whole subject of this debate were perhaps slightly narrower than, and certainly different from, the attitudes and interests of the whole Community as now enlarged. Undoubtedly, the proposals which were then put forward contained a number of points which were of great concern to, and not wholly acceptable by, this country.
We were able to accept, and do accept, in principle, the harmonisation of the structure of Excise duties and the methods of control administration; but, as to the details, of course we had to look at them very critically indeed—and that is precisely what the Select Committee did. But, as your Lordships will see from its date, it was printed on the 26th July—that is to say, the 50th Report—and the very next day the Commission submitted a communication to the Council which led to a quite radical change, and that was the change referred to by my noble friend Lord Raglan.
Perhaps, invited as I was by the noble Lord, Lord O'Hagan, I might spend one minute trying to bring the matter up to date for those who are not familiar with what happened. At the end of July 1977 the Commission sent a communication to the Council. The purpose of that communication was to give a fresh impetus to the Council's examination of the earlier proposals, which had rather dragged since 1972. In essence, the Commission, while

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confirming their earlier stance on matters of principle, rejigged the proposal and altered their priorities. What they in effect did was to say, "Certain problems are not going to be solved swiftly; therefore, let us select those which can be dealt with more swiftly". They urged work to be resumed on the draft Directives and, in particular, the draft Directive, first of all, for harmonising excise duties on alcohol; secondly, the draft Directive for harmonising the structure of excise duties in relation to beer; and, thirdly, the similar Directive in relation to mineral oils—the beer and alcohol to be taken together, followed by the third one on mineral oils. That would then postpone the question of the Directive on wine and the other questions which are discussed in the Select Committee's report.
Something was said, too, about the forthcoming enlargement, or likely enlargement, of the Community. We would hope that it would be possible to solve some of these problems before they become even more complicated by the further enlargement of the Community. Your Lordships will see that what we really have, therefore, is a change in the whole package since July 1977. I would not say that matters have gone back to square one, but it is certainly true that there is a lot of talking yet to be done, as my noble friend Lord Raglan said, and there is still a lot of room for manoeuvre. The views expressed in this House and, indeed, in the Select Committee's report will be most valuable when the United Kingdom delegation has to discuss the details of these proposals at working group level in Brussels. Indeed, that is where the matter now rests, and the next stage is to resume working group discussion in Brussels.
There is a point which has been made which I should like to deal with at this stage because it arises out of that and a point made by my noble friend Lord Brown about unanimity and majorities. In the original documents, which have now been shelved as a result of the new initiative, it was proposed that there should be set up a committee operating by a qualified majority—and that, I think, is what my noble friend had in mind when he talked about the qualified-majority. First of all, that proposal has been shelved; and, secondly, in any
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event it is a proposal for a committee to deal with technical matters only, and, in relation to rates of duty and taxation, unanimity is still required and the proposal in the Directive was not any different from that. So I think my noble friend's fears on that account are, as one sees the present documents and the present proposals, not well founded.
In considering the discussions which have to take place in Brussels, of course, the views of the trades concerned will also be sought, and I think they might well, on balance, see some advantage in making progress in relation to alcohol and beer. I can bring your Lordships further up to date in regard to the attitude of the Scotch Whisky Association because they were good enough to send me today a copy of their representations before the Committee up-dated to take account of developments in and since July 1977. They made, and continue to make, strong representations against breaking up the package, and that is a representation by them which we shall certainly take into account when we go into our discussions. The United Kingdom Government are not committed to the new approach which the Commission proposed to the Council—the approach which is contained in the document R1966/77.
I would say only this in relation to what the Scotch Whisky Association submit to us, that we think—and I think they recognise this themselves—there still will be some advantage in proceeding with the Directive on alcohol, because if their prime competition comes from other spirits, like brandy, if one proceeds with the proposals contained in the draft Directive then there will be an equalisation of competition between whisky, on the one hand, and brandy on the other, throughout the Community, and that can only be a benefit. Secondly, the same Directive contains the proposal—it is now in Article 21—that there should be a deferment of the date when duty has to be paid. It is a deferment which works out at about two months. At the moment, as your Lordships know, when whisky comes out of bond duty falls to be paid at once. Under this proposal, the duty would be postponed for approximately two months.
Lord BROWN: My Lords, would my noble friend permit me to ask him a

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question? Is it not possible to cause the French Government to treat whisky and brandy, so far as Excise duty is concerned, in the same way under other rules of the Common Market, rather than resort to these Directives as a means of correcting that situation?
Lord McCLUSKEY: My Lords, I think my noble friend raises an important point. Under Article 95 of the Treaty there are provisions which might well be invoked, and the method of invoking them would be for one body, one person or one interest to take infraction proceedings against the French. But, of course, not everyone in the Community is entirely guiltless; everyone lives in a glasshouse, to some extent. There are two possible approaches. One is that everyone starts infraction proceedings against everyone else, and the whole thing becomes bogged down, to the delight of lawyers in Luxembourg; the other alternative is to proceed by agreement to draft Directives and try to solve the problem in that way. As at present disposed, the Government would like to proceed by way of Directive rather than a lot of bitter litigation.
May I turn briefly to the matter of the beer Directive? We have a system at the moment whereby the excise duty is calculated in relation to the worts; that is to say, before fermentation. Other countries, in particular Germany, have a different system whereby the duty is exigible at the time you have an end product, a beer. The proposal in the draft Directive on beer is to shift to the German system. That system is one which United Kingdom brewers are tentatively inclined to regard favourably. There is no fiscal reason why we should not move to it, although it involves some complicated calculations in order to ensure that there is no substantial loss of or increase in revenue. It was suggested in a recent report of the NEDO Sector Working Party on brewing that we could move to such a system, but these are matters which have to be discussed further with the trade interests involved before an acceptable arrangement can be concluded.
I was asked particular matters, and I think I should try to reply to them. First, my noble friend Lord Raglan asked me specifically the question as to
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what percentage of the total taxation is represented by the duty and, I think, the value added tax on wine and spirits. It is in fact 3.9 per cent, of the total taxation revenue.
My noble friend Lord Brown spoke of the competition between whisky, on the one hand, and certain wines on the other, I do not know that the Scotch Whisky Association has made much of that particular competition. I think, as I said a moment ago, that the principal competition is between one spirit, whisky, and another spirit like brandy rather than between whisky, on the one hand, and certain wines on the other. But we shall certainly take account of what the noble Lord said when we discuss these matters further with the Scotch Whisky Association.
I think that, in general, the Government approach is that, in view of the change in stance by the Commission, we need to go back to our trade associations and our various interests and re-discuss these matters with them; and we need to try to keep the initiative going at Brussels as soon as may be in order to achieve some advance in bringing these matters to a conclusion. We would also, in principle, endorse what the Commission has said: that one must keep in mind, at least for the medium term, the introduction of the framework directive and the other directives which are the subject of this report. However, I think that tonight I can go no further than to say what I have said.
I can certainly assure the House that the Government and those advising them will be grateful for the points that have been raised and will take them into account. There is one matter that I omitted to reply to. I have now been supplied with the information. It is this. The United Kingdom revenue from tax on spirits that I was asked about is said to be £790 million; from beer, to be £785 million; from wine, to be £234 million and from British wine to be £35 million. British wine is the old name for what is now known as "made wine"— which I spell for your Lordships: m-a-d-e. Made wine is wine produced from an imported must which is then fermented and which may have alcohol added. Unless there is any other point which your Lordships may feel that I have not answered, I do not think I can assist the House further.
6.2 p.m.
Lord RAGLAN: My Lords, I should like to give my congratulations to the noble Lord, Lord O'Hagan. I know very well that he was given only a few minutes' warning to step into this breach. I handed him some papers, but the noble Lord had read the report already and that gave him an advantage, one might say, over somebody who had not read it. I thank him for his remarks about my Committee and I should like to take this opportunity of thanking him for the contribution he made to the committees before he moved on. I congratulate him again on the tour de force which he managed to pull off this afternoon at such short notice.
My noble and learned friend Lord McCluskey is right. I am a home brewer and so I know more about wine than people who are not. I am at the moment in pursuit of a very good recipe for barley wine of which I was given a bottle the other day and which caused my wife to retire to bed rather earlier than she otherwise might have done. My noble and learned friend Lord McCluskey said that the Government are not committed to this idea of splitting up the package and are not taking a stance on it at the moment. Might I suggest that it does not matter very much whether the package is split so long as one only tries to reach agreement on structure and is avoiding the question of rates of duty for the time being. It might be easier for the Commission to take these matters one at a time so that they can concentrate on them, rather than to bring them to the Council, the European Parliament and to Member States in one big dollop.
I omitted to question my noble friend about the revenue raised from beer. I have done some quick arithmetic and I think that the total revenue raised from Excise duty on wines, spirits and beer is about 7 per cent. There is 3·9 per cent. from spirits and wines and a huge quantity from beer. We are dealing with a sensitive area so far as the Chancellor of the Exchequer is concerned; that was the only point that I wanted to make.
My noble friend Lord Brown wanted the Government to put up a stiff opposition to these series of Directives. He alleged that the Excise duty could be weighted heavily against spirits. Indeed,
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we said that in our report. It may be helpful to your Lordships if I say that on page XIII of our report we give the present rates of duty on alcohol obtaining in this country. This shows that the tax per gallon of pure alcohol in respect of spirits is £47 and that on fortified wine (at 22 per cent.) is £20; so that the tax on the alcohol contained in fortified wine is at present less than half that of the tax levied on the alcohol in spirits. That is perhaps the reason why wine mixtures are becoming so popular. If you mix wine with any kind of spirits and import it, there is less duty to be paid than if it were spirits—and you get more "kick". The Government may have to act in that respect. But I think that from what my noble and learned friend Lord McCluskey said about the way in which we hope to reach agreement over the method by which the duties will eventually be levied by the Commission, we shall be able to manage these in such a way that no one beverage will be discriminated against in favour of another.
On Question, Motion agreed to.

CAMBODIAN REFUGEES IN THAILAND
6.20 p.m.
Lord ELTON Lord ELTON rose to ask Her Majesty's Government what steps they are taking to assist refugees from Cambodia Kampuchea now held in camps in Thailand; and what is their response to the pressures that have compelled over 142,000 refugees to flee to Thailand from adjacent Communist countries since the spring of 1975. The noble Lord said: My Lords, I returned last month from a journey in South-East Asia in which I visited Thailand and in particular the province of Prachin Buri and a refugee camp in Aranya Prathet. This camp is about 330 kilometres to the east of Bangkok and about four kilometres to the west of the Cambodian border. It is as a result of what I discovered in my travels that I put down the Unstarred Question which is now before the House.
I must confess to your Lordships that, although I have spent the last two days trying to reduce the length of what I have to say, I shall continue for a longer time than I should like at this time of night. Those of your Lordships who may prefer to read my words in Hansard are welcome to do so without giving offence. Much

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of what I have left out is available in the report that I have written on the journey and the rest I will try to abbreviate.
The camp contained a population of 7,000 refugees, although it had been built to house only 4,000. The numbers therefore had doubled since it was constructed, but the sanitary arrangements had not been extended. Moreover, the water supply, which was supposed to make them work, failed almost from the start. I will not describe to your Lordships the conditions that result in a wide area of the camp; I can only say that they are a considerable threat to the health of the camp population.
The failure of the water supply was not only in that district area but also for all purposes. The boreholes had been sunk to a depth which was well below that of the water table, but the table, none the less, was too low for the pumps to lift the water to the tanks. The only source of water therefore in the camp is from hand-dug wells made by the refugees themselves. They have now reached about the maximum depth at which it is safe to use such methods, and they are in any case approaching bedrock. The best informed opinion I could get on the spot was that the supply would last for a further five to five and a half weeks. That was on 15th November. It takes very little arithmetic to show that, unless things are changed, the supply of water will probably run out somewhere about Christmas Day. I inquired from the United Nations High Commission for Refugees whether the situation had changed. I received the reply from Bangkok this morning that it had not, in connection with either the water supply or the sanitation, though confidence was expressed by the Thai authorities that something would be done very soon.
What does this camp look like? Across the countryside, as you approach it, it looks extraordinarily like a concentration camp, but this is a misleading view because the water towers (which are sadly empty) look exactly like watch towers; but it is surrounded by a high ring-fence. The only exit from the ring-fence is through a tall wire gate and that is guarded by an armed militia man whose business it is to keep not only strangers out, but the refugees in. This is a new facet of the policy and I will return to it.
The voluntary organisations within the camp—for whom I have the highest regard and to whom I will refer again—had, with some difficulty, persuaded refugees to start growing vegetables in a largish area. Unfortunately, when the 3,000 extra refugees came in the only place in which they could build their houses from bamboo and straw was on the vegetable fields in which the crops had not yet been harvested. Employment in the camp otherwise for gain is virtually non-existent, though there are handicraft efforts going on which should be warmly encouraged.
The only object of existence in the camp is to survive until eventually—you hope—you are resettled, either in Thailand or in a third country. That hope has for so many been deferred for so long that they are now in danger of sinking into a fatalistic apathy. Thus it was that what I saw was a community deprived of both liberty and purpose, composed of people who had lost not only their homes and all their worldly possessions, but also many of their closest friends and relations, and quartered in conditions in which at any time disease may triumph over medicine. That so many of these unfortunate people have retained their dignity and a good morale speaks worlds of the work of the voluntary organisations and also of their own qualities of endurance. I must speak with great enthusiasm of the work of the voluntary agencies and also of the United Nations High Commission, whose field officer I met there and who pursued his duties, as did the others, with an efficiency, perception and compassion which were all that were required—and, indeed, since these people were all Britons, I think your Lordships have reason to be proud of your fellow countrymen.
Let me now turn to the conditions from which the Cambodian refugees have fled. In speaking on this, I rely not only on the information generally available to all of us, which I have been studying in detail both before and after my visit, but also on interviews I conducted with 25 of the refugees who were Khmer speakers. I spoke to them through an interpreter who was wearing a uniform of the Ministry of the Interior, which is responsible for the camp; but I also spoke to two or three people in English and half a dozen in French, directly, without an interpreter.

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The latter had not been selected but came to me out of interest and of their own free will. What is more, they spoke to me not within earshot of any official or indeed, for the most part of, anybody else.
May I then give a brief account of the country that used to be called Cambodia. On 17th April 1975, after a bloody civil war, Phnom Penh fell to the Khmer Rouge. Their first action was to destroy the old name of the country and replace it with a new one, Kampuchea. This act of destruction and change was symptomatic or symbolic of the whole philosophy that was to guide the rest of their campaign and continues to do so. It had already been outlined by one of Kampuchea's three deputy Prime Ministers, Mr. Ieng Sary. Its aim was the total destruction of every link, whether human or institutional, with the capitalist past of Cambodia and with virtually the whole of the rest of the world. The next step was taken in the zone that had been controlled by the Lom Nol Government until the end of the war. It was to turn the entire urban population, and that of the larger villages, out of their homes and on to the street. Somewhere between 3 million or 4 million people appear to have been involved in mass migration and resettlement. They were formed into labour units and communes and worked in conditions of slavery. This is borne out by the carefully researched writings of Père Francois Ponchaud. He reports that some were harnessed in teams of six or eight to pull the plough like so many cattle. Some of the many refugees whom he interviewed still bore the marks of the yoke to bear out their testimony.
Control of these settlements was given for the most part to three representatives of the Khmer Rouge, and their power was absolute. They alone have the right to perform the marriage ceremony; they have a power of life and death over the hapless people in the settlement. They have the sole right of life and death over the population and, according to the testimony of very many people, execution is the penalty for disobedience. They have for this a chillingly Orwellian phrase. They call it: "Being sent to the Higher Organisation".
The next phase was the deliberate elimination of all who did not fit into
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the system or had any connection whatsoever with the old Administration, and of their families. The lowest estimate I have so far come across is from the same Francois Ponchaud. It is a cautious one. It has been carefully researched and was made right at the beginning of 1976, only 8½ months after the fall of Phnom Penh, since when many more lives have been lost. His estimate was 800,000 and it is very widely regarded as a gross underestimate. The lowest current estimate last month was just over 1 million, and the highest just over 2 million. My own view, for what it is worth, is that the truth lies within those last two figures.
Your Lordships may say—and I would understand it if you did so—that I am being unduly gullible and that my corroborating witnesses, having been rendered destitute, homeless and bereaved by the Khmer Rouge, are hopelessly partisan. So be it. We have another witness: he also is highly partisan, but both his interest and his complicity render his authority unimpeachable. His name is Kheu Samphan, and he is another of the three deputy Prime Ministers of Kampuchea. Some time after the fall of Phnom Penh he gave an interview to a reporter named Stephen Grouess working out of New York. That was subsequently picked up and quoted by William Buckley Junior in the International Herald Tribune on 14th September. In the course of that interview he said to the reporter:
"In five years of war more than a million Cambodians have died. The actual population of the country is five million; before the war it was seven million".
The journalist asked: "What happened to the other million?" That question annoyed Samphan. He said:
"It is incredible, the way in which you Westerners preoccupy yourselves with war criminals".
I scarcely think it is necessary to say more.
That is the terror from which the refugees have fled and from which they continue to flee. It has a great similarity, I would say in passing, to the terror by which the Jacobin Party ruled France in 1792, right down to the concept that all virtue and all authority rest only within that part of the population which belongs to the party and is actively in revolution, and to the concentration of the power

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of that authority in the grasp of a handful of small groups of what they call répresentants en mission, with the power of life and death over the population.
Aranya Prathet, the district in Prachinburi which I visited, borders immediately on Cambodia. The border itself is disputed and skirmishes are frequent; but we are not only looking at skirmishes. On 28th January, an estimated force of 300 troops, armed with automatic weapons, grenades, mines and, some say, rocket launchers, seized and held three villages. When they left, they left 34 civilians dead behind them. I have seen the photographs. One of the victims was a pregnant woman and another was a child of three, who was in fact her child. There have been at least two more large-scale attacks since then. One took place the day before I arrived, and 50 villagers were taken from their fields and fishing nets and shot, according to the reports then current.
I think it is fair to mention, in this very delicate situation, that there does exist an elaborate series of publications undertaken by an organisation called The Committe of Patriotic Kampucheans, operating in Waverley, New South Wales, which has only recently come to my notice. They have applied what would appear to be a very sophisticated critique to discredit the evidence of Father Ponchaud. Also, they have written up an elaborate, lengthy and highly circumstantial account of the whole history of Thai-Cambodian relationships, including frontier disputes. It has all the marks of careful research and at first it commanded my respect; but then I came to the passage relating to the refugees and specifically to the district which I had visited. That was the only passage I could positively check, and I found that in each of three particulars on which I could have given corroboration, either from my own experience or from the figures published by the United Nations (which are not in dispute) it did not coincide with either. On balance, therefore, I am inclined to reject the evidence of these publications. Incidentally, it was because of the violence starting to escalate in January that the 3,000 refugees who are extra to the 4,000 originally in Aranya Prathet were moved into the camp from billets in the surrounding countryside which they had previously occupied. I think that that
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was a prudent move on the part of the Thai Government, which one may not complain about.
May I then look at the arrangements which the Thai Government have made for the refugees in the past and what has now replaced them? They have set up a series of camps for the different nationalities coming over their borders. The arrivals are screened by the military, and supposed trained subversionaries, of whom there have been a number, have been weeded out and are dealt with under arrangements I am not familiar with. The remainder—the vast majority—then go into these camps and the Government receive from the United Nations a subvention of 25 cents per day for each of them, in return for access to the camps and the refugees.
The camp gates were open; certainly, the one I went to had up to that day been open so that 250 children could go, at a nominal bus fare, into a local village to get free education every day. But that stopped on 15th November. From that date, new camps which have been built are designed to receive the majority of the refugees and they will not be open as of now, to the United Nations for inspection. That is still subject to negotiation, and I would ask your Lordships to bear in mind that the Thai Government is a new one, that the situation is a rapidly developing one which is difficult to cope with, that there is no tradition of security of tenure of civil servants in Thailand and that therefore the Civil Service will not act without instructions from the Government. In fact, the Government were being sworn in the day I was there. There may be reasons for this hiatus and I hope it will be overcome; but in the meantime the policy is for all arrivals to go into military camps for screening. The assumption is that they are not refugees but illegal immigrants following an improved economy rather than people fleeing from a vengeance behind them in their home country. Those camps are specifically for refugees, or "illegal immigrants" as they call them, who are to be repatriated as soon as guarantees of safety can be got from their parent Governments. I shall not pursue the likelihood of such a guarantee being honoured. I think some of your Lordships will be familiar with the alleged fate of 26 who were thus repatriated to Cambodia, which I believe

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to have been fatal. Moreover, in the shopping arcade next to my hotel, I happened, before I went to the camp, to pick up a little news sheet which set out in specific detail the regulations under the current immigration Act. These regulations imposed a fine of 10,000 baht, which is something over £2,000, or two years' imprisonment, or both, on anybody either assisting the refugees without informing the authorities or failing to turn them over to the authorities, or failing to inform on anybody else so doing. Therefore it seems that they mean business.
Before your Lordships condemn the Thai Government as inhumane, will you please allow me o put this matter into proper perspective? In our country, because of the media's instinct for a good story and their concentration on the particular, we are very apt to think that the principal refugee emergency in Indo-China is represented by the boat people from Vietnam. That is in fact not the case. I have the United Nations figures for the end of October: the total of the boat people in Thailand at that time was 2,311. The total from Cambodia was 15,106, but the figure which casts a gigantic shadow across the whole statistical table is the 75,633 from Laotia. At the time of my visit, they were still coming at the rate of 2,000 a month. If you add those figures together and put with them the figure of those refugees who have already been resettled in other countries by the United Nations—they amount to about 47,600—you get a total of 142,000 refugees or more. That is the figure which I quoted and that, may I remind your Lordships, does not include the very large number of people who came over immediately before the census started in December 1975. These were the people who fled before the fall of Phnom Penh and the people who got out shortly afterwards. Nor does it include those who came over the borders in a clandestine manner and melted into the countryside—there are, I know, a number of those—nor does it include the uncounted bodies of those boat people who set sail for freedom in frail cockle shells and never made it to the shore.
This is an enormous problem for the Thais to cope with, and they ask themselves whether it is altogether right that three
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years after the emergency officially ended they should still be faced with this problem. Moreover, they say that the Thai-Laotian border is the scene of a traditional tidal migration in pursuit, first, of good harvests and, secondly, of good economies. Thirdly, they say that therefore these people are not looking for safety but rather for some of the free tickets which 10,500 of their compatriots have already got to the United States, where they think that life will be better.
Moreover, the Thais are facing this problem at the end of a season when the rains have partially failed and the rice crop is reduced—and both food and exports depend on rice in Thailand. Moreover, they are in a delicate situation as a result of the change of régime, they are under frequent military assault on at least one of their borders, and, on top of that, a seemingly endless flood of migrants come into their country to depend upon their succour.
If some of your Lordships think that their policy is inhumane, I challenge you to say what our own policy would be, if we ourselves were faced with the same pressures on a proportionate scale. What, indeed, has it been, what is it now, towards those who wish to immigrate into our country for reasons which, if less pressing, are none the less real? Therefore, let us look at what is being done to help them. I have spoken already of the voluntary organisations. I shall select one—because I went to only one camp—the Project Vietnam Orphans. Living on an annual income that would not keep an English working man alive for a couple of months in this country, they have made a very real contribution to camp morale. They have built with local materials an education centre in which there is a classroom, a generator, welding equipment, a forge, a carpentry shop and facilities to paint in oils and watercolours.
This is immensely valuable to camp morale. It gives a sense of purpose and a means of qualifying oneself for resettlement. Every day, they distribute milk to all the 2,000 children under 12 years of age; and, incidentally, they use Common Market surplus dried milk for the process, which we ought to welcome. In the process, they visit every family once every four days and can identify cases of malnutrition and other diseases. They also

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teach two hours a day in foreign languages. Their work is beyond praise. There are other agencies there from other nations, but I must not weary your Lordships much longer.
What is the solution to the problem? At present, the Thais can see only resettlement in third countries as the only practicable alternative. A great deal has been done already and 47,500 have been accepted for resettlement. Incidentally, of those 22,000 or more went to France, 21,000 went to the United States, 1,400 went to Malaysia under an admirable scheme run by Perkim, under the presidency of Tunku Abdul Rahman, 1,300 to Australia, 400 to Germany and 180 to Norway. What the Thai Government will not at present contemplate is a resettlement on any significant scale within their own country, for a number of reasons.
The first is political difficulty locally. The second is a fear that any largely successful scheme will simply increase the flood coming over, and that they will be swamped by it. But I think that if that flood is ever stemmed, it would be reasonable to look at making an offer to them of a feasibility study to open up some of the interior of the country for cultivation, with a road funded through the United Nations. This should not be imposed, but it should be offered.
There are other initiatives which we can take. For a start, we must get the world by the ears and condemn to the international community the atrocities that are being committed in the name of Communism in Kampuchea. The United Nations Human Rights Commission is the proper forum for this and I should like to see our people ensuring that Kampuchea is on the agenda at the next meeting. If any countries try to block this, they will stand condemned before the world by their actions.
Secondly, the whole problem posed by the refugees may be so huge as to be insoluble, but let us proceed one step at a time. We can do something. Just now I read out a list of the number of refugees accepted by some third countries. Your Lordships will notice that Norway, with a population a fraction of our own, has taken 180. Our own score so far is 94. The total allocation agreed by Her Majesty's Government in a letter dated
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22nd January is only 116. We should do no harm to ourselves, and an incalculable kindness to the individuals concerned, if we were to increase it. Could we not perhaps even double it? So small an extra number would not rock the boat. And speaking of boats, the boat people in Thailand number only about 2,500 and a modest contribution such as this would actually have a visible effect on that problem and might be imitated. We should be in a stronger position to suggest an expansion programme to others, if we were expanding our own.
Thirdly we should press the United Nations for an increased budget allocation to UNHCR. I am very glad to see that we have, in fact, increased our subvention by, I think, £55,000 this year which is to be welcomed. Fourthly, we should recognise the outstanding work done by the voluntary agencies and the fact that they, being non-bureaucratic and non-statutory, are not tied by bureaucratic procedures and can respond very swiftly, and in a flexible and imaginative manner, to emergencies which need to be quickly met. I think that we ought to capitalise on this characteristic, and I suggest that the Government might look into the possibility of giving grants in aid to specific approved schemes. Again, the approval would have to be given very quickly, and you would need a body comprising not only representatives from all the voluntary agencies concerned, but also from Government. As it happens, such a body already exists in the Standing Conference of British Voluntary agencies for aid to Refugees—now to be known as the Standing Conference on Refugees—and I think that it should be investigated as a means of injecting some specific Government help.
Before I mention the fifth initiative that I have in mind, may I ask your Lordships to consider for a moment the wider implications of all this? If you stand back from the map, you will see that what we are witnessing is a little fringe of human debris, being pushed forward by the endless advance of a Red revolutionary tide flowing westwards and southwards through Indo-China. The next country, the dam at which this tide is now lapping, is the border of Thailand. Thailand is a founder member, and a large one, of the ASEAN

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group of countries which include Singapore, Malaysia, Indonesia and the Philippines. That has a market of 230 million people and the estimated increase of GDP per head per annum is 4½ per cent. It is a challenging and a staggering opportunity for our own industry and exports. It is very much in our interests to increase the economic base of that community, as well as the justice with which the wealth within it is distributed.
This organisation, the Association of South-East Asian Nations, is set up as the mirror image—slower to develop and later established—of the European Economic Community. We joined the European Economic Community in order to be able to make a visible, a real and an effective impact on the politics and economics of the world. Is this not exactly what the EEC was built for? Is this not exactly why we joined it? Can we therefore not have a closer liaison between the two communities, an identification of interests, which will be enormously for the benefit of both?
We also have an overseas development Ministry. I think that we want to beware of trying to catapult a principally rural, mainly traditionalist community, such as exists in Thailand, into a modern industrial society. Neither their social organisation nor their philosophy are suited to this. But they live by producing rice. It is possible enormously to increase both their productivity and the numbers employed in the effort. They also have a thriving industry for handicrafts and for making small, light industrial products. I commend to your Lordships' notice the work of various organisations which are already facilitating the distribution of these products; in particular, Aid to the Artisans, incorporated in America, which acts in association with museums and Trade Crafts, a publication which tells one all about outlets in European countries.
I think that those five initiatives, in conjunction with the feasibility study of a road, are not a great breakthrough. They are not an enormous stride forward in charitable terms. I think that they are the least that we can, either out of naked self-interest or for mere shame, undertake ourselves. That is why I have asked this Question, and that is why I shall listen with the closest attention to the Minister's reply.
6.50 p.m.
Lord GLADWYN: My Lords, last Saturday was Human Rights Day and was duly celebrated by the Secretary-General of the United Nations and the President of the General Assembly. Mr. Waldheim observed:
"The protection and promotion of human rights is now among our most urgent priorities. All Governments must rededicate themselves to this purpose".
M. Lazar Mojsov, the President of the Assembly, echoing these admirable sentiments, went so far as to claim that there had been "significant progress" in the 29 years which had elapsed since the Universal Declaration was adopted, but he noted that unfortunately we were faced with what he said were "mass and flagrant violations" of human rights, notably in respect of apartheid and
"in certain strongholds of colonisation, oppression and foreign domination",
all of which, in his view, should be eliminated. Nobody seems to have referred to the sad fact that in addition to South Africa, basic human rights are now, in varying degrees, repudiated by no fewer than three-quarters of the 150 members of the United Nations, or that the behaviour of some of them, notably Cambodia and Uganda, with Vietnam and Laos apparently not far behind, is barbarous beyond belief.
To say, in such circumstances, that progress is being made is really rather insufferable. Presumably M. Mojsov holds that the achievement since 1948 of independence by some 80 States validates his contention. But however desirable such independence may have been—and I certainly do not deny that it was—the undeniable fact is that, by and large, human rights were much better maintained by Colonial Governors than by present-day Presidents. As things are, indeed, professions of faith in human rights by many such rulers and their representatives in New York is nothing less than a rather grisly charade.
The question is, what, if anything, we can do about it? I am afraid that the answer is, not much. Reliance on any action by the United Nations is obviously hopeless. The majority there will continue to suppress any attempt to protest against the denial of human rights in those countries, other than some which

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have violently Right-Wing Governments, where they are being most flagrantly violated and will continue to make use of the crusade against South Africa as a means of diverting attention from even greater scandals. Nor is it much good our lecturing foreign Governments like a governess when we lack any ability to rap them over the knuckles if they misbehave. Only the Americans could do that if they wanted to, which is perhaps doubtful for reasons which are evident enough.
We can, indeed, try to set an example by our own behaviour. When and if we may have occasionally, and to a very limited extent, in the face of a state of rebellion, to suspend certain human rights, we can make some allowances for other otherwise well-meaning and democratic Governments which may be in a similar plight. If, for instance, the West German Government have to introduce, as they may, special measures to cope with the Baader-Meinhof murderers, we ought to recognise the necessity of such a step. It is, in any case, against this deplorable background that I approach the situation recently investigated by the noble Lord, Lord Elton, to whom all our thanks are due for bringing it up for debate today and for his splendid efforts on behalf of the flood of wretched refugees.
It is clear that what is happening in Cambodia is not only a major outrage in itself but, if we may believe the noble Lord, Lord Elton, potentially a danger to the maintenance of international peace and security. How should we react, therefore, to this particular scandal? Well, despite what I have just said, I believe that the behaviour of the Red Khmers is so exceptionally frightful that we should not hesitate to condemn it publicly, whether in the United Nations or elsewhere. Here I agree entirely with the noble Lord, Lord Elton. Perhaps it will not do much good, but at least we can try to mobilise such international indignation as we can.
The practical steps that we can take were outlined by the noble Lord, Lord Elton, in his admirable speech, and from my limited knowledge I agree with all of them. That is the only thing that we can do in a practical way. We must also recognise the very difficult situation in which the Government of Thailand find themselves. We may have to make some excuses for
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them if they do not act always in accordance with what we think is absolutely desirable.
Also I think that we must do our best to back up with money and by other means the United Nations High Commissioner for Refugees and the various voluntary agencies operating in this field, some of which were referred to by the noble Lord, Lord Elton.
We must also, somehow or another, try to encourage—back up, if you like—the Thai Government, perhaps from an economic point of view. It may do good. The more secure they feel they are, the less they will react in an unfortunate way and the better it will be for us all. I cannot imagine anything that might be more in the collective interest of the European Economic Community than some kind of support for Thailand and a common policy of aid to refugees, as recommended by the noble Lord, Lord Elton. I hope that the Government spokesman who is to wind up will accept that point and try to persuade the Secretary of State for Foreign Affairs to raise this matter without delay in the Council of Ministers of the European Economic Community.
Surely the great political objective is, by one means or another, to see to it that the calamity which has overwhelmed Cambodia does not now overwhelm the neighbouring country of Siam, thus justifying those who, from John Foster Dulles onwards, favoured the so-called "domino" theory, whereby Communism had every prospect of engulfing the whole of South-East Asia if, for any reason, the Americans had to abandon the struggle in Vietnam.
In the few remaining minutes of my speech may I, in this general connection, subject your Lordships to just a few reflections on the apparently increasing tendency of the human race, in default of great wars, to tear itself to bits behind the scenes—homo homini lupus, man is the wolf of man. Why has this happened? Some people say it is the result of population pressure and of food supplies not keeping up with the surge of population. I do not believe that to be so. The effect of population pressure may result in an enormous number of people just dying in starvation areas. I do not believe, for instance, that there was any shortage

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of rice in Cambodia when the Red Khmer came into power. It was not therefore a question of food supplies.
No, my Lords, it is much more likely that the appalling massacres of recent years, such as Hitler's extermination of the Jews, Stalin's purge of the Kulaks and now the apparent liquidation of one-fifth of the entire population of Cambodia are, as often as not, the result of some obsessive and fallacious ideology. There was, after all, no objective need for any of these fearful happenings. The first was attributable to a mad philosophy of race, not dissimilar in essence from that which may ultimately result in some kind of disaster in South Africa. The last two were an effort, in effect, to apply to a local situation certain crude and undigested doctrines of Lenin; namely, to put it very briefly, that society can be reformed and progress made towards an ideal future only if, in response to a kind of historical necessity, a group of intellectuals, allegedly representing the proletariat, violently overthrows an existing régime and maintains itself in power by ruthlessly suppressing any section of the population which may stand in its way—the end, of course, invariably justifying the means.
I have heard it suggested, I believe in the Press, that the leaders of the Khmer Rouge—a few peasants who had managed to get some education in Paris where apparently they had absorbed some popular Leftish doctrines—were persuaded that only by totally eliminating what they conceived to be the "bourgeoisie" could any progress be made. So when the régime collapsed and the opportunity arose as a result of the civil war and the disappearance of American aid, they did just that. To have exhibited any humanity in the process would, to their closed and rather infantile minds, have been an unpardonable concession to the woolly liberal thinking. Therefore they had—as I believe one of them confessed to a foreign sympathiser—to "clean up the towns" in their phrase; in other words to murder up to about 1½ million of their own compatriots. It only shows what a little learning at the feet of some Left-Wing professor can in practice achieve.
The moral is that people should somehow be warned that extreme and violent
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philosophies, whether of the Left or of the Right, are equally poisonous and equally self-destructive. It is no good thinking that we ourselves are totally immune from the virus in this country. Violence is increasing here at much the same rate, I fear, as disillusionment with politics and contempt for politicians. It will need real leadership, and perhaps some new political and industrial philosophy, if we, too, are not to fall victims to a new nihilism, embodying a rejection of all the values enshrined in the great Declaration that we celebrated last Saturday. No man, my Lords, is an island. Unless we get closer to our democratic neighbours in order to forestall it, and unless we can induce our young people to see the real calamity inherent in certain philosophies, we may ourselves in the long run be in for grave trouble. In short, my Lords, the end can never justify the means.
7.2 p.m.
Baroness VICKERS: My Lords, I should like sincerely to thank the noble Lord, Lord Elton, for his interesting report and also his initiative in studying this tragic situation. I shall be interested to learn from the noble Lord, Lord Goronwy-Roberts, what action the Government have taken or are contemplating taking in regard to refugees in Thailand. I want particularly to discuss the latter part of the Question with a view to making some suggestions. As the noble Lord said, everyone will be grateful to Malaysia for the action they have taken, and also I think to Indonesia and to Thailand. In particular, the noble Lord mentioned Tunku Abdul Rahman, who is known for his compassion. He actually adopted two Malay leper boys some time ago in order to try to encourage others to do likewise. Perhaps we might ask whether some of the 4,247 refugees now awaiting resettlement could go either to Sabah or Sarawak, which are not Muslim dominated and are not very highly populated.
I am grateful also to the representative, Mr. Jean Heidler of the UNHCR in London, and in particular for the information he gave me regarding those trying to escape in small boats. I am also grateful for the action taken by Amnesty International and would like to congratulate them on winning the Nobel Peace Prize. It was sad to read in The Times on Saturday

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that the information on political prisoners in Cambodia—
"perhaps the worst offender of human rights in the world"—
is practically unobtainable. The noble Lord has certainly helped with that tonight.
In the information I have received there has so far been no mention of the International Red Cross, which has done spendid work in many countries; and I should like to relate my experience in Indonesia in 1945–46 when they were there for nine months or more and really helped the situation. When the Japanese conquered the Dutch East Indies, as Indonesia was then called, they interned thousands of people. For example, in Batavia, now called Djakarta, there were four camps, in one of which there were 10,000 women and children. All in the camps naturally wished to be returned either to their country or to the various islands where they lived. But Lord Louis Mountbatten (as he then was) asked them to remain where they were and said that we would arrange special ways of getting them out of the country or getting them resettled. The problem was that, as your Lordships know, the Indonesian revolution had started and they were being killed. Of course, a great many persons were scattered in Java and the other islands and it was difficult to get at them, so the process took a long time. When the Indonesians declared their independence, many Dutch were in camps and had to remain there; and others of mixed races were interned by the Indonesians because they were considered to be pro-Dutch.
With some Swiss representatives of the International Red Cross and the Indonesian Red Cross I went to Central Java to meet President Sukarno who was still resident there and he agreed that those in camps should be visited and asked to sign a paper saying that they would be faithful to the State. They would then be given protection and would later be freed. Those who wanted to leave the country would be taken out and would be rehabilitated in the country they wished to go to. I know from one visit alone that 75,000 came out and arrangements were made for the others. It was done by collecting these people in certain places; those in camps were easy, but with those who were still at large it was not so
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easy. However, information was given to them that if they went to a certain point and remained there they would be taken away to safety by—in this case—the RAF flying aircraft into the interior. They were then flown to the ports; some were flown straight to Singapore and some were taken by ship to Holland or Australia.
I must here pay a tribute to both the RAF and the Royal Navy for the work they did. I admit that there were delays in the action and it took about 14 months to finish the job, and for myself I had to try to persuade all those of mixed blood to stay as I felt they would be unhappy in non-tropical countries. One knows what has happened, for example, in regard to the Amboinesians in Holland and the trouble they have experienced there. The Indonesian Government kept their word and, so far as I know, the then internees who remained in Indonesia settled down well. I have been back several times, once at the kind invitation of the Government, and I have never received any complaints.
I should like to suggest that the International Red Cross or any other organisation which is acceptable should be allowed to interview those who feel they cannot remain and, instead of having to go off in small boats and in other undesirable ways, they should be taken by arrangement to an agreed staging place from whence they could be officially transported. I hope that suggestion will be considered.
It would be advantageous to the countries concerned to get rid of the dissidents: it would give those refugees concerned a chance to get settled officially in a country desirous of having them. I understand that 27 countries have been approached and I only hope that when people are moved out of their country the family unit is not too broken up. It is far better to keep them together, if possible.
I believe my suggestions are in line with the scheme proposed for consideration by Governments; today I wanted to show that, given goodwill by Cambodia and others concerned, and patience by those waiting to leave, especially if they are willing to go into a temporary camp until they can be transported (as was done in Indonesia) it would be advantageous to all concerned. Without meaning to criticise in any way the work of the 22 relief

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organisations, it seems to be rather a lot of organisations; I do not know what co-operation they have, but perhaps the noble Lord will be able to tell us. I think it is advantageous to have one direct plan. Perhaps Indonesia might be asked to have a temporary camp in Sumatra with food and services provided by the United Nations and the refugees should be confined to the camp, because they spread about if they are not looked after. They could wait there until a country willing to take them can be found. This has worked very well up to date in other refugee organisations.
The Thai embassy produced an excellent document called Turn Not Your Eyes Away and I should like to give all possible praise to the Thai Government for doing a first-class job particularly, as the noble Lord has said, in the field of rehabilitation. There is difficulty in regard to illegal entrants and those not loyal to Thailand. Therefore, it will be better, if they genuinely wish to leave their country of origin, that they should be resettled in countries where they can have no further contact with Thailand. I gather that the difficulty is that quite a number of them go back over the border and return to their country probably as spies. On 12th November 1977 the Economist said,
"The buck stops everywhere."
We now have this excellent debate, in which we can see that the buck does not stop here. I think that the time has come for an effort to be made to help the Thai people, and to realise also that Laotian mountain tribesmen and others cannot be expected to settle down in alien West Sussex.
I understand that from 15th November onwards Thailand's attitude to the Indo-Chinese refugees, under a new agreement concluded with the United Nations Organisation, is to be that stricter measures will be taken against those who enter Thailand illegally. It is very difficult for the Thai Government to decide who has entered in this manner if they just slip over the border. These are the people who need special interrogation, to see whether they are truly illegal entrants or whether they have simply entered as so many do in Berlin over the Berlin Wall. Those who came into Thailand prior to 15th November 1977, will come under the
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financial support of the United Nations Organisation. The Minister in Thailand said that Thailand had done its best to get third countries to assist Thailand to repatriate some refugees to their country. He pointed out that Thailand had tried to get the displaced persons out of Thailand, and to discourage them from coming to Thailand either by land or sea. However, for humanitarian purposes, they had been provided with food and temporary shelter before being sent out of the country. What more can a country like Thailand do?
I gather there has been sufficient money for settlement. There is an amount of 14,350,000 dollars at the moment, which will include help for education, resettlement and self-reliance projects. I should like to suggest that some arrangement might be made on similar lines to what was done in Indonesia. I think this is fairly practical. It was not easy in Indonesia. When I was going in, the General in charge of British troops said to me. "If you disappear we are not going to send any troops to find you". The International Red Cross were far more practical. They made me sign a document saying that if I disappeared my family would not claim compensation. It was the first time I knew I was worth something.
I hope that we may be able to get something done on these lines. I am quite certain that, if the International Red Cross or other people were to approach them—after all, we have radio and so on to put it over to people in these countries, which was not possible in 1945 in Indonesia—they could get the refugees organised into groups and get them to come out, for the benefit of both the refugees and the country concerned.
7.14 p.m.
Lord TANLAW: My Lords, I think it is very fitting that so soon after Human Rights Day on Saturday we should be focusing our minds on a mammoth human rights situation such as described by the noble Lord, Lord Elton, this evening. Some noble Lords may have been aware that Amnesty International had a carol service in Trafalgar Square on Saturday. In that congregation there were many young people, there were churchmen, committed Christians, those, like myself, who have relatives detained

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trial-less in some far distant land. All of us listened and were comforted by some of the words the noble Lord, Lord Soper, spoke. He spoke with great simplicity and sincerity about the problems of human rights in countries far away from these shores.
Whereas it is possible to focus the mind or direct one's concern to one individual or even a few individuals about whom one has knowledge, it is virtually impossible to feel, understand or comprehend the situation of the numbers of human beings in the kind of distress which the noble Lord, Lord Elton, has described to us today, and this is only in one part of the world. My noble friend Lord Gladwyn expressed some of the helplessness that I certainly feel, and I know it has been felt by other noble Lords who have spoken—What can we do?
The noble Lord, Lord Elton, has set out in his report, and indeed in his speech this evening, possibly the most practical and sensible things that can be done at this time, and I wish to give him all our support from these Benches. He made mention of the voluntary agencies and one should underline the work which they are doing. We should give them more financial assistance where it is possible, and more recognition of the work done by this small and dedicated band of individuals in very difficult circumstances. The noble Baroness mentioned one agency which is operated by Tunku Abdul Rahman in Kelantan. The work he is doing deserves recognition. I think it is perhaps unfortunate that official circles in other parts of the peninsula cannot share with the Tunku his concern for human rights and the constitutional principles on which he founded the State of Malaysia.
On the wider issues which were touched on by my noble friend Lord Gladwyn, and which the noble Lord, Lord Elton, expressed with the general phrase "the domino theory", I only have two points to mention in the context of this debate. To follow on from what my noble friend Lord Gladwyn said, it has perhaps been overlooked that in Cambodia the revolution was an agrarian one, but there was a feature in it which I think I have never read or heard about before, which was the division between those Cambodians who lived in the country and those who lived
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in towns or in large villages. This revolution, in my view, could not have succeeded on ideological principles alone. I have a suspicion—I can only have that, as I am not familiar in depth with this part of the world—that if in areas with large rural populations the economy, that is, the village unit, breaks down to an extent which offers no future for the younger sons, these people look towards the larger villages or towards the towns; they see that some of the prosperity remains there and does not come out to the villages. This point has been mentioned time and again in the context of aid-giving agencies and support for South-East Asia or the developing countries.
I believe that this revolution, which was both mindless and bloody, could be repeated in Thailand, in Malaysia, or in Indonesia, or indeed in any country with a large agrarian population whose economy has gone wrong, or which has been repressed to the extent that they are desperate. It has already been mentioned this evening that Thailand may be an area that is vulnerable to this kind of revolution. Let us hope not.
There is another factor at work here, which is the hereditary system in which land is carried down from one generation to another. At each death of the landholder the land he possesses is distributed among his sons. After each generation the divisions get smaller and smaller. It is my feeling that in areas like Thailand, possibly in Indonesia, these parcels of land have been reduced to a very small acreage indeed. They are nearing, or have already passed, what is subsistence level. When this present generation dies and these lands are subdivided yet again, I have a suspicion, a suspicion only, that the seeds of another agrarian revolution may have already been sown.
As regards land tenure and the future of land tenure, the villages and rural areas of not only Cambodia—it is already too late there, as we have heard—but Thailand, Malaysia and Indonesia will perhaps be the biggest centres of explosion in South-East Asia within a very short time. Again I have a sense of helplessness as regards what can be done. I know that there are problems of land tenure in certain parts of Sarawak, and, I think, Sabah. I do not know because I have no direct knowledge of Indonesia, but the pressures of

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population, plus the factors which I have already described, will again add to the possibility of eruption of people who do not see a future at all.
We have heard from the noble Lord, Lord Elton, what can happen and, indeed, has happened, to a country where the rural economy has broken down. It could happen again and again in South-East Asia unless the aid, the prosperity and, indeed, the bourgeois outlook to which reference has been made, manages to permeate and succeeds in permeating the rural areas which we have discussed.
7.22 p.m.
Lord GRIDLEY: My Lords, in following the noble Lord, Lord Tanlaw, I hope that he will forgive me if I do not make any specific comment on what he has just said. I found it extremely difficult to follow his arguments and, having been a civil servant in Malaya for 30 years, I cannot conceive that there can be any reason why there should be any trouble over land tenure or agrarian reform or how they have any bearing on the present situation in Cambodia.
I am sure that on whatever side of the House your Lordships may sit, we are all grateful to my noble friend Lord Elton for not only his speech but the information he has obtained first hand by his visit to a disturbed area in South-East Asia. First of all, I want to deal with what I consider to be the terrible situation arising in Cambodia. For, if that situation did not exist, quite obviously the grave difficulties which face Thailand in the settlement of its refugees would not then be the matter under consideration tonight. Basically, I want to get back to the origin of the trouble and comment on Cambodia.
When the noble Lord, Lord Elton, states, as he has done, that out of a population of 7 million inside Cambodia a conservative estimate gives the liquidation, under the present régime, of 1·5 million to two million inhabitants in a space of three years, I begin to wonder whether the world will ever come to understand the sanctity of human life, man's spirit and that conduct of affairs which should govern the attitude of men in their dealings with one another. So, in reading the noble Lord's report on his visit, my mind was cast back to a trial which opened in
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Singapore on Monday, 18th March 1946, which was to bring to justice certain individuals who had perpetrated crimes on all fours with those crimes which today have been, and are still being, perpetrated by the Khmer Rouge in Cambodia. That trial in 1946 was, in essence, to establish a code of conduct to be followed in the future by which men would respect the sanctity of life after a war and even in peace. However, that seems to have been forgotten in the present instance of Cambodia.
That trial in 1946 was before a military court. The object was to bring to justice certain individuals who had no respect for civilised law, life or a compassion for mercy. It was a trial to establish the guilt or innocence of men charged with causing the death, by torture, of 15 of my compatriots who were taken out of Changi Gaol into Singapore for interrogation, during which they were tortured. Who was the president of that court? The president of the court hearing that case was none other than Lieutenant Colonel S. C. Silkin, who today occupies the position in Her Majesty's Government of Attorney-General.
Mr. Silkin acquitted a number of the accused but some were sentenced to imprisonment. However, eight were sentenced to death. In passing the death sentence Mr. Silkin had various things to say to Colonel Sumida Haruzo at that time head of the Japanese Kempetai— Gestapo. This is relevant in considering the situation which now exists in Cambodia. I quote only a part of his speech. He said:
"If, as I believe, Colonel Sumida, some of your victims made their sacrifice in the hope and belief that what they stood for would not die, let this be their epitaph, that they died for an undying cause".
He went on:
"To those of us who survive falls the supreme task of establishing and maintaining that higher morality between nations and of supplanting the rule of force and fear by the rule of law".
My Lords, I repeat:
"supplanting the rule of force and fear by the rule of law".
In view of the atrocities perpetrated by the Khmer Rouge within Cambodia at present the civilised world cannot remain silent. I support my noble friend and all other noble Lords who have spoken, in

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the hope that a statement of condemnation will be issued by Her Majesty's Government against the nefarious régime within Cambodia and the opinion of the civilised world will be mobilised against it. To remain silent would be a betrayal. It would be contrary to our principles to remain silent and, as has been suggested by other noble Lords, I think that some condemnation should emanate from the United Nations.
Before I leave this point the noble Lord, Lord Elton, in his excellent report and in referring particularly to the situation on the Thai-Cambodian border, said:
"Escape routes from Cambodia when discovered are marked by the heads of those who have attempted to use them, set up on stakes such as used to adorn London Bridge in the Middle Ages".
I can quote something earlier than the Middle Ages, and the barbarity that seems endemic among certain races, because I was taken out of gaol in 1942, which was not the Middle Ages, and shown heads stuck on poles in a similar manner to which the noble Lord has drawn attention. It was stated by the Japanese who spoke to me that they were the heads of those who had listened in to allied broadcasts and who, in consequence, had been executed. So customs which seem to be endemic in certain parts of the world die hard. I have made those comments to reinforce what I consider to be the accuracy of the noble Lord's report.
I notice that my noble friend Lord Elton appeared to be anxious that we should be sympathetic towards Thailand. For many years I served in the North of Malaya on the Thai-Malayan border. I would say that on the whole the Thais are a very lovable race and are a race who want to remain at peace. That is their problem. I can understand that they are deeply worried by what is going on in their country at present. For many years the peace which they enjoyed in Thailand was brought about by the strong metropolitan Powers of Great Britain administering Malaya, and France, which was then in what is commonly known as Cambodia, or French Indo-China. So the Thais were able to manage and govern their own affairs protected by two strong Powers, and I think that it was the only country in that part of the world at that time which for very many
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years—in fact all of the time—ran its own Government.
Suggestions have been made tonight about what we should do and how we should help the Thais in Thailand. Let us treat them with respect, sympathy and tact and do all we can to help them. In the last war I happen to know that their intelligence services were of great use to us in our war against the Japanese.
I am not surprised that the Thais are deeply worried by the refugees crossing their borders from Cambodia and even from Laos. There is always the danger of subversive infiltration in that part of the world, particularly because of the very thick jungle which exists, and it is comparatively easy to infiltrate. It must be worrying to the Thais when this emanates from people who might be acting on behalf of the Khmer Rouge. If I understood my noble friend Lord Elton correctly, he was unable to discover with any certainty whether all of those people had nefarious activities and emanated from the barbarious régime, although quite obviously some would be escaping from the tyranny to which they had been subjected.
As I think the noble Lord, Lord Tanlaw, pointed out, all this is dangerous to the existence of what has now become known as the "domino" theory. The existence of these problems in Thailand ought to be of great concern to the Governments of Malaysia, Singapore and even Australia, whose interests are paramount in the area and which dominate that particular part of the world. However, it does not mean that what is happening in that area of South-East Asia is not of tremendous consequence and fraught with dangers to all of us in the civilised world.
My noble friend Lord Elton made various suggestions for the resettlement of refugees in Thailand with assistance to the Thai Government, but he found that the official policy of the Thais was to repatriate all refugees who could not be settled in third countries to the homelands from which they came, albeit to exercise that decision humanely. I can understand that view and would merely observe on that point that in view of the Japanese attack in 1941—when Siam was invaded for the attack on Malaya and the Thais were forced to become an ally of Japan whether they liked it or not—in retrospect

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the Thais have every reason to be worried about any refugee who may settle in their area today. That probably explains their present lack of enthusiasm towards the suggestion of a resettlement of refugees in the area. I would think that in any discussions we have with them, or which other Governments may have with them, it would be very difficult to change their views on this. But certainly, as my noble friend has suggested, the position should be explored.
As regards resettlement in Malaysia of any large number of these refugees—and I do not understand some of the things I read in the Press about Malaya being rather touchy about certain things at present—a great deal of tact would be necessary in our approach to that Government. They still have Communist infiltration on their Northern borders which, although contained, is nevertheless a running sore, and I am doubtful whether the Malaysian Government would easily accede to any large-scale resettlement of refugees. Nevertheless, I feel that an approach in a friendly manner should be made to them.
Other noble Lords have spoken about the activities of Tunku Abdul Rahman and, therefore, I shall not repeat what has been said. However, there are most serious and dangerous problems in this area which cry out for a solution at this particular moment in time. The longer it is before we face them, the more dangerous they become and the longer they remain unsolved. For myself and from my experience in the areas in which these dangers exist, I have made my own comments in this debate on the problems as I see them, but I have not covered all the important issues, for time does not permit. Obviously, there is a need to improve the condition of the existing refugee camps in Thailand and to render assistance to the Thais in securing this. It is obviously desirable that the refugees should be allowed some gainful employment from these camps in husbandry or the planting of vegetables, because for a refugee to have time on his hands must be thoroughly demoralising. With respect to Her Majesty's Government, I would suggest that all these matters need their urgent consideration and the consideration also of the other Governments in South-East Asia who are affected.
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Under the colonial system the peace that many enjoyed, the prosperity, the standard of living and the friendships that grew up between ourselves and the indigenous populations, not only in the countries in which we had a direct responsibility but in many of the other adjacent countries, received a blow in 1941 by the Japanese attack. But the principles for which we stood remain and we are remembered for them. Above all, the goodwill towards us is still there. Therefore, in any of our dealings in these great difficulties that goodwill remains and our influence is still very great.
In conclusion, I would merely remind the House once again of the words of Mr. Silkin, our present Attorney-General, to which I referred at the outset of my remarks when I spoke of that higher morality between nations in supplanting the rule of force and fear by the rule of law. I ask the Government to give an undertaking to consider carefully the points raised in this debate and those made by my noble friend Lord Elton, and then initiate action which cannot wait. Although war is not imminent in that part of the world, we have there all the ingredients which could lead to war. I hope that in these circumstances we do our very best to remove the dangers which exist. This has been a serious debate and we may have to have another debate on the issues which have been raised.
7.38 p.m.
Lord GORE-BOOTH: My Lords, I am sure that all Members of your Lordships' House who heard the noble Lord, Lord Elton, opening this debate must have been greatly moved—indeed, rather shattered—by his first-hand account of what he saw in Thailand. If one has had some experience of voluntary work in less developed parts of the world, one sees something of the symptoms which he so vividly described, but the particular case of these enormous numbers of people coming over the frontier and having somehow to be housed by a country which is not rich in resources, or in what I might call intense administration, must be somewhat overwhelming.
I had not intended to speak quite so politically as most of your Lordships, but none the less I feel that the debate gives the opportunity of saying one thing

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which I know the noble Lord, Lord Elton, feels, and has written elsewhere, about the views we hold on Cambodia. Most of your Lordships must get very tired of being told how iniquitous the Salvadorians, the Argentinians, and the Chileans are, and so are certain things which they do; but it is time that, even if they are not here to hear the debate, they should read what has been said about Cambodia. There you now have, at the end of the day, a highly repressive Government living with at least one million shadow graves and having adopted that odious system invented in East Germany by which, if you try to get out of the country and the Government do not want you, they shoot you. This is what it is like, and it is time the whole world appreciated the nature of that place.
In this I do not wholly differ from the noble Lord, Lord Tanlaw, because some of the developing countries have indeed retained what one might call provocative land ownership systems far too late in the day. On the other hand, this is not wholly true in South-East Asia where some countries, notably Burma, have, in a curious way, dealt with these matters peacefully over the years, and it may also be true that Indonesia's experience has made this question less actual than it would otherwise have been.
What I tried to do, and shall try to explain as shortly as I can, was a little thinking on what it was within our power to do about the present situation. I put what I have to say in two categories: practical compassion and money. On the matter of practical compassion, of course, the voluntary agencies can play a great part, and I am sure—if I may speak without authority on behalf of them—that there will be great pleasure among the agencies which are working in that part of the world at the appreciation which has been shown of their work on all sides of your Lordships' House. It is a very arduous task that they take on, and, from what one has seen of it, our young people particularly exercise a gallantry, endurance, and cheerfulness in this work which is difficult to believe until you see it. I know that your Lordships appreciate that, and they will be grateful.
Of course there exists here one of the paradoxes of the situation. As the Thais have said in their time, "Of course, we
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don't want to make our country too comfortable for these people because our object is not that we should retain them being looked after by your voluntary societies; it is that they should vacate our country and go elsewhere". There are reasons for the Thais doing this. The first is because they have an extensive rather than an intensive system of agriculture and cannot, without a revolutionary change, make more room in their own country.
Secondly, there is a real fear in Thailand of the powerful military neighbours to the East of them. After all, there is a tradition of hostility over frontiers between Cambodia and Thailand and this could always be translated into practice if the Thais do anything which they and their enemies feel is too provocative. So, again, the good work that is done in Thailand is, in some sense, an embarrassment unless it can be followed up by action on the part of the rest of the world.
The situation that we have, and as many of your Lordships have decribed it, is ominous. It is ominous because, unlike, for instance, the situation when Soviet tanks crushed the Hungarian Revolution in 1956, there is no way out. Hungarians who thought quickly enough could get across into Austria and be welcomed. There is nowhere to which fleeing Cambodians, Vietnamese and Laotians can go except Thailand. Therefore, their country is under very great pressure indeed, and it is extremely important for the rest of the world to discover, if it possibly can, some way of relieving the pressure. I do not feel totally pessimistic, although I am enormously anxious about it, if only for the reason that I should think that the flow will probably diminish if only as a result of measures taken by the Communist states of what was Indo-China.
Now, I come to the money aspect of this question, because unfortunately refugee and displaced person situations cannot be dealt with without money in a rather special sense. What I think those of us who come new to refugee situations do not always realise is that money is not just something which is needed to get people out of somewhere and settle them somewhere else. For instance, I have seen one statistic produced by the United Nations High Commissioner for Refugees which puts the matter like this: over two

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years, a sum of £2 million was spent on various refugee and displaced person activities by the United Nations' High Commissioner. Of that almost exactly two-thirds was spent on refugees awaiting a definite asylum—a durable asylum is the technical phrase. Therefore, what we have to think of is not only the possibility of getting someone to accept refugees, it is the enormous expense of the maintenance of these refugees until such decisions are taken. One's conclusion from that—if I may reach a conclusion in advance of summarising any conclusions—is that anything that any of us and any of the countries who sympathise in this situation can do to reinforce the finances of the United Nations' High Commissioner is directly relevant to our success in getting refugees into new and permanent asylum.
We can be encouraged in our efforts to do this for one particular technical ground; that is, that we need not think of the United Nations' High Commissioner being subject to all the ebb and flow of opinion and doctrine in the United Nations Assembly. The High Commissioner has a great degree of autonomy in this matter, so, if we do help him in this situation he will not be hindered and obstructed by the kinds of resolution that come out of a highly charged Assembly, which was probably at the time it passed them thinking of something else. In that respect at least, there is an important agency at work—and the noble Lord, Lord Elton, paid tribute to its efficiency also—trying to persuade the Thais not to give in, not to start the ghastly process of repatriation, but to be patient while all of us, if we can, try to persuade ourselves that we can accommodate more people in the rest of the world.
In this respect, the noble Lord referred to some figures. It is enormously to the credit of the United States that they now accommodate over 160,000 Vietnamese in their country. One may say that they have a certain special responsibility, and this is true, but it is none the less an extremely generous gesture for a very large country. The French also have a good record based, of course, on the fact that the official language in Indo-China was French, so France has opened its doors to people from that part of the world.
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We too have moved, shall we say, although 116 is not a very large score. We might manage to do a little better. But, really, I would put the case on the very much broader ground that, given the background to what has happened, the free nations of the world ought somehow or other to make a more conscious and a more co-operative effort to see if they cannot increase the numbers which, so far, if they have not been content to restrict themselves, they have felt themselves compelled to keep to. This is really the message which I feel comes from this rather shattering report.
Of course, if the rest of the world is more generous in future than it is at the moment then all our nations will become that much more multi-cultural. I am sorry about that word, but I think your Lordships will understand what it means. I cannot see the world enduring without that happening. After all, we have accepted it here, in spite of what the National Front may try to say; and the French accepted it long ago. It is not a purposeful policy; it is a thing which happens—and who can say with confidence that the world will ultimately be the worse for it?
So what I hope Her Majesty's Government will be able to tell us they are able to do is to think on these lines; and, in the meantime, perhaps we can do two things specially. The first is this. Can we perhaps do a little more to take advantage of the existence of multilateral organisations—starting, of course, with the EEC—to see whether a more corporate effort could not be exerted to help the Thais? Can we finance the United Nations High Commissioner's activities more richly and, in general, think out ways and means in which the Indo-Chinese (I hope your Lordships will forgive the obsolete expression, but it helps to describe those who come from the whole area) could be accepted in other countries, always bearing in mind that some of the mixtures of culture simply would not work but that others possibly would?
The second thing that I hope Her Majesty's Government will be able to do in any case is possibly to increase our subscription to the United Nations High Commissioner's Office. It is not fashionable to speak of increases in expenditure, and I am fully conscious that in this matter

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I am being a little paradoxical. None the less, with even £100,000 or £200,000 more, the High Commissioner could proceed more quickly and more widely, and then at least we should not have the feeling, which I felt your Lordships quite understandably had throughout this debate, that we are helpless. I think we are helpless to influence the major policies of the future in that area. That, I do not see that we can do. Certainly, we cannot reverse the political tide which has overwhelmed Laos, Cambodia and Vietnam; but perhaps we can, in a limited way, at least afford comfort to and provide a home for rather more of these refugees than we have yet, as a world, been able to do and thereby also, as a secondary effect, assure a prosperous and peaceful future for Thailand.
7.54 p.m.
Baroness ELLIOT of HARWOOD: My Lords, we have had a most interesting debate, and I think that almost everything which can be said about this subject has been said. In that case, perhaps I ought not to speak at all, but I have been deeply involved in questions affecting refugees for such a long time, and I was so much impressed by Lord Elton's report and the moving way in which he put over the whole subject, that I feel I want to add a very few words to what has already been said. I agreed so much with Lord Gladwyn when he pointed out that here we were, celebrating Human Rights Day with a wonderful speech in Trafalgar Square, knowing full well—those of us who study these matters—the ghastly things which are happening in the area in the Far East that we have been talking about. This must make all our consciences feel very anxious and disturbed, because it is something about which we are really all concerned. I read in an article in the Economist the following passage:
"It is much better to draw a line under history and to regard today's refugee problem as only the latest in a long line of migrations from tyranny. As such, the responsibility for alleviating it belongs to every country which claims to be concerned about human rights."
Every country, my Lords—and all the speakers this evening have spoken about the many countries that we should like to help.
I still think that it is fundamentally the first charge on the High Commissioner
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for Refugees and the United Nations. The High Commissioner has a great standing in the world. As the noble Lord, Lord Gore-Booth, has said, the High Commissioner can do things which put him in a different position from the wrangles, debates and discussions that go on in the General Assembly. He has freedom to act and to work, and we all know how remarkable many of the High Commissioners have been. I think the last High Commissioner, Sadruddin Aga Khan, has been a very remarkable High Commissioner and has done a remarkable job.
What Lord Gore-Booth said about money is, of course, the key to the whole thing, and the only contribution that I can really make on this stems from my experiences back in the years 1959 and 1960, when the whole United Nations and the whole world joined together in a great appeal for World Refugee Year. I have in my hand, my Lords, the final account of the United Kingdom's appeal for World Refugee Year, which raised more than I think had ever been raised for any great international or national appeal. We started out with the idea of getting £2 million. We raised £10.5 million in a little over a year. We raised just under £10 million in one year, and then another £1 million came in because it was already all planned. My Lords, I think that if people really realised all that has been said today by your Lordships in this House about the things they have experienced and know and understand—Lord Tanlaw, with his long experience; Lady Vickers, with her experience; and Lord Gore-Booth—things might be different. All these things are not known to the British public; they do not know about them.
I well remember, in World Refugee Year, thinking at the outset, when I was invited to be chairman of the appeal and was asked to raise £2 million, that it would be quite impossible to do, because the British public would not understand about refugees. We did not have a great many refugees in this country, and no problems like the present-day. I was wrong. The response all over the world was terrific. Perhaps it would be more difficult to do today; I do not know. The result of this appeal was to clear all the camps in Germany. That was the

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main appeal at that time because it was the aftermath of the war; and that is where the refugees were. Today, they are further afield. Nevertheless, I think that if the delegates from the United Kingdom, in going to the United Nations, could do what the delegates did in those days and persuade the United Nations that this is a subject which they could well put on their agenda in order to raise really huge sums of money to give towards the administration and help of the High Commissioner, so that he can get into the countries in question and really help, then that would probably meet with a very much better response than people think today.
It is difficult for us here. We all of us know what our financial situation is, and I fully understand that it is very difficult for our Government to give large sums of money. But on these occasions the British public and the public all over the world respond to appeals if they are worldwide. I should not be surprised if the High Commissioner were suddenly to find that he had some hundreds of millions of pounds which he could devote to this work; because I agree with the noble Lord, Lord Gore-Booth, that it is only through the work on the ground that we are really going to be able to tackle this terrible problem.
I should like to add my words of support to the voluntary organisations who are working in these countries now. It is incredible the number of people who devote their lives to work of this kind. When it comes to organisations like Christian Aid, Oxfam, Save the Children Fund, the International Red Cross and UNICEF, all those organisations have had such experience in this matter and they have been doing it for years. They did it after the last war and they have been doing it ever since. They have such experience that, if more money was available, they would be able to increase their work far more economically and with greater experience than anyone coming from any other form of administration. I would add my pleas to those who have spoken in favour of the voluntary organisations and of giving them more money.
My Lords, to me, it is terribly depressing to think that, after all these years and
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after the great efforts made, this is still going on and we still have these appalling conditions in countries where, year by year, things get worse instead of better. I echo the words of the noble Lord, Lord Gladwyn, when he was talking about the influence of a few people who are very extreme and who can get the ear of, perhaps, not very well-educated people and influence them en masse. I believe that that is all too true. It is one of the things that we ought, all of us, to try to fight in any way we can, not by extremism but by wisdom and by tact and also by education, provided the education is of liberal kind.
I am sure the Government are sympathetic. In all my experience, Governments have been sympathetic toward refugees in giving what they can. I am sure that this Government are no exception but I would suggest to them that there is something to be said for trying to get, through the United Nations, a great appeal throughout the whole world for more money for what we want to do. It is only by money, by backing up the organisations on the ground, by appealing to people on humanitarian grounds, that we shall really make any inroads into this problem. I am sure that out of our debate today some publicity, some knowledge, may spread through the United Nations, and that this will be of assistance to the Government and, above all, of assistance to the people working in these countries.
8.4 p.m.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, the noble Lord, Lord Elton, deserves the gratitude not only of your Lordships' House but of a much wider audience for having initiated this debate and for having done so not only with a remarkable speech but on the basis of direct experience of the region and the peoples for whom he spoke so movingly. We are grateful to him and we are also grateful to those who have taken part in this debate.
The noble Lord described a state of affairs stemming from the recent upheaval in Indo-China which reasonable men and women can only regard as appalling. He compared them to the Jacobin excesses of two or more centuries

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ago. I would agree with him that they are of Jacobin or even Hitlerian proportions and character. How many innocent people have perished at the hands of these new rulers or have died unseen while trying vainly to flee, we shall probably never know. What we do know is that here and now, years after the revolution whose leaders claimed to seek a better life for their peoples, countless numbers are willing to incur great risks in a search for the basic elements of a civilised life or even to survive at all. Even the discomforts and the dangers of a refugee camp, the conditions of which we have heard described so graphically tonight, are found better by these thousand of people than the prospect of returning to countries which are now in the grip of a despotism far more brutal and ruthless than any which preceded it—countries which were formerly renowned for their gentle civilisations.
The noble Lord referred to Cambodia, particularly, where the régime's barbarism towards its population is abominable by the standards of any age. A number of those who took part in the debate—in asking the question, what can we do?— have said, among other things (I will come to the other things in a moment) that we must condemn what is happening, especially in Cambodia, in Thailand, as a result of the Cambodian atrocities.
I can assure this House that Her Majesty's Government not only condemn without measure what has happened and is happening, but also are preparing to do so even more strongly in the near future. I, myself, have condemned in this House these Cambodian atrocities as long ago as May 1976; and my honourable and right honourable friends have, similarly in another place, expressed Her Majesty's Government's abhorrence at the behaviour of the Cambodian regime.
Our concern has been made known directly to representatives abroad and our representative to the Third Committee of the United Nations Organisation has repeated our views there. Noble Lords may recall that, as a further indication of our attitude, the Government acted on 24th October to inform the Cambodians that we no longer intended to appoint an ambassador to their country. We now propose to take a further action in condemnation and exposure of these practices
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at the next meeting of the United Nations Commission on Human Rights; that is, in February 1978. I believe that a colleague of mine in the other place informed Members there that we were considering this.
I am able to tell this noble House tonight that we will raise the matter in the Human Rights Commission, and I hope some at least of our friends and allies will support us in our action. The noble Lord, Lord Gladwyn, asked us to invite our friends and allies particularly in the Nine to do so. I hope they will. We have already approached them and we will approach them again; but we will go ahead, whatever number support us in this matter. Indeed, we have gone further than most countries to condemn what is happening in Cambodia—and our colonial connection with that part of the world is not as close as that of some others.
We must recognise, of course, that the leaders of this régime care little for the concern felt abroad that their behaviour has aroused, and that there is very little we can do to assist the people who are forced to continue living inside Cambodia. However, there are others, by their scores of thousands, who have escaped, and the British Government are well aware of the burden which the Government of Thailand have incurred, through offering succour to these refugees. According to the figures that I have seen, as many as 88,000 of these unfortunates may now be in Thailand, and these include some 73,000 Laotians, some 14,000 Cambodians and about 1,000 Vietnamese; but many others, of course, have moved through Thailand for resettlement elsewhere.
The Thai Government has made considerable efforts at great cost to itself to supplement the great work of the United Nations High Commissioner for Refugees. I was glad to hear tributes paid in the course of this debate to Sadruddin Aga Khan, with which I and the noble Lord opposite me would wish to be associated most warmly. For 10 years he has dedicated himself to this work of helping the refugees of the world. He has now indicated to the Secretary-General of the United Nations that he wishes to lay down this particular burden, and I have no doubt he will pick up other equally heavy burdens in a cognate connection. We were all delighted to see the terms in

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which the Secretary-General accepted his resignation and thanked him for the great work he performed in this field.
The High Commission for Refugees, the World Food Programme and, as we have heard, a number of voluntary agencies—some of them in association with Governments in South-East Asia—have been active and effective in this field. I join with those who pay tribute to the voluntary associations—a number of them were named here tonight. One could add to the list, of course, Whatever enormities are perpetrated against people in this and other areas of the world, it is always a fact that these magnificent men and women come forward in the work of rescue and succour.
I am glad to say that the British Government have—as have successive British Governments, of course—contributed generously in support of these efforts. To take our performance in the most recent years—because the noble Lord wished to direct our attention to this—we pledge £350,000 for the 1977 regular programme of the United Nations High Commissioner for Refugees. Part of this covered activities in South-East Asia, and this year we have pledged a further £350,000, and for next year £400,000. Additionally, in June of this year the Government contributed a quarter of a million pounds towards the High Commissioner's programme for providing additional material assistance to refugees and displaced persons in Thailand and other countries which received refugees, many of them from Cambodia. This was a special effort to help their resettlement. Moreover, my right honourable friend the Minister for Overseas Development has decided, subject to Parliamentary approval—which I have no doubt will be forthcoming—to increase this contribution of a quarter of a million pounds to three-quarters of a million pounds.
I hope that we may agree that these regular contributions together with these special substantial contributions are not only worthwhile in themselves but give tangible effect to the concern in this country for what is happening in South-East Asia. Additionally, my right honourable friend the Home Secretary has agreed to admit to this country refugees from Vietnam, Laos and Cambodia—
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that is to say, people who have had previous connections with the United Kingdom. He has also agreed that Indo-Chinese already here, who do not want to return to their country of birth, will not be required to do so. In response to the international appeal by the High Commissioner for Refugees on behalf of the "small boat" refugees from Vietnam, the Government have agreed—as we have heard—to accept a quota of 116. That quota is now nearly filled and we are considering what further measures may be taken.
We have, as we have also heard, traditionally set a good example to other nations in the assistance that we have given to refugees from all parts of the world. We shall not fail to do so in the future; but the scale of the present problem is such that its solution must be an international one. It is for this reason that so much of our effort has been aimed at assisting the international agencies as a Government, assisting the High Commission and, indeed, as individuals and organisations in our country, responding wherever the call has been made by the voluntary organisations.
The noble Lord, Lord Elton, in his most moving address, proposed a number of initiatives which the Government could take to help deal with the problem of refugees. I have shown already that we are taking action in many of the areas to which he has referred. We have been foremost among those who have condemned events in Cambodia; we propose to take the lead in the Human Rights Commission in a few weeks' time. Secondly, we are increasing our support for international agencies to bring relief to refugees in Thailand and elsewhere. Thirdly, we are considering what more we can do to assist with resettlement. I take very much on board the suggestion that we might look at the possibility of increasing our reception of refugees.
We have, of course, done a great deal of this in fairly recent years, and while I join with others in expressing admiration for the performance of other countries, they have had a connection with this part of the world which we have not had. And in those parts of the world where our connection—colonial and otherwise—has been closer than theirs, I think our receptivity to displaced persons has been

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perhaps a little greater than theirs. It varies according to circumstances and to historical connections.
Nevertheless, we are considering what more we can do to assist with resettlement. We shall not fail to consider the further points which the noble Lord has raised and which have been raised by others, notably by the noble Lord, Lord Gore-Booth, and by both the noble Baronesses who spoke. I very much welcome what has been said by the noble Baronesses and the fact that they stressed the importance of the voluntary contribution. It is the duty of Governments to contribute, for example, to the international agencies set up by the United Nations. It is an obligation on individuals to respond to the call of organisations which try in a voluntary way to provide the money, the manpower and the womanpower to assist refugees in every part of the world. So, my Lords, in stimulating Governments, let us also encourage individuals.

  BEER PRICES
  BEER PRICES
  TERRORISM: REVIEW OF ACTS
  TERRORISM: REVIEW OF ACTS
  ANIMAL WELFARE AND TELEVISION PROGRAMMES
  ANIMAL WELFARE AND TELEVISION PROGRAMMES
  ANIMALS FOR RESEARCH
  ANIMALS FOR RESEARCH